I assume you've pretty heavily shorted GLD while buying like amounts of physical?
Almost - no shorting. Even if solid paper profits are realized with a spread trade like that, there's a strong possibility that those funds may become confiscated, debased, or frozen. All fiat-denominated assets are considered losses until converted into Au/Ag/BTC or productive items (real estate in growing regions, construction machinery, etc). |
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Fun times! If the paper price in gold is pushed below $1550 on a closing basis, we'll have a separation from physical.
What are you basing this on? Isn't a separation from physical a continuous thing? Like premiums gradually increasing? The link between paper & physical has been tenuous for a while, but with non-stop demand the connection is only hanging on by a thread. Approach to separation is a gradually increasing process; it's the final, complete dissociation that's abrupt. Think of holding a magnifying glass over a leaf on a sunny day - the leaf slowly heats up until ignition finally occurs. |
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Fun times! If the paper price in gold is pushed below $1550 on a closing basis, we'll have a separation from physical.
Bitcoin still seems to be acting like the canary. Or maybe more like a peregrine falcon.
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I haven't seen your opinion on something that seems like an obvious flaw in using XRP as a store of value: lowering the account reserve, which must happen from time to time due to growth and lost/used up XRP, will unlock large amounts of XRP and lower the price. This would happen suddenly and not according to any fixed schedule, unlike Bitcoin block rewards. Why would I want to store value in XRP when I can easily convert it to BTC and avoid this?
I think that's exactly the point.. XRP is not meant to be a store of value.. its the oil that keeps the Ripple system going. Maybe it'll go up or maybe it'll stay extremely low for ever.. its really at the whim of OpenCoin and the devs who hold the majority.. but you don't have to worry because its not a store of value like Bitcoin. I don't think it will even be able to function as a store of value. As stated below: Bitcoin's supply is infinitely expandable; Ripple's supply is infinitely renewable. A bad analogy would compare Bitcoin to voltage and Ripple to current. so if the XRP's are not expected to increase in value, why is it that this is exactly what expectations i'm hearing from ppl who are rushing to get their hands on them? also giving them out for free encourages one to just hoard them in case they do skyrocket in value. after all, they didn't cost them anything. some Bitcoin miners otoh have to sell mined Bitcoins to pay for the costs of mining or the work they've performed. this encourages dissemination of the units.
Expectations don't necessarily translate into reality, and I don't expect them to here. Adoption will be the major driving factor here, as it is with Bitcoin. The difference is that without market competition for limited supply, the value is unlikely to rise much until the available units have been distributed and a steady turnover volume has been achieved. It's like try to keep a 100m rope taught with only a 1m arm span. how do the validators get paid? what incentives do they have to set up servers and pay the costs? don't they, as well as OpenCoin, represent focal points of failure? the entire system depends on them.
Validators don't get paid. Each time a transaction occurs, the XRP used to facilitate the respective transfer is debited from the 100,000,000,000 unit ledger, making all remaining XRP worth slightly more than they were in relation to the entire supply. For example, a transaction occurs and now there are 99,999,999,999 units remaining. Let's say that there are 80,000,000,000 XRP left after two years. The residual could conceivably be worth ~20% more than if there were 100,000,000,000 of them, because they're becoming more scarce. However, it's probable that there will be an extended delay in value increase due to the sheer volume of supply. For there to be real constraints on the units available, there would have to be a lot of transactions occurring. That means a lot of users. Value will only rise when that supply limit becomes a practical constraint. However, like bitcoins, ripples are arbitrarily divisible. Therefore, the supply constraints will be balanced out to a large degree by progressively lower XRP-valued transfer costs. In effect, the BTC cost to conduct a Ripple transaction might never change! It would only change in terms of XRP. In other words, if your wealth is within the Ripple system, it will only appreciate if it remains within that system. Otherwise, it will be essentially the same value as when it entered, at least in terms of XRP valuation. Bitcoin and Ripple divisibility:  Bitcoin's supply is infinitely expandable; Ripple's supply is infinitely renewable. If Ripple becomes such a dominant network that it covers the vast majority of known financial structures, it is possible that XRP holders could be well rewarded in relation to other asset classes. That's a ways off, though. For now, as the situation exists, Bitcoin is the cryptocurrency; it will act as the means of exchange, metric of value, and store of value. Ripple is primarily suited as a means of exchange; if it remains small, it could become a MoV and SoV; if it becomes large, it would primarily be a MoE and MoV, but not a strong SoV. |
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Let's make it even simpler. How many of you have ever felt betrayed by a brother, sister, or even parent?
Ripple doesn't make anyone more or less trustworthy. One of its primary functions is to level the playing field currently dominated by banks. What Ripple does in terms of evaluating trust is offer a transparent record that is resistant to manipulation. It creates an environment where there is a strong incentive to be responsible. Avoid knee-jerk reactions that attack, ask questions to learn  |
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"The only way gold goes higher is if we get a precipitous drop in the USD".
Note: it ain't happening.
It already is. Relative value among currencies masks this. The US does not have sufficient internal demand to support its own economy. If the dollar rises, it becomes expensive to foreign investment. Remember buy low, sell high? The US is currently the greatest tax shelter in the world... if you're not a US citizen. Let's put it another way - if the world is going to flock to Bitcoin, then fiat currencies will bear the brunt of any damage, especially the USD. The reality is that gold is being sought far more than cryptocurrencies (for now). Guess who's on the other side of the massive short contracts below? That's right, your favorite neighborhood bullion bank!  |
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so if the XRP's are not expected to increase in value, why is it that this is exactly what expectations i'm hearing from ppl who are rushing to get their hands on them? also giving them out for free encourages one to just hoard them in case they do skyrocket in value. after all, they didn't cost them anything. some Bitcoin miners otoh have to sell mined Bitcoins to pay for the costs of mining or the work they've performed. this encourages dissemination of the units.
Expectations don't necessarily translate into reality, and I don't expect them to here. Adoption will be the major driving factor here, as it is with Bitcoin. The difference is that without market competition for limited supply, the value is unlikely to rise much until the available units have been distributed and a steady turnover volume has been achieved. It's like try to keep a 100m rope taught with only a 1m arm span. it's a ponzi.
It's only a Ponzi if the source code isn't released. how do the validators get paid? what incentives do they have to set up servers and pay the costs? don't they, as well as OpenCoin, represent focal points of failure? the entire system depends on them.
Validators don't get paid. Each time a transaction occurs, the XRP used to facilitate the respective transfer is debited from the 100,000,000,000 unit ledger, making all remaining XRP worth slightly more than they were in relation to the entire supply. For example, a transaction occurs and now there are 99,999,999,999 units remaining. Let's say that there are 80,000,000,000 XRP left after two years. The residual could conceivably be worth ~20% more than if there were 100,000,000,000 of them, because they're becoming more scarce. However, it's probable that there will be an extended delay in value increase due to the sheer volume of supply. For there to be real constraints on the units available, there would have to be a lot of transactions occurring. That means a lot of users. Value will only rise when that supply limit becomes a practical constraint. However, like bitcoins, ripples are arbitrarily divisible. Therefore, the supply constraints will be balanced out to a large degree by progressively lower XRP-valued transfer costs. In effect, the BTC cost to conduct a Ripple transaction might never change! It would only change in terms of XRP. In other words, if your wealth is within the Ripple system, it will only appreciate if it remains within that system. Otherwise, it will be essentially the same value as when it entered, at least in terms of XRP valuation. Bitcoin and Ripple divisibility: Bitcoin's supply is infinitely expandable; Ripple's supply is infinitely renewable. If Ripple becomes such a dominant network that it covers the vast majority of known financial structures, it is possible that XRP holders could be well rewarded in relation to other asset classes. That's a ways off, though. For now, as the situation exists, Bitcoin is the cryptocurrency; it will act as the means of exchange, metric of value, and store of value. Ripple is primarily suited as a means of exchange; if it remains small, it could become a MoV and SoV; if it becomes large, it would primarily be a MoE and MoV, but not a strong SoV. contrast this with Bitcoin. the source code was available from day 1. one could conceptually connect the dots behind how the system works immediately if you took the time. i honestly cannot say the same thing for Ripple.
