Yes using traditional exchanges, from what I know. Is there something that fully decentralizes the system?

The Euro is down almost 2% from a week ago; the dollar is up about 1%; the Australian dollar is even; gold is even. If the dollar were all that and a bag o' chips, the Aussie and gold would be down with the Euro. Instead, this is a game being fought among fiat currencies to distract from the fact that they are collectively losing the war against gold.

I was several months early in expecting this to happen. Sorry cypherdoc, this time you lose. At least you're playing with GLD so you can stack paper. Too bad you're missing the boat on physical.

Last day of the month. Shenanigans are to be expected. Greek elections in mid-June may provide a cover story for a "solution" that will supposedly save the day and shift the focus elsewhere, probably back to the US and an official announcement of QE (which never stopped).

A great video from the Got Gold Report:

Got Gold Report for May 28 2012

I'd rather value a business that builds its own credibility than one that strives for an expedient route to legitimacy, or approval from a direction that isn't valid in the first place. Trust is only good if it isn't abused.

• Deposit 2000BTC
• Earn 2000BTC from interest
• Withdraw 2000 of total 4000BTC

Your initial investment is doubled and returned, and everything from there on out with the remaining 2000BTC is pure pirate profit

In late 2010, one of my silver trades did very well. So well, in fact, that it gained almost 5,000% (yes, 50x initial capital). Regrettably, on that particular trade, I tripped myself up and lost most of it (still kicking myself - I really wanted that island). What I didn't lose was my initial investment, having pulled that out shortly after doubling. The rest was play money.

I just discovered that beer actually has an aftertaste (afterscent?) when it goes out through the nose. Also, remember to turn your head away from the screen...

It's possible that the risk may be outside of the Bitcoin environment. Assuming small operations doesn't give enough perspective because small fry generally have an eye on growth, not preservation.

Since Pirate's business is geographically dependent, I'll outline one possible perspective. When looking to preserve wealth, there are a few options that high net worth entities have always been able to rely upon:

• Precious Metals (esp. Gold & Silver)
• Land & Real Estate
• Fine/Rare Artwork
• Gemstones

Not every HNW entity is at the high end of the spectrum, so ownership of any of the above might not be held in ideal locations, or liquidation may not be easy. Asset seizure or account freezing can be far more devastating to HNW entities than it might be for middle and lower class individuals. Risk of confiscation is a 100% loss consideration; without much to confiscate, the financial loss isn't as great. If there happens to be another form of wealth preservation that's even more difficult to attack than the above list, you can be certain that it will garner attention. Even a handful of Euro or USD millionaires could easily take a sizable stake without breaking a sweat, yet still look at their purchase as insurance.

Example:

Assume my net worth is USD$10,000,000 and I want to protect as much as I can. Keep in mind that nothing is truly free. With the absolute worst-case scenario of 100% loss due to some form of loss, theft, or destruction, I elect to protect 25% in total, so $2,500,000 is reserved.

All of the above are physical items that could be somehow taken. Astute HNW individuals often keep their eyes open for investments or ways of protecting their assets. Let's say I've been hearing about this 'Bitcoin' thing from another HNW associate. I observe for a while and learn what I can about the system. At the same time, I'm well aware of increasing threats from government that may seriously jeopardize the safety of my accumulated wealth. Not only would my savings be at risk, but also my livelihood. It would be folly to think that HNW persons are incapable of sensing when sentiment toward their social class is negative.

My decisions on wealth preservation lead me to conclude that equities are too risky given recent events, and the banking system is too dangerous for wealth storage. Not counting fees, I decide to allocate my security assets as so:

$1,000,000 is put into gold.
$500,000 is put into property.
$400,000 is put into art.
$400,000 is put into gemstones.
$200,000 is put into Bitcoin.

In the event that Bitcoin fails, I'm only out 2% of my net worth and less than 10% of my preservation fund. If it takes off, I could easily become a Bitcoin Billionaire. If it remains about where it is, no harm has been done and my wealth has been preserved.

How much would I be willing to pay for that protection? There are many who spend a good percentage of their net worth on security. I certainly don't want to cause any serious disturbances for whatever I'm putting my wealth into unless there's an impending threat and time is of the essence. If I have to pay 50-100% on top of the going rate to acquire an asset without drawing attention to myself, so be it. It's often a small price to pay for peace of mind.

Other cases can be made from a low net worth individual or business perspective, but they mostly fall under the trade-off in perceived risk between classes, not so much speculation or growth within a single asset class.

A Pecuniary Pirate's Path to Profit: use the little straw to sip from a big jug.

It boils down to finding a niche, and in retrospect people say: "Why didn't I think of that?"

Are you sure the exchanges reflect Bitcoin's real value? Do you have access to dark pools? Are there other assets less desirable or risky than Bitcoin... ?

The way Pirate has things structured, a sudden failure is much less likely than a gradual evaporation. Unless, as he said, the price appreciates sharply.


There may be defaults in extreme cases. Pirate may have to either keep a large reserve of BTC, halt/reduce interest payments, or acquire quietly by using USD from the other side of his business so as not to further displace price. That isn't to say 40-50% change is even enough to cause such stresses; the number may be 400-500% or more.

This is basically what we're seeing in traditional financial markets, only in the opposite direction. In the case of lenders, halting interest payments is a very powerful tool that actually indicates positive growth, whereas in traditionally mature markets it's indicative of negative potential.

Of course, the ride will end sometime; the interest rates will decline and competition will increase. However, until the 21mm unit asymptote is approached, there's still room for expansion.

The way I reckon, that view is a much more responsible one than most here are assuming. To put it as Jim Sinclair might say, the days of colonial style wealth extraction that only benefit those at the top are over.

Sure, the concentration of wealth from a successful venture might be extreme at the top, but it leads to impoverishment and resentment of those involved, whether directly or indirectly. A rising tide raises all ships, but wealth extraction holds many underwater.

Instead of hoarding his shiny Bitcoins and his proprietary venture a la Facebook, Pirate is granting access to a potentially risky investment. Doing so means that no other business doing the same can offer as high a rate of return without copying his profit-sharing model.

As for his risk, it is not so much that Bitcoin might fail, but that those whom he is obligated to might come after him with pitchforks, demanding blood. To lessen or eliminate the latter, he is sharing access to his operation - in the event of failure, he'll step down as Captain of the ship rather than be forced to walk the plank like Jamie Dimon.

In light of that, lead on, Captain Pirate!

Confirmed.

Is this intended as a merged-mining chain, or fully independent?

Just in time for the end of the month, the Euro is below $1.25 for the close.

Gold futures delivery notifications are due tomorrow, and there are still over 90,000 contracts open at 100oz per contract, or about 3x the physical metal reported available; how many of them stand for delivery will determine whether the exchanges use paper settlement in lieu of physical delivery. If paper settlement forcibly replaces physical delivery, there is no reason to believe that the base money supply is not being inflated at a completely unrestricted rate. Such an event would require truly impressive circumstances to direct attention elsewhere; futures investors are mostly not muppets investing their retirement savings in the latest darling equities.

Once more - how interesting...

I'll be moving my token forex holdings entirely to long AUD & CHF positions late in the NY trading session tomorrow. Physical gold & silver are still physical gold & silver.

Once again, I actually agree - with both the price not going to the moon yet and not having deposits at the exchanges.

Another point - exchange volume may not be as indicative of the actual Bitcoin price as expected. I suspect that dark pools may actually be providing a very significant amount, if not the majority of liquidity, and could be trading at a somewhat higher rate than the exchanges.

A relatively major spike down in Bitcoin yesterday from ~USD$5.10 to $5.02 was followed by an immediate uptick to the stable range of around $5.10-$5.14 which has held for some time now.

A relatively major spike down in gold began yesterday and continued today to yet another retest of December's low, also followed by intense buying pressure that pushed it back up to the stable range pivoting around USD$1550-$1570 that's held for the past week.

To reiterate: I do not think this is a coincidence. Rather, I see this correlation as an indication that Bitcoin offers a better indication than the paper gold market offers for physical gold, primarily because paper gold markets are proving themselves more related to fiat currencies than the underlying metal. This is not even accounting for Bitcoin dark pool pricing, which is not reflected in the usual exchange rates and may be higher by 10% or more.

At least it wasn't a 400BTC typo

Europe’s debtors must pawn their gold for Eurobond Redemption

Each of the struggling nations must pledge 20% of their debt as collateral. With the fund "officially" at €2.326 trillion as of November 2011, 20% is €465.2 billion. Let's assume the best-case scenario wherein 100% of each nations' gold is used, diluting the price level of the metal.

Officially reported gold holdings show the EU totaling 11,494.1 tonnes. That's about 370 million troy ounces (3.7x10^8 * 32150).

Now let's see how Europe's gold would be valued if all of it were pledged to the 20% requirement:

€465.2 billion divided by 370 million troy ounces comes to ~€1,257/toz or ~$1,572/toz at $1.25 per Euro. Very close to today's prices - isn't that interesting...

Remember, the above was assuming all of Europe's official gold were stripped to back estimates from six months ago, and it's obvious that no Euro country is going to give up its gold easily.

