Dylan Grice: financial privacy, the stupidity of central bankers and the “cockroach portfolio”

Merryn talks to Dylan Grice of Calderwood Capital about how central bankers are the problem, not the solution; how bitcoin can counter the increasing “weaponisation of money”; and why, if you want to preserve your capital, you should copy the cockroach.

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Merryn Somerset Webb: Hello and welcome to the MoneyWeek magazine podcast. I am Merryn Somerset Webb, editor-in-chief of the magazine, and with me today, and this is a special treat by the way, we haven’t had him on for ages, so I’m excited about what he’s going to tell us, although I have a horrible feeling it might not be particularly positive.

But we’ll come to that. It is Dylan Grice. Now, Dylan, you haven’t been on our podcast for, gosh, a good year, maybe more. So, tell us about what you’re up to at the moment.

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Dylan Grice: I think ever, actually, Merryn. I don’t think I’ve ever been on the podcast.

Merryn: That’s nonsense. You must have been.

Dylan: No.

Merryn: Inconceivable.

Dylan: No. This is my debut, Merryn. I’m very, very, very delighted to be here, finally. I was waiting by the telephone for a call.

Merryn: And there was I thinking that you’d been on so often you wouldn’t want to come on again. But, hang on, you’ve spoken at our conferences. Definitely, you’ve done that. We’ve written up your stuff time after time after time.

Dylan: In answer to your question, what have I been doing recently, I’ve been waiting for the call, a call to go on Merryn’s MoneyWeek podcast. So, I’m delighted to be here.

Merryn: Excellent. Well, my apologies for not asking you last year or the year before or the year before, but I’ll now ask you relentlessly every couple of months until you never want to hear from us again. Maybe that will be compensation. But you were working in Switzerland for a while. You came back. You’re back in the UK. You’ve got a new business. Right?

Dylan: Yes. I was working in a family office in Switzerland, one of the largest family offices in Europe, maybe the world, actually. I was running the liquids portfolio, the liquids part of the business and that informed the set-up.

My wife and I wanted to come back to the UK a few years ago. We did that and I was ready to set up my own business, as well. So, that is what Calderwood Capital is. We’re quite an unusual business in the sense that we run a hedge fund but we also sell subscription research.

I say unusual because I don’t know many hedge funds who actually sell subscription research but I also don’t know many vendors of independent research who also run a fully audited hedge fund. So, I think that makes us quite different.

I think, in terms of the fund we run, it is a very different fund with a very unique idea. It’s based on the family office model, endowment model, if you like. The name of the game is very much capital preservation. The way we preserve capital is by investing in quite quirky ideas and quite quirky funds. We are a fund of funds but we focus on ideas in areas which are fundamentally uncorrelated to one another.

So, very, very high orthogonality, very, very high diversification, very low to zero correlation with mainstream assets, very low volatility, expecting to make mid to high single-digit returns regardless of the overall financial conditions. That’s the family office influence on the fund.

Merryn: But, Dylan, that sounds like every fund manager’s impossible dream to earn in the high single digits every year, regardless of market conditions.

Dylan: That’s right. I should stress that we are doing this, I think, in a way that is actually quite straightforward. There’s no rocket science to it. We’re not doing it because we are just so much cleverer than everyone else. We have multiple strategies. This is one of the things that’s really interesting as a fund of funds.

Fund of funds are just so discredited. They’re discredited because they pay fees on fees and basically they invest in a bunch of hedge funds, and the hedge funds all do the same thing. Basically, what you end up with is you underperform the stock market when the stock market is going up and you get all the stock market downside on the way down.

So, you basically just get a beta product that you’re paying high fees on and that’s what people understand to be a hedge fund portfolio. And the reason they understand that is because that’s what most fund of funds have done but actually the hedge fund community, the hedge fund space, is very, very diverse, very, very differentiated.

