'Digital Gold' Flight To Physical Gold

'Digital Gold' Bitcoin Flight To Safe Haven Physical Gold

- Latest bitcoin, crypto crash causes gold coin and bar demand to surge
- Bitcoin down 40% from high, Ripple down 50% and Ethereum down 30%
- Ripple and 'Digital gold' Bitcoin fall past key psychological price levels
- $300bn wiped from cryptocurrency fortunes in just 36 hours
- New research says that there is 'Price Manipulation in the Bitcoin Ecosystem'
- Savvy crypto buyers converted their short term gains into physical gold bars, coins
- Bitcoin and Ripple sellers bought gold both for delivery and storage from GoldCore
- Gold ETF holdings rise - Assets in iShares Gold soar to $10.7 b, highest in 5 years
- 95% of cryptocurrencies will go to zero ...

Editor: Mark O'Byrne

30% to 50% price drops in a matter of days and the loss of $300 billion in value is quite a knock for a market that was not meant to be in a speculative bubble.

In just 36 hours the cryptocurrency market has managed to make a fair few people feel very nervous as they watched crypto currency prices fall very sharply.

The two most popular cryptocurrencies (as measured by market cap) saw the biggest losses over Tuesday and Wednesday, this week. Digital gold bitcoin dropped below it's key psychological level of $10,000, whilst ether also made a drop below the all-important level of $1,000.

The crypto market has been on a tear for the last few months. We are frequently asked by people about bitcoin and whether or not they 'should' be getting into it.

Gold is the best way to secure value from crypto volatility

Unsurprisingly many cryptocurrency buyers or investors have been looking at how they can secure their gains. Since early December and continuing in recent days, we are seeing numerous existing and new clients who had seen massive gains in bitcoin, ripple etc diversifying into physical gold. They have been buying both gold coins and bars, for both delivery and storage.

One high net worth British entrepreneur involved in tourism sold a substantial amount of bitcoin and bought kilo bars (gold) for storage in Zurich. Another tech entrepreneur told us he was selling Ripple after having very large profits and a "nine bagger" meaning his initial punt on Ripple had surged nine times. He bought a substantial amount , over 100, of gold maple leaf coins for insured delivery.

Ripple lost 50% of value in one day

It's not just digital gold bitcoin gains that have people diversifying into gold. In the last two weeks, we have had a few clients who had seen huge short term gains in Ripple diversify back into gold.

They told us they were concerned that the massive price appreciation was unsustainable and they got nervous about it and decided it was a good time to sell and take some profits. This was a fortuitous move given XRP (the Ripple currency) lost 50% of its value on Tuesday alone.

Source: Coinmarketcap.com

This price action (along with the other major cryptocurrencies) has got many asking as to where the value in a cryptocurrency really is. Some in the newly rich crypto community are recognising that it is about realising real value when you cash out and place it into real assets such as gold and silver.

Those we have spoken to and have assisted in recent weeks are selling a very overvalued asset and putting it into a still undervalued asset. Gold prices remain quite depressed, especially from where they were compared to six or seven years ago, and sentiment is still quite poor.

There is a definitely a trend there and we think that trend is likely to continue given the overvaluation of crypto currencies and the undervaluation of precious metals.

This trend is already playing through the price of gold which has been on a winning streak just as cryptos begin to fall out of favour (see chart above).

It is also being seen in a sharp increase for gold coins and bars as reported by Bloomberg overnight.

There are people in the cryptocurrency industry that have been trying to position cryptocurrencies as alternatives to gold and indeed as "digital gold." We think increasingly people are realizing that these digital assets have much higher risk levels than the traditional safe haven asset - gold.

Risk of manipulation 

As we explained earlier this week, there are some dodgy dealings and market manipulation going on in the world of precious metals namely silver but also gold. Whilst it is a disconcerting prospect, the beauty of it is that precious metal investors can take advantage of it and secure physical silver and gold at relatively low prices, in preparation for the coming bull markets.

However, when it comes to the manipulation of digital or 'paper' assets then it doesn't work out so well for the average investor. One of the reasons so many of the early adopters took to bitcoin wasn't just because it was a cheap punt but also because it was supposedly more secure and offered a more honest form of exchange than those currently seen in the wider financial world.

Yet it has been victim to a number of security breaches and even price manipulation scandals. A new paper by researchers at Tel Aviv University and the University of Tulsa finds that bitcoin has been victim to price manipulation.

In a paper entitled 'Price Manipulation in the Bitcoin Ecosystem' , they find that 'Suspicious trades on a Bitcoin currency exchange are linked to rises in the exchange rate.'

Making particular reference to the infamous Mt Gox debacle they analyse:

 the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired. During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.

So bitcoin might be vulnerable to manipulation and not be as unbreakable after all.

From digital gold to real physical gold

As we have explained repeatedly, bitcoin (or any other crypto) is not a substitute for gold or silver. But, they can have a complementary relationship as we are seeing today.

Bitcoin and crypto currencies are digital assets. Most are no more secure in terms of value or pricing than any other form of digital gold, stock or ETF. However, many of those who choose to hold cryptocurrencies do so for the same reason many choose precious metals - because they wish to diversify outside of the global monetary and financial system.

Physical gold and silver bullion that is allocated and segregated in your name is the best way to guarantee the securing of the profits achieved from and wealth created by cryptocurrencies.

Most crypto currencies have little real value whatsoever other than to make hard and fast profits from - or indeed hard and very large losses.

The lesson here is to take profits on overvalued assets - be they cryptos, stocks, bonds or property. Sell over valued assets and buy undervalued assets. Rebalance investments and diversify into undervalued assets such as gold bullion - the proven safe haven.

Related Reading
Here’s Why Bitcoin Won’t Replace Gold So Easily

Up to 95 Percent of Cryptocurrencies ‘Will Drop to Zero’ – GoldCore

Goldnomics Podcast – Gold, Stocks, Bitcoin in 2018. Everything Bubble Bursts?

Gold On The Blockchain - For Now Caveat Emptor

 

News and Commentary

Gold Rally May Have More Room to Run - GoldCore (Bloomberg.com)

Bitcoin’s Nouveau Riche Run to Gold as Cryptocurrency Crashes (Bloomberg.com)

Gold treads lower as dollar gains on stronger U.S. data (Reuters.com)

Fed’s Beige Book finds muted reaction to Republican tax plan (MarketWatch.com)

Homebuilder Sentiment in U.S. Cools in January From 18-Year High (Bloomberg.com)


Source: Sputnik

Did Bitcoin Just Burst? How It Compares to History's Big Bubbles (Bloomberg.com)

Wall Street Has a $1.7 Billion Bet on the Rising Risk of Grid Attacks (Bloomberg.com)

This is What Happened to Sales & Prices of Manhattan Office Buildings as Chinese Buyers are Suddenly “Absent” (ZeroHedge.com)

VIX Surges To Highest Since 2015's Flash-Crash Versus Europe (ZeroHedge.com)

Collapse of Construction Giant with 43,000 Employees Globally Sparks Fear and Mayhem (WolfStreet.com)

Gold Prices (LBMA AM)

18 Jan: USD 1,329.75, GBP 961.14 & EUR 1,088.40 per ounce
17 Jan: USD 1,337.35, GBP 969.45 & EUR 1,092.48 per ounce
16 Jan: USD 1,334.95, GBP 970.38 & EUR 1,091.32 per ounce
15 Jan: USD 1,343.00, GBP 971.93 & EUR 1,092.93 per ounce
12 Jan: USD 1,332.90, GBP 978.75 & EUR 1,099.78 per ounce
11 Jan: USD 1,319.85, GBP 978.14 & EUR 1,104.45 per ounce
10 Jan: USD 1,321.65, GBP 976.96 & EUR 1,103.31 per ounce

Silver Prices (LBMA)

18 Jan: USD 17.09, GBP 12.31 & EUR 13.96 per ounce
17 Jan: USD 17.21, GBP 12.49 & EUR 14.10 per ounce
16 Jan: USD 17.10, GBP 12.43 & EUR 13.99 per ounce
15 Jan: USD 17.12, GBP 12.58 & EUR 14.14 per ounce
12 Jan: USD 17.12, GBP 12.56 & EUR 14.12 per ounce
11 Jan: USD 17.01, GBP 12.64 & EUR 14.24 per ounce
10 Jan: USD 17.13, GBP 12.64 & EUR 14.27 per ounce

Recent Market Updates

- Gold and Silver Bullion Are Only “Safe Investments Left” – Stockman
- Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver”
- London Property Crash Looms As Prices Drop To 2 1/2 Year Low
- Gold Bullion Up 1% In Week, Heads For 5th Weekly Gain As Bonds Sell Off
- Gold Prices Rise To $1,326/oz as China U.S. Treasury Buying Report Creates Volatility
- Gold Hits All-Time Highs Priced In Emerging Market Currencies
- World is $233 Trillion In Debt: UK Personal Debt At New Record
- 10 Reasons Why You Should Add To Your Gold Holdings
- Spectre, Meltdown Highlight Online Banking and Digital Gold Risks
- Palladium Prices Surge To New Record High Over $1,100 On Supply Crunch Concerns
- Gold Has Best Year Since 2010 With Near 14% Gain In 2017
- Happy 2nd Birthday Bail-in Tool! We Suggest Gold As The Perfect Gift
- 98,750,067,000,000 Reasons to Buy Gold in 2018
- Gold, Bitcoin and the Blockchain Replaces the Banks – Realists Guide To The Future

Comments

BigWillyStyle887 Thu, 01/18/2018 - 08:20 Permalink

Wallstreet blew a bubble in cryptos while buying up all the miners on the cheap for the next big run. They crack crypto bubble and take huge profits while retail gets assfucked and strap themselves in for the next miners cycle.

 

Idiots get fleeced as they always do. It should have been a red flag when wall street wanted futures contracts but instead bitcoin became MUH DIGITAL GOLD.

ReasonForLife BigWillyStyle887 Thu, 01/18/2018 - 10:41 Permalink

Are you denying there is real tech and potential in some of the crypto companies?  If not, then how can you get fleeced if you're in it for the long run?  Once the product is release and starts gaining mass adoption, some of these companies will become the next apple and google.   It's not all a casino, like the article speculates, 95% of them will go to 0.  However, that leaves us 5% that will not.   Picking these out is picking out real tech, good teams, good communites with minimum hype and pump and maximum focus on development and changing future.

Yes, idiots will get fleeced, as always.

In reply to by BigWillyStyle887

gdpetti ReasonForLife Thu, 01/18/2018 - 11:06 Permalink

Crypto's aren't blockchain, right? But haven't some indicated that blockchain isn't the future but the R&D phase for the built-in potential of Hashgraph? And remember who started this crypto paradise of marketing? https://www.naturalnews.com/2017-12-10-evidence-points-to-bitcoin-being-an-nsa-psyop-roll-out-one-world-digital-currency.html

So trade it, but that indicates mostly momentum based, and not long term Holding, which is where the sucker play comes in, as it always does.... same on the  main markets.. dependent upon all the mutual funds, pension funds run by yes-men just like all the central banks... It's a con game, short for confidence game... and all of our lives, and civilizations are based in just that, confidence in the system, but those systems are designed by the same 'chosen people of Satan' especially here in the "West" and in all of our colonies worldwide.

Currently it's a game of ending our puppet show called politics...'outing' the OWO, and replacing it with the oligarchs in the SG's, NWO.... and they don't need the markets... they don't like competition.. but it exists as they fight for top dog positions.. as China will soon find out when we start WW3.

Cryptos are just the R&D for the NWO's crytpo SDR basket, not 5%, but 1 single 'coin' for the new realm.... remember when credit cards were first rolled out? or debit cards? same game, same script to prep the public for the next leg of the ladder. If trading any of 'end-times' markets, the key is knowing where the exit is.

In reply to by ReasonForLife

silentlurker Thu, 01/18/2018 - 09:29 Permalink

A misleading graph - the drop in dollars per bitcoin looks to be about 45% while the rise in dollars per oz looks to be about 6%. By using both left and right axes the graph at first glance shows a (-1):1 relationship.  

exartizo Thu, 01/18/2018 - 09:58 Permalink

Dear Mr. GoldCrap,

You should stop writing crap like you think you're writing headlines, you idiot.

I do hope your net income from mercilessly peddling gold at all times, regardless of the current declined true investment potential of precious metals in general, went through the floor last year?

Sincerely,

A ZH Reader

ogretown Thu, 01/18/2018 - 10:29 Permalink

I do not understand the attempt to make this into a 'one or the other' kind of deal.  I buy a few gold coins every month and favor the one ounce Austrian Philharmonic.  Three times over the last couple of months I was forced to buy one ounce Canadian Maples because the Phil's were sold out - to a small group of people in our area that trade Bitcoin. Seems like a wise way to reinvest at least part of the e-coin profits. 

r0mulus Thu, 01/18/2018 - 18:50 Permalink

Gold measure in tens of dollars at right- Bitcoin measured in thousands at left. Lols around the house. Would be better to see them plotted together!