rpietila Wall Observer - the Quality TA Thread ;)

[sidhujag]

reading the btce chart looks like we testing $620 then $600

Done up we go

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[ArticMine]

...

I see it as very unlikely that the bear market in gold will continue for much longer. The bull market was reversed only through blatant manipulation with the help of derivatives. Part of the Quantitative Easing money created is used to short gold. Gold as the ultimate physical store of value will not lose its status and will rise in fiat terms when the fiat ponzi starts crashing - yet most likely much less than BTC.
Real money thinking will move to Bitcoin, but Keynesian thinking will flee en masse to real money thinking when their views dissolve.
Most of the world still sees gold as the ultimate representation of wealth. A big proportion of the people will not shift so easily from a physical store of value conception to a digital store of value conception. People like gold, especially more so outside the western world.
Gold can easily do x10 (1000%) within the next 10 years - depending on the geopolitical and monetary unfolding.
Silver can do x50
Bitcoin can do x1000 (100,000%)

My take is that the Keynesians will stick with what they love namely fiat; however if they decide to go for real money they will pick Bitcoin over gold. After all why pick the asset that is "going up x10" over the one that is going up x1000? Furthermore by picking that asset that goes up x10 they have to admit they were wrong.

My take is within 10 years
Gold x0.3 or even less
Silver x0.2 or less. I expect silver to lose value with respect to gold.
Bitcoin x2000 or more.

[shmadz]

Countries might benefit more if they would invest today in BTC rather than gold, but we are quite far from there imho.
Still countries will benefit more from investing in gold today rather than investing in US treasuries.
About your "we don't need them" - I don't know what group of people this "we" refers to so I cannot comment.

Humans love gold since as far as history can see - it will not change.
Humans need an open and honest currency, and gold.

hi

"we" means productive people, "them" means leeches.

humans will always love gold, it's a very cool metal. but it's use as a currency is limited. store of value? probably, for a while, but there's just so damn much of it.


but this is the part I really like:

Countries might benefit more if they would invest today in BTC rather than gold,

At some point, a political party will win a majority vote on a platform of using bitcoin for at least some portion of it's finances. it's public money and we deserve to see where it's going. it will take a long time, but barring 1984 styles police-state apocalypse, I think it's inevitable.

[explorer]

Countries might benefit more if they would invest today in BTC rather than gold, but we are quite far from there imho.
Still countries will benefit more from investing in gold today rather than investing in US treasuries.
About your "we don't need them" - I don't know what group of people this "we" refers to so I cannot comment.

Humans love gold since as far as history can see - it will not change.
Humans need an open and honest currency, and gold.

hi

"we" means productive people, "them" means leeches.

humans will always love gold, it's a very cool metal. but it's use as a currency is limited. store of value? probably, for a while, but there's just so damn much of it.


but this is the part I really like:

Countries might benefit more if they would invest today in BTC rather than gold,

At some point, a political party will win a majority vote on a platform of using bitcoin for at least some portion of it's finances. it's public money and we deserve to see where it's going. it will take a long time, but barring 1984 styles police-state apocalypse, I think it's inevitable.

But how does one effectively bar a police state? ?  Especially one that is gathering momentum?  The sheeple seem to be in love with it. 

[tabnloz]

My personal experience lies in comparing my dealings with both e-gold and MtGox. In both cases I got out with no loss of funds before the collapse. The difference is how I managed to get out. In the case of e-gold I had to convert my gold into CAD and take delivery of the CAD. In the case of MTGox I had to convert my CAD to BTC and take delivery of my BTC. In both cases I ended up keeping the "delivered" form of money, CAD for e-gold, BTC for MTGox.

Yeah, just like I got my bitcoin out of bitcoin-24.com when they collapsed.
People who were in FIAT are still waiting for their money. (after more than a year).

The crucial point here is that gold is far worse than fiat in this context. So for ease of taking delivery we have

Best: Bitcoin and other crypto-currecnies
Middle: Fiat currencies USD, CAD, EUR etc.
Worst: Precious metals, gold, silver etc.

There is a reason why fiat was invented in the first place.

This is one of the reasons I expect both a very strong bull market in Bitcoin combined with a brutal bear market in gold and other precious metals. So we could see BTC / USD in the 100,000 to 1 million range or higher and 1 oz of gold dropping to 500 USD or even below 100 USD. In effect a major transfer of wealth from gold to Bitcoin, kind of like the move from horse powered transportation to motor transportation 110 years ago.

I agree that bitcoin wins out in this sense.

I have read though, in Rickards The Death of Money, that the gameplan of the big power blocs seems to be to drive down the price of PM's. One benefit of this is that the China's & Russia's can cheaply increase their gold holdings. Once it gets to 2.7 - 3 % of GDP, then, barring any kind of market crisis, the stage is set for the IMF to introduce SDR's which will include gold in the basket of currencies it is based on. This would significantly increase the fiat price of gold. Implicit to this is that the USD will cede its status as reserve currency.

In this case it might be gold up, bitcoin up?

This assumes that gold would be included in the SDR. The SDR is defined in terms of fiat currencies and does not include a gold component. In any case I just do not see the "big power blocks" or "gold is a barbarous relic" school of thought suddenly embracing gold.  The real demand for gold has been from the Austrian / Libertarian or "real money" school of thought not the Keynesian / central banker side. The trouble for gold is that Austrian / Libertarian or "real money" capital could very easily flee en mass to Bitcoin. In addition there is the indication that gold is due for a big correction, without even considering Bitcoin. If one takes a look at the inflation adjusted price of gold over the last 100 years http://inflationdata.com/Inflation/images/charts/Gold/Gold_inflation_chart.htm one sees a double top developing. If one puts all of this together one has the perfect storm for a brutal bear market in precious metals.

As for industrial uses of gold such as circuit boards yes it exists, but it is very small compared to the monetary value of gold. I lived through  the gold bear market of 1980 - 2000, which coincided with the rise of personal computer and the Internet. Still gold went from over 800 USD per ounce to close to 200 USD per once in 20 years, and this is in terms of the depreciating USD. The next gold bear could be worse.

No, gold is not in the SDR basket at the moment, but Rickards being a gold / real money guy, writes that the reason for the stockpiling since 09 is that it will be. The IMF has the only clean balance sheet that could accommodate a larger crisis and they would do print by way of SDR (including Gold USD, UKP, Yuan, Euro). I tend to listen to him as Currency Wars has been largely accurate and DoM seems to be continuing that.

Some other points you raised are also interesting: that gold money could seek refuge in bitcoin and that the Fed may actually use bitcoin as a way of managing its fiat debt. The second point here is merely conspiracy at the moment but it is very interest and possibly very lucrative

[tabnloz]

I have read though, in Rickards The Death of Money, that the gameplan of the big power blocs seems to be to drive down the price of PM's. One benefit of this is that the China's & Russia's can cheaply increase their gold holdings. Once it gets to 2.7 - 3 % of GDP, then, barring any kind of market crisis, the stage is set for the IMF to introduce SDR's which will include gold in the basket of currencies it is based on. This would significantly increase the fiat price of gold. Implicit to this is that the USD will cede its status as reserve currency.

In this case it might be gold up, bitcoin up?

sorry for barging in but I just wanted to address this part.


I agree that it appears that china, russia, many countries are buying - or foolishly trying and waiting to repatriate - gold.

but I don't think gold will save them. we don't need gold, and we don't need them.

what we need is an open and honest currency.

https://www.youtube.com/watch?v=KR3MgIPxb38

*edit, how do you rate Death of Money on a scale of 1 to 5? is it a good book? I like to read people that can write really well, and engage your imagination, so is it worth reading?

I think DoM is good reading along with Currency Wars. I dont' 'belong' to any particular school but i enjoy the different theories. And, importantly, Rickards has been pretty spot on over the last few years, especially with regards to the longevity of the Euro.

[shmadz]

I think DoM is good reading along with Currency Wars. I dont' 'belong' to any particular school but i enjoy the different theories. And, importantly, Rickards has been pretty spot on over the last few years, especially with regards to the longevity of the Euro.

thanks

[shmadz]

But how does one effectively bar a police state? ?  Especially one that is gathering momentum?  The sheeple seem to be in love with it.  

sorry about that, it's a figure of speech I guess.

what I meant to say was "unless society crumbles and we allow a 1984 styles police-state apocalypse, I think the adoption of bitcoin for governments is inevitable."

[rpietila]

humans will always love gold, it's a very cool metal. but it's use as a currency is limited. store of value? probably, for a while, but there's just so damn much of it.

The majority of people hold the mistaken notion that gold is valuable because it is scarce. In fact, the complete opposite is true:

Gold is valuable because it is the element that has the highest stocks:flows ratio (basically: it is the most plentiful)


Because gold is so abundant already, making more gold is very difficult and does not materially change the balance of the existing stocks (only about 1.2% per year). This guaranteed low inflation is what makes gold a savings medium.

