The year was 2012. And Baidu—China’s Google—was struggling.

The search engine was losing market share to Google. Over the past year, Google went from 30% market share to 42%.

The Chinese were finding Google more trustworthy.

That’s because Baidu was coming off a couple scandals.

In 2009, the government accused Baidu of knowingly allowing fraudulent advertisements. And in 2011, officials again caught the company skirting advertising laws.

By July 2011, the company’s stock started a 50% decline.

As troublesome as this was for Baidu, it was worse for the Chinese government.

The Chinese Communist Party often censors what its citizens can read online. But Google refused to censor its search results.

In November 2012, China banned Google searches. The Communist Party said it wanted to prevent the “spread of harmful information.”

That was just a fancy term for censorship. But it was also a profit grab…

Most of Google’s 42% market share went straight to Baidu. And the Chinese search engine took off.

For those who watch China, this is a familiar pattern…

A foreign tech company enters the country and breaks ground… only to see China ban or restrict the technology. That paves the way for a domestic champion to step in.

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China blocked social media giant Facebook to allow domestic rival Tencent to flourish.

And China never allowed Amazon or eBay to gain footholds on the mainland. That gave homegrown Alibaba space to dominate the online retail market.

We’re seeing the same thing play out in the cryptocurrency space. Today, I’ll show you how to take advantage of this trend.

Home-Court Advantage

As we wrote last month, China has banned initial coin offerings (ICOs) and cryptocurrency exchanges. Most of these ICO platforms are outside of China.

[Regular readers know ICOs are the cryptocurrency equivalent to initial public offerings (IPOs) held by private companies.]

That made September a bad month for cryptos. Bitcoin dropped 40% on the news (it has since recovered those losses).

But at the Daily, we look past the mainstream news… and dig deeper to see what’s really going on. That’s why I reached out to our in-house crypto expert Teeka Tiwari.

No one in the business knows more about cryptocurrencies than Teeka.

Over the past year, he’s crossed six time zones… visited five cities on two continents… and spent hundreds of man-hours researching cryptocurrencies.

I asked Teeka whether China’s current crypto crackdown was a long-term threat… or just history repeating itself.

Here’s what Teeka told me:

I believe China’s action to be temporary out of national self-interest. Again and again, China has proven that it will kick out Western technology companies in favor of homegrown companies. That’s why the five largest tech companies in China are Alibaba, Tencent, Baidu, JD.com, and NetEase.

Google, Facebook, Amazon, Netflix, and Apple don’t even rate there.

He went on…

China won’t let something as big as the blockchain go to a foreign competitor. Right now, platforms outside of China are dominating ICOs. If they don’t get back in the market soon, China will lose out on this lucrative market.

Teeka told me that officials inside China say the ban will be temporary. The government just needs some time to regulate the industry.

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When China eventually repeals the ban, it will open space for homegrown cryptocurrencies to take off. And they’ll flourish… just like Alibaba, Tencent, and Baidu.

To be ready for this buying opportunity, you need to have some bitcoin on hand. You’ll need it to buy most other cryptocurrencies, including those based in China.

When China allows exchanges to reopen, you’ll see a boom in demand for bitcoin that will push the price to new highs…



Regards,

Nick Rokke, CFA

Analyst, The Palm Beach Daily

CHART WATCH

Worldwide Pension Crisis

The pension crisis isn’t just an American problem…

It’s a problem across most developed countries in the world. And it’s only getting worse.

You can see how bad it is in the chart below.

The blue dots represent total governmental tax revenue required to meet pension payments in 2015.

The black dots are projected tax revenues needed to make pension payments in 2050.

You can see that as bad off as the U.S. is, other countries are in even worse shape.

The pension crisis is a worldwide problem.

—Nick Rokke

MAILBAG

From Gary E.: I HATE all these friggin’ videos promoting some other newsletter. Especially the ones that don’t give me a choice either to watch or read the book-length transcript that I can at least skim to get to the point. This morning it was some promo on three marijuana stocks I should buy. Haven’t you ever heard of an executive summary?

I’m ready to cancel all my subscriptions to any organization that keeps bombarding me with this crap.

Nick’s Reply: Thanks for your feedback, Gary. I’m sorry your experiences were negative. As you know, our marketing emails are the only way we stay in business. Over the past week, we’ve had more than 40,000 subscribers view that email. And your letter is the first negative letter we’ve received about it. We work hard to accommodate all our subscribers’ respective wishes. For those who don’t wish to receive marketing emails, our customer service team is standing by to remove your names from our marketing file. You’ll miss the opportunity to subscribe to some of our best services—at discounts of up to 50%—but it’s your prerogative as a valued subscriber. You can reach our customer service team at (888) 501-2598. Thanks again for your feedback.

From Sharon R.: I’m happy with your Elite 25 portfolio. And I’m purchasing the stocks in my IRA account. But I receive many emails every day from the Palm Beach Research Group, and don’t always get to read the updates.

It would be helpful if the Elite 25 updates had that in the title in bold. That way it would be easy to find and I wouldn’t miss it. The Elite 25 is as important to me as The Palm Beach Letter.

Nick’s Reply: Hi Sharon. We’re glad to hear you’re using the Elite 25 investment strategy. The last Elite 25 Update was published in the October 3 Daily. You’ll always find it under the bold header ELITE 25 UPDATE. We update the portfolio by the second business day of every month. So, make sure you check the Daily during the first week of each month. If you happen to miss the issue with the Elite 25 Update, you can click here to view the portfolio page. It’s updated every month.

IN CASE YOU MISSED IT…

California is the “greenest” state in the country… But it’s about to go dark.

Now the state needs a $2.1 billion energy bailout… and you can get paid handsomely from it. Learn more here…