How much greater is the amount being called for in the plan now, with debt levels expanding geometrically: 3 trillion, 5, more? How much gold will be pledged as collateral: 50% doesn't seem realistic, maybe 10-20%?

It doesn't take much to connect the dots and see that the EU plan alone could easily more than double the gold price, and we haven't even gotten to private debt and numerous distressed nations, especially Japan or the US. Anyone expecting physical gold to falter from here is operating on assumptions half a year out of date, on top of the consistently gross underestimations that official sources provide; gold at $1,570/toz was a reasonable price when $1,900 was breached.

It's also important to keep in mind that fiat inflation is happening right now.

One of my purchases sat for weeks on what is still a beta offering. I refrained from complaining about it, having come to understand that Pirate's quality reputation is well-earned and worthy of patience. Not only did my purchase eventually go through, it did so shortly after a major update to the entire system that improved on almost every aspect.

I'd rather trust a pirate than a politician.

An observation: Euro still under pressure, but Aussie & Cando resilient along with gold & silver.

That seems like accumulation of the commodity currencies in the face of bad news, not a recipe for dollar take-off. These delaying tactics can only last so long.

3.000+ years of history and reality make the argument sensible. Also, note the smiley...


The official prices you see are based on paper markets which have effectively unlimited supply, not the physical supply & demand dynamic.

For many, gold purchases by central banks alone totaling more than 25% of global demand, on top of unrelenting private acquisition, isn't enough "evidence".


Bulls & bears have teeth. Grow stronger!


^ new wallpaper


^ new fav quote


Well put.

Looking at global growth, there's no reason that gold should remain depressed while other asset classes have ballooned alongside the world's real economy.



Gold has been held back from its parabolic rise for nearly a century, whereas real global growth has already hit two inflection points since the 18th century.


A sign of a worthy opponent

If it were a genuine challenge, I might reconsider my position. Instead, it's more song and dance from another bird in the gilded cage.

Most people know in their gut that something is wrong, but they can't place exactly how things are amiss. The initial reaction of youth is often that greedy, evil corporations are to blame. Then it becomes republicans or democrats or labour or whatever party holding political power happens to be perceived as "unfair" and insensitive.

Eventually, some come around to realization that these are all built on the same foundation, but even then it's difficult to sort out what makes sense and what doesn't. It can take a long time to build up the experience and knowledge to find and take the red pill. Even afterward it can be tempting to revert to the official lie story.


It's already been happening for quite a while. That article was from 2011, and with the beating of the drums to the tune of "gold is in a bubble", the pace has accelerated. Greece has been seeing extremes of this, where there isn't much more being sold at all because few of the people remaining actually have any.

Even if everyone in the western middle classes were to dump all of their gold onto the market at this point, it isn't likely much relative to demand, and it certainly wouldn't delay the rise for long. That's what probably happened last year and has allowed the futures exchanges to keep enough metal flowing to avoid implosion. Aside from western nations, who else is going to sell their gold and silver - China? India? Russia? They have a much better handle on the value of precious metals, so not likely. They'd buy whatever gold the west throws away!


Yes, as long as there's still sufficient supply for sale. However, with massive printing keeping pace with gold flowing to market, what happens when the flow slows or reverses? What's to be done with all the extra printed fiat? The situation will be worse than it was when the whole thing started.


++1

Also makes it easy to see the relative growth trend; Bitcoin being fairly unknown has much more room to grow than gold with its universal recognizability. I'm pretty sure we can agree it points to parity potential, or better.

The latest from Got Gold Report is interesting - note the ICE USD 71.8% short position increase.



Also, a nice divergence in the miners relative to gold.

Yes, please assume that moniker so the rest of us with sensibility can make use of "The Real Deal" and step away from the paper avalanche discussion

Agreed.


Yep, and that big buyer group includes the very institutions so railed against - JPM, Citi, HSBC, etc.


Where are most people now? Gold is the last thing most people are in, at least when it comes to the western world. That means half the world has yet to get in on the precious metal appreciation.

As I explained earlier in the thread, it takes mere seconds to type in an arbitrarily-large number, and perhaps a few minutes to days for that to make its way into the world financial system. Deflation doesn't occur that quickly because debt is often negotiated on and tied up in legal proceedings, so as long as there is belief/trust and dependency on the existing fiat system, inflation will outpace deflation.

Re-read that and ask yourself how deflation could possibly overwhelm monetary inflation that can occur nearly instantaneously without the base money being rejected.


I swear, I'm going to have to figure out a way to automatically precede every quoted utterance of 'gold' with 'paper' when 'physical' isn't specified.