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Simon Mikhailovich: Bitcoin Doesn’t Follow Gold’s Rules

Tom welcomes a new guest Simon Mikhailovich. Simon is a contrarian investor, entrepreneur, and the founder of The Bullion Reserve.

Simon discusses how today’s accounting practices may look okay on paper, but the truth is we are bust. It is now impossible to meet the future demands on cash-flow. Rates today are at 5000-year lows, while most assets are very overpriced. The dollar has declined in value during the past century by 95%. He argues that since interest rates are now zero, currency can only fall in value from here.

Banks have no choice but to follow the path they are currently on, and no politician will alter that course because it would be political suicide.

He discusses gold’s key characteristics in-depth and what makes it so fundamentally different from any other asset. Gold represents independence, scarcity, and permanence. Gold is independent because it is a physical item that does not rely on anything or any infrastructure. He says, “Empires may come and go, systems will change, and technology transforms, but gold remains.”

There have been many hyperinflations, and during these crises, people have chosen to use the dollar as an alternative. What happens when the dollar is compromised? What is the option to the U.S. dollar?

Bitcoin comes from the same desire to have independence from the financial system. However, there is a lot of marketing hype and misconception surrounding these digital assets. He makes a compelling case that digital assets are inherently different. Crypto requires infrastructure, and while gold will always exist, the same can not be said for bitcoin.

He discusses what propaganda means and how it represents marketing. You need critical thinking and some experience to evaluate these types of claims.

Lastly, Simon discusses his bullion business and the services he provides to high-net worth investors.

Time Stamp References:
0:00 – Intro
0:53 – Accounting & Obligations
4:00 – Discounted Cash-Flow
6:00 – Dollar Purchasing Power
7:18 – Central Banks & Politics
9:19 – Properties of Gold
18:45 – Futures & Pricing Today
25:29 – Gold 2.0 – Bitcoin?
39:06 – Pricing & Sentiment
41:38 – Defining Propaganda
50:20 – The Bullion Reserve

Talking Points From This Episode

  • Account practices and future obligations
  • Three key characteristics of gold
  • Futures markets and digital wealth
  • Defining propaganda
  • The Bullion Reserve

Guest Links:

Simon A. Mikhailovich is a co-founder, lead manager of The Bullion Reserve, and a director. Mr. Mikhailovich is an entrepreneur and contrarian investor who predicted and profited from the financial crises of 2000 and 2008. Before co-founding TBR in 2014, Mr. Mikhailovich co-founded Eidesis Capital, a special situations investment firm. Between 1998 and 2014, the Eidesis team deployed over $2.5B of capital through special opportunity funds focused on high yield corporate bonds and loans, credit derivatives, distressed CDOs and MBS, and gold. Previously, Mr. Mikhailovich was a Portfolio Manager at Falcon Asset Management, overseeing alternative investments in hard assets, including oil and gas properties, timberlands, and agribusiness. During the credit cycle of the early 1990s, he headed a workouts’ team responsible for restructuring multiple businesses in North America and Europe. Mr. Mikhailovich received a M.S. in Business (Finance) from the University of Baltimore and a B.S. from Johns Hopkins University.

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