WBD160 Audio Transcription

Dan Tapiero on Why Bitcoin and Gold Are Both Important

Interview date: Thursday 17th October 2019

Note: the following is a transcription of my interview with Dan Tapiero from Gold Bullion International. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this interview, Dan explains what changed his mind on Bitcoin, gold as a safe haven asset, Twitter, wealth redistribution, trade wars and Trump’s influence over the markets.

“That feeling as a macro investor was… wow this is real, and I’m early, and I better figure out what to do right away.”

— Dan Tapiero

Interview Transcription

Peter McCormack: Dan, how you doing?

Dan Tapiero: Doing well!

Peter McCormack: Thanks for coming on the show. Your name's come up a lot recently. I think I've been asked about five times now, people have said, "you've got to get Dan on the show! He used to be a Bitcoin hater, now he's a fan. You've got to get him on, you've got to talk to him about why he's changed, why he's converted."

Dan Tapiero: I don't know if I was a hater, but okay.

Peter McCormack: A nonbeliever?

Dan Tapiero: Okay, I'll give you that a little bit!

Peter McCormack: All right, well let's do the background first because you're what people would call a gold bug, right?

Dan Tapiero: Well, I don't know if I would say a gold bug, just because gold bugs are super ideological, only have one view and opinion and are not really open to other thoughts. I've been a global macro portfolio manager and I've been in the hedge fund business for 25 years and so have looked at all sorts of different assets, at different periods and I'm really looking for, what I call almost like a step function change type of opportunity.

So I've been involved with gold on and off since the early 90s and then in 2008, started my own physical gold company with a partner called GBI, Gold Bullion International, which grew from... I guess this is why people might think gold bug, but it grew from basically a presentation, a thought I had in my head, to a company today that has done over a million trades, has over 300,000 clients and we make it easy for people to buy and store physical gold. So yeah, I'm a businessman who's interested in the gold market.

Peter McCormack: Right, so you have an onboarding and custody service. That's the way I would think of it in the world of Bitcoin, you allow people to buy it and you custody it for them?

Dan Tapiero: Yeah I think that's right. We have seven different vaults, where we lease space around the world and you might be thinking, I'm giving you a little more detail here than you need, but…

Peter McCormack: No, I want it, this is good!

Dan Tapiero: So we have New York, Salt Lake, Zurich and London and in 2008, I was looking around for a place, as I wanted to own my own gold outside of the banking system. I had traditionally traded a lot with the big counterparties and I called up JP Morgan and UBS, they were the two really large players and I said, "I wanted to do a few million dollars" and they told me at the time that the minimums were $10 million and $20 million.

$20 million was more than I wanted to allocate, so I started looking around and there was really nowhere online, there was no platform that I thought was trusted, that wasn't based in some weird place and they said, "wire your money here" and maybe you hedge your gold there. So I said to an ex-partner that I had started another business with, "hey, what do you think about this idea? 

Because I'd really like to own it for myself in a secure way, in a jurisdiction outside of the US. Anyway, it took us two years to build that technology. It's a platform and what we do is we plug into other people's distribution systems.

So for instance, our largest client and our first client was Merrill Lynch wealth management and what we did was we built a system that plugs into theirs, so that for instance, a financial advisor can, who's sitting there in Ohio, his client calls him up and he says, "hey, I want a kilo bar stored in Singapore" and the Merrill advisor calls up his screen, pushes a button, and then that's us.

The next day that guy in Ohio has got his bar in Singapore. So I wasn't aware of Bitcoin in 2008, but some of the things that motivated my interest in having physical gold the way I wanted it, outside of the system, a hundred percent insured, secured, these are similar things or characteristics of Bitcoin in a way and why people want to have Bitcoin.

Peter McCormack: Well yeah and also a lot of the Bitcoiners sometime see it as a Bitcoin versus gold argument and are always trying to say why Bitcoin is better than gold. I actually see it slightly differently, I just see that there are two very complimentary assets, that offer a similar kind of value, but with just different properties.

Dan Tapiero: I think that's right and in a way, a super intelligent and concise description. In theory, we could stop the interview right here, as that's exactly right! It's funny how resistant people are to just that very simple concept. I think that's right, each has their own properties. I think I've said somewhere that Bitcoin is a very big thing and I think one of the things that Bitcoin is, is that comparison to gold. But I think just to be even handed and to follow up on that comment you just made, there are characteristics of physical gold, that Bitcoin can't sort of replicate.

As an example, physical gold can be, if you want it to be, truly off the grid with no record, no transaction record anywhere. You can also pick it up, so I could buy some physical gold, have it sent to my apartment in London, and then I can go pick it up and walking around the street to another bank or vault or wherever. With Bitcoin what we're seeing now, I mean we just saw how it was helpful in tracking that child pornography ring, this concept I keep going on about, this truth machine, Bitcoin really is a bulletproof ledger that tracks everything.

Physical gold is mostly trackable, but there are people out there who don't want it tracked and it doesn't have to be. So that's one thing, another thing is tax implications. Physical gold has different tax implications in all the different jurisdictions and even within products in the United States, different products have different tax liabilities associated with it. I don't want to say there are a lot of loopholes in that sense, but there are, and I'll just give you one example, you said you're in London often and very few people know this, but are you a British citizen?

Peter McCormack: I am British citizen.

Dan Tapiero: So you probably didn't know this. Now if you're a UK citizen, you can buy the UK sovereign gold coins and they are free from tax forever. No capital gains, no income, there's no wealth tax on it. It's considered the money of the realm, dating back to I think the 1700s, when they passed some law. I'm not sure about why it's that way.

But GBI we actually work with the UK mint quite closely and I thought this was incredible when I first heard about this! I understand being a Bitcoin holder and I think yes, there's multiples more of price appreciation, but at some point you're going to pay taxes if you sell any of it. Here you are with your UK sovereigns, zero tax! That's incredible, don't you think?

Peter McCormack: I do, but my bet on Bitcoin is that it will appreciate in value over the next 10 years before I sell any at a much higher rate than say gold. So whilst I'll have to pay tax, that's my bet. But I don't have anything against gold and I perfectly understand why people have it and they store it and why people have like a basket of assets, especially if they're managing money.

Just for me, I'm not a wealthy person, so I've gone all in on the Bitcoin, but I'm interested in the gold Dan. I've got some questions for you. So you custody it, say I want a kilo of gold from you Dan, and you say that you'll custody it for me, do you then just go onto the market and buy it and have to actually then physically have it delivered to your warehouse or vault?

Dan Tapiero: So you're talking about the specific logistics and I guess it depends. So we lease space from Brinks and so we're a large vaulter, so we get very cheap rates compared to what an individual will get for a smaller amount. So in a sense, we're an aggregating business. But it depends, if you're buying your kilo in New York, maybe the same day we have someone selling it, so we just move it from them to you, the ownership.

If it's a small vault, we're not really in any small vault, but if you were at a small vault somewhere and they didn't have the bar there, then yeah, we would have it directly sent from one of the vaults where we do have the gold. This is a very flexible product. You can have it delivered to your house, we deliver to over a hundred countries, think about that.

Then you can say three days later, "oh I want to put it back into a vault in London. I had it in New York, I took delivery, I looked at it, I put it back, I prefer to have it in London." So this lots of flexibility and we have 50 different products, different coins, bars, kilo bars, smaller little bits, some people buy one coin. So the logistics just depend on the specifics of what you're doing.

Peter McCormack: No, it's really interesting. What are the risks with this? So one of the thing Bitcoiners will say is, "well, my Bitcoin can never be confiscated, my private keys." Would people ever worry about that? Is that something anyone should ever be worried about?

Dan Tapiero: It's 100% insured. So if your gold ever was stolen or confiscated, it's 100% insured by Lloyd's of London. Especially if you're a smaller holder, you have no risk. I would think maybe if a government came in and took your gold because you had 400 or 500 million, maybe that might be more difficult, that would have to come under a separate insurance agreement.

But for millions, tens of millions and believe it or not, with a Brink's vault, there's never been any loss. It's like they say Bitcoin has never been hacked, it's the same thing. No one has ever lost a single penny having their gold in a Brink's vault.

Peter McCormack: All right, so then why are you going to be offering Bitcoin alongside gold now? Are you going to offer a buy and custody service for that, because that would be a really cool business, if you were offering both gold and Bitcoin!

Dan Tapiero: So actually we sort of do, and this is a funny story and maybe why I am one of the few gold guys who was exposed to Bitcoin. We had a young guy who worked with us very early on, ended up being President of GFI for a while, no longer with us, who of course, the younger guy at the time, he was probably 26, 27. In 2013, 2014, we actually had a digital gold product, but there was no demand, so the business went nowhere and we lost money on that business line. We then integrated with a company called Bitreserve. This is 2014, which started to into Uphold,

Peter McCormack: Oh yeah, I know Uphold.

Dan Tapiero: So if you go to Uphold, you can still today, we were the first place that you could buy or sell Ripple or Bitcoin to buy yourself physical gold, silver, platinum or palladium. It took us a year to integrate with them, but we did, so if you go to Uphold today, you could sell Ripple and buy palladium. That's the functionality that we gave them and we built for them, almost 5, 6 years ago. But unfortunately that business never really took off and I don't know that I can explain it.

It still is there today, it's not a big revenue driver for us. What we had in the very beginning, you'd find this interesting, is they were very small bits of money coming out of China and my guess is they were buying Ripple and then they were selling their Ripple to buy physical gold and then we would have it stored outside of China somewhere. So it was a way for them at the time, but again, I say this freely, just because it's never turned into a big business. I would've hoped it would've been a conduit for Chinese money to leaves the country to be honest, but it never turned into that.

So maybe we as a firm looking forward over the next 3, 4 years, really need to think about building out that business. I'll say one last thing, we did six months ago, start a business with equity trust, which is an IRA and in the US, it's a retirement accounts. You can set up an independent retirement account on this with this company and we built this for them, we partnered with them, you can buy I think anyone of 8 cryptocurrencies for your IRA, which means that they're tax free and that business actually has taken off in the last 6 months.

So I mean it's mostly Bitcoin, but then we also offer 6, 7, 8 other ones and that's, that's in partnership with Digital Currency Group, Barry Silbert's group. But we built the tech for all of that and there aren't too many places in the US, where you can buy Bitcoin in your IRA at a reasonable price. There are a few other people out there who are really, really gouging people and I feel bad for them.

I wish they knew about our product because they would be saving multiple percentage points. So we are sort of involved, but not as much as maybe we will be in the future.

Peter McCormack: Okay, so one thing that would be interesting for me to understand is, as I mentioned before, I was told that you were originally like a non-believer in Bitcoin and you've kind of changed your view on it. Can you talk to me about that? Can you tell me when you first heard about Bitcoin, what were your doubts about it and what changed? Because I think that's going to be a really interesting thing for a lot of people to hear.

Dan Tapiero: Yeah, so the thing with this is that, being in the global macro money management world, I was aware of Bitcoin early. I remember it was on the front page of the FT at one point when it hit, I think it was $30, and then collapsed back down. I forgot what year that was. But my familiarity with it increased when GBI got involved as I said, we integrated with Bitreserve in 2014 and we were actually making little bits of money from the trading in Bitcoin and Ripple. 

So I was aware of it and I thought, "yeah, that's great, that's cool." But the problem for me early and really until recently, is just that the market cap was just too small. As a macro guy, I've traded in markets that trade trillions of dollars a day. The currency markets are multi-trillion dollars, the bond markets are billions, sometimes trillions, even the gold market, I remember one day in 2011, I traded over $1 trillion of gold and traded it in maybe a day or two. So I've always positioned in these large assets playing for big moves and big trend moves in large asset classes. 

So Bitcoin was more like a small, VC, I would almost say play thing. It was like a tech stock trading at 30 cents and I was never involved in stocks, I don't trade stocks, so I just saw it, but it wasn't real to me, even when it hit $10/$15 billion market cap, it was just still too small. So I'm like, "yeah, that's cool, but it's not macro and I've got all these other asset classes I'm looking at."

But what happened was when it went up to $18,000/$19,000, well let me just say before that, being very involved with GMI, which is Raoul Pal's group, I think I was one of the original subscribers to his monthly newsletter back in the early 2000s and he even covered me when he was at Goldman Sachs, so I've known him for over 20 years.

He had a session down in the Caymans, I think maybe there were 10 or 15 guys there and there was one year, I think it was 2013, he presented the bullish case for Bitcoin and so did a bunch of other guys. Those guys are probably pretty well known today in the Bitcoin space.

Peter McCormack: Yeah, that's Vijay Boyapati, who did the bullish case for Bitcoin. He's been on my show and Raul's been on actually as well.

Dan Tapiero: Yeah and they were early and very smart about it. As I said, there were probably five or six other guys as well there. But still, I had this problem and it wasn't really big enough and in fact Raoul, he had bought it, as I said around $300, he sold it around $2,000/$3,000 in the run up, went up to $20,000 and again, it's been on my radar, I looked at it every day.

Then earlier this year, really in January I saw this thing, in that it was down 85% from the high. If you're a macro guy and you looked at markets, different types of markets, your old career, you know that when a market goes down 85%/90%, either it's a total bankruptcy or a fraud or a zero and will be a zero or it's really the buying opportunity. You saw this with like Thai banks in 1998, after the peg break in 1997, there are plenty of examples of it.

So I thought, "well Bitcoin's not a fraud so I'm going to start buying" and I started buying it at $4,000, $5,000, $6,000, so I bought all the way up and the more you buy and the more of your personal net worth you put into something, the more interested you become in it. What happened was I just started spending all my time reading, digging into Bitcoin and I was just blown away, because I didn't realize that it was all the things that it is.

I had looked at the white paper years before, but I don't have any background in computer science or cryptography, I don't know how to code, I wasn't even good at math in high school, so it was a very far road for me, it was a long stretch for me to understand it. So I just thought, "oh, you know, I don't get this. This is for the VC tech geniuses out in Silicon Valley." So I gave up and I think a lot of people gave up and I bought some of those early books that came out in 2014 and 2015 and they made no sense to me at all.

But I didn't give up this time earlier this year because again, as I said, I had this position, which I still have, but the things that were available to read were helpful. I read Saifedean Ammous' book, that was helpful, Antonopoulos' Volume 2 was very helpful and after the interview I did with Real Vision, I was introduced to the world of Twitter. I had never been on Twitter, I'd never tweeted, until August or September basically of this year and that is an incredible community of, I mean there are some geniuses in that world!

There are also some goofballs. But to be able to read comments from Adam Back or even some of these younger guys who are unbelievably knowledgeable, that helped the process of learning. I think one of Bitcoin's problems, people always say, "well, what's the barrier to adoption?" I've said this before is that I think when you're outside of Bitcoin, it's extremely opaque to get into it. Well the language is hard to learn, it's like you're learning a new language, the concepts are hard and there aren't that many people who are explaining it within a framework or context that makes it easy for what are called no-coiners.

Peter McCormack: Dan listen, this is why I do my show the way I do it. I often get called like, "oh Pete, you're an idiot!" Because I ask simple questions and try and get people to explain things, but I think people on the inside, they don't actually realize how deep the rabbit hole is and how much knowledge there is. Also people can be really hard on you if you get something wrong. So for example, you might get sucked into looking at alt coins for valid reasons, I totally understand why people do and you might want to ask certain questions. Then people will just go crazy at you and it's just like, "well, come on, take a step back. Let's help people here."

Dan Tapiero: Yeah and I don't particularly mind that, because I've always been one who believed in strong debate. I was a history major and did a master's in history in school and then of course being an investor, part of the fun for me is having an idea and then going back and forth in a real way, with people who are the best at what they do and can provide insight and let me know where I'm wrong or I'm right.

I don't know if you look at some of the places where I've worked and things I've done, one needs a thick skin to survive, number one, but it's more that I'm interested in the heated debate. So just as an example, maybe about a month or two ago before the Hedera Hashgraph release, I asked somebody very simply on a weekend on Twitter, "so can someone tell me, what they think the pros and cons are of the Hedera Hashgraph versus Bitcoin".

Peter McCormack: What did you do Dan!?

Dan Tapiero: I know! But let me tell you something, it was one of the most interesting back and forth because all of a sudden this guy Eric on Twitter, this guy is some sort of genius as well and he's probably like 28 or 29 and says he lives in Sweden or something.

Peter McCormack: Eric Wall?

Dan Tapiero: Yeah!

Peter McCormack: He's a great guy.

Dan Tapiero: Some missive that actually was incredible and then you had the pro Hedera people come out against him and they were debating in the thread of my question. So it's like, where this is also... The power of Twitter is something that's also blown me away. I'm a 51 year old guy, not naturally taken to all this stuff, but you know part of the decentralized power of Twitter in a way is also, similar to the decentralized power of Bitcoin in some way, the decentralized aspect.

So to have this debate and then Eric release something on Medium and then the Hedera people released their response to that, you can't get that anywhere in the world! I guess my point is that 5, 6 years ago, maybe that did exist, but I feel like Bitcoin Twitter is filled with enough people at all the different levels and I feel like it is a nice community.

I know people talk about this toxic, this and that. Again, there's this Ethereum/Bitcoin thing, but for the most part, I think it's a really nice community because people like you, want to help people learn and understand and not just ask like, "okay, well how is Bitcoin going to be scalable?" Like that's the dumbest question and people have asked that over and over and over, but when you get to that place in the rabbit hole, you don't ask that question anymore because you understand what Bitcoin is, which is, it's much bigger than all of that.

Peter McCormack: Yeah absolutely, and Eric's a great guy! I was out in Oslo with Eric earlier in the year, we went to the Human Rights Freedom Forum, we went dancing together and he's a hell of a dancer as well. A lot of people don't know that and he's going to be coming on the show very soon. But it is great, I love how you can go online and you can get into a debate and Eric can be there and then you can have Saifedean Ammous jump in and then you could jump in and there maybe Raoul jumps in.

