Both Bitcoin and gold (& silver) are grinding upward. The dollar is all over the place, and the Euro is getting ever-closer to the breaching the $1.25 level. For the past few days, commodity currencies have not been dragged along with the Euro as tightly as they were in recent weeks.

Once Euro sub-$1.25 happens, I'm expecting a final panic sell-off in equities and forex into the end of May or early June; markets have been too controlled so far. Gold may be dragged a bit lower initially, but I don't think by much; I'm still looking for the $2,100 to $3,000 range to be hit in the next cycle.

Judge.me is a refreshingly progressive business, not necessarily one that's counter-intuitive. The arbitration guild is intriguing and potentially doable with Bitcoin or double-blind tokens, although some of the "hows" might be a mite difficult to overcome, particularly arbitrator compensation (micro-payment stipends?) and specialization (law student participation?). It's kind of like a poor-man's version of Judge.me.


I thought I sensed a lot of incongruity with contemporary socialism

So you knew Bitcoinica's active wallet was going to be stolen? Quite a claim.

Amusing new poll. Irrespective of the potential Ponzi issue, who runs Pirate's operation: others who postulate fraud, or Pirate himself?

I've already suggested that overall Bitcoin economy growth could support such high rates, and that even if it is a Ponzi, it most likely is to the detriment of the US dollar instead of Bitcoin or investor deposits.

Nope, it's just "Pirate Cents"

As mentioned, Margin Call was very good.

Bad movie, but excellent at highlighting cause & effect related to differing perspectives on money:
Rollover

Yes, if the Fed were to instill restraint, the USD could remain the global reserve currency. However, that turns into a situation of the Fed against congress, the presidency, and eventually most of the world.

It isn't enough to look at what the Fed alone can do, but what other comparable forces are in play. The Fed has to fight immense demand for lax policy coming from several directions or wind up deflating the economy too quickly, pushing it toward a Greek scenario - or worse.

Maintaining fiscal responsibility requires effort from multiple parts of the US government, corporate America, the domestic population, and other nations' governments because of the reserve currency status - not just the Fed. Monetary policy can restrain to an extent, but there's arguably more pressure from other branches to continue profligacy, in addition to public outcry demanding short-term relief without understanding the consequences.

While the possibility exists for austerity/restraint, and it may be implemented for some period of time, it is not the most probable course that will be taken to completion. The give & take battle for the past 3-4 years has clearly been in favor of easing and business as usual over addressing structural decay in any meaningful way.

As an analogy, it's like thousands of people crossing a bridge every day for years and an engineering team discovering severe metal fatigue mid-span. Closing the bridge is unthinkable to those using it daily, but only so much repair can be done without a month-long closure. Political leadership can either approve the closure, forcing thousands of people into a forced vacation with many of them likely to go bankrupt because they live paycheck-to-paycheck, or authorize only minor repair that will keep the bridge open while escalating risk that it will fail at a later date.

Likewise, the Fed has been doing patchwork repair for decades when the structural problems needed to be properly handled. The probability of catastrophic failure has been increasing all the while, and now no amount of spit & duct tape will keep things together.

Put another way: if risk of bank failure were increasingly linearly by 1% per year for 99 years and nothing substantial were done to reverse it, there'd be a 100% chance of failure on the 100th year. The real problem is non-linear, and much worse than it seems.

I'm guessing the market share loss is because of the recent ToS changes and the effect on Dwolla transfers.

Has anyone been noticing the biggish up-spikes on negligible volume at Gox? Looks like pressure is building for the makings of a breakout.

There are positive and negative elements in everything, and any self-respecting libertarian would reject violent aggression. Like the Occupy movement, any substantial trend is eventually bound to attract interests anathema to the core.

My own views might be closest to agorism. I've observed and helped develop business methods that seem counter-intuitive and costly at first, yet result in positive outcomes for all participants, leading me to a stance that what we think of as the state may be unnecessary. Judge.Me is one business that I recently became aware of, and happens to accept Bitcoin for payment.

Glad the link was worthwhile: sharing information makes us what we are

Just making sure I was on the same page

I agree that central banking/economic planning could work, and did to an extent. As far as I see it, reliance upon the fallible human component led to failure, similar to how communism could work on a large scale (not merely in small, functional communes) if everyone were completely honest and thought the same way.


At this point, yes, there does need to be growing interest. That shouldn't be as important as the asymptote is approached. Bitcoin certainly weathered the decline well.

I wonder whether the reduced confidence is attributable more to greater awareness of the weaknesses after having been tested more than previously. After all, the same risks are still present and have been since before last year's bubble. Adaptability in such a young environment is something that I think outweighs the dangers for now, and will for some time.

It isn't necessary to know all of the factors, as long as you understand what gold is. Rote memorization of myriad different case situations can often be described by a single formula - understanding the principle allows narrowing of potentials.


Read that again - where did I say anything about the USD?

Gold has maintained a steady range in relation to oil for over 50 years. The dollar has not. A similar situation exists with various other real assets.




This:


You made a statement about the falling paper price of gold "hurting" and I replied by saying that it was something else entirely that hurt, not the falling gold price. Miscommunication perhaps; the two were separate and if you hadn't mentioned hurting, I wouldn't have brought up fascism.

This real pain has nothing explicitly to do with gold.


In the end, yes - but the transition will be a process, whether it's fast or slow.


By doing what? By raiding demand deposit accounts of citizens because everything else has already been drained? By telling the BRICs that they'd better keep buying US debt - or else? By bombing brown people to keep the oil flowing?

The Fed is a big magician - a snake oil salesman. And he's outstayed his welcome.


Where's the logical, reasoned rebuttal that refutes documented efforts by the US gov't to manage markets?


I haven't been keeping track for some time. Link?


Armageddon accompanies that. Monetization is the only option when there isn't enough time to naturally process the debt. It's like choking because you've stuffed too much beef down your gullet, and peristalsis can't move the backlog quickly enough.

The question is: how much debt monetization must occur to stabilize the economy on a global basis? Will it be 20%, 50%, 80% or more?

What would happen if even 10% had to be monetized? Including Eurodollars/Petrodollars, there is perhaps $20-30 trillion in base money supply. If $70-144 trillion came into the world markets over a period of less than a decade, monetary inflation stands a very good chance of causing pricing destabilization which rapidly leads to catastrophic business failure and debt defaults. The whole cycle accelerates from there.

I subjectively think any less than 50% debt monetization ($350-722 trillion or more) would be insufficient. If that level is not met, debt growth would be virtually guaranteed to outpace the world's ability to process it - this may be the US dollar's 51% threat.


I know I don't speak for all gold advocates, and many would rail against my ideas just as they do Bitcoin.

I have always been negative on the majority of precious metal ETFs as an investment - they are by and large short-term trading instruments; GLD especially is the epitome of paper gold.

Miners have had and still have massive upside growth potential. There are geopolitical risks inherent with owning them, which is less desirable than having physical bullion in possession - potentially to the point of avoiding miners under certain circumstances. Careful selection is necessary, but miners are still very worthwhile - especially with the possibility of paying dividends in kind.

I've been saying for a long time that a paper/physical separation is possible, and that each stress to extreme outside ranges raises the chance of that occurring. The mechanism for that occurring have also been outlined repeatedly.


To that, I think it's been said better than any way I can put it...



I don't know if we can be friends anymore 


I love the leper analogies

"Denominated in" does not equate to "exclusively redeemable in".

Absent increasing inflation, there is more pressure for the USD to collapse than to continue providing stability. Since all other options have been shut out, the USD can only swing in one of two directions: it can remain the world's reserve currency at the expense of the US economy or it can be inflated to oblivion so America can escape its debt burden.

Forcing USD holders in a certain direction after they trusted the US promise to manage the dollar responsibly results in foreign holders seeking a way to get out of the USD. You don't think there's selling of the dollar by the biggest participants on the planet? What do you think China is using to acquire gold and natural resources?


Seriously, WTF? Raise interest rates?

So the US would be paying the BRICs more on the massive holdings they already have? Some "punishment". How does that do anything but harm domestic interests in the short-term? At least there might be a glimmer of hope for genuine recover, but the sitting political establishment would have the Bernank replaced in a split second, possibly after a surprise "terror" attack so further power grabs could be pushed.

The USD is rising against other forms of debt. How much of that rise is being used to prevent other monetary assets from rising as they normally would, and what kind of uncontrollably destructive force is being kept under wraps while it builds?

Yes, I'm going to quote myself again, because it's been spelled out:


I wouldn't be surprised if the total amount of outstanding derivatives now exceeds $2 quadrillion rather than the $700 trillion to $1.44 quadrillion estimates from the BIS.

Curiosity strikes: how does gold meet your needs?


Is this in reference to general awareness and interest outside of the Bitcoin microcosm?

It may be easy to dupe many end users for now, but it is much more difficult to fool dealers and virtually impossible to get one over on mints and refineries. Were gold more prevalent, people would have more familiarity to a point where the ear is attuned to the sound and the hand recognizes valid heft. Not that counterfeiting would be eliminated, but it would go a long way to reducing the ease.

I do agree with the latter point, I just think the world isn't at that transition point yet. Within a decade, perhaps - in the 2020-2040 range, it's almost guaranteed.


That's exactly the point - there is no direct way of approximating the price without being part of the highest circles of influence. All of the official numbers thrown at us have been tainted by such an extreme level of unreliability that there's no way to trust them as being legitimate. The US employment numbers alone are so blatantly rigged that even the MSM has finally capitulated and run the story.

We can extrapolate based on the divergence between gold production relative to existing reserves, versus rates of fiat creation and associated debt instruments. Based on that, they are so far apart that the current prices for gold are nowhere even close to the low end of possibilities in fiat terms.

The best approximation I've seen is: Priced In Gold.


Not "goes up in value no matter what" - maintains purchasing power relative to other real goods no matter what. This distinction is very important.



Do not play the demagogic politician by conflating my stance on precious metals with the patterns I see in social leadership. They may be related, but are still separable concerns. I truly hope that I am wrong in the social context, but nothing is suggestive of that save the potential of a singular, transcendent event.


A lie behind a screen, masquerading as reality, is not reality. Let me know when you've mastered the ability to grab smoke and hold a reflection.


Booya!


A gold bug's best friend is Bitcoin. There is no other financial instrument capable of offering improved functionality with the same set of emergent benefits.

When the time finally comes to make the transition, what else would ever be able to hold the wealth accumulated from millennia of use as a store of value than Bitcoin? Only Bitcoin or a variant of it.


Default how, realistically? A transient period measured in years to decades doesn't seem so bad to me as a way of preventing destitution at the hands of fiat-pushers.


And look at how much it is being denied continuance of its legacy by growing powers around the world. The dominant Silverback only maintains power for so long before his demise.


Those are years, if not decades away from actually occurring, let alone being economically worthwhile or even possible.

No - the dollar can go up, down and all around. That doesn't change the fact that it is being rejected around the world. All you're seeing is a rising dollar juxtaposed with a falling paper gold. There is no valid discovery mechanism for gold's value with existing markets because the assumption is that the denomination is fiat rather than gold. Priced In Gold is the closest we have to observing gold's true value.

Anyone holding physical metal has experienced a rise in purchasing power and has no need to fear any financial catastrophe, whether deflationary or inflationary. The dollar and other fiat currencies can whip up and down all they want: physical holders can ignore them and do things other than obsessively trade or invest - like live their lives! What hurts is the sad trend of western nations toward a modernized Hitler/Mussolini/Stalin-style fascism and the associated destruction of humanity.

What you can't see is wiping you out. Dig deeper than the numbers flitting across your screen; get financial NVGs.

"Official" pricing could stay there permanently if the assault by banks & gov'ts is finally successful in fully separating paper & physical. Paper remains manageable, while physical is unavailable at paper prices; artificially-induced shortages.

Norcini - Central Bank Gold Buyers Battling Hedge Funds Today

While cypherdoc and so many others have been selling, thinking gold is going to fall into oblivion from here, banks and other large interests have been buying like mad - a transfer of wealth from weak holders and misinterpretations to strong hands established on what actually is happening. It's all about the phyzzz.

105,231 silver contracts were dumped on the market this morning between 9am and 10am EST, as silver was smashed a dollar from $28 to $27.

The paper is coming from out of nowhere: QE is in progress, and orders of magnitude greater than anything the world has ever seen. These "markets" are a complete fabrication - prices are not reflecting value of real assets!

Try tantalum. Call me when it crashes and you want to panic sell

The price does not reflect value.


A brokerage is not the deciding factor of direct registration. If a company handles share issuance in-house or uses a transfer agent, it is dependent upon the company or its transfer agent.

The real issue is not whether your broker or the gov't fail, but whether your shares have been lent out. In that case, rehypothecation may come into play. If you do not have your shares entered as book entries with a 3rd party other than your broker (the respective company or transfer agent), you will have difficulty establishing ownership and retrieving your assets - if you even have any hope of getting them back at all.

If it's your word against your broker or a firm claiming rehypothecation rights, you are screwed. If you have a 3rd party with independent confirmation of your ownership, you will be at the front of the line for claim payout.