Yes, and how long was Bitcoin in development? This iteration of Ripple has been in the works only for a few months, with good results so far. Until the source is released, skepticism is normal, but don't fall into the trap many goldbugs did when first learning of Bitcoin. |
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look how much push back ppl have around here about "early adopter" advantage even though that's a myth about Bitcoin.
There is an advantage to being an early Bitcoin adopter, or you and I wouldn't be here. It is not a myth, only a perspective that believes such a circumstance to be "unfair". That goes for participating in anything successful. Ask yourself this: do you think it unfair that Satoshi may hold 1mm+ bitcoins? Does knowing who holds a lot of wealth make that knowledge less palatable? for Ripple, its not a myth. its a fact. what OpenCoin is trying to do is create a new currency w/o anybody doing any work and based on trust. they're handing them out for free which is what they'll be worth in the end; nothing.
So no work has been done to construct an incentive structure built around an open protocol? Nor has any work been done to create a uniform, secure web interface? nobody talks about the fees that they will be charging everyone to ensure "security". what they mean is their security based on their own principles. if they have to issue a bunch more XRP's to keep it all going, i'm sure they won't hesitate. the whole system actually reminds me of the derivatives market. it's based on trust btwn ppl in this interconnecting web of actors. everything's fine when it's going well but if a crisis hits, trust will evaporate instantly.
The issues related to Bitcoin blockchain dusting would plague Ripple without some form of expense involved with transfers; it is not security based on arbitrary principles. OpenCoin can only issue more XRP by changing the protocol. Once a critical mass of nodes exist, it will be virtually impossible to simply issue more. The only difference between Bitcoin and Ripple in that sense is that the network agrees on whom the recipient of funds are through consensus. After a majority of funds have been distributed, there won't be any need for that mechanism; Bitcoin ingeniously makes double use of that feature, allowing market forces to shift the incentive from block reward to transaction fees. Ripple is a good platform for derivatives. This doesn't mean it's pointless, though. What it does is create a common protocol for everyone, not just major clearing houses. If Bitcoin is like having a bank in your mobile, Ripple is like having a COMEX or LCH in your mobile. There are certain distinct, subtle differences between Bitcoin and Ripple. While XRP could conceivably make Bitcoin largely redundant, the active nature of Bitcoin's transaction verification process offers functionality that might not be possible with Ripple. One instance where Bitcoin and Ripple ideally interact is with Bitcoin as a reserve - Ripple acts as the basis of a credit system; if that results in restricted XRP supply accessibility, Bitcoin can be used as a settlement mechanism. Because both are closed systems interacting with each other, there is a limit to the extent of structural dislocation. Of course, we still need to see the Ripple server source, but as long as the protocol can be adhered to in practice rather than theory... it'll be an incredible development. As for why so much is being held in reserve - remember 2011? Bitcoin in the hands of pure market forces was hit by sheer buying with no selling. It was no surprise that a spike and crash would occur. How can this be prevented? Continuous selling pressure to temper volatility. There would be an increasing amount of supply necessary to maintain steady growth, and with sufficient adoption, OpenCoin would eventually be unable to manage that kind of effort - very similar to how the central bank and BIS management of gold has manifested. Keep in mind that in order for OpenCoin to have an asset actually worth holding, it must be used and valuable on a somewhat wide scale. Sure, that could be accomplished through fraud, but since the protocol is supported through distributed nodes, the network will take on a life of its own and no longer even be possible as a fraudulent endeavour. |
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can you imagine what type of principles governing their chain that the gov't would come up with? probably something like a Ripple where the originators get to keep 20% of the original coin, lol. what a farce. that's why i'm not a fan of Ripple and would never support it. chains have to support the majority of participants, not just the interests of a few.
