Here Come the AI Swindlers
AI: The Opportunities… and the Scams
Even more than last week, this week is shaping up as fulfillment of our “best of times, worst of times” thesis.
Even as Joe Biden threatens to expand the war in the Middle East — more about that shortly — exciting developments are afoot over the next three days in both crypto and artificial intelligence.
Let’s take on AI first — not least because it’s set to be the sensation this week at the Consumer Electronics Show in Las Vegas.
Paradigm’s iconoclast investor James Altucher will be there, along with publisher Matt Insley and several other members of our team.
They’ll be wandering the exhibit floors and talking up company reps on your behalf — eyeing the opportunities for generational wealth, yes, but just as importantly watching out for the scams.
“Already, we’re seeing signs of scams,” James says on the eve of the event’s opening tomorrow.
“About 33% of companies have tagged themselves as AI businesses. My team has been going to CES for years. They know these companies. They weren’t AI companies before and they probably aren’t AI companies now.”
James has seen this all before — first in the 1990s dot-com boom and again during the 2017–18 crypto boom.
Not long after James designed the first websites for companies like American Express, HBO and Disney… it seemed any two-bit company could juice its share price by adding dot-com to its name.
“Companies like Books-A-Million could launch a website, rebrand as a dot-com company and sit back while their stocks went up by 15X in two days.”
Same drill with the 2010s crypto boom: A few years after James first talked up Bitcoin on CNBC (at $114!), companies added “blockchain” to their name for the same effect. One infamous example was a beverage firm called Long Island Iced Tea Corp. When it transformed into Long Blockchain Corp., the share price soared.
“Did it have anything to do with blockchain? Who cared!” James recalls. “The market was thirsty for anything crypto-related, and Long Island Iced Tea capitalized on the trend, leaving investors with a nasty hangover.”
So yes, here we are again. “Marketing firms are dusting off their old playbooks and slapping ‘AI’ onto anything they can find,” James warns.
“From toasters to toothpaste, suddenly everything claims to be powered by the magic of artificial intelligence.
“The biggest danger AI investors face is being so dazzled by the promise of AI that they forget to scrutinize the substance behind the claims. It's like buying fool's gold and hoping it turns into the real deal.
“The complexity of AI also makes evaluating promising companies harder than ever. You basically need a Ph.D. in statistics in order to understand what these companies are even making.”
Don’t get us wrong. We’re not trying to turn you off of AI. We wouldn’t be sending a large contingent to Vegas if we were.
We’re just saying you have to play it smart. You need a knowledgeable team in your corner to make the most of an epic opportunity.
If you feel as if you missed out on the riches that came out of the 1990s dot-com boom… or the riches that came out of the 2010s blockchain boom… then here’s your chance to seize on the “wealth window” that AI is making possible this week.
Depending on your age, James says this could be the final chance of your lifetime to “get in on a brand-new technology” that “will create a tidal wave of new wealth.”
If you’re not already a member of Altucher’s Investment Network, give James’ AI presentation a look now before the Vegas convention floor lights up tomorrow.
Countdown to a Crypto Catalyst
Meanwhile, the echo wave of the crypto boom is also set to hit full-force this week.
We mentioned it on Friday: Sometime before this Wednesday, the Securities and Exchange Commission will make the final call on whether to approve at least one ETF backed by “native” Bitcoin (as opposed to Bitcoin futures).
Every indication right now is that the SEC will approve not only one but as many as 11 applications from companies seeking to launch a Bitcoin ETF.
Today’s Wall Street Journal is quick to spotlight Bitcoin’s big rally in recent months — and how “skeptics say it is nearly out of room to run” on the eve of the decision.
On the one hand, the skepticism is understandable — in the short term. It could be a classic “buy the rumor, sell the news” event.
That is, the mere expectation of approval has driven Bitcoin’s rally from $17,000 a year ago to over $45,000 this morning… and once it’s official, the announcement will touch off a wave of selling.
