Bitcoin

Trends in motion tend to stay in motion. Monetary collapse is a near certainty, but here's one way to profit from crypto-currencies.

History shows us that panic follows a loss of trust. The financial house of cards we've built today is ripe for a panic-causing event.

• India Joins Brazil to China in Efforts to Tighten Liquidity (BBG)
• Seven dead as police and protesters clash in Egypt (Reuters)
• U.S. senators fail to cut deal, head for showdown on filibuster (Reuters)
• Gasoline Tankers Beating Crude for First Time on Record (BBG)
• Smithfield's China bidders plan Hong Kong IPO after deal (Reuters)
• Bitcoin ETF plan struggles to find support (FT)
• Big Home Builders Gobble Up Rivals Starved for Cash (WSJ)
• Putin wants Snowden to go, but asylum not ruled out (Reuters)
• Zimmerman's lawyer calls prosecutors 'disgrace' to profession (Reuters)
• McDonald’s to bring Big Mac to Vietnam (FT)
• Korean Pilots Avoided Manual Flying, Former Trainers Say (BBG)

That a BitCoin-based ETF is a horrible idea for those who believe in what BitCoin stands for, i.e., a status-quo regime-remote monetary process which is naturally also independent of existing capital markets, is quite clear. Yet a BitCoin-based ETF prospectus, namely the Winklevoss BitCoin Trust, with a proposed offering of 1 million shares at a price of $20 each, is precisely what the Winklevi filed today with the SEC. We can only assume this idiotic idea is proposed simply to entice the habitual gambling momentum-chasers, who seek a conventional method of pursuing the momentous volatility that only Bitcoin can offer now that regular BitCoin exchanges are being shut down by the US and other governments, as absolutely nobody else would be interested. That, or just another expression of the identical twins' megalomania who enjoy nothing more than seeing their name in lights or in the title of a security. Because once one reads the risk factors, among which we find the following, we doubt even said habitual gamblers will be interested: "It may be illegal now, or in the future, to acquire, own, hold, sell or use Bitcoins in one or more countries, and ownership of, holding or trading in Shares may also be considered illegal and subject to sanction." Well, you have been warned.

• Scalpel in Hand, Chinese Premier Li Stirs Reform Hopes (Reuters)
• Obama Sets Conditions for Keystone Pipeline Go-Ahead (FT)
• World’s Most Indebted Households Face Rate Pain (BBG)
• SAC Probers Weighing 'Willful Blindness' Tack (WSJ)
• Draghi Says ECB Ready to Act, Calls for Investment Over Tax (BBG)
• U.S. Tops China for Foreign Investment (WSJ)
• Basel Presses Ahead With Plans to Limit Bank Borrowing (FT)
• Gillard Ousted as Australia PM by Rival Rudd (FT)
• Japan Economic Strength Will Show in Stocks, Nishimura Says (BBG)

In remarks given late last week to the curiously named United States Institute for Peace, the head of the Treasury’s Financial Crimes Enforcement Network (FinCEN) vociferously denied any attempts at regulating digital currency... specifically Bitcoin. But that doesn’t mean they can’t spread fear, uncertainty, and doubt. Bitcoin, being completely decentralized,  is nearly impossible to regulate. And the government at least seems to understand this point. Which is why the director so emphatically denies attempting to regulate the digital currency. But in this short 4-page speech, the Director twice made a connection between Bitcoin and (you guessed it) terrorism. Twice more connected Bitcoin to those who would exploit children. And four times linked digital currency to ‘criminals’ in general. It’s certainly enough to scare most people away.

In our first Chart of the Day we present the Caracas stock exchange performance since 2012. It puts the action in the Nikkei (and BitCoin) to shame. It also explains why anyone selling $29.95 newsletters equating the "market" with the economy is a charlatan. Finally, it shows that in the great race to achieve a "wealth effect" utopia, one may not have toilet paper, but one will always have a soaring stock market.

Virtual currencies were hailed as revolutions. They were the way forward., the way to overhaul the system and the way to replace the Dollar, Sterling, the Euro and the rest of them.  But, just last week Liberty Reserve was closed down for illicit transactions and money-laundering activities that could have nothing more than repercussions for the rest of the companies living quietly in the auspices of cyberspace doing more or less the same sort of activity.

In the wake of the financial collapse of 2007, central banks around the world run by Keynesian zealots religiously applied the formulas they had been taught would boost aggregate demand and rescue the economy from the brink of total catastrophe. Easy money, going under the euphemistic moniker of “quantitative easing” was supposed to stimulate borrowing, spending and growth through the mechanism of historically low interest rates. Predictably, this approach failed miserably, as these kind of policy decisions largely miss the point of how the economy really works. As long as central banks continue to meddle with the money supply, investments will not be made efficiently and the economy as a whole will suffer.

Jim Rogers was recently interviewed by GoldMoney and had plenty to say (as usual):

On Bernanke: "He doesn’t want to be around for the consequences of what he’s doing."

 

On Fiat: "Paper money doesn’t have a very glorious history, but again, nothing imposed by the government has a very long and glorious history."

 

On Europe's Crisis: "You can postpone it all you want, but the problems just mount."

 

On Capitalism: "You are not supposed to take money away from the competent people and give it to the incompetent so that the incompetent can compete with the competent people with their own money. That’s not the way capitalism is supposed to work."

For all the grief BitCoin (and so often gold and silver) get during times of excess volatility, especially by those Keynesian prophets who urge everyone to adopt the one true FIATH and put all their cash in stocks (and more please: just use margin) we hear precious little about the ridiculous volatility farce that nationalized mortgage lender Fannie Mae has become: from opening above $4, trading up to $5.50, and now plunging to under $3.00, the stock is nothing but concentrated heatmap of every E*trade momentum chasing baby and dart-throwing monkey in the world (ignoring the fact that all "swing traders" merely respond to "price action" whatever that means and are thus all making money, no matter what happens). As for the fact that the swing in the stock price in the past hour wiped out nearly $15 billion in market cap, or nearly half of the total, on absolute no news (which is also substantially larger than the entire BitCoin market) well... we'll just leave it at that.

Bitcoin has made significant progress towards becoming the world's first truly global currency over the past few years. To gain better perspective on bitcoin’s impact, we took a look at global wallet downloads, demonstrated interest by region, exchange volumes across currencies, mining node locations, real-world interactions around bitcoin, and the major companies and investors pushing the bitcoin economy forward. Perhaps most intrguingly, interest from China has grown extremely rapidly in the last 30 days.

If you develop your beliefs about gold and silver by sourcing mainstream media news, everything you believe about gold and silver will always be wrong.

An increasing number of people have complained about governments and central banks in recent years, even using the word “tyranny” to describe them. They are, of course, called names in the establishment press: conspiracy theorists, mainly. Calling someone a name, however, does not erase their argument (at least not among rational people) and both the governments and the big banks stand accused. Up till now, however, these accusations were never accepted by the general public. The average guy really didn’t want to hear about the evils of government money. After all, that was the only thing he had ever used to buy food, clothes, gasoline, cars, and so on. He didn’t want to acknowledge the accusations because he feared what might happen to him without his usual money. Now, however, we have a brand new currency (called Bitcoin) available to us: something radically different. This gives us a new way to directly address the subject of monetary tyranny, providing a clear test for the governments and money masters of the world.

We recently described in detail what a venture capitalist might see in Bitcoin and it appears that some of that message got through... Interesting news out today in the Bitcoin world.  As you may recall, last week I highlighted how the highly respected venture capital firm Union Square Ventures (Fred Wilson, early investor in Twitter) invested in Coinbase.  Today we learn that another very high profile investor has plunged into the Bitcoin pool.  In this case it’s Peter Thiel, and his investment is in BTC merchant processor Bitpay, a company I have highlighted previously on several occasions. Incredibly, the tremendous growth rate continues as they added another 1,900 merchants in April and are currently signing up around 100 additional merchants a day.