It's raining red right now. There was no statement of buying gold at this point. I had recommended silver instead. The general premise is merely that being short gold is extremely dangerous at this point, while being long you can sit and wait for the price to rise. Also beware of a divergence between the paper and physical markets.

Gold and stocks are completely different animals.

Silver is tied to industrial uses that will drag it down on economic slowdown expectations and it can act as leverage to hold gold back, but not indefinitely. It still has a historical purpose as money alongside gold.

Gold has broken to multiple new highs, but the dollar is still range-bound. Why?


Patience

A better trade would be long gold/silver and/or mining stocks and short the equity indices.

* Note that gold has formed a double top on the short term charts (1hr or shorter) after a push down from ~$1770 to ~$1730. The $1650-1680 range is the initial target followed by $1600 and $1550. Any spike down from here on out will be met with immense buying, so the drops will be very short-lived. Trade short at your own risk; I recommend buying physical metal.

I'm with evoorhees on the price/value discovery aspect.

As far as bubbles, it depends on the trigger. If there's a spread by word-of-mouth I'd expect a more gradual growth rate, so we might not see any discernible bubbles like the 3,000% jump this year.

From what I gather (feel free to correct me), the slashdot effect (reddit, et al.) seems to have been the major trigger that started the run up. That's a good source of early adopters with technical know-how.

The next trigger will probably be a more usable interface; possibly a functional mobile application. Once that happens, the next rise will likely be much bigger. Any subsequent correction from that should take a longer time to stabilize. Continuing spread of awareness and subsequent waves of new participants ought to bring volatility down.

With mobile usage, I think the Bitcoin economy might grow faster than you'd expect (whether its flexible enough to handle the growth as is remains to be seen). Exogenous shocks from national economies are frightening individuals enough to get them moving into alternatives (gold, Swiss francs, etc). If even a small fraction of that moves into BTCs out of curiosity, the flows could be immense relative to the size of the Bitcoin economy.

I guess it's just hard for me to describe what happened with Bitcoin as a bubble, even though it has the hallmarks. It seems more like naturally exponential growth.

I'm basing my estimation on an assumption of apparent growth so far and what feels right to me in competing factors

2011 (remainder): 0-1
2012: 1-2 (major shock causing 30%+ ranges)
2013: 1-2
2014: 2+
2015: 2+ (weak bubbles; low in magnitude or quick to break)
2016: largely undetectable

Yes, it's definitely price deflation across equities and the entire commodity sector right now - brought on by panic selling with a rush to cash. So why is gold taking off alongside treasuries, the typical safe-haven?

With a mindset of deflation taking center stage, it's a perfect set up for highly inflationary measures to be taken by money-printing central banks under the guise of 'saving the system' or, as Goldman Sachs' Lloyd Blankfien suggests - doing 'God's work'.

I don't know what the Fed statement will be tomorrow, and it doesn't really matter but for short term hysteria. The simple matter points to deflation causing extreme hardship and a desire for valuable assets that won't depreciate, including gold (how many citizens are even aware of treasury bonds)... or inflation that debases the domestic currency, making other assets much more valuable, particularly gold. Win-win for precious metals, rock-and-a-hard-place for the US hegemony. Politicians can be relied on to take the easiest way out, like clockwork.

If everyone is being led to believe that a parabolic blowoff is due for gold, then that's what will be presented. All the suppressing banks have to do is let some pressure off and gold will bolt like a racehorse out of the gate until they have enough physical metal to return to holding the price in check. That will be the sharp selloff. Then the headlines will suggest yet again that the bubble has popped. I've seen too much chart painting at low-liquidity times over the past few years to rationalize any other explanation.

Keep in mind that a double top or gradual rollover pattern is not indicative of the final high. Instead, watch for gold to establish a new trading channel with a higher angle of ascent from the one formed over the past decade. The price will definitely be highly volatile, perhaps $100+ range per day, but the overall trend will still be ascending.

I am actually expecting gold to be driven down overnight or early tomorrow ($1760/oz now), prior to the FOMC meeting. Remember Bernanke's announcement of QE2 last year? There was a spike down in price during his broadcast, then prices took off and never looked back. Be quick if you trade it. Any hint of even slightly relaxing policy, whether it's announced now or later this month, and it's off to the races. What do you think the debt ceiling was raised for?

How are treasuries valued? How are equities valued? How is gold valued? Which can be exchanged on-the-spot with no intermediary, or accepted as collateral with no questions asked? Will the true reserve asset please stand up?

If management (read: printing) of a currency were the key to prosperity instead of real effort (farming, engineering, manufacturing, etc), we could all print our own money and live like kings.

Bernanke and company are doing their best to prop it up, avoiding a very painful waterfall-style crash. The dollar's decline is being controlled as best it can.

I do admire and appreciate the goons for their skillful machinations and preventing complete social disorder, but still consider them fools for having allowed the situation to get as bad as it is.

It was a 'meh' day. At close, gold was up ~3.3%, silver rose ~1.8% and mining stocks were mostly flat (XAU -1.7%, GDX, GDXJ & HUI 0%).

Pretty dull IMO. I slept in

All of that is highly commendable. It's probably better from a long-term economic standpoint than any other investment. Real assets and skills are the way to go.

If you have some extra time, you could learn about options trading. Buying long-dated, far OTM calls and puts for <$1 easily amplifies your gains. When trading options, I find it best to pick a position and a decent entry point, then sit on it for a long time. Especially with precious metals. After that, go outside and live life or do something else to generate income.

Some brokers that don't require minimums (afaik):
Trade King - no minimum deposit or balance.
OptionsXpress - no minimum deposit or balance, but high commission for low-volume traders.
Think or Swim - merged with TD Ameritrade, may require deposit now - not sure.

Interactive Brokers - included just because it's the ideal, but requires a significant min. deposit.

Agreed on the turmoil in London. And people always think it can't happen to them...


I agree, that is the situation... for now

The US does not have time on its side. China doesn't need to sell, it can just stop buying - that's all. The rest will happen by itself. This way, China isn't viewed as a financial aggressor, yet the pressure remains and even increases on the US because it won't be able to expand its funding for debt servicing. It's a bit like watching your opponent drown while you're holding a life ring.


Can you sleep at night holding US treasuries? Fear is a tool for herding pigs and sheep toward their slaughter. Buy blood, don't chase a comet's tail.

I choose gold, silver and Bitcoin with a sprinkling of solid, dividend-paying stock in global powerhouse companies (nibbling at some juicy discounts today). Just a suggestion. I sleep very well.

It isn't about getting the gold price down. We're in the midst of a highly-controlled asset revaluation. Dollars have become untenable, but nobody wants the system to collapse catastrophically. It's the dollar that's being managed down.

Excellent thread, thanks for resurrecting it.

I'm not sure trying to estimate how many bubbles there should be is accurate. They don't necessarily occur because of an attempt to create them. What did you base your projections on?


As Bitcoiner had pointed out, bubbles must be in relation to another asset. Bitcoin experiencing a "bubble" in this case seems to be tied more to global instability than the Bitcoin system itself. Rather than a bubble, it looks like a deflationary escape from other assets (not always the same ones) mirrored by a rise in Bitcoin.

Any significant wave of new interest will generate a disturbance of capital flow until the pool is large enough to stably withstand the shocks. Derivatives such as Namecoin will likely help with that. Niche entries that are blockchain-compatible will directly provide additional liquidity, much like fractional reserve banking. The major difference is that each variant is also self-regulating - the human control risk is nullified.

I think the danger of fractional reserve banking is losing sight of which asset the system is based on. In our case, fiat dollars are certainly not what the original foundation was. It was dollars as claims on gold and silver. Dollars simply made fungible transfers easier. Bitcoin is providing the same service, but acting in both functions (precious metals backing as well as easily-exchanged currency) while removing the human influence.

Coming back to the bubble topic: in order to estimate the number of shocks to be expected, it might be better to look at how quickly the global economy is deteriorating. Its state seems to be accelerating to the downside with 1-2 minor crises per year and 1 major crisis every 2 years or so. If this rate does increase, then we might expect Bitcoin to undergo more frequent periods of high volatility as well depending on which asset class is most closely associated with the system at the time.

Regarding the USD - inflationary efforts have caused it to become highly undesirable for major foreign holders of US debt. They are using the equity sell-off as an opportunity to supply dollars in exchange for valuable assets. This is why the dollar is in a range instead of having taken off due to increased liquidity from domestic fire sales in assets.

I think the 9-year cycle concept is too myopic. Gold moves based on influences with far greater scale than 9 years. Add to that the fact that it has been suppressed for so long that short-term cycles will be severely distorted and eventually snap back to the fundamental trend; reversion to mean.

Yes, there are many associations in asset classes that will shift rapidly. It's going to be difficult to keep up with them as they accelerate. Foreign exchange rates are already fluctuating by 100-200bps per day. Gold will entertain another mini-blowoff, most likely before November; a crash will follow, probably to the $1600/oz range after attaining $2000-3000/oz or better. Pundits will again claim that gold is in a bubble.

However, look at the 10-yr chart - gold has followed a very consistent upward trending channel which is developing the base of a very long-term parabolic rise. It will take several more years to play out. The precious metals are nowhere near bubble territory yet. The bubbles I see are in equities, treasuries and the US economy in general.

I am projecting about 3 more years for the next phase of gold's upward revaluation, followed by another phase for about 1 year, then a peak within 3-6 months after that. Each phase will at least double the price of gold as public awareness and intent to acquire the metal grows.

Around late 2015 to mid-2016 should be the final stage of US economic capitulation and gold's rise to dominance in the international financial arena. It will act as the foundation of a floating associative rate with all surviving currencies at that point, possibly including Bitcoin.

Precisely. The dollar and treasuries being the opposite position of gold & stocks.

Being denominated in dollars as the dollar is inflated, both will rise. When (not if) confidence collapses in the dollar, treasuries have only the support of the dollar while gold stands on its own. Value is not granted by fiat, only represented.

Of course not, because the ZM wouldn't have laws, right? It's easier to ask forgiveness than permission.