And that might well turn out to be the case. But again, that’s just the short term.
Long term, the advent of Bitcoin ETFs will open up the crypto sector to a huge swath of institutional investors for whom Bitcoin is — for any number of reasons — a challenge to manage. We’re talking pension funds, insurance companies, university endowments.
And we’re especially talking about registered investment advisers catering to the well-heeled. According to 2022 figures from the Investment Adviser Association, they manage $114.1 trillion in assets for 61.9 million clients.
You can imagine how even a tiny percentage of those assets moving into Bitcoin for the first time could meaningfully move the needle.
That’s why our own James Altucher — the fellow who was talking up Bitcoin at $114 a decade ago — anticipates Bitcoin easily reaching $100,000 by year-end. Not bad from today’s $45,000, no?
But the halo effect of this decision on other cryptos could be far, far bigger.
In fact, James has identified six tiny cryptos that could 10X or even 100X over the next 12 months.
And all as a consequence of a decision that could come down anytime between now and Wednesday. If you haven’t already, you’ll want to check out this interview with James right away.
Biden’s Blank Check
Crude is sinking hard this morning — down $3.42 to $70.39 — despite an alarming report that Joe Biden’s own advisers believe the president is about to stumble into a major Middle East war.
That’s according to HuffPost — whose story is replete with anonymous quotes, which ordinarily make your editor suspicious. But these appear to be the kind of anonymous quotes aimed at preventing a new war rather than starting one, so I’m inclined to give them the benefit of the doubt.
At issue: Whether Israel will pursue a full-blown war in southern Lebanon, in addition to the one in Gaza, confident of continued unconditional backing from Washington.
“I’ve been trying to keep an avalanche from falling on Lebanon and so have a lot of people,” a U.S. official tells the website. “The problem is no one can rein in Biden, and if Biden has a policy, he’s the commander in chief ― we have to carry it out. That’s what it comes down to, very, very, very unfortunately.”
This item comes on the heels of a Politico report that says the administration is drawing up plans to handle a “protracted regional conflict.”
It’s not just Lebanon. Rumors continue to swirl about U.S. airstrikes against Yemen’s Houthis — who’ve been harassing Israel-linked shipping.
The impact on global shipping continues to snowball. Here’s a development from the weekend passed along by Paradigm’s military affairs expert Byron King…
As long as Joe Biden continues to ship arms and money to Israel with no questions asked — by one measure, U.S. taxpayers funded 15% of Israel’s military budget before the 10/7 attack — don’t expect this situation to improve.
The stock market’s modest rally from Friday is carrying into today, with the Nasdaq up strongest — nearly 1.25% and approaching the 14,700 mark. The S&P 500 is up more than a half percent and comfortably back above 4,700 again.
The Dow is the laggard, down a third of a percent, and you can chalk up much of that to a near-7% drop in Boeing.
As you’ve likely heard, there was a scare late Friday on an Alaska Airlines flight headed from Portland, Oregon, to Ontario, California… and suddenly Boeing’s 737 Max is in the news for all the wrong reasons, as it was after two fatal crashes in 2018–19.
➢ Pro tip: Delta is the only one of the Big Four airlines with no 737 Maxs in its fleet — at least for now. In 2019, I made a point of flying only Delta on several visits to Paradigm’s Baltimore HQ — and everything was seamless. Guess that’s my plan again in 2024…
Gold is taking a modest hit — the spot price down about $14 to $2,031. But silver is holding steady at $23.16.
Financial Arsonist Commemorated at I-95 Exit
From the “Today I Learned” Department…
And it’s not new! Exit 190 on Interstate 95 in South Carolina has been the “Ben Bernanke Interchange” for nearly 15 years!