There’s a huge range of fundamentally different strategies, quite niche, quite also esoteric and nobody wants to go near them. Why? Because they’re unfamiliar and they’re a little bit different and, yes, you might even have to do a little bit of work to understand it.

And people don’t like this, most people don’t like this, most hedge fund portfolio managers don’t like this. So, what do most hedge fund allocators do? They invest in long-shot equity or they invest in event-driven or they invest in risk arbitrage, etc, all these classic hedge fund strategies, and what they end up getting is an equity portfolio.

So, we don’t do any equities, we don’t do any duration, we don’t do any fixed income. We do stuff like reinsurance, cryptocurrency arbitrage, litigation finance, trade finance, mortgage derivatives, etc. What you end up with is a radially diversified portfolio which, do your arithmetic, when you get very uncorrelated return streams, you end up with something that’s not correlated to anything else. So, that’s what we have.

Merryn: So, there is a hedge fund devoted to cryptocurrency arbitrage?

Dylan: Yes.

Merryn: Fascinating. And how has that been doing?

Dylan: Not so well, actually, but not in the way you might think. If your question is have they been caught in all the carnage? No, they haven’t, absolutely not. That doesn’t mean they wouldn’t be caught up in it in the future but, as things stand, the crypto arbs have been doing what they always said they would do, which was take advantage of mis-pricings.

The easy way to think of it is that you have a bitcoin price on an exchange in Hong Kong and you’ve got another one on an exchange in California, and these are very, very different market, they’re segmented markets, they’ve got different liquidity flows and so, quite often, those bitcoin prices are different and they’re arbitrageable.

So, that’s roughly, in very simple terms, what a cryptocurrency arbitrage manager would do. And they’ve kind of performed. I think some of them are up this month, some of them are down, some of them are up year to date, some of them are down.

When I said they haven’t performed, what I meant was relative to how well we expected them to perform last year and that was because too much money ended up in the space. Towards the end of last year there was a huge inflow of capital and that has crushed the arbitrage returns. So, we actually exited the space in February/March time because the prospective returns just weren’t interesting enough.

Merryn: Interesting. I thought when you said that these funds took advantage of mis-pricings, I was going to say is there anything except mis-pricings in crypto, but I know you’re slightly keener on crypto than I am.

Dylan: Yes. Choose your poison, I suppose. You could make that claim in a whole bunch of markets today.

Merryn: Fair. All right let’s go on to your research. The research you sell comes in the form of other things I’m sure, as well, but mainly in the form of your Popular Delusions newsletter, which I’m sure you have many subscribers to, and quite right too.

Let’s talk about some of the things you’ve been writing there and I know that in your May issue, which is the last one that I’ve got, you say that you’re not quite as pessimistic as you were earlier in the year and that you did not expect a bear market in equities. We did actually get a bear market in equities, so how are you feeling now? In the US, anyway.

Dylan: I would like to qualify this before I say anything.

Merryn: Definitely qualify. Always qualify at the moment.

Dylan: Actually, on a high level, I wouldn’t hold myself out as having any great crystal ball or insight and we certainly don’t tell our subscribers or our investors that we are better than the next person at forecasting the market.

So, do we have a view on how things are going to unfold? Yes. Do we have an opinion at any point in time? Yes, of course we do. But I think that you have to take our opinion, as you take anyone’s opinion, with quite a large pinch of salt.

Merryn: Absolutely. But you’ve got a pretty good record of being right, so we’re more interested in what you think than what a lot of other people think.

Dylan: Actually, funnily enough we have, over the last few years, in terms of some of the things that we’ve said and some of the calls and event comments that we’ve made, we’ve got some pretty big turning points.

Back in January 2000, we pointed out the credit markets were just insanely tight and we actually showed a very, very good way to get very asymmetric exposure to a widening of spreads. In other words, how to get very, very cheap exposure to downside without really paying much if the market continued to run away. And that went very, very well. At the very bottom of the March 2020 Covid crash, the title of our piece was Buy Something, Buy Anything.

