Meanwhile In Precious Metals And Virtual Currencies...

Tyler Durden's picture

The old 'new normal' precious metals smackdown has made a few appearances since the Cyprus debacle started but this morning's drop is impressive (given the lack of movement elsewhere) as gold drops back below pre-Cyprus levels. There is one 'currency' that is surgung in value though - Bitcoin is now trading at $107.36, up from $46 pre-Cyprus...

Gold is now back below Cyprus levels and Silver has been sliding...

 

But Bitcoin has been surging (looking somewhat parabolic longer-term)...

 

 

Charts: Bloomberg and BitCoinCharts

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JustObserving's picture

If we smack gold and silver hard enough, inflation will be controlled.  How did we control inflation before HFT?

CH1's picture

The world goes nuts and gold goes down. Insane.

Ah well, another buying opportunity.

Middle_Finger_Market's picture

$100 to the upside is still a good buying opportunity for physical. 

BaBaBouy's picture

Gook Luck @ The Bit Casino ...

Debtonation's picture

I'd like to see 'em try to smack down Bitcoin.  Can't rehypothocate or short it.

SafelyGraze's picture

don't know about rehypothecating bitcoins

but .. if you edit main.cpp

https://github.com/bitcoin/bitcoin/blob/master/src/main.cpp

between lines 1155 and 1170, you can remove (or comment out) the two if-statements so that CheckProofOfWork always returns "true".

 

YBNguy's picture

Bitcoins would be pretty easy for a government to confiscate as a cyber currency.

Gold you can bury.

MillionDollarBonus_'s picture

I agree. It's far easier for the government to confiscate bitcoins than gold. +1.

malikai's picture

Yea, so Gold just closed today. And I can't wait til I can start publishing my BTC models.

https://www.quantsig.net/live.html

BaBaBouy's picture

WOW ... Million Bonus Finally Made Some Sense ...

Rubbish's picture

Silver will be pushed sub $20 and Gold will fall to $1,000-$1,100.

 

Those would be my entry points. The wizards are busy pushing stocks to ultimate highs.

mick_richfield's picture

At those prices, what will you buy ?

Do you think anyone at that point would still be selling metal ?

Stuntgirl's picture

I would love to see those prices, but I also note that the premiums I get are adjusted with price drops.

It's a bit sad, but the absolute inability on my part to model a shortage price point is making me accumulate proportionally at these drops. Trying to find a balance is screwing with my brain.

mick_richfield's picture

But of course you can't model anything in a dishonest market.

So all you can do is accumulate as you are able to, expect frequent dishonest price drops, and the market to lock up at some point that you will not be able to predict from prices.

I think what you're doing sounds optimal in an environment like that.

Jack Napier's picture

I'd like to see 'em try to smack down Bitcoin. Can't rehypothocate or short it.

True, but they can and likely are throwing large quantities of money at it. BitCoin is the only deregulated market. Speculation rules the day. It's hard to say how much of the BitCoin surge is due to businesses in Cyprus needing a viable alternative that banks can't steal directly vs. how much is due to the powers that be trying to lie to the world in that we don't need gold and silver for protection from bank failures. They will gladly have everyone jump into BitCoin if it allows them to continue to suppress metals. A global digital currency has been the goal from the beginning. Are that many of us really such lemmings that this is not obvious?

Scarlett's picture

It's not only bitcoin.  Litecoin exploded from $0.07 to $4.20 today.  Of course it's bubbly, but still, as Taleb said, this is the beggining of something great.  This will accelerate the endgame for gold/silver smackdown.

FEDbuster's picture

How does Bitcoin work in a "grid down" world?  Say there is no internet and no electricity, will Bitcoins buy you a dozen eggs from your neighbor?  Or am I better off being able to offer him a 1960 90% silver quarter?   

Scarlett's picture

You're better off with a silver quarter.  Bitcoin will be good for transfers amongst the military checkpoints, though.

 

 

FEDbuster's picture

From my understanding of history, gold is the best to get you through military checkpoints.

Scarlett's picture

What's the strategy?  Seriously, if they go into your car, where are some places to store gold and just pass unforeseen?  

FEDbuster's picture

Plenty of hiding spots, but I was thinking about the bribes needed to get you out of the cities, states or country.

FireBrander's picture

Gold will get you killed at the "check point"; why take a bribe when they can kill yiu and take it all?

thisandthat's picture

Unless someone goes trough your papers.

Rubbish's picture

You act as if these metals are a way of life. Most people on the street would ignore your thoughts. The sooner you apply that to your inventment strategy the better.

 

Pigs get fed, there is always a slaughter !

fonestar's picture

I believe a new gold standard would probably be one of the worse things that could happen to us.  It would just be the same psychopaths in charge now, only in a highly deflationary environment.

"Yes we have the gold in our vaults and no you cannot see it."

