Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

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

© 2005-2019 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