Thanks for sharing your views and detailing Armstrong's thoughts on this. I do not think the long term play I outlined differs from Armstrong's in terms of 'CONFIDENCE'. The flow from paper to physical and back again is all about confidence (confidence in the 'system').

The flow from European/Asian (Japan?) bonds into US stocks until 2017 is something I can imagine. This is typically described as the US having the cleanest 'dirty shirt'. However, this is a rush from one type of paper somewhere in the world to another type of paper in a different part of the world (the loose cannons of capital). It all takes place within the paper world.

What I am interested in is under which circumstances Armstrong sees Gold reaching $5,000 and what the stock market will be like when that happens. After all, this is a crucial premise of the paper vs physical theory. Whether Gold peaks at $2,000 or $20,000 is not interesting. It is only interesting to know at what level stocks are at that moment (will it reach the long term bottom between 1:1 and 2:1?). With Gold at the suggested peak of $5,000, the Dow should then be between 5,000-10,000, meaning a serious crash (no longer a correction) from current levels. Perhaps this is something Armstrong may see happening beyond 2017 in the bottoming process of 2018-2023. Is this the time period in which he sees also US bonds break down (resulting in the anticipated rush from paper - all paper - into physical)?

If (US) stocks were to explode higher into 2017 as a result of the public wave going into the private wave (in paper), levels in 2017 will be so high that a crash to Dow 5,000 (to reach Gold 1:1 parity) would be the biggest crash in stocks since 1929-1932. Somehow, I doubt this will happen with CBs on watch, ready to throw the kitchen sink at it if deemed necessary (and they will). In such environment, I do not see Gold peaking at $5,000 but at least a multiple of that. Trouble is, we do not know exactly sure what CBs are going to do (keep on printing or at some point just let it be).

Anyway, on the last theme (predicting CB behaviour), I think Gold provides protection in both scenarios. In case of excessive printing, Gold will protect in the long run and if CBs let the markets collapse, Gold will be a good hedge against banks and other financial institutions failing. In that respect, I find the idea of $250 trillion seeking a safe haven somewhat misleading. If the SHTF, much of that $250 trillion will prove to have been illusory: too much claims on wealth in the system.

By not focussing on stocks, at worst I can be a fool and at best, well protected.

Our computer is also projecting the same timing targets of June/July and then September.

QUESTION: At Stuttgart you said gold coins would be one asset people could use against the banks and that there is some seasonal high. Could you explain that a bit more in detail.

Thank you. You deserved the standing ovation.

ANSWER: Yes, for the individual you can buy gold coins that are familiar to people rather than bars. That is for burying gold in the backyard.

As for the seasonality, June has often been the turning point in gold be it highs or lows. This time we should see a pop and then any decline will come in the fall. A weekly closing above 1239 should confirm the pop to the upside. The key resistance technically stands at 1309 area. Keep in mind that a rally in gold at this time would reflect perhaps a correction is shares and further send money into the short-end of the government debt curve.

At this time, we see that there is the traditional risk of a correction in the share market that could set off the final stage of the bond bubble. Keep in mind this is not going to materialize in the long-end of bonds/bunds. What we are seeing is capital is not rushing into the 10 year or greater paper, it is rushing into the very short end. Rates there are negative as there is not enough short-term paper around to meet the demands to park cash.

We still see May – July – September as key targets for turning points. Whatever we end up with in September should produce the opposite trend immediately thereafter. As we now head into the last week of May/first week of June, we should start to see the choppy trends begin.

It is more likely than not that we should see a retest of support that will scare people and cause them to believe the stock market will crash. The high in the Dow still remains March 2nd at 18,335 level. Support begins at the 17,153 level and a daily closing beneath that level will signal the correction is then possible. The key support lies back at 16,540 level. A drop back to that area in the weeks and months ahead should convince everyone to buy more government paper and complete the final bubble top in government debt.

This is why Brussels is now calling for a European Army. That will be their power and sending Greek troops into Germany will prevent the troops from siding with the people. This is also why there is a mad rush to create robots for war. They have no emotions and cannot be turned. Government understands their weak-link for throughout history it has always been the loyalty of the troops.