Merryn: I remember that. I wrote about that. That was a fantastic piece. I used that line at the end of a column, buy anything.

Dylan: Again, in hindsight it was the right thing to do but I think it was just one of those rare occasions when it’s obvious, and one of the reasons it was obvious is because everyone was absolutely terrified and petrified. Then, as that rally unfolded, we said listen and everyone hated it, we said listen, you just have to be along for this.

It’s not about whether it’s good or bad or expensive or otherwise. This is what’s happening. The printing presses are whirring and it’s just going to throw everything up in the air and it’s going to create a huge bubble. Last December we pivoted and said, listen, this has gone too far, this has gone crazy and we think that the crash risk is very high.

Why have we made some of these calls? If you think about what we’re doing, Merryn, and who we’re speaking to, we have our fingers in a whole bunch of different pies and we're talking to managers who are, day in and day out, trading in markets which are generally quite obscure, that people don’t really have much insight towards or even any access to.

If you get into some of the darker recesses of the credit markets, the market for synthetic credit derivatives, for tranches on those derivatives, if you get into the mortgage derivatives space, cryptocurrency, as we’ve already said, even things which are just not really obviously related to those areas like reinsurance and catastrophe risk, it’s amazing how much information you get that you can triangulate.

What we saw at the end of December was that, effectively, credit markets were just giving away tail protection for free and there were a whole bunch of different places you could see that. You could see it in synthetic credit markets. You could see it in cash credit markets. You could see it in agency mortgage markets. There was just no premium at all on tail protection.

So, our conclusion was, look, this is crazy. The market is very complacent because it’s giving away tail protection for free and that proved to be correct. What’s happened since then is that those tails are no longer cheap. Those tails are actually, if anything, they’re quite expensive now and you can see that pretty much anywhere you look.

If you look at spreads, spreads are now on the cheaper side. The equity valuation relative to real yield is kind of neutral. The reason why we felt less pessimistic, A, we’d already had a big drawdown and, B, we just felt you’re seeing a lot of pain already and you are seeing, in inverted commas, some tentative early indications of value.

That’s not to say that you go and buy with both hands. It’s just that every now and then something is obvious and it was obvious in December. It’s not obvious anymore. So, that was the thinking, whether it was right or not, I don’t know, but that was the thinking.

Merryn: How do you feel now? Around the same?

Dylan: I think around the same. Well, obviously, we wrote that last month and this month has been quite disastrous. One of the reasons for thinking that we’d probably seen the worst was because we just felt that you can already see higher interest rates. I didn’t say high interest rates, by the way, I said higher interest rates. And you can see already that it’s breaking things.

I suppose we just felt, look, if push comes to shove, central banks everywhere, first and foremost the Fed, but all over the world, they’re going to look at the damage that they’re about to inflict on their economy in the name of trying to get inflation back down to that 2% level and I think that they’re just going to blink and say, no, we’re just going to take 4% inflation. We’re not going to cause another depression to bring inflation down to 2%, we’re just going to leave it at 4%. So, that’s what I was thinking.

Now, I could be wrong on that, and this month I certainly have been or I could have been attributing too much skill to these guys. They might actually be so cack-handed that they just cause a complete collapse without meaning to.

Merryn: Well, it does slightly feel like that’s a possibility, doesn’t it? They were so behind the curve with inflation. They so firmly believed that they were the ones who have been controlling inflation for the last however long, that I think they thought that they could do anything and they could let inflation run a little while, say if it was transitory, and sort it out later because they’re so good at this stuff.

Whereas, in fact, we know they’re not really good at this stuff and we probably are beginning to think to ourselves, well, hang on a tick, did they actually have anything to do with the low inflation rates of the last couple of decades?

Well, if we start to think, maybe not. Maybe they thought they were controlling it but of course it was all to do with macroeconomic global factors beyond their control anyway, as it may be now. So, they’re just sitting there fiddling with levers that don’t do anything.