You've got this kind of global group of people all debating issues to do with Bitcoin, I think it's an amazing time to be alive to be able to do that. But I do find it interesting. I tell you what else I find interest Dan, was where you said you initially dismissed it not because of any of the fundamentals, you just dismissed it because of the market cap size and you're a trader essentially.

So that was very interesting because I'd made the assumption you dismissed it as magic internet money, which had no meaning. So what is it about the properties that when you were learning about Bitcoin, did you really come to appreciate? What was it that kind of grabbed you?

Dan Tapiero: Yeah, I would also say one of the other things why I knew there was something there, was that some of the very best people in my global macro space who are around my age, maybe a little older, but around my age, moved into the space permanently. Dan Morehead, he was at Tiger Management after me and I've known Dan for 20 years, Mike Novogratz, Fortress was a global macro fund, he now has Galaxy, John Burbank is also now very involved.

So they were very smart, younger guys who I respected who had moved into the space, so it also made it easy for me not to say, "oh, it's magic internet money", because these guys were really smart, who invested. Anyway, I'm sorry I just wanted to... It was maybe making it a little easier for me, because I saw my peers who actually had done all the hard work fall into it and you said, "so what were the properties?"

Peter McCormack: Yeah we're going to come back to that. I've got a very short question, you might be able to clear something up for me relating to Dan Morehead. Do you know if he was into the 90s heavy metal band, Pantera, and that's why he called the fund Pantera or is that a coincidence?

Dan Tapiero: I don't know. I really don't know actually, but I'm going to see him in a few days, I can ask him.

Peter McCormack: Can you ask him to come on my show? I can't get hold of him. I don't think he knows who I am, but I think he should come on, I want to talk about...

Dan Tapiero: He's hard for me to get hold of these days, so I can't promise anything!

Peter McCormack: Well find out the Pantera thing, but yeah, so what I wanted to know, what is it about the properties of Bitcoin that initially kind of made you go, "oh, this is something!"

Dan Tapiero: I got to a certain point where I realized initially that Bitcoin was really the culmination of 30 years of scientific and cryptographic research. I have that timeline and I saw this, as a person interested in history and the evolution of things, when I saw that timeline, starting with David Kahn, Ralph Merkle and then David Chaum, and all of these things, I thought, "oh my gosh, this is an invention, it's a breakthrough." Then the fact that the paper solved the Byzantine General's problem, I was just not in that world. I was not aware of these things.

So I thought, "wow, that is super legitimate!" I had been an academic at school, so it was like in the realm of an academic paper that actually had a real world application and that even had $1 or $2 billion or $5/$10 billion of market cap, I should have realized back then. But again, I had no idea. I just didn't do the super deep dive. So that for me was the light bulb like, "wow, this is like the invention of electricity."

That immediately sort of sucked me in, because I thought everyone who knows less about Bitcoin than me, which is basically a lot of people, even though I'm not by any means, even close to some of the experts. But I thought everyone else has no idea about this and so I'm still way ahead of people generally.

So that got me very excited, when I'm really early, I had a farmland business in 2006/2007 that I started, I was very involved in agriculture and I had the same type of epiphany, I thought grain prices were going to double for a certain number of whatever reasons and the same thing with the gold in 2005/2006 when I got very focused on gold. What I'm saying is that that feeling as a macro investor was the same, of "wow, this is real and I'm early and I better figure out what to do right away."

Peter McCormack: When you talk to other investors, you've got a lot of friends, macro investors and analysts and various people you talk to, amongst them, I'm assuming there are some naysayers, some who still don't know Bitcoin, they don't believe in it, maybe they don't understand it. What is the kind of like rejections you're getting from people?

Dan Tapiero: Almost all of them, and I'm talking about very, very successful guys in their endeavours, almost all of them, and that goes from money managers to people who are very senior in Wall Street to billionaire business people, they all kind of smirk a little bit and then I say, "well, you know what, you're probably not really going to do the work that's required to really understand it", and then they're a little interested because I've goaded them on a little bit.

A guy who's very successful doesn't want to be told that there isn't something he can't understand that's related to money or business or making money or what the new banking system might look like 10/15 years from now. I would say part of that, it's not their fault, but you need to have the time to put into it and if you're running a business or several businesses and it's 10/12 hours a day... 

I've been an independent investor for many, many years and I've started two companies from scratch that were based on a macro thought and I've been involved in probably 30 to 50 different, I would say significant macro trades in my career over the last 28 years. So this whole process, it wasn't that difficult for me to fall into it, oh my goodness, light bulb goes off, lock myself away in a room, read 10 books, listen to a hundred podcasts, read a thousand articles and that's basically what happened and it took months and it wasn't the only thing I did, but it pretty much was.

