Royalty & Streaming precious metal transmission and royalty company CEO Brett Heath has warned that digital currencies “will lead the load towards the next financial crisis”.
Metalla Royalty & Streaming is a Canadian company founded in 1983 and has a current net worth of nearly $ 500 million. Metalla offers exposure to precious metals through royalties and flows of gold and silver.
Speaking to Kitco News on May 28, Heath compared digital currency to the technology-induced collapse of the early 2000s and the 2008 mortgage crisis, noting that:
“When you look back at the last few decades and see all the financial crises that happened, you know, they all have a couple of things in common. And one of them is the massive adoption of a new financial product or a new technology that it is not very well understood «.
“If we simply go back to the 2008 mortgage crisis […] We had the massive adoption of mortgage-backed securities, secured debt obligations. And once the public adopted that, this new financial product collapsed. It was a big problem, “he added.
The CEO described digital currency as a “license for the private sector to print money,” as he questioned the amount of liquidity that has been pumped into the market since early 2020.
Heath made a comparison with the US M1 (total cash in circulation) and noted that since January 2020, the M1 has “increased four and a half times”. According to the Federal Reserve, the M1 went from $ 4.018 billion in January 2020, around $ 18935 billion in April 2021. Heath emphasized that:
“It’s an extraordinary increase and it’s such a short period of time. But if we look at digital currency using the total market capitalization of digital currency, it multiplies by ten.”
Heath seems to have concerns about the systemic risk of mass investment in an asset class that he believes has no “intrinsic value,” and the end result is a mass sale similar to the technology crisis of the early 2000s:
“When you remove that amount of capital from digital portfolios around the world, you better believe that you will feel some significant financial repercussions,” he said.
The proponent of precious metals seems unperturbed by the predictions that Bitcoin will surpass gold as a reserve of value. He also questioned the notion that the maximum supply of Bitcoin of 21 million gives it scarcity or value, and pointed to other less valuable digital currencies that are backed by what he says is better technology:
“What about the other 10,000 digital currency-related tokens and coins that exist today, many of which have better technology, better privacy, and use much less energy?”
“When there is so much, what is the value or what is this intrinsic value really?” add.