Dylan: Well, it doesn’t do anything good. I feel very strongly and have done for a long, long time that central bankers are the problem, not the solution, and I think that they cause great mischief. I think these guys are, frankly, dangerous and I’ve never had a huge intellectual respect for them. I’m sure they’re all good people but I don’t think they’re very smart.

And one of the reasons I don’t think they’re very smart is because I think that they don’t think deeply enough about the things that they don’t know. They’re just too sure of themselves, they’re too convinced that they’re right and they don’t listen to other opinions.

It’s kind of an economics PhD echo chamber that they’re all in. As someone who has done post-grad economics, I promise you that’s not a great place to be. So, I can definitely see that scenario where they accidently crash-land the economy and it feels like we’re on that trajectory right now.

Merryn: But if you were in charge right now, Dylan, and I’m sure many people wish you were, but if you were in charge right now, is that what you’d do, just put interest rates up a little bit more and tolerate reasonably high inflation for a while and get on with it?

Dylan: No. And this is why I would never get it and I’d probably get hate mail and I might be the subject of an assassination attempt because of what happened to Volcker, but I would try and break it. I would jack up interest rates way above the nominal GDP growth, which is where I think they have to go to be tight.

Merryn: And you would simply accept that recession was necessary and we need a big clean out anyway?

Dylan: Yes, I would. But then I would also try and restructure the entire financial system so that I didn’t have a job anymore.

Merryn: Okay, brilliant. Give us two minutes on what the ideal financial system that you’ve just re-engineered looks like.

Dylan: A fundamental view of mine is that the government shouldn’t have any great privilege. They should be subject to the same laws as we are. By all means, if the government wants to issue currency and print money, no problem, but I don’t think they should ban other people from doing that. They shouldn’t prevent other people from doing that and they shouldn’t have an unfair advantage in the issuance of currency.

So, I think the banks should basically be allowed to issue their own currency, which could be collateralised or uncollateralised or whatever they want it to be, and let the market choose which currency they want.

Merryn: There have been experiments in this before, free banking, right?

Dylan: Yes, kind of. There’s been some experiments with varying degrees of success generally according to how closely they follow the model. There have been some very successful episodes of free banking in Scotland, in particular, and there have been some less successful examples of free banking.

America in 1837-1861 is held out as not such a great example of free banking because it was heavily regulated and heavily interfered with. For example, the state banks, who could issue currency, in many states, not all, but in many states they were forced to own a portion of the reserves in state securities, state government bonds, which in those days basically meant railroad bonds.

So, guess what? Those states didn’t have particularly stable financial systems but that was do with dodgy regulation. It wasn’t to do with the notion of free banking. So, yes, I believe that free banking is a far more equilibrating financial system. It would lead to a far more robust and stable financial system.

The market would ultimately choose the currencies that it wanted to use. The rate of interest would be set endogenously according to who wanted to borrow or lend. As I said, it wouldn’t need a central bank, wouldn’t need a central banker, and it wouldn’t be a personalised political thing, which it is right now.

Merryn: I’ve got to say I rather agree with you but I think we can both assume that it’s not going to happen any time soon.

Dylan: You mean, I’m not going to get the phone call to be the next governor of the Bank of England?

Merryn: Well, under your system there is no governor of the Bank of England.

Dylan: I suppose after I kill the economy, Merryn.

Merryn: Oh, I see. So, one of us could get the call and then we could change the system. Again, that’s definitely not happening. Let’s talk about slightly less esoteric things. If you’re a MoneyWeek investor, you’re a MoneyWeek reader and you’re an investor and you’re managing your SIP, and maybe you’re coming up to retirement a few years away and you’re beginning to feel a little bit nervous, how should you be investing, do you think?

Dylan: Well, I hope that you’re investing today the way you were investing last year and the year before. I really believe you have to think these things through quite carefully and then you form your plan and then stick to your plan.

