The calm before the storm

[GoldCore]

Gold and silver prices have declined in recent weeks as central banks have once again turned more ‘hawkish’ than was expected at the beginning of the year. But, as with anything, these things don’t happen in a vacuum. As we describe below, monetary policy is causing major trouble across a number of sectors, who can tell where the biggest crack will appear first. But, when it does, you’ll be pleased you chose to hold gold and silver during times like these. 

Tightening policy, at such a rapid pace is causing stress in every sector of the economy, especially the financial, real estate, and household sectors. See our post on April 13 Has the IMF Told the World to Buy Gold? which outlines key fault lines that have been exposed by the rapid interest rate increases.

Any one of these fault lines could erupt into a major ‘storm’ and most likely it will be a combination of defaults and restructuring of debt as we discussed in the post on June 1 Global Debt Crisis: Pretend and Extend? Central banks will once again fire up the printing presses to save select banks, companies, and governments, further devaluing their currencies in the process. For investors, it is a gamble as to which will be saved, and which will be let default or restructured to the detriment of current investors. 

 

It’s not only gold and silver prices that have faced challenges, but the equity, bond, and housing markets have all seen value declines in recent weeks. The chart below shows gold and silver prices along with two sample equity market indices performance since the beginning of the year.

The major exception in the chart below is the S&P 500 index which has risen sharply in recent weeks on the back of the largest seven companies in the index.   

Mid-year update

The start of a recession is one time when both gold and equity prices decline at the same time, but in general gold rallies as central banks scramble to cut rates and restore financial/market stability. 

The chart below is the long-term look at the gold to S&P 500 ratio. The peaks in the ratio signaled a peak in the gold price and the bottom of 1999-2000 signaled a peak in the S&P 500. The ratio appears to have set a low in December 2021 and set to explode higher as gold rallies during the next fiat currency printing cycle.

The gold price ratio to the broader MSCI World Equity Index shows a very similar pattern as the ratio between the gold price and the S&P 500. 

The gold to oil price doesn’t show a clear long-term relationship – however, over the coming months as economic weakness sets in we can expect gold to rise sharply in terms of oil.

The ratio of the gold price to wheat declined sharply in 2021 when wheat prices surged due to the supply shortage, however, the ratio has reverted to the longer-term average.

The last chart in this section is the gold price to UK house prices. The relationship between gold and house prices is surprisingly similar to that of gold with the S&P 500 and MSCI.  Historically, house prices have been a good store of value, which in the long-run will likely continue. However, in the short-run house prices are likely to decline further as the effects of higher interest rates weigh on homeowners and buyer affordability.

Holding physical gold and silver is a proven ‘insurance’ vehicle for when the coming financial/economic storm hits. No counterparty risk or devaluation from the printing of fiat currency!

For those new to investing in gold and silver – Our recent podcast The Case For Gold and How to Buy It, featuring GoldCore CEO, Stephen Flood will walk you through the details.

[Captinjack]

I see these charts and countless YouTube vids and even email news letters,seems to me no more than gold/silver pumpers desperate to get sales up or taking add revenue from suppliers, why pump something so hard if its so obviously good?

[SidS]

10 hours ago, Captinjack said:

I see these charts and countless YouTube vids and even email news letters,seems to me no more than gold/silver pumpers desperate to get sales up or taking add revenue from suppliers, why pump something so hard if its so obviously good?

My thinking entirely.

[n1k0s]

There are different forces at play right now, that weren't there two years ago. Inflation, supply/chain problems, war in ukraine, de-dollarization, etc. All these bring hard assets into a desired position. 

[SidS]

14 minutes ago, n1k0s said:

There are different forces at play right now, that weren't there two years ago. Inflation, supply/chain problems, war in ukraine, de-dollarization, etc. All these bring hard assets into a desired position. 

The optimist in me would like to agree with you. That being said the perfect storm of Covid, supply chain issues, unlimited helicopter drops of money, escalating tensions in Afghanistan and Russia in 2020-2021 should have sent both metals soaring long term. What we got instead was a surge in August-September 2020 that sent metals skywards followed by a plunge and then a lot of bobbing along. I suspect if anything it will be a repeat of this.