Look I am suffering from Multiple Sclerosis. I tried all sorts of remedies since 2012. The only remedy which put my M.S. into remission in 2012 and 2013 was high dose vitamin D3. In both instances, I stopped the treatment due to fear of permanent renal damage. As of March 2015, I became desperate because my condition was progressively deteriorating and worse yet I couldn't get any serious work done and my life and opportunities were slipping away from me.

Since the end of March, I have been taking daily doses of vitamin D3 that average greater than 30,000 IU per day. I have also been drinking about 2 - 3L of water per day to flush out my kidneys (and urinating like a sieve), "B Natural" co-enzymated B complex occasionally, Kelp tablets daily for iodine, and dark leafy greens equivalent to spinach daily (as well as any other foods I like).

This treatment has given me the energy to program up to 18 hours per day and release a new social network. It appears to have lowered my EDSS symptoms index from roughly 5 to roughly 3.

The Brazilian neurologist (graduated and interned in the USA) claims to have cured 95% of the 2500+ autoimmunity (mostly Multiple Sclerosis) patients he has treated over the past 15 years or so, by employing this high dose vitamin D3 treatment. Note he requires the patient to see a doctor who has been trained on this protocol. I unfortunately can't afford the expense and time lost to see one of his apprentices. So I am winging it and not thrilled about that. Hopefully I can soon have enough money and free time to get professional oversight.

All production is consumed by humans. The robots don't eat. If we make the robots produce stuff with a 10 times higher efficiency, it must mean that either humans are enjoying 10 times more stuff, or doing 9/10ths less work (or combination). The equation does not have other roots.

Many are concerned about the distribution problem. A short answer is that when making 10 times more stuff with the same resources, it is easy to make everyone better off: even if some enjoy ultimate opulence, the rest also do better than the kings of early ages. Without working necessarily at all.

The current system seems to be trying to hinder the progression to this nirvanatic condition, by imposing an incalculable number of rules and regulations to thwart freedom in relations and businesses, and seems to be ready to unleash death and destruction to hinder it further. This is somewhat of a shame, but I don't think they will be any more able to resist advance than all the previous systems.

Wow. Your response triggers, definitely need attending to, my over-defensive friend.
Maybe take the dog for an extra walk, or something?

Well, yeah.

And no one understands you. Right?

Armstrong sees a downturn in bond markets. Tipping point to watch is 2015.75, marked as possible reversal date. From the above, I understand that he takes a scenario into account of a correction in stocks the last few months before this reversal date, leading to the last push into government bonds. After that, in his scenario bonds will tank but - counterintuitive - I understand he thinks stocks will be a good place to park money. He is not fond of gold and only sees it as a long term investement (if somebody wants to take that trade) or suitable for panics. This is where I cannot fit the long term theory I started this post with (see background here and here). How can stocks do well if the bond market is in upheavel? It does not fit the picture of paper burning and a rush to physical. In our current interconnected financial markets, a crash in bond markets will render many parties insolvent and will have devastating effects on markets overall. I cannot see stocks surviving this ordeal without heavy damage, depending as it is on finance and leverage at current levels (not even speaking about business profits).

I do see a good moment going full into stocks after this bond market crash has played out, provided that we will still have 'free markets' (quotes intended, you know why...). I believe Armstrong describes this as the start of the private wave instead of the public wave that is moving towards or in the end phase. From my perspective, it should simply be a bottoming of long term indicators telling me that fear and the rush to physical is at its extreme, demanding a move to paper against all odds (at that time). I do known that negative interest rates and the obvious move to non-cash societies are not helping Joe Sixpac's level of trust.

Whether Bitcoin (or other coins like Monero) play any role in this scenario is something I cannot get a feeling for. It seems too much of a gimmick to benefit from (or be negatively affected by) the gyrations of the paper/physical markets, having a mind of its own. I do see some vague similarities in Gold seeming to bottom just like Bitcoin. I do hope that crypto chooses the side of physical, as its turn is around the corner after decades of paper deluge.

Bring it on!  

When Gandhi was studying law at the University College of London, there was a professor, whose last name was Peters, who felt animosity for Gandhi, and because Gandhi never lowered his head towards him, their “arguments” were very common.