What you’re seeing this year is, frankly, what you see again and again. You see drawdowns, you see panics, you see manias turn to bust. This isn’t any different. So, when you’re building your strategy, you have to incorporate that into your allocation, into your approach and into whatever plan it is you’ve got.

I would like to think that you’re not really anything differently right now, you’re just continuing to execute on the plan. So, what kind of plan have you got? I guess it depends. I think a very neutral way to do it is to have some of your money invested… Again, I’m not a financial adviser but are you younger, are you trying to get rich, because that has a different answer.

Merryn: I think, in general, we’re not. In general, we’re a bit older and we’re trying to preserve capital at this point.

Dylan: So, the MoneyWeek demographic is not the same as the crypto crowd?

Merryn: No. No, it’s not.

Dylan: The crypto crowd’s objective is exactly the same, which is how do I stop losing more money. Capital preservation, this is what we did at the family office, this is what we do in our fund. I think a very, very good starting point with capital preservation is what I call the cockroach portfolio.

And the cockroach portfolio is just a very, very simple construct. Your starting point is that you don’t know anything. I don’t know the future. I don’t really know what the valuations of stuff are. I don’t know the relative attractiveness. I don’t know anything and maybe I don’t even want to know.

I just want to have the most robust portfolio I possibly can do, given I don’t know anything. The way you do that is you just slice your portfolio up into four buckets and one of those buckets you just fill it up with equities and the other one you fill it up with bonds, and the other one you fill it up with cash, and the other one you fill it up with precious metals.

And each six months or three months or 12 months you rebalance it so that all of those weightings are 25% each and that’s all you do. I think that’s your starting point.

Merryn: That’s a good one and if you were doing that today, what type of equities would you put in the equity bucket? When you say equities, do you mean you buy an MSCI World ETF and be done with it, or you say, well, hang on a tick, we need to be careful here and have more of a value bias? We need to look at valuations. We need to move out of the US, into cheaper emerging markets, etc, or is it just any old?

Dylan: Again, remember what the starting point is.

Merryn: We don’t know anything.

Dylan: The point is that I don’t know anything. I don’t know much. The reason we call it a cockroach portfolio is because cockroaches are, frankly, pretty dumb. They’re pretty dumb animals. They don’t really know much but they have survived for 260 million years, so they’re doing something right, and what they’re doing right is they’re surviving.

Capital preservation is survival and the name of the game when you’re preserving capital is not to be super duper intelligent, is not to get 10-20-30 times returns. It’s just to survive and get through to the next decade in one piece, and you just keep doing that.

And that’s what cockroaches have done evolutionarily. They’re far more successful in terms of their longevity than we are and I bet they last longer than we do, because they’re dumb. So, the cockroach portfolio is dumb.

Yes, you might say, well, I want to tilt it towards emerging markets or I might want to tilt it towards steady safe compounders like Microsoft or Google. OK, fine. But now you’re saying you know something. I’m not saying there’s anything wrong with that but I think, as a starting point, your benchmark that you’re trying to do better than should be something like the MSCI Aggregate, an ETF, MSCI equity. For your bonds, I think something like the Vanguard, the Global Aggregate ETF.

Cash you can actually get one-year Treasury ETFs. Gold, again, you can mix it with silver or you can mix it with bitcoin. You can play around the edges or you can look at funds that do something similar. I can think of a few that I probably shouldn’t mention on your podcast.

Merryn: Oh, no, you can mention whatever you like on the podcast. We know that you’re just mentioning, not selling. That’s fine.

Dylan: When friends of mine come to me, I always say, listen, your starting point should be the cockroach portfolio. If you actually want to go a little bit further, so something that’s based on that but is run by people who actually do know something, I would send them to Ruffer, I would send them to Trojan.

I think if you actually cut through what these guys are doing, historically it’s not so different. They’ve actually got better returns than a cockroach, but they should have better returns because they know more than a cockroach. I think that this is the framework that I would use for capital preservation.

