Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
Stock Market SPX Probable Pop-n-drop - 22nd Feb 18
Stocks Fail to Hold Gains, But Still No Correction - 22nd Feb 18
Why We Should Buy Essay - 22nd Feb 18
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Bitcoin - High Tech Fiat Alchemy

Currencies / Bitcoin Dec 20, 2013 - 12:07 PM GMT

By: Dr_Jeff_Lewis

Currencies

The curious case of Bitcoin and the associated rise of electronic currency has rekindled money and wealth discussions. It has also given rise to the re-birth to a libertarian cyberpunk ideology. In some ways, the response is a natural reflection of the devaluing of paper promises. In others ways, electronic cryto-currency is perfectly positioned to launch into physical metals. In fact, early correlation has been established, despite the overall tight control of the precious metals markets.


The most enthusiastic e-currency proponents have an insatiable appetite and need for understanding and defending their positions. What is fascinating is the much sought after anonymity and speed of movement. More difficult to establish is credible backing.

However, the intensity and enthusiastic defense are manna from heaven for the long-term physical precious metals investor. Such an investor is apathetic to the cause that any significant mass of the populace will gradually wake up to the ongoing (and historically unprecedented and ultimately hyperinflationary) monetary experiment being run today.

Bitcoin investors, outside of the pure speculator, are not necessarily buying from the safety or fear side of the trade. Obviously, the same could be said for the speculative side to precious metals paper trading, though at this point the betting is heavily to the short side of the boat.

The machine will start and feed on itself, becoming more and more fragile. And then velocity hits light speed. Collapse.

The New vs. The Strong

Electronic and currencies have a market backing. And while this may suffice in providing confidence, the speculative patterns that have developed along with the rise of derivatives in the crypto space threaten the worthiness of that market backing.

In much the same way, precious metals trading is dominated by manipulative paper trading wagging the physical dog. Electronic currencies could fall into the same pattern. It is worth noting that (without much of their own defense) the precious mining sector has been nearly destroyed by these illegal and unregulated price management practices.

JP Morgan’s recent patent application for its own digital currency might be construed as a warning sign rather than a vote of confidence. It is easier to imagine this move as stakeholder - just in case the U.S. Treasury’s enforcement arm doesn’t decide to come down on businesses that accept virtual currencies (which if course it already has).

A currency with a “market”, rather than commodity, backing is much more exposed to an array of external influences that are largely political in nature. This makes it much easier to manage perceptions, using a monetary propaganda put in place long ago to keep the oldest forms of money out of the system.

The Bitcoin movement is reminiscent of the tendency to limit our projection of new technologies. In his recent book, "Antifragile", author Nassim Taleb characterizes robustness of the inanimate objects. Taleb notes that if some thing or technology has already existed for a significant amount of time, the likelihood of its survival into the future rises considerably. 

Precious metals are obviously an old world technology that, despite machinations to the contrary, have continued to exist. They wield influence and are desired. The current period of overt price manipulation, horrible sentiment, propaganda and misinformation is spread by the priesthood of monetary policy. This pales in comparison to the demand for physical metal, which has never been stronger.

The Medium vs. The Storehouse

Money loves speed and momentum, and digital currencies offer this in a way that dovetails with the magic of user-friendly electronic devices designed for toddler interaction.

Speed and ease of use, however, is not necessarily conducive to a store of wealth, savings vehicle, or the formation of capital - essential ingredients for organic economic growth.

The use and widespread adoption of digital currencies would easily dovetail with an investment class still anchored by the desperate search for yield and the often fruitless endeavor to have money work for you.

Indeed, the digital currencies could be an essential mechanism for transferring or coaxing the trillions of dollars in retirement accounts and pensions soon to be looking for yield.

Much like a glass of water in the desert, fair value and civilized commerce ultimately revert to the natural predictability of commodity - not debt, military or market-backed mediums of exchange.

For more articles like this, and/or for a breath of fresh silver market reality amidst the stench of denial and technically meaningless short term price obsessed madness, check out http://www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2013 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules