Bitcoin

Everyone knows "you never go bull retard," but it seems Eclectica's Hugh Hendry, the hardiest of hardy Scots, has accepted that there is only one way for this farce to end. As Investment Week reports, the bear-turned-bull has bought 3D printing stocks as a play on trend-driven, QE-fuelled equity markets, and said the rise in the valuation of Bitcoin amounts to “the same thing”. Perhaps summing up the "trend-driven, QE-fueled" new normal better than anyone, Hendry added:"I say to my team 'don't tell me the valuations, it is trending'... This is the environment where Bitcoin could go to $1m. There is no qualitative reason, but it is trending. If I could own Bitcoin, I would.   It gets worse: Hendry is now chasing the biggest momentum trend of all, that of Bitcoin, which he now "expects" to rise to $1 million! As for his hedge - don't laugh - 3D printing stocks...  Sigh. We suspect, as he noted previously, he will be avoiding mirrors even more now. And yes, that this whole series now reeks of an Onion viral marketing campaign, is clear to everyone. Although sadly, we fear it is all too sincere, and a sad consequence of what happens when Bernanke's centrally-planned markets crush one after another talented asset manager and leave the E-Trade momo babies in charge.

Whether it was President Obama's call for moar debt, less spending cuts, and a safety bid from his implicit end-QE comments, technicals from moving-averages, or reflections of the USD weakness; precious metals are surging this morning... Stocks are tumbling further (as are bonds) back to EURJPY-implied levels... call for gold bubbles in 3...2...1...

Getting ready for Christmas? What’s Santa got in his sack for you this year? Well, if there’s one thing you should be preparing for, then it can only be the big crash of February 2014. 

Faith in the current system is as high as it has ever been, and folks don't want to hear otherwise. If you're one of those people who thinks it prudent to have intelligent discussion on some of these risks -- that maybe the future may turn out to be less than 100% awesome in every dimension -- you're probably finding yourself standing alone at cocktail parties these days. A helpful question to ask yourself is: if I could talk to my 2009 self, what would s/he advise me to do? Don't put yourself in a position to relearn that lesson so soon after the last bubble. Exercise the wisdom to look like an idiot today.

Bitcoin is on fire. Mainstream media coverage is everywhere. No doubt, digital currency is a growing trend in Latin America… particularly in neighboring Argentina where the government has been nationalizing everything that isn’t nailed down. As a result, Bitcoins in Argentina frequently trade for more than 30% higher than in neighboring countries… presenting a rather interesting arbitrage opportunity. With all the mainstream attention, though, Bitcoin has been building its share of detractors. Most of these pieces roll out the same tired points– that nobody knows anything about the mysterious programmer who put it together… that it’s too volatile… etc. But, for the US investor, there is one big issue that remains entirely unclear...

The past several weeks have seen the emergence of several innovative and user friendly websites related to Bitcoin specifically, and crypto-currencies generally. The site is CoinMap.org and it serves as a sort of Google Maps for Bitcoin. The site attempts to plot the various brick and mortar retail locations across the globe that accept BTC.

First the ECB, then the Fed, and now the Dutch central bank have come out and explicitly warned of the dangers of virtual currencies like Bitcoin and Litecoin. Their explicit statement this morning, raising questions about deposit guarantees, central issuer responsibility, and volatility do their best to inform potential users (or traders) of the alternative currency that it is the devil incarnate. It seems, despite the mainstream media's guffawing at the swings and outrageous fortune in the market's early days, that the powers that be see these crypto-currencies as anything but benign.

What do people in Utah (apparently) and Republicans have in common? Now, that’s a conundrum if ever you have heard one! The clock is ticking away and I guess you still haven’t found the answer. 

Spot Silver is trading back to early July 2013 levels as it drop 4.1% - its biggest down-day since the SeptTaper debacles began. Gold is also being monkey-hammered; down 2.9% for the biggest drop in 2 months. Meanwhile, Bitcoin is on the rise...

The implicit, and ever more explicit, institutional acceptance of the dominant cryptocurrency Bitcoin (we say dominant because as we pointed out last week, there has been an unprecedented spike of digital currencies one can pick and choose from) continues when following the surge in vendors willing to transact in BTC over Thanksgiving, the latest news comes from the birthplace of the modern central bank, the UK, where we learn that none other than the UK Royal Mint has been working on plans since this summer to issue physical Bitcoins in collaboration with the Channel Island of Alderney. But where the story gets downright surreal is that as the FT reports, the same symbolic Bitcoin token issued by the Royal Mint "would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse." In brief: a perfect, and utterly incomprehensible, fusion of (opposing) hard, soft and digital currencies all rolled into one...

UPDATE: BTC has rallied 26% off its lows in the last 55 minutes

From it's gold-matching highs at $1242 on Thursday night, the price of Bitcoin has collapsed over $400 (32%) to $840 on heavy volume. Of course, this is only a one-week low for the exuberant digital currency but still a significant plunge (as its smaller brethren Litecoin has collapsed 51% from its highs). Interestingly, this drops the price of Bitcoin in USD below the 'arb'-based price of Bitcoin in China ($965). It seems, all coincidence aside, that the BIS infamous plunge-protection-team has been re-trained...

It was only a matter of time before the success of Bitcoin led to a new attempt to create a digital currency backed by gold. It seems as if that day has now arrived.

You've probably read many articles about money - what it is (store of value and means of exchange) and its many variations (metal, paper, etc.). But perhaps the most important distinction to be made in our era is between metallic money and credit money. As the following 16 reasons make very clear, it is no exaggeration to say that the transition from gold money to credit money changes everything. The key distinction of all these important differences is the ephemeral nature of credit-money (and any form of fiat currency). History teaches us that a financial-political crisis of sufficient magnitude reveals the underlying value of credit-money - i.e. zero - in a brief but cataclysmic loss of faith/trust.

UPDATE: ... And then Bitcoin collapses 13% minutes later...

It seems the growing tensions in Asia (Japan-China sabre-rattling and Indian capital controls) have prompted more great rotation out of fiat and into digital currency as China/India markets open. For the first time ever, the price of one unit of Bitcoin exceeds the price of an ounce of gold...