I should say we take it a step further at Calderwood, but then when you’re investing in stuff like mortgage derivatives or cryptocurrency arbitrage or litigation funding, then you absolutely know something. You better know something. These things are a little bit more opaque and risky. Of course, the flipside is we should expect to make a higher return because we know something. But, yes, that is where I would go. I would go cockroach, Trojan and Ruffer.

Merryn: Let’s go back to the gold quarter, where you said you can mix that with bitcoin. Now, this is interesting because obviously there has been a lousy couple of weeks, months for bitcoin and for all the other cryptocurrencies and there has been a big drive over the last four or five years for people to call bitcoin digital gold. And I can’t tell you how many press releases I get over time telling me that I don’t need gold anymore, it’s old and stuffy. I need bitcoin instead. It’s got all the same characteristics as gold and it’s the new gold.

But, of course, the last couple of months have shown that it’s actually nothing of the sort. It’s got none of the characteristics of gold, none of them. Not a store of value, not an inflation hedge, nothing. As we said earlier, we slightly disagree on this but why would you put bitcoin in your precious metals basket?

Dylan: In the last couple of years gold was trading at 2,000 and it’s now 18-something. Gold has not been an inflation hedge.

Merryn: No, it hasn’t. It hasn’t done a very good job either but not nearly as bad a job as bitcoin.

Dylan: Sure. But, it’s not been an inflation hedge on this particular occasion.

Merryn: True. It has a record of very long-term as a great inflation hedge but obviously its short-term wobbles are fairly intense.

Dylan: If you’re comparing digital gold, bitcoin to gold, then you can’t say bitcoin has not even been a good inflation hedge, not like gold, when actually neither of them have been a good inflation hedge.

Merryn: Absolutely, fair.

Dylan: You have to treat them fairly. That’s all I was saying. I totally agree with you. In terms of longevity, gold is absolutely proven. By the way, on a private, personal level we own gold. My wife and I own physical gold. So, I’m not going to disagree with anyone’s view on that.

We also own bitcoin, we also own coins and our view, my view, is that actually there are, I think, a couple of things. All this digital to gold hype, it’s kind of true. That’s what it is. It is digital gold. Now, if you don’t like gold, you’re not going to like bitcoin, and if you do like gold, you still might not like bitcoin for all sorts of reasons.

But it does have a couple of things which are potentially valuable that gold doesn’t have. For example, if you’ve got family at the other side of the world and want to send them some gold, it’s actually quite difficult, whereas sending them some bitcoin is very, very easy. So, bitcoin is no respecter of distance and I think that that can be something that is potentially interesting.

The other thing is that I think that bitcoin, and I think that this is something that people maybe don’t fully understand or haven’t given enough thought to or just dismiss it as just being a little bit kooky, and that is the notion of financial privacy.

We’ve seen the weaponisation of money already, very obviously with the whole Ukrainian and Russian thing and many people listening might have absolutely agreed with what we did with the Russian reserves.

It’s not about whether or not you agree or disagree. I think, from my perspective at least, it’s really just an observation that money is now a part of the arsenal of the state and I think anyone who works in finance and has to continuously update their details to multiple counterparts who are being bullied by their KYC departments.

I think in our industry, certainly, you can feel in a very real sense this surveillance apparatus that you’re frankly a part of. I just did my money laundering test yesterday because I've got to do it every month and it says, basically, if there is anything slightly out of the ordinary, you have to report it as suspicious to your money laundering reporting officer or to a designated person and you’re not allowed to tell the client.

We’re setting up a kind of informer network. That’s what’s coming. Then, you say, well, we’ve got to stop money laundering, we’ve got to stop financial crime, we’ve got to stop terrorism and drug dealing. Okay, fine, that’s absolutely fine.

But look over in Hong Kong and you see the Press Freedom Association got its bank account frozen by HSBC because Beijing told them to, and you see Navalny’s bank accounts were shut by Putin. So, it’s actually kind of funny that Putin’s bank accounts then get shut by the West, but now we’re doing it.