One day, Mr. Peters was having lunch at the dining room of the University and Gandhi came along with his tray and sat next to the professor. The professor, in his arrogance, said, “Mr Gandhi: you do not understand… a pig and a bird do not sit together to eat “, to which Gandhi replies, “You do not worry professor, I’ll fly away “, and he went and sat at another table.

Mr. Peters, green of rage, decides to take revenge on the next test, but Gandhi responds brilliantly to all questions. Then, Mr. Peters asked him the following question, “Mr Gandhi, if you are walking down the street and find a package, and within it there is a bag of wisdom and another bag with a lot of money; which one will you take?” Without hesitating, Gandhi responded, “the one with the money, of course”.

Mr. Peters, smiling, said, “I, in your place, would have taken the wisdom,  don’t you think?”

“Each one take what one doesn’t have”, responded Gandhi indifferently.

Mr. Peters, already hysteric, writes on the exam sheet the word “idiot” and gives it to Gandhi. Gandhi takes the exam sheet and sits down. A few minutes later, Gandhi goes to the professor and says, “Mr. Peters, you signed the sheet, but you did not give me the grade.”

Someone has proposed a 'P2P relay'?  LOL!  I argue that at some level all levels this is label is an absurdity.

Automation necessitates socialism.

The idea that once a job becomes automated, new jobs will be created that the unemploymed people can move to which is equal in or higher in wages has shown to not be an accurate prediction. Capitalists work within their idealistic system which does not represent the constraints of reality.

Surplus labor is continuing to increase, wages overall will contine to decrease until there is social revolution.

And remove a nasty burst during block propagation.

This may be a very simple reading of it, but wouldn't a one world currency run into the same problems the Euro has, just on a larger scale? (ie, smaller less competitive nations are disadvantaged and have very little wiggle room in case of downturn etc)

That's the magic of IBLT...

NYT has an article claiming Nick is Satoshi.

http://www.nytimes.com/2015/05/17/business/decoding-the-enigma-of-satoshi-nakamoto-and-the-birth-of-bitcoin.html?_r=0

While I agree the evidence shows him to be in the likely list, there is a pool of other people who worked on similar projects and participated in similar forums, any one of which could be Satoshi as well.

The most optimal distribution in my understanding (see my hundreds of posts on the issue for the development process of the understanding) occurs naturally if the market is as well as possible unfettered by friction. The greatest visible source of friction are taxes and regulations, but they can't hinder the achievement of the natural distribution in the long run, just make it slower to achieve.

In practice the more important sources of "friction" (I am using the word figuratively to couple it with the previous) are 1) ignorance and 2) length of the thought process before investing. These two issues do not alter the optimal state, but are important for the growth of the tree.

As we know, the tree looks quite much a tree no matter in which stage of growth it is. The same can be observed in the distribution of cryptocurrencies regardless of their phase in lifecycle. They always have the roots, the stump, the trunk, branches and leaves. The premine or other dysfunctional start can make the tree very maimed in the beginning, but if it lives on, it will attain the functionality (the things are consequences one of another; if no functional distribution is achieved, it dies). The taxes and regulations make this process slower. But what are needed for the tree to grow, are the two numbered things.

1) You can only invest in what you know exists.

2) The typical length from awareness to committing money (in case all the factors are favorable) averages 24 months.

The optimal distribution is a circular definition and refers to the dynamic equilibrium where each market participant holds exactly the number of coins that satisfies his utility function. This tends to form a distribution where the largest owners own coins approximately in the power law ratio (if largest stash is 1, the next largest is approx. 1/2, third 1/3, 1000th 1/1000 etc. until about 3% of the total owners own half of it. The 97% own the other half and their proportions are governed by other functions, based on demographics and conditions. Whether debt is possible, also affects the distribution.

It is important not only to reach the distribution, but reach it in a way that the ones on top of the ability rank are also the ones on top of the pyramid. The combined "dev gets premine" & "early adopters get the coins cheaper" & "coins can be bought with existing money" approach is very popular in coins, and leads to this result better than the alternative approaches tested so far.