The eventuality for Ripple should be no different from what exists with Bitcoin now - large balances held by the originators (or assumed to be early adopters in Bitcoin). It'll be functionally decentralized with an equivalent level of adoption as Bitcoin has. Of course, the server source remains to be seen, but the concept is strong. |
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rKZpvYnERpz3d9eamfRoF2uYD5fmHgpKWH
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There's lots of cheap shares on mpex, any ideas why?
Need for liquid assets, other investment opportunities, loss of interest, etc... or perhaps just foolish impatience. SD has the potential to be a Coca-Cola, generating dividends for a long time to come. Not to mention capital appreciation. |
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Are you aware of Ripple.com?
-MarkM-
I have heard of it. I like my idea better. Ripple is still under the control of a few, right? Ripple is essentially a protocol, similar to Bitcoin. With community growth, there will be distribution of control among participating nodes as there is now in Bitcoin. |
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iz it tim yet?
Tim to BUY! If it weren't for Bitcoin and increasing counter-party risk in traditional equities, I'd be buying again. |
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At some point the physical market will disconnect from the paper/digital gold markets.
There will be an independent quote of gold coin market averages that differs from the "official" gold spot price (which may have 7 years delivery delays and other hooks attached, etc).
Well said and I agree. Bullion dealers will simply adjust their premiums. This happens because there will be shortages and what do you do when your supply is going too fast? Right, you adjust your price. Look at this from a different angle: assume legislative controls have been set in place, locking prices of all goods, and declaring no business may charge greater than a 5% premium on any good. If the premium had previously been 10% on gold, then the price of gold will be the same as it was before (price controls), and the 5% premium would ensure that any dealers unable to stay in business at that level would run out of stock or close. In addition, those businesses remaining would be unable to acquire supply if any competition outside of the country were to arise, as having a frozen premium rate means room for negotiating on cost is non-existent. Put simply: we have a choice of rising prices or increasing shortages. Price stability makes government look good; shortages make businesses look bad. Politicians can blame businessmen and assume greater control over industry. |
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over the last two years I have grown to loathe gold and silver in every non-shiny, non-tangible shape and form.
That's one of the objectives pursued through authority "open" market operations, since almost nobody in the West gets the difference between non-shiny and tangible. over the years, the tsunami should build as the shift begins.
Amen to that. |
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look. we're at $1600/oz. it could get alot worse.
and just how much delight would Ben and the Wall St banks get from a forced selloff in gold?
Again, where is the supply of real metal coming from? We're still looking at $1600 in paper prices, and we all know that paper can go to zero. You can't tell me a picture of food is worth the food itself. Gold market report: spike in banks' net short silver position shows a decline in gold shorts, and silver getting unruly. The lid is being held on top of the pressure cooker way longer than is safe. Either way, Bitcoin is better due to lack of counter-party risk. The $30 mark should easily fall within the next three months - then it's on to $100. I can't wait until a BTC is worth more than XAG |
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even if you're right about sentiment it doesn't mean it's going to get any better. in fact, it's likely to get much worse.
About the only way it could get worse is if central banks, Chinese, Indians, and Russians were to dump all the physical gold they've accumulated. The exhaustion spike is due, and that's just the paper game unfolding - the tail wagging the dog for just a little bit longer. Where is the supply of real metal coming from? |
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it's the quintessential definition of catching falling knives.
If Coca-Cola were down this low, you'd probably be calling it a screaming buy because sentiment is at an all-time low and the valuations are absurdly below reality. This is exactly the time to be accumulating better-than-dirt-cheap shares. no actually, i wouldn't. now's not the time. gold sentiment to me continues to be high. my listening of all the podcasts hasn't detected any change at all amongst the gold bugs. Sure, the hardcore ones. Everyone else has gotten bored, scared, or distracted by new highs elsewhere. Edit: sleight of hand - it isn't just for David Copperfield... |
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