Silver still hasn't hit $50 per ounce (even with the silver squeeze) and gold trickles along steadily straddling the inflation line.

The pumpers promise an exciting rollercoaster ride with more ups than downs, when you finally get to the front of the ride queue you find bumper cars and teacups awaiting instead.

 

[n1k0s]

@SidS: i agree. But same goes for other asset classes too. There is a long await for a uranium boom (the so-called commodity super cycle) which is also justified by the electricity demands (see: interruption due to Nord Stream, electrification due to EVs, etc). Uranium is also lagging expectations, much like gold does.

That's to say, that the game is a waiting game. 

In addition, gold has bitcoin as a competitor to scarce commodities, which is not a negligible competitor. It is 1.1 trillion market cap and still under adoption and/or scrutiny. So, historical charts will be limited to see how this plays out.

[MetalMandible]

8 hours ago, SidS said:

The optimist in me would like to agree with you. That being said the perfect storm of Covid, supply chain issues, unlimited helicopter drops of money, escalating tensions in Afghanistan and Russia in 2020-2021 should have sent both metals soaring long term. What we got instead was a surge in August-September 2020 that sent metals skywards followed by a plunge and then a lot of bobbing along. I suspect if anything it will be a repeat of this.

Silver still hasn't hit $50 per ounce (even with the silver squeeze) and gold trickles along steadily straddling the inflation line.

The pumpers promise an exciting rollercoaster ride with more ups than downs, when you finally get to the front of the ride queue you find bumper cars and teacups awaiting instead.

 

We've hardly reached what can be considered 'long term', if the measuring stick starts in 2020.  The effects of such global events need considerably more time to shake out, especially given the capability of central banks and first world nations to kick the rusted old spit can down the road.  Thing about that is, they're basically gimp, barefoot, and half cocked while doing so. 

[Bratnia]

There's always the alternative option of rather than trying to out-smart (guess) the market, let the collective wisdom of that market tell you want to do. Target a 50/50 FT250 stock index and gold asset allocation and periodically rebalance your portfolio back to 50/50 weightings. Monthly if you like, or just once/year if you prefer

For regular trading, ETF funds suffice. VMIG for the FT250 stock holdings, PHAU (trades in USD), PHGP (GBP) or SGLN and maybe some SBUL (short gold) - that might be used to short some of the physical gold coin value that you hold to align to target weighting without having to actually sell coins.

The market will tend to do a OK job of instructing you, 8.8% annualised returns since 1986 for instance. 1980's and 1990's when the price of gold remained broadly flat and it had you accumulating multiple more ounces of gold - without having to add a penny to the portfolio for instance.

If you rebalance your stock/gold portfolio once/year, then the end/start of a new financial year (5th April) is a reasonable choice, as you might then opt to rebalance in the old, or new, or a combination of both 'years' according to whichever might be the more tax efficient. 

[Bigmarc]

10 hours ago, n1k0s said:

In addition, gold has bitcoin as a competitor to scarce commodities, which is not a negligible competitor. It is 1.1 trillion market cap and still under adoption and/or scrutiny. So, historical charts will be limited to see how this plays out

The whole of crypto is 1.1 trillion (10300 projects) bitcoin is at 5.9 billion. Wouldn't even get in to the top ten market cap of companies. Gold is at 12.6 trillion. Not sure how much of a competitor it is. 

 

had a few drinks writing this but felt it was important. 

Agree with other comments tho

[MetalMandible]

10 hours ago, Bigmarc said:

The whole of crypto is 1.1 trillion (10300 projects) bitcoin is at 5.9 billion. Wouldn't even get in to the top ten market cap of companies. Gold is at 12.6 trillion. Not sure how much of a competitor it is. 

 

had a few drinks writing this but felt it was important. 

Agree with other comments tho

Not that a few drinks need be blamed, but you'd have to move that decimal a couple spots to the right for the actual market cap of BTC. 🫡

[Bigmarc]

2 hours ago, MetalMandible said:

Not that a few drinks need be blamed, but you'd have to move that decimal a couple spots to the right for the actual market cap of BTC. 🫡

Yep was a good try, 590 billion. 

I have a banging headache this morning. 

[n1k0s]

@Bigmarc Indeed, btc has 0.5 trillion market cap and the entire crypto about x2 of that. 