A bi-metallic system would be good but there is no longer the physical silver to circulate.  A good mix would be gold, silver, copper, bitcoin, local currencies and barter.

Jack Napier's picture

A proper gold standard fixes the ratio of dollars to ounces or grams of gold, whatever measurement you prefer, but a fixed ratio. This allows for an approximate steady 3% inflation at most which is tied to the extraction of gold and thus purchasing power never changes with a fixed ratio. It would not be deflationary from a currency standpoint, but from an economic standpoint of course the financial system would completely deflate and default without ZIRP and infinite bailouts that easy monetary policy provides. A gold standard does not require any central bank policy or human element. It is self regulating as long as the rules are enforced which is the whole problem, they aren't.

There is plenty of silver for a metal standrd. You could have it with one ounce of silver. All metals are divisible. It's a matter of how much value you attribute to what quantity of metal.

BitCoins are a terrible idea for backing a different currency because they can be easily influenced by big money. Silver is also in that boat but only because it is such a small market due to being severely undervalued and thus depleted. Gold on the other hand is the big boy on the block and will not bend to such tactics, but you are right that we need a bi-metallic standard, actually many competing metal standards so they keep each other honest, but it has to be metals only since they are non-renewable elements.

BitCoin is king right now, but as soon as a competing digital currency with a superior algorithm comes out everyone will flock to that and BitCoin will crash, assuming that there is infrastructure to support BitCoin long enough for that to happen.

Gold and silver, and to a lesser extent the other metals are the only true extinguishers of debt and the only sound money that are durable, divisible, fungible, and portable. BitCoin and fiat currency both fail to meet all these requirements for both a unit of account and a store of wealth.

Middle_Finger_Market's picture

You have just translated the ancient knowledge of 'The Golden Ratio' into modern day economic terms. Bravo! 

fonestar's picture

Bitcoin is not just a currency, it is a crypto-wealth-tunnel.  It is hard to put a value on this technology but it is clear to me the technology is extremely valuable.  It facilitates transfer of wealth and it has utility in the real, physical world.  Owning bitcoin is like owning an oil pipeline as opposed to owning a few barrels of oil.  What is the AlCan pipeline worth in dollars?  Yes, you could go and build another pipeline beside it but how much would that cost?  What would be the incentive to use it instead?

Middle_Finger_Market's picture

A crypto wealth tunnel that extends to the end of the power line?? Then what? ''I want my money back..!'' ...ermmm what money?! The cyber money that exists on the end of a FUCKING phone line???  

fonestar's picture

What are you trying to say?  Someone is going to ask that the global internet is turned off?  It's that simple hey, just shut 'er down?

I expect the power of each Bitcoin to be massive.  Each bitcoin will gain mass until it tears a hole in the fabric of the fiat universe.

Middle_Finger_Market's picture

No, that's why I said I would have to trust the source (to survive)...and also believe the fact that we are not heading for a second dark age...you see you must learn to read your history. Going a few steps back may be the best option to have gone too many steps forward in the wrong direction? Technology has a crucial part to play in our evolution as a species...but not alongside our current old school 'left brained' 'show me the money bitches' capitalist mentality. Technology goes dormant while the system evolves...but do your Bitcoins survive the trip?

fiftybagger's picture

You are right fonestar,

Take a few wallets and lock them in a time capsule.  Come visit them in a few years and see what you have.  TBTB become quivering masses of goo when they behold this technology.  Bitcoin and silver, the crucifix and holy water of central bankster blood money sucking vampires.  Arise Chickuns and eat the vampire squid.

Silver For The People

The Bitcoin Channel

 

ich1baN's picture

I find it interesting that a little turbulence has everyone thinking gold and silver will fall much further. 

Geologists from PDAC 2013 say that over 600 junior gold miners will disappear from the mining realm by June/July 2013 if gold stays at its current price. If this happens, there will be a huge supply of potential gold not coming to the market. 

Silver's total cost of mining is in the $25.50 - $26 range. This is not just the cash cost to mine. But we know that about 70% of silver is by-product mining from copper, so if copper becomes uneconomical, then you will see silver supply start to become more scarce. 

I know the Fed's intention is to hold gold and silver in a range and shake everyone out of hedged assets and into the equity eurphoria, but if they shake gold to hard, it will defeat their purpose of capping it. If gold supply comes off the market, it will shoot up like Rhodium did in 2008. Silver will follow as it is inextricably linked to gold's long term price action. 

fonestar's picture

Some of the idiots posting on Bitcoin make me laugh!

You seriously think if you want to pay me (or anyone born somewhat recently) I am going to sit around waiting for your gold and silver bars to show up on the Western Union wagon?  What is this 1880?

I measure payment time in MILLISECONDS and if payment is taking longer than a few hundred milliseconds that is too long!

blabam's picture

Wow you're like, totally cool! And clearly don't know what you're talking about.

malikai's picture

It sounds authoritative and that's what matters.

Middle_Finger_Market's picture

The plain and simple truth is that Bitcoin has become increasingly popular as a method to circumvent capital controls and that's about it! You don't want your money in there for too long and it is not a viable solution to the slow demise of FIAT. The world revolves around tangible hard assets; commodities. @commodsaregold 

malikai's picture

Money is three things.

Each of these can and have been separate in many currencies throughout history. Each with differing effects.

  1. Unit of Account
  2. Standard of Exchange
  3. Store of Wealth

BTC has #2 nailed for retail FX and internet goods/services.

For some people, it also has #3 (particularly when your government helps itself to 90% of your cash).

Jack Napier's picture

BitCoin is not a store of wealth. It's not durable. It's not even tangible. In 1,000 years would you rather dig up a flash drive with some BitCoins on it or a chest full of gold? BitCoin is the best currency that has ever existed and is far superior to fiat, but only gold and silver are sound money. They have different purposes.

malikai's picture

I agree, but in 1000 years I'll be dead and not concerned with money.

I am interested in trade in the here and now.

ParkAveFlasher's picture

Bitcoin is a track-hider.  Money goes in, and is made gaseous.

The metals markets will go physical.  Brace yourself for margin adjustments.

thisandthat's picture

Like I keep saying, bitcoin has capital control embedded right in the system - you can't just buy any amount you so desire straight away, the way you can with virtually any other currency/commodity - there's (stringent) limits as to how much you can buy on a daily basis (hello, Cyprus)...

Middle_Finger_Market's picture

LOL! So you imagine, imaginary wealth available in MILLISECONDS...hmm when Bitcoin starts bringing the currency into the real world via gold and silver pieces give me a call...coz I got ZEE gold and you got an internet coupon printout! Unplug the internet and we unplug your wealth...

fonestar's picture

What is so special about your gold?  There is lots of gold where I live!  Why don't I get paid in a **REASONABLE** amount of time, take that currency and go buy gold if that's what I want to do?

Middle_Finger_Market's picture

The main thing that is special about my gold is that it has intrinsic value and is a tangible 'real world' asset that I can bring to the barter table. At the same time it is only worth as much as I am able to trade for in that moment i.e. if I trade for food and there is one food vendor and lots of gold sellers my gold may as well be worthless, because I cannot eat it! In the ideal world we do as you say; we carry around easy to carry notes or credits on a card and we get what we want :)! But unfortunately the powers that be have put our confidence in disarray as at any moment the so called credits we have may be worth a lot less or even as in Europes case taken from us. So we say; we want our wealth and we want to be able to see it. We have lost confidence in the system!  

fonestar's picture

What is different about your gold than the gold in my area?  Does it have a different atomic mass or something?  Why would I want to sit around for days, weeks, months waiting for your gold to show up?

Middle_Finger_Market's picture

My bad, I thought we were still on the bitcoin vs gold shizzle. No, nothing is different about the gold. You can see that the powers that be want to bring the system to it's knees though, so hedge accordingly and expect to be bartering and helping out your neighbours and vice versa.  

Jack Napier's picture

Gold is a store of wealth and physical currency. BitCoin is a digital currency. Fiat is a debt based currency. They are apples, oranges, and bananas. What makes gold and other precious metals superior is that their value is not contingent upon a nation's ability to pay its debt as is fiat currency, or a functioning Internet and power grid as is BitCoin. Only metals have value in and of their nature which cannot be taken away. The others are just for convenience but will not save you from a financial meltdown. Cyprus is a cakewalk compared to when the derivatives crumble.

Silver Bully's picture

'What is so special about your gold?'

It has been the most reliable store of value for over 5000 years. It also works well as a currency. A store of value and a currency are two different things. Bitcoin is incredibly flexible as a currency . . . but it is a HORRIBLE way to store value. It is actually worse at storing value than the U.S. dollar (you at least have something physical if the value goes to 0). Bitcoin is all or nothing. The moment it gets compromised the game is over - confidence is shattered in it as a currency, and people will drop it like a bad habit.

The reason gold has lasted so long in human history is it is a fantastic way to store value while being a pretty good currency to boot. Gold is gold is gold. Unless you can find a way to alter physics, it is always reliable. Bitcoin is far too unreliable to store value in long term. If you think gold is so awful I'll take any you have, and I won't even charge anything! ;)

Panafrican Funktron Robot's picture

I was reading some comments above about investments in the "hear and now", and I would just respond to that by saying for those of us that have children (or related children we care about), we tend to care more than the average bear about what happens after we die, and there is a substantial subset that wants their productive labor to primarily go towards building our kids and grandkids wealth.  And that's why "store of wealth" and "return of investment" really, really matter to a lot of people.