Then, you see the Canadian truckers, Canadian truckers who were protesting. Whether you agree with them or whether you don’t agree with them doesn’t matter. Those guys got rounded up virtually and they got their bank accounts frozen.

I think this financial surveillance net is absolutely worldwide, is absolutely real. It’s not just something the Chinese and the Russians and those guys use. It’s something that we use ourselves now.

And my view is, on a ten-year view, do you think we’re going to be doing more or less of this? My guess is more. So, a long-winded answer to your question but I think financial privacy is something that you don’t really get with gold. It’s not that you get with anything other than cash and I have a suspicion that it’s not something which is widely valued.

And my fear is that we will start to see events unfold in the coming ten years that people will realise that actually it does have a huge value. So, I think that’s something you get with bitcoin that you don’t get with gold.

Merryn: That is pretty much the only very good argument for bitcoin that there is or for cryptocurrencies that there is and I agree with you on that financial privacy and we’ve written about it a lot in terms of the death of cash and why it matters because it takes away your financial privacy.

I think the bit that I’m not quite sure is how in extremis bitcoin can really help you with that because if a government really wants to invade your financial privacy, if they really want to shut you down financially, then crypto becomes illegal and the crypto platforms are asked to reveal to the same information that our banks are asked to reveal. So, for ordinary people, I don’t see, in the end, how crypto is any safer than their own bank account.

Dylan: Well, I think I totally agree with you. It was my fault because I used some individual examples but if you actually just take a step back and say money is a weapon. Money is a weapon that states are using against one another and money is a weapon that states are using on their own citizens.

That’s just two observations of fact. That’s not some kind of kooky conspiracy stuff. That’s what is happening. I happen to be quite glad that I live in the UK. It’s not perfect but I would much rather live here than in Russia.

My guess is I think that we will probably always be higher ground and I think that on balance, and our regulators and all these things, I don’t think we’re some vile regime like the Iranian regime or something, for example.

But if you’ve got the growth of financial surveillance in these countries and across the globe, if this is a global trend, then the global demand for financial privacy presumably will rise and the only answer to that I think is cryptocurrency is probably bitcoin, which is one of the reasons, obviously, why they’re looking to regulate it.

But, as I said, the part of the bitcoin debate which I think doesn’t get enough attention. I think the store of value, that gets a lot of attention. The inflation hedge, that gets a lot of attention. The usability, that gets a lot of attention. What doesn’t get the attention I think it fully deserves is financial privacy.

And if you’re seeing as part of a global trend financial privacy on the wane, then I have a suspicion that the global time for financial privacy is going to arise and I think that’s bitcoin.

So, as I said, I think that’s one of the things that I find quite interesting about it but I also feel, just to be very, very clear, in the same way that when you’re arguing because a lot of people hate the idea of owning gold. They just can’t imagine anything more stupid than owning gold.

Now, you can have an argument about gold but the conclusion is always, look, you put some of your money in gold but you certainly wouldn’t put all of it or anything like all of it. I think it’s the same with bitcoin.

You would put some of your gold allocation in bitcoin, enough to make a difference if push comes to shove, but not enough to make you poor if there’s another crypto crash like you see every other year.

Merryn: Not enough to upset you if you lose it all.

Dylan: Yes.

Merryn: Unfortunately there are a lot of people out there who didn’t heed that advice earlier. Anyway, readers, I think that is the best defence or use case for bitcoin you’re ever going to hear, so thank you very much for that, Dylan. I’m going to have leave it there unless there is anything else you feel you’ve got to say before we say goodbye.

Dylan: No. I think I’ve been long-winded enough already.

Merryn: Not long-winded, fascinating. Dylan, thank you so much for joining us. We really enjoyed it and I hope you’ll be back, oh I don’t know, next month, month after.

Dylan: I will wait for that call.

Merryn: Brilliant. Thank you.