Bitcoin has to do at least a x10 to arrive at gold's market cap but it is not impossible given the adoption it enjoys. 

I think overall it is a valid question whether btc can replace gold as a safe haven. They share very similar properties like scarcity and immutability.

I'm personally tempted to split my gold budget into both gold and bitcoin. 

If you have another opinion I'd be happy to hear, because I am afraid of getting stuck behind my own confirmation-bias. 

[Bratnia]

37 minutes ago, n1k0s said:

I think overall it is a valid question whether btc can replace gold as a safe haven. They share very similar properties like scarcity and immutability.

I'm personally tempted to split my gold budget into both gold and bitcoin. 

If you have another opinion I'd be happy to hear, because I am afraid of getting stuck behind my own confirmation-bias. 

At least with physical gold that can't simply disappear, unlike digital virtual scarcity. If you can't touch it you don't own it. If China, US, EU etc. collectively decide that Btc should no longer be permitted then the distributed copies of the ledger where the "valid' version is the majority common version, that official version of the ledger could be revised, such that even a cold storage Btc key just associates to a "Btc not found" error - because a majority of states says that should be so. Physical gold could also be outlawed, as it was in America 1930's to 1970's, but that relies upon surrendering it to one of the majority of states that demand such. If held in a minority state that hasn't banned gold then you still own/hold that gold, as could American's across the 1930's to 1970's years where owning gold in other minority states such as the UK was still permitted. A problem with physical gold is that of the risk of moving it around internationally, the uber-rich own yachts or private jets for such purposes, for others a safe method is to liquidate it in the source country - where it being banned looks to be on the horizon, transfer that 'cash' to the desired target country and repurchase gold there. Or failing that repeated trips transferring small amounts each time. As prior attempts to ban it however were unsuccessful (US) I suspect there's less of a inclination to attempt a repeat of that to instead do as America now does, strive to confiscate it via high taxation. If/when the UK for instance starts taxing gold more punitively then that is the time to liquidate/move proceeds to a no taxation alternative and repurchase gold there.

[Bratnia]

At the start of 1896 a initial thirds each into silver, gold, hard US Dollar bills, all stuffed under a mattress. Each year you rebalanced the three back to equal values ... and at year end 2020 the combined value in RPI inflation based terms still bought the same amount of stuff as it bought in 1896. But that wasn't a consistent inflation offset, at times it bought just half as much, in other cases 1.5 times more stuff.

Revising that to invest the USD into US stocks, and holding just one or the other of silver or gold, so 50% USD in US stock, 50% in silver, up to 1975, and then 50/50 stock/gold since 1976, and that was a have cake and eat it case. You could have had your inflation adjusted money returned to you via 30 yearly instalments (3.33% SWR) and more often ended with at least your inflation adjusted start date amount still available.

There is another caveat to the above, as prior to 1931 and both gold and silver were money. One Pound legal tender gold Sovereign coins for instance. Savers would be inclined to deposit that gold (money) into banks for both safe keeping and interest (more gold (or silver) in return). So pre 1932 years assumed base-rate interest rewards for silver (or gold). I also switched from silver to gold in 1976 as otherwise the big up-run in silver prices in 1979 positively distort the picture, so I aired on the conservative side by rotating silver into gold at the end of 1975.

Put another way and the Pound lost 5% annualised purchase power. What something in 1896 cost 2p required 10 Pounds in 2020 to buy the same. Perhaps a nice lunch or whatever. Whereas if your 'wallet' comprised equal amounts of US shares and gold (or silver) then liquidating some of those 'notes' saw a similar amount of stock shares and/or ounces of gold being liquidated to pay for lunch in years across 1896 to 2020, and where mid/longer term the cost of that lunch tended to have worked out to have been a free-lunch.

Edited July 1, 2023 by Bratnia

[Bigmarc]

5 hours ago, n1k0s said:

@Bigmarc Indeed, btc has 0.5 trillion market cap and the entire crypto about x2 of that. 

Bitcoin has to do at least a x10 to arrive at gold's market cap but it is not impossible given the adoption it enjoys. 

I think overall it is a valid question whether btc can replace gold as a safe haven. They share very similar properties like scarcity and immutability.

I'm personally tempted to split my gold budget into both gold and bitcoin. 

If you have another opinion I'd be happy to hear, because I am afraid of getting stuck behind my own confirmation-bias. 

I do often wonder ho the powers at be come up with the market cap of gold, it's close to impossible to know how much is out there. Which is kind of the beauty of it unlike bitcoin which has a set amount. This is why I think there is no comparison and I treat it as two different markets. The thing is with gold, it has a deep rich history intwined with religion and war and anyone in power has an abundance of it. 

Bitcoin or the crypto market is currently highly volatile and has the potential to make great gains and I almost treat it as gambling. I did put a small amount of gold in myself a few years back and have to say I didn't make any money but have an education. This is probably why the market is held up as there is a large portion of people who refuse to sell at a loss (including me).

Currently I am up on silver and gold and my crypto is a mess. 

I have no doubt the cycle will change but I am not sure that in our lifetime it could be seen as a store of value as the whole industry is still full of holes and untrustworthy for it to be taken seriously. 

If you are not involved in it yet I would highly recommend (when you have time) to go to the crypto threads on this forum and filter it from the earliest post. Read through it as it's a good indication of people's thoughts and opinions in the early days, also quite funny reading about members trying to buy coffee with it not knowing it's potential future value in the tens of thousands. 

[n1k0s]

@Bigmarc
Thanks a lot for sharing these thoughts.

Regarding your post on market cap: that's a great point. I guess for the transparent part of the world since miner companies are public you can estimate the amount extracted and from there guess the value extracted per year. But if we are talking about China or Russia, the state is extracting without reporting and then the exact amount is impossible to know. I read somewhere that china is believed to hold something of the order of 50K tons, which is about x5 the US amount. 

As for crypto i am not investing to anything apart from bitcoin. I think the construction of bitcoin is very radical concept, in the sense that it is a digital asset where no copy is possible. It is also a libertarian concept in the sense that there is no owner. In some philosophical way, this makes it democratic and appealing.  

The rest of the crypto is very dubious. As the bitcoin code is public on github, anyone can clone it, change a few parameters and launch their own token. I don't take that seriously - not even for gambling.

Bitcoin will face a war from issuers of money, as it disrupts the power of issuing a monetary policy. That's the main risk I think. 

 

[Bigmarc]

13 minutes ago, n1k0s said:

As for crypto i am not investing to anything apart from bitcoin. I think the construction of bitcoin is very radical concept, in the sense that it is a digital asset where no copy is possible. It is also a libertarian concept in the sense that there is no owner. In some philosophical way, this makes it democratic and appealing

What predicts the price? Where do you store it? Can bitcoin change its code? What device do you send it on? How much does it cost to do it? Are all these party's reliable and safe?

It's supposed to be a peer to peer exchange but relying on third, fourth, fifth and on partys to use the network. 

It's way to complicated for mass adoption but still useful as another tool.

 

[Roy]

I just discovered that I can move bitcoin from an exchange to the ledger without having the ledger in hand.

Is this a new function or I've been ignorant all this time?

[HonestMoneyGoldSilver]

2 hours ago, n1k0s said:

@Bigmarc Indeed, btc has 0.5 trillion market cap and the entire crypto about x2 of that. 

Bitcoin has to do at least a x10 to arrive at gold's market cap but it is not impossible given the adoption it enjoys. 

I think overall it is a valid question whether btc can replace gold as a safe haven. They share very similar properties like scarcity and immutability.

I'm personally tempted to split my gold budget into both gold and bitcoin. 

If you have another opinion I'd be happy to hear, because I am afraid of getting stuck behind my own confirmation-bias. 

The following are ramblings from an initial adopter (more than 10 years ago) of BTC and a former acolyte. Nothing I say is relevant or important but if you're at a loose end I will kill 10 minutes for you:

Do you believe that computer tech developed in 2008 by defence/intelligence agencies is a worthy competitor to tech produced in 2023 considering the hardware and software upgrades since then, including AI? 

If you believe BTC is a viable investment and a competitor to gold then you have to answer a few challenging questions.

1) If BTC is digital gold then why did it lose 75% of its value during a period of high inflation? BTC was $65K and slumped to $16K peak to trough from Nov 21 to Nov 22.