It seems South Carolina lawmakers took the first steps in January 2008 — heh, during the earliest days of the “Great Recession,” as it turns out — to honor the sitting Federal Reserve chair in this fashion. The first couple of “whereases” in the resolution say…
Whereas, Dr. Ben S. Bernanke grew up in Dillon County, acquiring knowledge and developing integrity and personal skills in rural South Carolina; and
Whereas, this solid foundation is the building block upon which Dr. Bernanke has established an impressive career as an economist, leading him to become highly respected in his field; and…
LOL with the florid language. As I wrote for a 10th anniversary retrospective of the Global Financial Crisis, Bernanke was one of the arsonists who put out his own fire.
More ironic timing: Bernanke returned to South Carolina for the dedication ceremony on March 7, 2009. A few days later he announced a tripling of the Fed’s “quantitative easing” program. QE was an aggressive money-printing scheme that launched a 12-year bull run in the stock market… while hollowing out whatever was left of the middle class after 2008.
Not-so-fun fact: The poverty rate in Dillon County grew from an already-high 23.9% in 2008… to 30.3% in 2022. Just sayin’...
Mailbag: Shipping Delays, Shopping for Precious Metals
“The topic of the potential for shipping backlogs around the ports of South Africa,” a reader writes, “tripped the old memory switch into wondering what ever happened to the ginormous amount of backed-up shipping off the California coast?
“Wasn't that going to take years to be resolved?”
Dave responds: Much as we pride ourselves on follow-up in this e-letter, things do fall through the cracks now and then — so thank you for the gentle reminder.
When last we left the saga, congestion at the West Coast ports was easing up — but only because Asian shippers were opting for East Coast ports instead, taking a longer voyage through the Panama Canal. The Port of Savannah in particular got backed up badly — prompting some vessels to dock in Charleston and Jacksonville instead.
According to a mid-December 2022 report from The Maritime Executive, “a dip in demand during November has allowed the Port of Savannah to begin clearing its vessel backlog with a forecast that they could be caught up within the next few weeks.”
So the COVID-fueled aspect of the supply-chain snarls appears to be pretty much over, four years after they began. Now it’s geopolitical with the Red Sea/Suez Canal.
And it’s weather, too: Thanks to a drought and low water levels, traffic at the Panama Canal is likely to be only half of normal by next month.
For the remainder of today’s mailbag, we’ll combine our recent threads about precious metals at Walmart and Canadian bank freezes…
“FYI,” a reader writes, “I just paid $553 for 20 U.S. Mint 2023 1-ounce American Silver Eagle brilliant uncirculated bullion coins at Walmart’s website.
“It appears the same product is $648 on APMEX. I’m not sure what the difference is other than $95 in savings per 20!”
Meanwhile, “I'm not Canadian,” writes our final correspondent, “but until 2022 I had a fairly sizable amount of gold and silver held in a storage account at Kitco in Montreal.
“As soon as possible after the banking freeze, I drove across the border, loaded up the car with my precious metals and brought them home. Maybe a precious metals storage account would be exempt from that type of shenanigan, but I'm not willing to gamble on it.”
Dave responds: The saying among crypto-heads — “Not your keys, not your coins” — applies just as much to precious metals.
A bank’s safe-deposit box is the worst place to keep them. As our Jim Rickards has said for years, the moment you’ll most want to retrieve them is likely to be the same moment the government declares a bank holiday — and you can’t get at them.
Obviously for security reasons you don’t want to keep a huge stash in your personal possession — so that’s where a reliable custodian comes in.
We’ll vouch here for our friends at Hard Assets Alliance. You can take delivery, of course, but HAA also offers allocated storage in five locations — New York, Salt Lake City, London, Zurich and Singapore. Allocated means the coins and bars you buy actually have your name on them.
The usual disclaimer applies: Paradigm Press now owns a stake in Hard Assets Alliance, so we’ll take a small cut once you fund your account. Even so, HAA has among the lowest premiums in the industry and they’ve been doing right by our customers since 2012. Give them a look today.
Best regards,
Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets
