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The smart thing to do is to not write about Dogecoin.
The smart thing to do is to not glorify a cryptocurrency that was started as a joke.
The smart thing to do is to not draw attention to its cute dog mascot.
So what that it rallied about 400% in the last week?
So what that its market capitalization is now about $50 billion, according to CoinMarketCap.com?
Sure, the price has gone parabolic. But there’s one good, solid reason to avoid it: Dogecoin is the embodiment of the exact opposite of the “safe money” assets I favor.
So what if Dogecoin enthusiasts rallied social media forces to drive its value higher yesterday, declaring Tuesday, April 20, 2021, Doge Day.
Sure, the price has gone parabolic. But there’s one good, solid reason to avoid it: Dogecoin is the embodiment of the exact opposite of the “safe money” assets I favor.
Indeed, these kinds of wild, speculative vehicles are downright dangerous for most investors. I hope you stay well away from it.
Now, that’s just Dogecoin. Cryptocurrency is a great invention overall. There are good reasons to take part in the crypto money revolution — as investors and as users.
But Dogecoin doesn’t rate highly on empirical criteria, like many other names in our Weiss Crypto Ratings system. It’s ridiculously volatile. It carries little margin of safety. And it doesn’t spin off income.
The last factor there is incredibly important. Investors face two extreme threats to their income: massive money-printing and the promise of years of near-zero interest rates from the Federal Reserve and an enormous borrowing-and-spending binge by the federal government.
Wild speculations like Dogecoin aren’t the way to “fight back” or even hedge against these risks. Neither are traditional U.S. Treasury bonds nor many other income-generating strategies you may have heard about.
There are alternatives, though — legitimate, time-tested strategies to generate consistent income. Those are what I mean when I talk about “safe money” strategies.
These include actions like making sure you retain a reserve of cash and short-term Treasurys for safety.
And continuing to invest in assets that can protect your portfolio against rampant central bank money-printing as well as government borrowing and spending. That means investing in gold, silver, mining shares and, yes, even certain cryptocurrencies.
I recommend starting by looking up the top Weiss-rated cryptos over on our Weiss Crypto Ratings site.
As for the Dogecoin hullabaloo, let’s leave it to others. It’s not the kind of thing that typically ends well for anybody.
Until next time,
Mike Larson