2) If BTC is digital gold then why are there 10,000 other "digital golds"?

There is only one gold, it's a fundamental universal element, the resultant of interactions between quarks, neutrons, protons and electrons. BTC and all digital assets are created and controlled by man, not by the universe itself

3) Do you believe BTC is a currency, a commodity or a security?

If so then why do Buffett and Munger make this statement: "A cryptocurrency is not a currency, not a commodity, and not a security ... Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity."

BTC is not a viable currency when you consider the unworkable volatility with regards wages and credit. 

4) If BTC is a currency then why do people with viable alternatives not use it as a currency?

The USA is currently the centre of cryptos after cryptos were booted out or restricted in various other jurisdictions. There are some people who use BTC as a currency but they are in a tiny minority. It's only appropriate for sending large international transfers as advocated by Bill Gates, not for buying groceries or petrol. There are some other applications for BTC including the niche in which BTC originally made its name. From my POV the only reason BTC exists in the public psyche and gained widespread recognition is due to a certain Road that was made out of Silk and operated nominally by a Dreaded Pirate named Roberts. If you look at such applications today you will see many have diversified from BTC and the largest recent market, something to do with Biden's White House Market, banned BTC and refused to conduct any transactions in this "currency". The alternatives for Joe Biden and his friends in Ukraine are Monero and ZCash, commonly known as Privacy Coins, along with other alt-coins like LTC and derivatives of BTC. Some still use BTC as a legacy feature

5) If BTC is decentralised and anonymous why is it, ya know, neither of those things?

The aforementioned enterprises don't use BTC for security concerns, nobody serious will touch BTC. It's the antithesis of private with every transaction broadcast on a public blockchain and stored indefinitely. Having used this tech for many years before it became popular, I have witnessed and been privy to numerous orchestrated pump and dumps. These have always been a defining feature of BTC and cryptos more generally. Look at price charts for evidence or the documented proof of market manipulators in China and all over the world collaborating to manipulate prices. There's Tether (never, ever, buy or use USDT) and other so-called stablecoins (that are not so stable) which are being printed by international criminals. The printed Tether is used to primarily pump and act as a "plunge protection team" similar to how the Fed, ECB, BoE and BoJ operate. There are orchestrated dumps too. In the wider crypto ecosystem there are numerous nefarious actors and organisations who have cynically exploited investors, shareholders and retail investors. Even mainstream banks and financial corps have been training staff how to issue new coins and perform "risk-shifting" aka pump and dumps, learning these tricks from their involvement with BTC and other cryptos

Buffett and Munger aren't exactly hipsters. What about the hipsters then, the early adopters of BTC, what are they up to now? Hmm, seems like the "smart money" in the tech sphere has moved away from BTC and into other coins like Ether (ETH) along with a host of alt-coins, privacy coins and AI coins.

6) Which group is correct when stating their coin/token is the "answer" and indeed, what is the question? They can't all be right in claiming they are the new messiah of cryptocurrency, who is lying, who is credible? Are ANY of them credible? 

The mainstream financial analysts conducted a thorough investigation of cryptos circa 2012. They determined they have zero intrinsic value and they would never be trading or investing in such assets. JPM have famously said they would fire any member of staff who traded cryptos with CEO Jamie Dimon calling BTC "a fraud". If anyone can recognise a fraud it's definitely JPM and Jamie Dimon, they are world-class at fraud along with their ICE friends Goldman Sachs. If we fast forward to 2023 we can see some big names like Blackrock and Fidelity (oh there's Bill Gates popping up again), have filed applications to the SEC to launch a spot BTC ETF. These applications were denied due to "inadequacies" according to the SEC. Then we have Greyscale BTC trust. The opinion on the fundamental value of cryptos hasn't changed since 2012 (it's technically impossible to give a fundamental valuation but people swing from 0 to infinity and call it "price discovery"). These entities are not seeking to invest their money into cryptos but rather take a cut from their clients who may wish to allocate part of their portfolio to BTC. 

7) In light of such statements and technical analyses, what basis is there for claiming BTC or any crypto is a sound investment, a currency, commodity or security? 