Its main problems come in the later stage with the hoped mass adoption. No coin yet has a viable scheme to expand the money supply fairly in connection with the extent of mass adoption. I am no tech guy and don't know how difficult it is to code in a P2P software. I am on the opinion that everyone so far has just tried to copy Bitcoin's early success with a declining yearly inflation, perceived to lead to exponentially growing coin value which becomes the mechanism to drive the adoption. I have written brilliant pieces in favor of this approach, but it does not mean it is necessarily copiable (if it was, by reductio ad absurdum, we would have a million blockchains and everyone would become rich - what we observe instead, is that even Bitcoin is struggling).

What has happened to my thinking over the time I've dedicated to the matter, I have become less purist and less dogmatic. When designing the economic engine for Crypto Kingdom, I conceived CKG, which is a 100% premined, 100% non-crypto. The distribution has mainly happened via direct sales against monetary value, and to a lesser degree via grants and donations. It has always had a 2-way market, which has severely limited the effectiveness (and thus the scope) of donations. If I donated too much to a person whose utility function would consequently go out-of-balance, he would feel inconvenient and balance it by selling to the market. The existence of a market is therefore a more important tenet than the exact mechanism of the early distribution.

From now on, the CKG money supply will expand in proportion to the time spent on playing the game. This will be a very equitable way of getting the new CKG to the hands of the people in small increments, and will in my hopes be the missing link for the wider distribution, which in the case of cryptocoins has typically been tried with faucets but with little success. The reason why I hope this will be a much better method is that the playing is a prerequisite for getting the value, so there is the equivalent amount of commitment to the value received. Theoretically, this trumps industrial mining, which is a commercial activity with little connection between profitability and commitment.

The key points in achieving success for a cryptocoin (or in CKG's case, even a non-cryptocoin) are thus:

1) Getting people to know of it.

2) Having the value proposition that makes them interested in getting in, which also typically takes 24 months if they need to divert their existing money to buy it. The coin needs to offer something interesting, or unique, or be fair. The more of these are present, the better.

3) Having the markets that make it possible for the coins to settle in hands who value them the most, and provide the means to cash out to other assets which are needed for cash flow needs.


What I don't regard to be key points, despite popular thinking:

1) Wallet software or ease of making transactions

2) Ways to spend the coin directly on goods and services

3) Trying to reach people who are not ready for it, forcing value down on their throat.


As outlined in the previous post, my stance is that the coin needs to be valuable and worthy of being a portfolio asset. To achieve this, it needs to have only minimum transactional utility. The stage of mass adoption and mass utility (50,000,000+ users worldwide) will be driven by direct usability, but we will never get there unless the coin first has intrinsic value and the buyers of last resort.

I'd define it as Bitcoin is the blockchain data structure and the set of rules that govern what constitutes a valid block. If you want to change the rules that govern what is a valid block (transactions and block structure) then that is a fork. Anything else is not a fork. The reasoning is simple, these are the rules that govern if a specific chain is valid and thus govern consensus.

Nodes however can operate however they want, as long as they agree on the rules that define a valid block. If some nodes decide on a different set of rules, then they will be forced onto their own chain and lose consensus with the main chain.

Take Gavin's IBLT proposal as an example. This is a major change to bitcoind that changes how nodes communicate blocks to each other. This is not a fork simply because it does not change anything at all about what defines a valid or invalid block. Just the communication of blocks.

we know that full nodes have unconf tx sets that correspond by somewhere over 90%; which is why IBLT could work to communicate across the network that a new block has been solved.  the ppl who argue against raising the 1MB cap say that an attacker could create these bloated blocks to torment small miners.  the question is, where would they get the extra tx's to construct this bloat?

On the UTXO topic, the distribution of balances here

http://bitcoinrichlist.com/charts/bitcoin-distribution-by-address?atblock=350000

shows that 96.97% of addresses contain less than 0.001 BTC. Now these are address totals, any analysis of UTXO outputs would show that more than 96.97% of UTXO outputs contain less than 0.001BTC.

I think this shows that the UTXO is already vastly populated by dust nonsense that simply sits around. If UTXO size becomes an issue any intelligent implementation could easily swap these out to a lower tier of storage. Most of this dust will never be spent simply because you'd have to pay more in fees than the output is worth, spending them is literally burning money.

The boxing video inputs pushed the topic of Bitcoin out of my entertainment zone.

TPTB (no pun intended) would be a little more effective if he understood the value of attention.