This page has been archived and commenting is disabled.

Gold At $64,000 – Bloomberg’s ‘China Gold Price’

GoldCore's picture




 

Gold At $64,000 – Bloomberg’s ‘China Gold Price’

- Bloomberg Intelligence suggest gold-backed yuan see gold at $64,000 per ounce
- “Chinese gold standard would need a rate 50 times bullion’s price”
- As China-U.S. relations deteriorate, gold-backed yuan possible
- Dollar and financial and monetary dominance of U.S. at risk
- U.S. and China war of words continues to escalate
- China rejects U.S. hegemony in Southeast Asia
- Currency war to escalate

If China were to partially back its yuan with gold it would require a gold price of $64,000 per ounce, 50 times gold bullion’s price today, according to a recent article from respected Bloomberg Intelligence.

goldcore_chart4_05-06-15
It seems like an outlandish forecast. However, as tensions between the U.S. and China continue to escalate such a scenario is not actually as implausible as it may first appear.

If China were to back its yuan with gold it would require a price of $64,000 per ounce according to a recent report from Bloomberg.

While Bloomberg give no details as to how they arrive at this figure, our “back of envelope” calculations would confirm that at its current value relative to the dollar the yuan would indeed require gold – priced in dollars – to be priced in the tens of thousands of dollars.

Chinese M1 money supply is roughly 33.64 trillion yuan which at todays exchange rate equates to around $5.4 trillion.

Bloomberg conservatively estimate China’s gold reserves at around 3150 tonnes although many analysts believe the figure to be much higher.

In order to back $5.4 trillion yuan with 3150 tonnes of gold, the gold price would need to be in the region of $48,600 per ounce.

Bloomberg conclude that, at today’s prices, it would be “basically impossible” for China to fully back its yuan with gold. Indeed, at $1,200 per ounce, it would require over 126,000 tonnes to back $5.4 trillion.

Bloomberg states that “there’s no evidence” that China seeks to adopt a traditional gold standard. However, China’s appetite for gold in recent years has been voracious and it is clear that they and the People’s Bank of China (PBOC) place great strategic importance on the precious metal.

The Chinese have been quite overt in recent months in their ambition to establish the yuan as a rival reserve currency and it is likely that they intend gold to play a role in that ambition.

If China were to even partially back its currency with gold it would gain further favour across the world as a reliable reserve currency when viewed against the increasingly debased U.S. dollar. In order to maintain some semblance of credibility the U.S. would likely be forced to follow suit.

For the U.S. to back its gargantuan M1 with its stated, and almost certainly grossly overstated, gold reserves of 8,500 tonnes it would push gold prices to multiples of their current price.

goldcore_chart5_5-06-15

There has been a definite heating of tone in the war of words between the U.S. and China in recent months. Only this morning, the Wall Street Journal reports on how details of 4 million federal employees were hacked in April. While the FBI have not directly accused China, the WSJ suggests that China is the prime suspect.

At the end of last month a Chinese state-controlled newspaper stated that if the U.S. continued to interfere with its activities in the South China Sea, war was “inevitable”. China are clearly not intimidated by the prospect of war with the U.S.

China rejects what it sees as U.S. “meddling” in South East Asia. At last years APEC conference, China’s president Xi had President Obama pointedly placed at the peripheries of the stage for the official photograph. President Putin was by his side. The message was subtle but quite clear – China views the U.S. as a peripheral nation in Southeast Asian affairs whereas Russia is at the centre.

If tensions continue to escalate – and with that the prospect of a “hot war” as recently warned of by many including George Soros – each side will seek to weaken its rival in a variety of ways. In January, Russia’s Prime Minister Medvedev stated that if his country were cut out of the SWIFT system, the “Russian response – economically and otherwise – will know no limits.”

In the event of an escalation in economic warfare it seems obvious that the achilles heal of the U.S. is the dollar and its erstwhile global reserve currency status. Many analysts believe that China would be reluctant to sink the dollar given it would undermine the value of their vast holdings of U.S. Treasuries and foreign exchange reserves.

However, there will be a tipping point where the advantage to be gained by badly impacting the dollar and positioning the yuan as new reserve currency will be greater than the disadvantage suffered by a collapse in the value of the dollar.

The tipping point is closer than many believe.

Must-read Guides:
Essential Guide To Storing Gold In Singapore
Essential Guide To Gold Storage In Switzerland

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 06/08/2015 - 09:02 | 6173824 SirBarksAlot
SirBarksAlot's picture

Last week, while flying around, there seemed to be quite a few people with military backpacks and some wearing uniforms.  I asked one of them if they were in the military and they replied that they were in the National Guard and had been called up for training, to be followed by one-year of service.  They weren't able to tell me where they were going, but they had that kind of nervous, pale look a person gets, right before they throw-up.

Bravo for the bankers!  We need another war, more wars, more wars with more countries.  We need more enemies, we need to show them who's boss.  We need, we need, we need...

Mon, 06/08/2015 - 09:40 | 6173965 Mike Honcho
Mike Honcho's picture

Guarding the nation....on the other end of the globe.

Mon, 06/08/2015 - 09:32 | 6173936 headhunt
headhunt's picture

They are headed for 'no boots' Iraq

Mon, 06/08/2015 - 00:03 | 6173256 KingTut
KingTut's picture

We all seem to have fallen prey to the massive disinformation campaign that the Fed has been cramming down our throats for decades.  These comments are a confetti of bullshit.

There is credit money (the fantasy in your bank account), and tangible money, like cash and gold. You can't eat any of this stuff, so forget that.  Tanglible money is important when a transaction is conducted between parties without trust, like, say, a drug deal.  The money changing hands has to be free and clear the instant the deal is done.  No counterparty risk, no credit, no loans no nothing. That's why drug deals are conducted in $100 dollar bills, a tangible form of money.

For buying milk at th grocery store this doesn't matter.  You trust Safeway to sell real milk, and they trust your credit card or check.  Notice they spend more time checking $100 bills for conterfeits than your personal check.  That's because they have a monser relationship with the banks, but they get no recourse for taking bum bills.

Paper money is fiat because it is created by the government.  The treasury prints it, and the banks give the govnernment bank deopsits (credit money) for the cash. Bank money is not fiat, because it is created by the banks, at the descretion of the banks.  The government has to play along with bank credit like everybody else.  When they write you a social security check, credit is trasferred from a government bank account to yours.

Gold is the $100 bill of government "drug deals".  When governments don't trust each other, like the US and Russia and China now, they can trade in gold and clear the trasnaction immediately.  Neither one wants the other's paper money, or worse, a deposit in the other's banking system. Gold clears it right now, no bullshit.  That has always been the reason for using gold as money, it clears no nonsense.

Nobody can come along and say your gold isn't "American Gold" so it isn't good.  All gold is exactly the same from now until the end of time.  Chinese gold is the same as American gold or Russian gold or Zimbabwian gold.

When the interantiona banking system is humming along gold takes a back seat, and most people forget about it.  But when trust goes down the drain as we are witnessing right now, it comes out of hibernation and takes the driver's seat.

It is important to understand that a nation's money, whether its paper money or bank credit, is backed by the real assets of the country.  Land, buildings, roads, taxing authority, the productivity of the people, and in the end Krugmans' men with guns (BTW: not the mafia).  Things like bitcoin are not backed with anything other than prime number scarcity, and cannot be as safe as the most pathetic fiat.  Airline miles are money, and bitcoin ain't much better.  

The IMF's SDR has the same problem.  The IMF is a symbolic construct, not a real country: it has none of the assets that back real currencies.  They have no land, a building they probably lease, and no guns.  So trying to make the IMF's money (SDRs) a reserve currency is a flimsy proposition. They will need to back their currency with somehting tangible ... like gold.  Perhasp they will try to fund SDR's through swaps, everybody who wants SDRs must buy them (with printed money of course), giving the IMF growing bank accounts in every country as assets to back their SDR "currency".

In the end tangible, currencies like paper cash, gold and silver are self-backed forms of money. Paper money relies on confidence in the government which is stable until it's not.  Silver and gold rely only on the permanence of the periodic table of elements, a bit more stable than any government.

They want to ban cash so when the banking system fails, you will still use it, because there's no alternative.  But that's stupid.  People will use the metals, but any tangible asset will do in a pinch. Their plan to ban cash is so mis-guided it hurts.  They will be engaged in an endless game of "whack-a-mole", with new scrip popping up faster than they can whack it down.

Mon, 06/08/2015 - 09:44 | 6173981 headhunt
headhunt's picture

No one will want 'scrip' as it has the same trust issue you mention, it will be all barter.

The trust issue is why China will not be a reserve currency until the commies, fascists and rampant corruption is gone - a very long time from now.

For all the sins of the USA it is still, in spite of 0bama and the leftist destructors, the safe harbor of the world.

There is no other country which is in a position to become the reserve currency holder, primarily due to location/geography and trust that freedom is in place.

Tue, 06/09/2015 - 00:25 | 6177326 Max Steel
Max Steel's picture

it has nothing to do with geography genius . You are a deluded and exceptional retard . Whatever helps you sleep even if they are confortable lies

Mon, 06/08/2015 - 09:42 | 6173971 froze25
froze25's picture

If you are paid by a check (credit) and deposit said check for bank credit on your deposit account.  You have only received credit.  The IRS has said that credit is not taxable income.  How do you point this fact out to the IRS, it seams we have been paying income taxes on non-taxable credit?

Mon, 06/08/2015 - 09:48 | 6173995 headhunt
headhunt's picture

It is simply a payment for service/product you sold and is backed by trust, there is no credit as you do not have to pay your employer or customer back for what you received.

But it would be nice if your scenario would hold.

Sun, 06/07/2015 - 20:38 | 6172855 Aquarius
Aquarius's picture

Gold does not vary in its value.

When the US Dollar and other fiat currencies finally tanks, it will be worth nothing.

As a consequence Gold could be quoted as trillions of US dollars per troy ounce - it is immaterial and of absolutely no consequence.

What is of consequence is that China will not release any of its Gold Bullion used for supporting its Promisary Notes and economy and hence most people in the West may never see Gold again - and never have the opportunity to hold it except in some fictious form. In fact, fictious is what the West has become; delusion; denial and duplicity.

http://verbewarp.blogspot.com.au/2006/03/warning-to-east.html

As the USA becomes a failed Totalitarian State, most of its John Gaults will leave - too bad about the innocents - this is the direct result of failed "leadership"(?) not the economy and leaves this once proud Nation of Liberty, Freedom and Justice feeding on its own; the  shadow of its former self.

Putting a Banker (system) in charge of your Society's Government does this, as 5,000 years of written histroy has shown clearly and repeatedly.

"There is one safeguard known generally to the wise,

which is an advantage and security to all,

but especially to democracies as against despots.

What is it? Distrust."

-- Demosthenes

(384 B.C.-322 B.C.)

 

Ho hum

 

Sun, 06/07/2015 - 12:30 | 6171655 CHX
CHX's picture

~ 200 T debt world wide (in US$) and ~180k metric tons of gold (~5.8 B ounces) world wide. A full backing of the debt with ALL gold would imply a price of ~34500 $ an ounce. Either way, gold as real money is greatly undervalued right now. Get some, and some silver too... Hold it (literally), be right and sit tight while the shyte show unravels. Good luck to all.

Sun, 06/07/2015 - 13:10 | 6171735 Dan The Man
Dan The Man's picture

If gold backing happens, the resulting sh*tstorm would cuz a massive reduction of currency with bankruptcies etc.  If the amount of currency falls, the gold ratio would gain, thereby creating a halfway point, maybe.  So i think 200T debt, would end up being 100T debt, and more likely a  $16,OOO +/- price tag.   

Still hefty tho.

Mon, 06/08/2015 - 09:50 | 6174006 headhunt
headhunt's picture

Whole countries would default and start over.

They would ignore their debt like it never happened - like a Brazilian reset.

Sun, 06/07/2015 - 07:32 | 6171262 Bagbalm
Bagbalm's picture

If China wishes they can do the same as Nixon - only back currency used in foreign exchange.

Sun, 06/07/2015 - 03:37 | 6171044 Kina
Kina's picture

Would love to see what would happen to the USD if China announced it was planning a move to a gold back Yuan in the near future. Even if they did it for a joke, to test the waters. lol

Then say no they are not, it was false information.  

If you were a person in the know would be great USD shorting opportunity and Gold shorting opportunity in turn, a doubling killing on a joke. 

 

I don't think China really needs a stronger Yuan right now.

 

Sun, 06/07/2015 - 01:15 | 6170930 TacticalZen
TacticalZen's picture

What if bitcoin pegged to a specific amount of physical gold in a country with liberal vaulting rules (Dubai?).  It could become the best of all options.  Anonymous and tangible.  Bring on quantum computing to make it truly secure.

Sun, 06/07/2015 - 02:27 | 6170988 honestann
honestann's picture

Impossible... very much unfortunately.  The reason is... someone who gives you physical gold for bitcoins cannot be anonymous, and neither can the other party.

Also, you don't want to even imagine what hackers would do in such a situation.  Bitcoin cannot be made secure, if you include all the infrastructure around bitcoin required to make it function effectively.

Sun, 06/07/2015 - 09:39 | 6171372 Haole
Haole's picture

I'm surprised you would post such utter bullshit and false statements after all this time and after all the many deaths of Bitcoin howled about here.   Anonymity is irrelevant and anybody who knows anything ever claimed that Bitcoin is anonymous.

Look into BitGold, this is essentially what they are doing NOW on an individual basis.  You can even have a debit card to spend your gold...

Bitcoin not secure eh?   Why is the algorithm yet to be hacked?  By anyone or anythng.  Exchanges and individuals may screw-up handling and/or storing it but saying Bitcoin is not secure is ridiculous and untrue.

Then again, saying stupid shit about Bitcoin is a ZH tradition by now so go to town if you have any more pearls of wisdom.

Mon, 06/08/2015 - 09:52 | 6174014 headhunt
headhunt's picture

Bitcoin can and has been confiscated by government - the ultimate hack.

Sun, 06/07/2015 - 10:13 | 6171449 kanoli
kanoli's picture

BitGold is not "bitcoin backed by gold."  It is merely a gold currency system like e-gold that is exchangeable for bitcoins as well as fiat currency.

Sun, 06/07/2015 - 10:43 | 6171473 Haole
Haole's picture

Bitcoin pegged to gold and vise versa, never mind the fiat component for now, what a concept.  That was the point.

 

Mon, 06/08/2015 - 09:28 | 6173926 bombdog
bombdog's picture

To be fair, whether you like Bitcoin or not, backing it with gold is virtually impossible. The bitcoins are mined in CPUs and gold is mined in the ground, so they have no relationship really. Backing the dollar with gold would work because the dollar has a counterparty with a fort full of gold and can therefore redeem the dollar in gold (if they have all the gold which is doubtful at this point in time). There is no bitcoin guarantor, no counterparty to bitcoin, so you might as well be backing unicorns with marshmallows.

Tue, 06/09/2015 - 00:30 | 6177332 Haole
Haole's picture

Was talking more about records of ownership, multi-sig escrows and transactions of various types, etc. but whatever...

Bitcoin is mined on computers but gold is mined in the ground?  Really?  Wow, who'd of imagined..?

BitGold and some very big money thinks they have a relationship, as one example but maybe I'd better listen to some guy on some internet forum...

Sun, 06/07/2015 - 10:18 | 6171437 honestann
honestann's picture

You conveniently ignored all the qualifers in my message.  Why did you do that?  I explicitly pointed at the infrastructure around bitcoin that makes it not entirely foolproof in practice.  Yet you just bounce off the walls like a crazed chimp, pretending I said something I didn't say.  Surprisingly, you then agree with what I said!

You also ignored the fact that I was just replying to someone else's claim of anonymity, not raising the point myself.

My real gripe with bitcoin was the exact same as fiat currency, namely "no intrinsic value".  That gripe stands.

-----

I also wonder whether you even understood the message I was responding to (and thus my reply) were about the notion of a bitcoin-like "currency" that is backed by physical gold (and thus convertable back-and-forth to-and-from physical gold).  That was the topic, not bitcoin itself as it stands today.

The fact is, the moment you attach anything physical that must be delivered physically (gold or otherwise), you cannot have the same degree of anonymity and security as bitcoin.  So the inherent problem is... either bitcoin remains fiat, or if a non-fiat version is created, the same degree of anonymity and security cannot be retained.  That's sad, but inherently true.

Mon, 06/08/2015 - 10:21 | 6174138 Hard Assets
Hard Assets's picture

Interesting discussion about BTC, fiat, gold, etc.

I’d like to make 2 points, investment (time) horizon and end-game.

I personally have a 14 year investment time-horizon. Why 14 years?  Analysts claim that silver will be history in 2029. Not ‘peak-silver’ but no silver. I do not know if these analysts have factored in increased supply from ‘junk’ or more supply post-2029 resulting from increased prices. What’s clear, from various charts I have seen, is silver is one of the first pure metals to become ‘extinct’.  By contrast, uranium is abundant until the turn of the century.

What is also clear, is that water, nat gas and oil will become an issue sooner than later. There will be problems prior to 2029, probably major ones.

As an aside, Mr. Saudi finance/OPEC minister/King Hero said that oil will never again see $100. Sure, peak-oil has been pushed back by the shale revolution but in 10-15 years are we not back to square 1 again? According to Saudi-man, the switch to renewables will be global, oil will be rendered useless and they are pumped full bore to get rid of the damn stuff. I believe this article was on ZH just after the recent OPEC meeting.

Frankly, I don’t follow this guy. We know renewables replacing carbon is not a reality (yet) and it may be a long time before renewables become ‘cheaper’ .

Secondly, Saudi has offered the ‘spigot full throttle’ reasoning on market share. Selling oil at $60 and killing off competition will surely increase market share, ‘mission accomplished’ ?  Selling 9 million bbls/day at $100 nets $900 million/day. Selling 10.5 million bbls/day at $60 nets  $630 million. These geniuses lose $270 million/day to ‘gain market share’? Further, they have finite oil supplies as does every country on the planet. They want to sell every barrel at $60 instead of $100? So now they drop the ‘market share’ horse manure with the new and improved ‘oil will be useless’ elephant manure mantra??

So how does the end-game play out? Very clearly in my book.  We need not squabble about definitions of ‘running low’, ‘peak’ or ‘extinction’ of metals, water, oil, etc. Add in climate change (real, perceived or otherwise), soil depletion, food supply, population, demographics, sovereign debt, etc., things are on a slippery slope.  Over time, the slope gets slicker and steeper.

Shortly after the 2008 mess, my wife said to me, “You are such a doomer…all this end of the world crap”.

I said to her, “How the fuck else does it end?”

I still am waiting for an answer.

Have a golden day !

Sun, 06/07/2015 - 11:14 | 6171468 Haole
Haole's picture

So, gold has never been lost, stolen, seized or "liberated"..?  Some people would like other methods of transacting value other than transacting with rocks.  Yes, the infrastructure around Bitcoin is what makes it practical aside from some hiccups in a 5 year old technology that has already changed, and is changing, the world and the way value is transacted.  Millions upon millions of transactions have taken place without incident in a secure, trustless and frictionless way globally.  Not bad for a new revolutionary, world-changing technology in it's infant stages. Remember all the antics with the internet itself in the early 90's? 

Ah, the ol' highly subjective "intrinsic value" argument. 

Looks like the "free market" intrinsic value of one Bitcoin is currently about US$225 nominally and multiples of that to those who are involved.  Heh, funny eh, just like gold and silver. 

Seems to me like the same dynamics that apply to the "intrinsic value" of gold/silver presently apply to BTC as well.

If BTC has no intrinsic value to some then that's great.  Prejudiced about that internet play money, perfect.  The future doesn't care about what either of us say. 

-------------------

 

Yeah, I wonder about a few things too.

This is not about Bitcoin being backed by gold necessarily, this is about gold being backed by Bitcoin.  That should be good for a laugh for some of you.  Laugh it up...

I don't know why 100% anonymity is such an issue.  We're talking about a future monetary system here which in all likelihood will include gold and Bitcoin from the way it's looking.  I'll say it again, anonymity is irrelevant now.  If one is worried about transacting and remaining completely anonymous then good luck with that.  Pseudonymity is fine with almost all that actually transact in BTC currently as the "intrinsic value" of being able to instantly transact any amount of value in a trustless, frictionless, secure manner anywhere on the planet essentiallty for free somewhat makes-up for it.  

Oh and BTC is not "Fiat".  Please...

 

 

Mon, 06/08/2015 - 09:43 | 6173977 bombdog
bombdog's picture

"This is not about Bitcoin being backed by gold necessarily, this is about gold being backed by Bitcoin.  That should be good for a laugh for some of you.  Laugh it up..."

ha ha ha ha

If you are to 'back' something it's because it's YOUR LIABILITY. Please think about it. Gold is nobody's liability, so backing gold with anything is a complete nonsense. Same way you cannot back Bitcoin with anything because there is no counterparty to a bitcoin except maybe God. God invented mathematics so I suppose you could ask God to back Bitcoin.

Mon, 06/08/2015 - 08:35 | 6173694 honestann
honestann's picture

Bitcoin is 100% fiat.  It was "made up and simply declared to be a currency".  That's what fiat means.  That bitcoin is fiat is 100% certain and clear.

What is the conductivity of bitcoin?  What is the durability of bitcoin?  I hate to point this out, but metals with high electrical (or thermal) conductivity are valuable in certain applications, as is the durability.

Now silver has slightly higher conductivity, but is much more prone to tarnish, and is thus not as durable in many applications.

These applications are REAL.  They are PHYSICAL.  They are NOT ARBITRARY or JUST MADE UP.

And so are many other applications of gold and silver.

Being vaporware (a series of bits), bitcoin has no physical purpose.

One can say "one purpose of bitcoin is to transfer [something] to somewhere else very quickly and cheaply".  I agree with that statement.  However, what makes bitcoin rather good for that purpose is precisely because the entire transaction can be compressed into seconds, or even a fraction of a second, and thus whatever bitcoin serves as an intermediary for is not likely to change significantly in such a short period.

So, for example, one could imagine the following.

Someone goes into a gold, silver, eggs, lumber, copper, noodle store and asks to transfer a certain quantity of gold, silver, eggs, lumber, copper or noodles from that store to some other gold, silver, eggs, lumber, copper, noodles store elsewhere in the world (or solar system).

Once you hand the guy whatever payment he wants for the gold, silver, eggs, lumber, copper or noodles... that guy can transfer however many bitcoins is the current-at-the-moment exchange rate between those goods and bitcoin... to the destination.  At which point that destination performs the reserve process and hands the gold, silver, eggs, lumber, copper or noodles over to the recipient they were being transferred to.

In theory at least, and with the necessary infrastructure, this sure can be more convenient (and cheaper, shipping wise) that trying to ship the gold, silver, eggs, lumber, copper or noodles to the far away destination.

And indeed, bitcoin might someday be very well developed for such purposes.

As money, however... it is only partially effective.

The main problem being... no intrinsic value.  You can't actually DO anything of value with a bitcoin... except exchange with others.  The bitcoin itself has no value.  PERIOD.

And another purpose of "good money" is to hold value over short, medium and long periods of time (as in "savings").  The fact is, bitcoin sucks for that purpose.  One time you might gain a lot of value, but the next time you might lose a lot.  If your huge transaction is the one that loses... YOU LOSE BIT.

So bitcoin is very cool in some ways, does have its strengths and applications, but also is BAD for certain purposes that some try to advocate bitcoin for.  The more rational supporters of bitcoin identify the strengths and weaknesses, and only advise bitcoin for purposes it is good, efficient, reliable, superior.

Others treat bitcoin like a religion... like the word of god.  Pure perfection and 100% perfect by definition.  Those folks are religious zealots, whether they realize or not.

PS:  Some people care about anonymity, others don't.  But if you don't realize the value of anonymity in the new world dominated by human predators, you must be smoking something way too strong for your brain to handle.

Tue, 06/09/2015 - 00:35 | 6177278 Haole
Haole's picture

I suggest you look-up and study the definition of a "Fiat currency".

Bitcoin is not Fiat.   The only thing that is clear in this regard is you don't have a fucking clue what Fiat currency is and how Bitcoin is used voluntarily on a decentralized network not owned by any authority and does not derive it's "price" and/or value by government decree.  Saying all one can do with Bitcoin is transact between peers shows just how little you know about what Blockchain tech is capable of.  Bitcoin, used as currency, is but one of many uses.   If you think it's worthless and a joke I'm so glad.  Apparently the real world outside this little echo chamber thinks it does have value.  Many many people and businesses are exchanging it right now, today.  Surprise, value.   Sorry, that's all the time I can waste on your nonsense.  Good luck with that.
Tue, 06/09/2015 - 06:46 | 6177693 honestann
honestann's picture

You are clueless and stubborn.  Bad combination.  Yes, bitcoin is voluntary.  Yes, bitcoin operates on a decentralized network.  Yes, bitcoin is not owned by any authority.

Yet bitcoin is fiat, just like regular fiat made out of paper and computer-bits.

Note also that paper fiat (dollars) don't have fixed or set value either.  What anyone charges for any real (non-fiat) good or goodie is set by the seller [and buyer if negotiation takes place].  That's true for fiat-bitcoin and that's true for fiat-paper.

That is also true to an extent for gold, silver and any so-called "real money" or "hard money", precisely because seller and buyer can negotiate and come to an agreement about the exchange rate between gold, silver, lumber, eggs and any other real, physical good... just like fiat-bitcoin and fiat-paper and fiat-bits.

So what is different then?  The difference is, gold and silver have real value.  Which is to say, gold and silver have utility --- you can make certain goods and goodies out of gold and silver that you cannot make out of computer-bits or ink-smeared-on-little-pieces-of-paper.

That's the difference.  And that is a very important, even KEY difference because all those forms of fiat versus gold and silver (and lumber and eggs and so forth).

It is not a question of whether bitcoin has value for transactions.  It doesn't bother me to admit it can (given reliable, well-designed infrastructure around bitcoin itself).  In fact, my message gave an important example where bitcoin can have advantages over gold and silver, which you then claim is a statement "I think it is worthless" (proving you just make stuff up).

HOWEVER, there is a difference, and that difference is what I'm pointing at.  That difference is... gold and silver have value and utility in and of themselves.  Without infrastructure.  Without huge systems to support them.  And that's the point... a very, very important point too.

Why important?  Because this means "gold and silver stand alone".  They do not require a big system be in place to have value.  Why is this important?  For several reasons, but here is one.  Once a transaction is done... the transaction is DONE.

Which means, no other human being on the planet is involved, or need be involved for the transaction to work, be complete, and be satisfactory for those involved.

This CAN BE important.  And given the way the globalists in the new world empire are headed, this IS important today.

But notice this.  The same is true if you exchange "eggs" for "lumber".  If you have more eggs than you need, and you exchange some for lumber you need... both of those involved in the transaction got something of value, and do not depend on anyone or anything else.  Not a "system", not an "infrastructure", not "changes of value over time", not "identification", not "certification", NOT ANYTHING.

They eat the eggs, and build with the lumber.

SIMPLE.  NOBODY ELSE INVOLVED.  NOBODY ELSE NEEDED.

Little pieces of paper and bitcoins are "hot potatoes".  They have no intrinsic value.  As long as the music keeps playing, and the infrastructure stays in tact, and no hacker inserts themselves into the system, and the exchange-rate between bitcoin and other products is reasonably stable over time, then those involved in bitcoin transactions can be satisfied with the results.

But the supposed value of bitcoin is not within bitcoin, because when the music does stop, or any of many other factors change (that are not under your control)... the bitcoin has NO VALUE == NO UTILITY in an of itself.

And that's the point.

Tue, 06/09/2015 - 20:15 | 6180814 Haole
Haole's picture

So you prove to yourself that Bitcoin does not fit the definition of "Fiat" in any respect yet proclaim that it is 100% Fiat and then call me stubborn and clueless?

Explaining the virtues and qualities of gold and silver like I've never heard of the stuff, particularly after being up and down this forum for 5 years?  Are you really that thick? 

You type all this blather and think you're going to alter my perception or have me take any stock in any of it?  Stubborn?  Clueless?  Hypocritical?

How about I keep replying to your lengthy posts of distorted personal opinion, misperception and utter bullshit just for the hell of it and you can keep wasting your time typing all kinds of nonsense for your ilk on these forums so they can be oh so impressed by it? 

I don't know who the fuck you think you are in your own mind but believe and think whatever you want.  Blather on as much as you want, it's your own personal 100% Fiat malarkey and nothing but as far as I'm concerned.

Wed, 06/10/2015 - 14:49 | 6183364 honestann
honestann's picture

You are one of those people who want to believe x, y or z is 100% perfect in every possible way.  Like someone who becomes a rabid fan of a certain baseball, football, soccer team... they are perfect and everyone else is trash.  As such, rational conversations with you are simply impossible.

Sun, 06/07/2015 - 01:15 | 6170929 TacticalZen
TacticalZen's picture

What if bitcoin pegged to a specific amount of physical gold in a country with liberal vaulting rules (Dubai?).  It could become the best of all options.  Anonymous and tangible.  Bring on quantum computing to make it truly secure.

Sun, 06/07/2015 - 00:46 | 6170901 Haole
Haole's picture

One Bitcoin will be $64,000 before one ounce of gold ever is, BTChez

Sun, 06/07/2015 - 01:54 | 6170966 chokeNpuke
chokeNpuke's picture

hahahahahhahahhahahahahahahhahahahhahahha you soooo funny NOT going to happen.

Sun, 06/07/2015 - 09:11 | 6171354 Haole
Haole's picture

Yes and ZeroHedge has been oh so accurate on Bitcoin for years now.  /s

ZH being wrong 100% of the time on Bitcoin, now that's funny.

 

Mon, 06/08/2015 - 09:47 | 6173990 bombdog
bombdog's picture

Sure like the time when Bitcoin went over $1000 and most people on here said it was crazy.

Tue, 06/09/2015 - 00:58 | 6177369 Haole
Haole's picture

I know and it was only on ZH that people said/knew it was crazy right..?    /s

 

How many times did ZH commenters proclaim the death of Bitcoin like monkeys in heat?  It was endless.  Like, that's it, we told you so kind of done?  "Hit" pieces posted by the Tylers...

 

O.K... 99.999% wrong.  My bad.  ;)

 

 

 

Sun, 06/07/2015 - 00:21 | 6170867 raywolf
raywolf's picture

no one will back a paper currency 100% by gold, perhaps 10% tops... if there's 5.4 trillion USD of Yuan, then 500 billion of gold will do it. At $1000 an oz... that's 500 million ounces.... which is about 10% of all mined gold... it's do able.... and interestingly the entire gold ever mined is 5.6 billion ounces, which at 1000 /oz is 5.6 trillion... a number very close to the Yuan head line number... So if China backed their currency 100% by gold it would effectively indicate they own the world... the battle for global currency domination continues...

Sat, 06/06/2015 - 20:18 | 6170460 besnook
besnook's picture

actually, to enforce a gold standard all that needs to be done is for countries to have enough gold on hand to settle their current account deficit. in other words the usa is finished if a gold standard was enacted.

Sun, 06/07/2015 - 02:32 | 6170994 edotabin
edotabin's picture

Maybe. What's the price of gold though? If it goes high enough, everyone can pay off everything.

Let's stop acting like the great oracles of our time.

Sat, 06/06/2015 - 17:48 | 6170137 roadhazard
roadhazard's picture

At $64K an .OZ all gold at the bottom of the lakes will be confiscated.

Mon, 06/08/2015 - 09:05 | 6173833 Hard Assets
Hard Assets's picture

RH,

 

Good point...that's why I have been keeping accounts of all boating accidents in the last few years !!

Sun, 06/07/2015 - 15:33 | 6172191 mt paul
mt paul's picture

ban goldfish....

Sun, 06/07/2015 - 00:54 | 6170910 TacticalZen
TacticalZen's picture

The physical gold held by most aware people is hedged with massive quantities of copper jacketed lead on a 1 lb lead to gold ounce or better ratio.  The asymmetric damage of all that lead entering the market would make it the most dangerous job in the world to enforce such a request.  We'll not even go into the subject of exotics like steel core or tungsten, or even DE.  Did we even cover home made thermobaric technology?  So I do not think our fearless leaders would try such a move short of declaring Marshall law and the beginning of a civil war beyond all consideration.  I suspect they would be too busy trying to keep civil society civil.

Sat, 06/06/2015 - 16:56 | 6170020 TeethVillage88s
TeethVillage88s's picture

77,619 Tons of Gold required for USA to hold a gold standard at $1,200 an OZ.

I might be wrong on the calc, since I did it the complicated way.

32151 OZ per Meter Ton of Gold (conversion)
8500 Tons in US Reserves/Gold Certificates
273283500 OZ in US Reserves/Gold Certificates
$2.991300 Trillion in M1 (USA)

Anyway short tons, long tons, Meters I've been saying for quiet a while no modern nation can ever go back to a Convertible Gold Standard in which you can ask for your gold. There just is not enough gold.

I'm not clear how a currency war could exist if China claims their money is worth more than ours. Usually it was the other way around. Rome, Great Britain, Dutch acting in a protectionist manner demanding payment in their currency. China is a trading nation and would demand use of Petro Yuan??

$1 USD per Chinese Blue Jeans made = 1/50th of a Gold-Yuan

Maybe it is just an exchange rate that would be effected until they can devalue the USD based on listed weakness.

Economic War = Started Long ago and USA came out on top with the Bretton-Woods and the Petro Dollar. No surprise that China or EU or Saudi Arabia would try to find economic Dominance. Gold Renminbi or Gold Yuan would only partly be backed by gold as any other nation that tried it.

Real Issue is whether anyone can Devalue the USD, if Petro Dollar Era is over, and if Economies will be Stable without a World Reserve Currency.

* M1/US Reserves in OZ = $10,945 per OZ Gold Price.

Sat, 06/06/2015 - 16:27 | 6169954 Magnum
Magnum's picture

Ok just rely on Eric Sprott and Goldcore for advice on PMs. Lol. Don''t be a sucker, the gold promoters never change their tune. There's a time for everything. Gold is headed lower! China schtina. $64k gold is ludicrous.

Sat, 06/06/2015 - 16:54 | 6170022 greenskeeper carl
greenskeeper carl's picture

i wish this 'gold backed yuan' meme would die already. the chinese depend on being able to conjure endless amounts or money/credit out of thin air. You can't do that with a gold standard. They won't do it for the same reason the US went off the gold standard- their leaders are corrupt and stupid, just like ours.

Sun, 06/07/2015 - 15:02 | 6172096 CHX
CHX's picture

In the end market forces will make the fiat price of fizzical gold such that effectively the currencies will be backed by gold in the end. Right now we have a fiat price of PM promises, futures promises leveraged 100:1 to the in the warehouse deliverable goodies. It's a scam, but as long as the miners play along (selling metal at losses) and GLD/SLV - the bankers PM stacks - are around and the bullion banks are not overrun by the BRICS demand for the actual goodies, prices may well go lower still in the medium term. China has a red button they could push any time and annihilate the US (it reads *sell 4 T USD/debt for gold*)

Sat, 06/06/2015 - 15:07 | 6169759 Crisnach
Crisnach's picture
Acciones populares pronosticos intradia Popular shares intraday forecasts:
Sat, 06/06/2015 - 13:57 | 6169593 Meremortal
Meremortal's picture

C'mon, make it a million an ounce. Cheap bastards!

Do NOT follow this link or you will be banned from the site!