8. Texas and other US states have already brought in or are in the process of implementing digital currencies backed 1-to-1 with physical gold and silver. These currencies would be legal tender, fully transferable into cash or gold and illegal to seize, being held at a local (state) vault. Why would we on TSF want a digital currency backed by nothing when we could have one backed by physical precious metals?

These are my personal musings and irrelevant in the face of market price action and consumer demand. It is these forces that explain the dynamic discussed in point 7 above. BTC can be the most toxic trash in the universe but it's irrelevant if people keep buying, like they did with higher-powered CDOs. As a financial historian I ponder how future generations will look back on this period of time and classify BTC and cryptos. For me they will be classified as a sign of "market froth", a consequence of easy money and excess speculation due to the tragic failings of Congress, regulators, the financial system and central banks over the last 25 years

That doesn't mean BTC, or more likely alt-coins, can't or won't make you rich. They can and they might. I understand why people invest in cryptos. People are desperate and if they lose the money they invest in cryptos, well, they're still poor, but there's a chance they might get rich. That last sentence basically describes our economy. People are content that some work low-paid jobs and live on the streets because they believe there's a chance that they will be the chosen one to make the top 1% or 0.1%, a 100-1 or 1000-1 chance, but still a chance

If you look at the USA market there is a prevalence for BTC and crypto appreciation amongst the left-leaning and left-voting populace, which is, relative to the conservative end of the spectrum, less educated, more desperate, less affluent and more "diverse" (non-white LGBTQ). If we look around at the countries who have total (legal tender) or significant BTC adoption we're counting El Salvador, the CAR (Central African Republic), Nigeria, North Korea, Iran and other mostly communist failed states. Cryptos are for lefties and while we're certainly in an era that is swinging wildly to the left, there is an expiry date on this madness. Sooner or later history, science and mathematics will catch up with them

Ultimately for me, and I do own some cryptos, it's become a question of function and usefulness to the state and wider humanity. If people get rich from shifting around digital assets while producing absolutely nothing other than wasted electricity and disc space, what good is that doing humanity? It's detrimental to humanity, one might describe BTC and most cryptos as a stain on our species. The technology for cryptos is not here yet just like with EVs. It might sound good on paper and PR gurus can certainly make it look amazing to the masses but when you take a deep dive and follow it from bean-to-cup, BTC and most cryptos are hot air. There will be a future crypto based on quantum tech and enhanced by AI that is a fully-fledged unbreakable privacy coin. That coin might be worth investing in. Until then it's going to be peaks and troughs, boom and bust, because few truly understand what they are investing in and those that do are outright criminals or have perverse incentives

Again I stress I'm irrelevant and fundamentals are irrelevant in the face of an irrational market and retail investors with suboptimal decision-making processes. If you love cryptos, love the left, go nuts. It's a game of manipulation and technical charts, an abstract game of Call Of Duty. Some will make a killing and get out but be sure there will be bigger and better games, updates, upgrades and revolutionary tech, that will make BTC and current cryptos look obsolete, just like the original COD. 

 

[Roy]

In an ideal situation,  someone will sell at $65,000, wait, and then buy back in @ $17,000 and 4 X.

I suspect someone did and they're either a banking or government employee. 

Edited July 1, 2023 by Roy

[Bigmarc]

25 minutes ago, HonestMoneyGoldSilver said:

The following are ramblings from an initial adopter (more than 10 years ago) of BTC and a former acolyte. Nothing I say is relevant or important but if you're at a loose end I will kill 10 minutes for you:

Do you believe that computer tech developed in 2008 by defence/intelligence agencies is a worthy competitor to tech produced in 2023 considering the hardware and software upgrades since then, including AI? 

If you believe BTC is a viable investment and a competitor to gold then you have to answer a few challenging questions.

1) If BTC is digital gold then why did it lose 75% of its value during a period of high inflation? BTC was $65K and slumped to $16K peak to trough from Nov 21 to Nov 22.

2) If BTC is digital gold then why are there 10,000 other "digital golds"?

There is only one gold, it's a fundamental universal element, the resultant of interactions between quarks, neutrons, protons and electrons. BTC and all digital assets are created and controlled by man, not by the universe itself

3) Do you believe BTC is a currency, a commodity or a security?

If so then why do Buffett and Munger make this statement: "A cryptocurrency is not a currency, not a commodity, and not a security ... Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity."

BTC is not a viable currency when you consider the unworkable volatility with regards wages and credit. 

4) If BTC is a currency then why do people with viable alternatives not use it as a currency?

The USA is currently the centre of cryptos after cryptos were booted out or restricted in various other jurisdictions. There are some people who use BTC as a currency but they are in a tiny minority. It's only appropriate for sending large international transfers as advocated by Bill Gates, not for buying groceries or petrol. There are some other applications for BTC including the niche in which BTC originally made its name. From my POV the only reason BTC exists in the public psyche and gained widespread recognition is due to a certain Road that was made out of Silk and operated nominally by a Dreaded Pirate named Roberts. If you look at such applications today you will see many have diversified from BTC and the largest recent market, something to do with Biden's White House Market, banned BTC and refused to conduct any transactions in this "currency". The alternatives for Joe Biden and his friends in Ukraine are Monero and ZCash, commonly known as Privacy Coins, along with other alt-coins like LTC and derivatives of BTC. Some still use BTC as a legacy feature

5) If BTC is decentralised and anonymous why is it, ya know, neither of those things?

The aforementioned enterprises don't use BTC for security concerns, nobody serious will touch BTC. It's the antithesis of private with every transaction broadcast on a public blockchain and stored indefinitely. Having used this tech for many years before it became popular, I have witnessed and been privy to numerous orchestrated pump and dumps. These have always been a defining feature of BTC and cryptos more generally. Look at price charts for evidence or the documented proof of market manipulators in China and all over the world collaborating to manipulate prices. There's Tether (never, ever, buy or use USDT) and other so-called stablecoins (that are not so stable) which are being printed by international criminals. The printed Tether is used to primarily pump and act as a "plunge protection team" similar to how the Fed, ECB, BoE and BoJ operate. There are orchestrated dumps too. In the wider crypto ecosystem there are numerous nefarious actors and organisations who have cynically exploited investors, shareholders and retail investors. Even mainstream banks and financial corps have been training staff how to issue new coins and perform "risk-shifting" aka pump and dumps, learning these tricks from their involvement with BTC and other cryptos

Buffett and Munger aren't exactly hipsters. What about the hipsters then, the early adopters of BTC, what are they up to now? Hmm, seems like the "smart money" in the tech sphere has moved away from BTC and into other coins like Ether (ETH) along with a host of alt-coins, privacy coins and AI coins.

6) Which group is correct when stating their coin/token is the "answer" and indeed, what is the question? They can't all be right in claiming they are the new messiah of cryptocurrency, who is lying, who is credible? Are ANY of them credible? 

The mainstream financial analysts conducted a thorough investigation of cryptos circa 2012. They determined they have zero intrinsic value and they would never be trading or investing in such assets. JPM have famously said they would fire any member of staff who traded cryptos with CEO Jamie Dimon calling BTC "a fraud". If anyone can recognise a fraud it's definitely JPM and Jamie Dimon, they are world-class at fraud along with their ICE friends Goldman Sachs. If we fast forward to 2023 we can see some big names like Blackrock and Fidelity (oh there's Bill Gates popping up again), have filed applications to the SEC to launch a spot BTC ETF. These applications were denied due to "inadequacies" according to the SEC. Then we have Greyscale BTC trust. The opinion on the fundamental value of cryptos hasn't changed since 2012 (it's technically impossible to give a fundamental valuation but people swing from 0 to infinity and call it "price discovery"). These entities are not seeking to invest their money into cryptos but rather take a cut from their clients who may wish to allocate part of their portfolio to BTC. 

7) In light of such statements and technical analyses, what basis is there for claiming BTC or any crypto is a sound investment, a currency, commodity or security? 

8. Texas and other US states have already brought in or are in the process of implementing digital currencies backed 1-to-1 with physical gold and silver. These currencies would be legal tender, fully transferable into cash or gold and illegal to seize, being held at a local (state) vault. Why would we on TSF want a digital currency backed by nothing when we could have one backed by physical precious metals?