If you know, why beat a dead horse? How much progress has been made against these 'barriers'? I don't see any that wouldn't be occurring naturally.

Really? There's 'enough' automation? Define 'enough'. Then let me know when robots can pick berries, harvest crops and fluff my pillows.

Bottom up? The entire society has already been designed. That's top-down; it might as well be a dictatorship.

Besides, with this much infighting and idiocy, I'd rather have the bumbling morons George Bush and Gordon Brown running the world. More than enough damage has been done to the entire project to relegate it to fringe nutcase status. Even if Mr. Fresco were to set the story straight, there's no way back. The world will have advanced well beyond his vision by the time ZM/VP find direction.

You do yourself a disservice by supporting the ZM. Do something productive with your time instead. If you absolutely must rally behind a cause, try seasteading.

LightRider - just stop. Anyone can post ideas that have become redundant and stale. If you really want to do the world a service, find what you're good at and do that thing.

Regarding major ZM goals:

• The problems of the world cannot be legislated away.
• Most of the ideas put forth have already been implemented.
• Current technology is not capable of fully automating human labor.
• Forcing widespread top-down change has proven counter-productive compared to bottom-up development

These issue have been discussed point-by-point here: A Dangerously Outdated Zeitgeist

It will be painful indeed. Many will grow angry and resentful, resorting to violence because they do not understand what's happening - the effects will spill over to those whose living standards have not taken a substantial hit. It's a dangerous cascade effect.

What automation, methods and technologies currently exist that will allow for sustaining such a large population? Where will the resources necessary for welfare come from? Why should people be supported at the expense of others? What you advocate is forced servitude without a sufficient system in place to facilitate that without human slavery. Robots still cannot do much. Be patient; don't propose additional suffering in the meantime.

New technologies and techniques open new fields of employment to be filled by those leaving declining fields (horse-drawn carriage makers gave way to automobile manufacturing; employees likewise shifted). High unemployment is a sign of stagnation, regardless of whether a society is rich or not.

Patience, grasshopper

With additional monetary stimulus, the equity markets will continue their upward trend. Note that Bitcoin seems to be more sensitive to that (assuming the correlation is valid) and precedes the major markets by a bit (pun intended).

The lack of stability is frustrating, but a natural aspect of a newly introduced concept. That stability won't be attained until the majority of weak short-term speculators have been knocked out.

Your idea is nice, but segregating the service introduces additional maintenance. It doesn't make sense to expend additional resources to maintain a duplicate site. You'll also be spending extreme effort trying to convince thousands of businesses, one at a time.

Integrating BTC payments into the shopping cart back-end is far more viable, so target the CMS software and payment processors instead of end-businesses. This way, you focus on a few target entities instead of thousands. If even one of them adopts Bitcoin, the others will feel the need to follow suit in order to compete.

Business will be more apt to try Bitcoin if it is available. They will not attempt to "roll their own" solutions.

Yes, it has been suggested.

Multiple factors are affecting what's going on, many of the same which are causing equity market collapses. The Bitcoin economy is simply being swept along, as it is a tiny market.

Continuation of the fundamental trend. Wild gyrations may occur around it, but do not change it.

It can't. Even before the debt ceiling was raised, it was impossible for the US to pay down the debt without both massive cuts in services and increases in revenue from taxation. Now, it's so far beyond the point of no return that the problems will accelerate. We have yet to approach terminal velocity.

The rest of the developed world isn't far behind, as the goal of the US is to make sure that it brings everyone down with it. With every nation at the bottom of the barrel, the US will lose less dominance than if it were to fall by itself. This will soon turn into a free-for-all; every nation for itself.


According to the BIS, approximately USD$600 trillion worth of derivatives. Prior to their recent revision of these numbers, that was more than double - USD$1.4 quadrillion. Governments and the banking system are in the process of monetizing these instruments in the hopes of revaluing the global economy before it catastrophically deflates.

You've got it spot-on: the current course is 1. Sadly, the second is rapidly decreasing in probability of occurring anytime during the next couple of years. I think most politicians will move even further away from that, actually.

The problem is the debt. If all debt were forgiven tomorrow, this coiled mess of insolvency would be free to begin anew; of course we all know that's an unrealistic impossibility.

The problem with the first solution, that's currently being pursued by western nations, is that the entire financial structure is completely unstable. It's a confidence game - our illustrious "leaders" are simply hoping to keep the system and its established status quo limping along until the next big thing comes along to save them. They have no way of contributing to any advancement because they largely do not even understand the problem and won't until it's far too late. You think unemployment is bad now?

The two realistic results are:

1. Intranational/Civil war(s) resulting from genuine austerity measures and efforts to implement true reform, involving militaries turned inward as with Syria (though probably not as outwardly brutal in western countries).

2. International/Global war as nations either attempt to secure needed resources (energy, food) that are rapidly becoming hotly contested or protect them from other predatory nations.

So far, it's looking like 2 is more probable for the developed world. Few areas of the planet will be spared the coming insanity as the old guard is gripped by its death throes.

A taste of rising domestic issues: www.shtfplan.com/headline-news/rise-of-the-mob-wisconsin-fairgoers-attacked-violently-beaten_08052011