So unfortunately I think that's still needed. So amongst my peers, the last thing I'll say on this is that there are guys over 60, it's zero and I don't think that any of them will be able to adjust. Even ones that have invested in venture capital firms that are involved in the space, very, very few, when I mean zero, I just mean a near zero number.

Over 40, I think the number is still very small and then under 35 and I don't know that many people under 35, I think the adoption rate is much easier, much quicker. So what we're talking about is a massive wealth transfer that's going to happen from the old people won't understand it, to the young people who it's second nature for.

Peter McCormack: So I think that's really interesting, as wealth redistribution, I think that's a very interesting concept. One of the things I've been trying to get over recently is where people have been talking about whether the institutions come in and they get excited when Bakkt arrives and then getting disappointed when there's little to no volume, I really think Bitcoin is very much a movement of people and I think by the time the institutions will arrive, we could be years away from that. 

So I think that we as a community, people should stop focusing and worrying about the institutions. I think it's much more about individuals and how we educate them and get them up to speed quickly, because I don't know about you, but I'm two and a half years in and I'm still learning!

Dan Tapiero: Yeah, I think that's right to some degree. The institution as they are referred to, really are a massive different group and is comprised of many different groups. So as an example, I think that there are probably a lot of successful fund managers that have invested in the venture capital firms in this space, who are funding the companies who are in this space. So Coinbase goes out and does a raise in December and they raised from Tiger, which is a big hedge fund complex, they raised money from, I can't remember who else, but I think maybe Union Square or Andreessen or whoever it was.

So the institutions are playing in that space, is my guess to some degree, because they don't want to deal with owning the Bitcoin and they don't want to figure out how to deal with it. Again, it's still an extremely small number of people and I think it's starting a little bit. I know this first hand, but I can't really get into it why, but it's definitely... Let's just say it's early in the first inning, but it's in the first innings. There is a game, people are aware of the game and it's in the first innings, but it's remarkable.

Again, I'm not so sure that it's the fault of the older people, after you've had some success in this world and you figure out your way of being successful in the business world, most people are not really looking for a new paradigm, they're not looking for a new way. So you have the people who run the Wall Street banks and accounting firms, but you know what? You have some of the accounting firms who are really advanced, at least in trying to figure out how to apply Blockchain and I don't like this whole thing, because you can't like Blockchain and not Bitcoin, that whole concept is ridiculous. It's all Bitcoin!

Peter McCormack: So are you a maximalist?

Dan Tapiero: No, I don't know if I'm a maximalist, but the invention, the value, is the Bitcoin solution, the network, the framework and the store of value and everything else. Look, I have nothing against Ethereum and they're interesting projects, that go on. I listened to Laura Shin the other day, she had some woman on who was doing something very fucking integrated with the Ethereum platform, that had real world application and this woman's business saves people in rural areas $100 off their cable bill because they're sharing excess wifi capacity or something like that.

I'm not very goo with the details, but I know enough to know that that's a project that's creating value for somebody. It's not Bitcoin, but look there's Coke and then there's Pepsi. I don't want to say it's like that because I think Bitcoin is thing.

Peter McCormack: Yeah, people prefer there's Bitcoin and then there's shit coins.

Dan Tapiero: You know what, I think that's very bad for the space. I think people should stop that actually, using that terminology and again, I'm not really big on cursing, especially in public.

Peter McCormack: Oh man, don't follow me on Twitter then, I curse a lot!

Dan Tapiero: I'm just not big on it because I just think it's unnecessary. But I think that being demeaning to something kind of like that, it's just... You know there's a lot of very smart people, people who are 10 times smarter than me and you, who spend their life working on non-Bitcoin crypto projects. So I don't feel comfortable dismissing that type of talent with an epithet. There's some goofy parts about this community that also keeps people away from it, that make the adoption more difficult.

Peter McCormack: Yeah, I think that's fair. I think I agree with you at some extent. I'm probably more on the ridiculous side myself sometimes because it's all a bit of fun to me sometimes, but I appreciate your point there.

Dan Tapiero: Well there's nothing wrong with a little fun, I'm all for a little fun, don't get me wrong. Look I see this whole world from an outsider perspective and I look at the level of talent of the people engaged and it's higher than certainly anything that I've ever seen in finance or in the investment world. Maybe 25 years ago, maybe then there's a smaller group and the talent was higher. But I don't think the people in that business are as high quality as the people in this business, especially under 35.