These are my personal musings and irrelevant in the face of market price action and consumer demand. It is these forces that explain the dynamic discussed in point 7 above. BTC can be the most toxic trash in the universe but it's irrelevant if people keep buying, like they did with higher-powered CDOs. As a financial historian I ponder how future generations will look back on this period of time and classify BTC and cryptos. For me they will be classified as a sign of "market froth", a consequence of easy money and excess speculation due to the tragic failings of Congress, regulators, the financial system and central banks over the last 25 years

That doesn't mean BTC, or more likely alt-coins, can't or won't make you rich. They can and they might. I understand why people invest in cryptos. People are desperate and if they lose the money they invest in cryptos, well, they're still poor, but there's a chance they might get rich. That last sentence basically describes our economy. People are content that some work low-paid jobs and live on the streets because they believe there's a chance that they will be the chosen one to make the top 1% or 0.1%, a 100-1 or 1000-1 chance, but still a chance

If you look at the USA market there is a prevalence for BTC and crypto appreciation amongst the left-leaning and left-voting populace, which is, relative to the conservative end of the spectrum, less educated, more desperate, less affluent and more "diverse" (non-white LGBTQ). If we look around at the countries who have total (legal tender) or significant BTC adoption we're counting El Salvador, the CAR (Central African Republic), Nigeria, North Korea, Iran and other mostly communist failed states. Cryptos are for lefties and while we're certainly in an era that is swinging wildly to the left, there is an expiry date on this madness. Sooner or later history, science and mathematics will catch up with them

Ultimately for me, and I do own some cryptos, it's become a question of function and usefulness to the state and wider humanity. If people get rich from shifting around digital assets while producing absolutely nothing other than wasted electricity and disc space, what good is that doing humanity? It's detrimental to humanity, one might describe BTC and most cryptos as a stain on our species. The technology for cryptos is not here yet just like with EVs. It might sound good on paper and PR gurus can certainly make it look amazing to the masses but when you take a deep dive and follow it from bean-to-cup, BTC and most cryptos are hot air. There will be a future crypto based on quantum tech and enhanced by AI that is a fully-fledged unbreakable privacy coin. That coin might be worth investing in. Until then it's going to be peaks and troughs, boom and bust, because few truly understand what they are investing in and those that do are outright criminals or have perverse incentives

Again I stress I'm irrelevant and fundamentals are irrelevant in the face of an irrational market and retail investors with suboptimal decision-making processes. If you love cryptos, love the left, go nuts. It's a game of manipulation and technical charts, an abstract game of Call Of Duty. Some will make a killing and get out but be sure there will be bigger and better games, updates, upgrades and revolutionary tech, that will make BTC and current cryptos look obsolete, just like the original COD. 

 

I put a bet of 100 unicorn tokens that you work in traditional finance 😉

[Bigmarc]

1 hour ago, Roy said:

I just discovered that I can move bitcoin from an exchange to the ledger without having the ledger in hand.

Is this a new function or I've been ignorant all this time?

Didn't know that either, always plug mine in. 

Did you know that you can now pay a subscription fee and they will look after your seed phrase for you? They extract it from your device. 

 

[Roy]

They're taking away everything that I liked about it!

Are people that irresponsible that they can't protect a seed phrase? Perhaps 'crypto' is not for them!

[HonestMoneyGoldSilver]

2 minutes ago, Bigmarc said:

I put a bet of 100 unicorn tokens that you work in traditional finance 😉

You'd be right 😎

If you analyse the minutiae you'll also see I grew up on the wrong side of the digital tracks

[DTL1982]

1 hour ago, HonestMoneyGoldSilver said:

You'd be right 😎

If you analyse the minutiae you'll also see I grew up on the wrong side of the digital tracks

I don’t work in finance nor am I anywhere near the age of Buffett or Munger. Isn’t Munger pushing 100?! Lol. That said, at 40 years old I still don’t “get” the whole crypto thing. Maybe it’s because I don’t understand exactly what it is. Is it just some  made up thing that exists in the ether that someone somewhere assigned an arbitrary value to?  Some numbers on a screen that could be wiped away with the click of a button?  I don’t see how people trust “owning” hundreds of thousands of dollars worth of it. I agree that it seems like gambling and if I wanted to gamble I’d just go to a casino and at least have a fun night out.