I think under 35 people who are innovative, creative, entrepreneurial who want to make something new, who want to make money, who want to be engaged in the future, they're not going into a macro hedge fund, they're not going into the investment business to be long bonds or stocks. It's a very uninteresting world with not great economic or financial prospects compared to this one.

So I think if some of those younger people are involved with projects that aren't Bitcoin, they're going to find ways to make things happen and I think we should be encouraging them, even though to me, yes, Bitcoin is the gold standard!

Peter McCormack: All right, well listen, before we finish there is another area I want to touch with you. You are a macro thinker, it seems to me that at the moment, there's a lot of crazy stuff going on. I'm not a financial guy, but I'm reading about negative interest rates, which seem crazy. It seems like China and the US, whilst having a trade war, they're also both trying to stimulate their economies. It feels like everything's going a bit weird! From your perspective and as an experienced macro guy, what's going on, man?

Dan Tapiero: Yeah I hear you on that! I think there are different timeframes that I think about [inaudible 51:07] that I used to think about a macro framework. So I think about like, "okay, let's start with today." I think today, , and the last 6 to 18 months, the world economy has been slowing and I think the data has shown that. The problems with the US and China, just think very simply, the US, China nexus was the growth engine really for the world for 15 years and now it's fracturing.

So de facto things can't be as good as they were, there's a change and there's an adjustment and people are trying to figure out what to do. If I have a business and I'm thinking about expanding in Asia, I'm probably not going to expand in China today, whereas 5, 10 years ago I might've. But look, I don't think this lasts forever either, I just think today there's uncertainty with that and Federal Reserve also, I think has made a mistake and raised rates too much. 

I think that contributed to some of the problems that we had last year in December, the markets basically completely collapsed and it was only in early January when the Federal Reserve basically did an about face on policy, that the markets also reversed of course. So since then you've seen many central banks from across the world ease interest rates and again, a lot of people say, "oh well this is the traditional financial role, interest rates, they don't do anything. 17 trillion negative bonds and the economy in Europe is still soft."

Yes and no, I think on balance, when the central banks all get together and say "we're going to make liquidity plentiful and we're going to lower rates", that liquidity then goes to places, it goes to market, it goes to stocks, it goes to gold, it used to go to bonds in some case, it certainly goes to credit and then that leads another demand cycle. People say, "well, we've exhausted that, we've been doing that for 30 years and more." I'm aware of all that, but it's still on balance, it has an effect.

So I think that the Fed recently in the last few months has reversed, from what was neutral, they were tightening to neutral and now to actually easing and hopefully they'll continue to drop rates and make liquidity more plentiful, because the data warrants it. The issue is that, and this is the first time I've seen this in my career, is that Trump... If you had to say to me what's the one thing today that's different than anything you've ever seen?

It's just that the political interference in the process of the economic management that's done by the Federal Reserve and probably to some degree the Treasury, it's never been as I would say, impugned upon by a President as we have today and it's really having an impact. He watches the stock market and when the market's at a high, he becomes more aggressive with China and then the market goes back down 5%, 10% and then he says, "okay, well we're coming close to a deal" and then he'll start attacking the Fed as well, "the Fed's been too tight, they should be easing more."

He even said a month or two ago, "we should have zero or negative rates, because the other countries are doing it. The dollar is too strong." We've never had a president, since I can remember following things, Reagan, Bush, Clinton, Bush, no one ever was on top of the markets like this, in almost like a daily fashion. So my guess is that he is going to want the stock market up into the election of November 20.

So I am centering my views on that expectation that he will get the macro policies that he needs and that means if the Fed doesn't accommodate and continue to ease rates, if the data stays soft, and again, I think it stays soft and neutral, that there's a potential that he really starts to talk down the dollar. This is some things that non-macro non-financial people don't understand, which is that the Treasury is responsible for the dollar, not the Fed and it is perfectly legitimate and legal for the Treasury to take any stance that it wants on the dollar.

I think the strength of the dollar in the last few years, it's been a reflection of overly tight Fed policy, so Trump does actually have a real case to make here, that the dollar is too strong and that it needs... I mean you have even official bodies like the IMF and World Bank, others saying that it needs a structural downshift. Step back for a second just to understand why, 15/20 years ago, the US was a much larger percentage of world GDP than it is today. The US dollar is still the world's reserve currency, but it's not the same percentage of world GDP.

So there's an upward bias to the dollar because people hold it in reserves and the Fed policy being too tight, also complicates things and makes the dollar stronger. So I'm coming up with my macro thought in a backwards way, I'm saying, what do I think will happen to ensure that the market is near its high on November 20 which is, that's the thing I usually do, I don't usually think this way, but when you have an election like this and you have a President who will go in and manipulate the markets, and I don't say that in some sort of evil way, but he will to ensure that he gets his results, I can go with that.

So what does that mean? I think things are slowing, I think liquidity will be plentiful, there's the possibility that China has just recently eased and that the ECB has maybe shifted towards a little more of an easing bias and just in the last few days I've been starting to think that maybe there's been acknowledgement globally and I'm not sure exactly. So I would think you caught me right now in a moment where I'm contemplating whether there's been a macro shift or not.

Peter McCormack: Interesting!

Dan Tapiero: But then just to finish up, I would say that if the Fed does not accommodate the weakness and the stock market does have a problem, if it does in the next few months, Trump and Mnuchin will come out to engineer a softer dollar and that could be 10 or 15% and if that happens, again it's bullish for gold, it'll be bullish for stocks, but I think that kicks off and also highlights the debate around Bitcoin, because 10, 15, 20 years ago there wasn't really the sense that fiat was being debased by authorities and that there was intervention pre 2008, which was a massive government intervention.

We really didn't have that so much and every time they come in and intervene that way, it just makes the case for Bitcoin stronger. So I don't think it's an epiphany moment. If the dollar went down 30, 40%, which I don't see right now, that would further put Bitcoin into the spotlight in my opinion.

Peter McCormack: Yeah interesting, because that's the discussions I've had with a few people recently. Will Bitcoin become a safe haven asset and right now it doesn't appear enough of people are considering it one.

Dan Tapiero: I'm not saying it has to be necessarily a safe haven asset. I think Bitcoin goes up regardless and I think Bitcoin goes up for a lot of different reasons, 80% of the reasons we haven't even discussed today. But the concept of an alternative currency, a hard money, does not necessarily mean it's a safe haven. I think gold is probably more of a traditional safe haven and gold is infinitely more liquid than Bitcoin. So the people who have assets, they want a safe haven, they're not choosing between Bitcoin and gold because gold is much more liquid.

You might have some flow into gold, but the concept that an alternative financial system or an alternative banking system, a whole new world is growing up, I mean this would be my thought, a whole new world is growing up alongside the legacy framework and so I just think that what will happen is, the whole ecosystem plus the market cap of Bitcoin and all the coins is around $350 billion. That's the value of the equity plus Bitcoin and the alt clients.

One day, people in the legacy system will wake up and it'll be $2 trillion and then the next day they'll wake up and it'll be $4 trillion. So at some point, there'll be a flourishing system, that I think will be in some way integrated with the legacy system, but not at this point. But it's going to continue to grow alongside, if you see what I'm saying, as opposed to a replacement. So I don't see that necessarily as a safe haven, more like an alternative and there is a difference.

Peter McCormack: Interesting! Well listen, I find it very interesting at the moment, I can't decide whether with Bitcoin it's going to become like this thing that could potentially take over or it's just going to be like an asset that sits on the side, I just don't know. But I find the whole thing exciting. I do feel a lot more confident when I speak to somebody like you though and hear you're a supporter of Bitcoin. I don't know, it just makes me feel like I've made the right bet!

Dan Tapiero: I think there's a chance it takes over eventually. I'm not the only guy... I may be early in my world, but there are lots of guys a lot smarter than me in my world who haven't figured it out, who will. So it's just the that the moat is very high and that's good for all of us, because the longer it takes them, the longer and more meaningful the opportunity is for us.

Peter McCormack: So we need to keep stacking sats while we wait?

Dan Tapiero: Exactly! Everyone out there should keep stacking sats, I love that.

Peter McCormack: All right, well listen I think that's a good point to end it, we've done a good hour. I do think one of my next visits to New York though we should do one of these in person, because I think we could go through a whole bunch of different things, that other 80% of reasons why you think Bitcoin will be a success I think would be an interesting show on its own. But before we close out then, one thing that would be good, if you can just let people know they can follow you, follow your work, your companies?

Dan Tapiero: Yeah, as I mentioned, I'm recently just on Twitter @dtapcap, that's my investment firm, DTAP Capital. For Gold Bullion International, you can go to our website if you're interested. We do sell physical gold directly and I'm actually going to be launching a new venture in the next few months that is in the Bitcoin space. But I'm not going to get into that, maybe next time we could chat about that!

Peter McCormack: You can announce that on my show if you want, get it out to a massive audience, you'd be welcome to do that. But certainly, when I'm next in New York, we should definitely meet up and do this again.

Dan Tapiero: I really enjoyed this!

Peter McCormack: All right Dan, well listen, best of luck with everything you do. Keep telling people to stack sats, educating the people in your world about Bitcoin, I think that's super useful. Thank you so much for coming on the show!