[explorer]

But how does one effectively bar a police state? ?  Especially one that is gathering momentum?  The sheeple seem to be in love with it.  

sorry about that, it's a figure of speech I guess.

what I meant to say was "unless society crumbles and we allow a 1984 styles police-state apocalypse, I think the adoption of bitcoin for governments is inevitable."

    Nothing to apologize for.  I was being a little facetious, but it is a valid point that the likelihood of this shit is stronger than merely non-zero.  How do you hedge that, besides planning to be somewhere else?   Bitcoin is likely good for that, but gold may be required to grease the wheels on the journey.  Always have some gold 
 
Which is more likely :  Western Governments adopting bitcoin, or terrorizing their subjects to the point of violent revolt?  I'm pretty sure I know which path they are progressing thus far.  That doesn't make bitcoin any less valuable, but it might raise the perceived value of PMs.

Wake me when BTC get over $700.

Out.

[findftp]

My personal experience lies in comparing my dealings with both e-gold and MtGox. In both cases I got out with no loss of funds before the collapse. The difference is how I managed to get out. In the case of e-gold I had to convert my gold into CAD and take delivery of the CAD. In the case of MTGox I had to convert my CAD to BTC and take delivery of my BTC. In both cases I ended up keeping the "delivered" form of money, CAD for e-gold, BTC for MTGox.

Yeah, just like I got my bitcoin out of bitcoin-24.com when they collapsed.
People who were in FIAT are still waiting for their money. (after more than a year).

The crucial point here is that gold is far worse than fiat in this context. So for ease of taking delivery we have

Best: Bitcoin and other crypto-currecnies
Middle: Fiat currencies USD, CAD, EUR etc.
Worst: Precious metals, gold, silver etc.

There is a reason why fiat was invented in the first place.

This is one of the reasons I expect both a very strong bull market in Bitcoin combined with a brutal bear market in gold and other precious metals. So we could see BTC / USD in the 100,000 to 1 million range or higher and 1 oz of gold dropping to 500 USD or even below 100 USD. In effect a major transfer of wealth from gold to Bitcoin, kind of like the move from horse powered transportation to motor transportation 110 years ago.

I agree that bitcoin wins out in this sense.

I have read though, in Rickards The Death of Money, that the gameplan of the big power blocs seems to be to drive down the price of PM's. One benefit of this is that the China's & Russia's can cheaply increase their gold holdings. Once it gets to 2.7 - 3 % of GDP, then, barring any kind of market crisis, the stage is set for the IMF to introduce SDR's which will include gold in the basket of currencies it is based on. This would significantly increase the fiat price of gold. Implicit to this is that the USD will cede its status as reserve currency.

In this case it might be gold up, bitcoin up?

yes, hedge your bitcoin with gold or visa verca

[rpietila]

This is one of the reasons I expect both a very strong bull market in Bitcoin combined with a brutal bear market in gold and other precious metals. So we could see BTC / USD in the 100,000 to 1 million range or higher and 1 oz of gold dropping to 500 USD or even below 100 USD. In effect a major transfer of wealth from gold to Bitcoin, kind of like the move from horse powered transportation to motor transportation 110 years ago.

I don't believe at all that bitcoin's rise means gold's demise. When bitcoin rises and holders diversify, a disproportionate amount is going to physical gold. I think this offsets the (also large) percentage of gold hoarders dishoarding gold to buy BTC.

Fiat is the thing I don't see anyone is interested in this scenario. It is also an instrument of slavery, because for every dollar you own, someone else is in debt the equal amount. It is shameful to have balances in most national fiats for this reason (ruble, yuan perhaps exception).

[cspeter8]

This is one of the reasons I expect both a very strong bull market in Bitcoin combined with a brutal bear market in gold and other precious metals. So we could see BTC / USD in the 100,000 to 1 million range or higher and 1 oz of gold dropping to 500 USD or even below 100 USD. In effect a major transfer of wealth from gold to Bitcoin, kind of like the move from horse powered transportation to motor transportation 110 years ago.

I don't believe at all that bitcoin's rise means gold's demise. When bitcoin rises and holders diversify, a disproportionate amount is going to physical gold. I think this offsets the (also large) percentage of gold hoarders dishoarding gold to buy BTC.

Fiat is the thing I don't see anyone is interested in this scenario. It is also an instrument of slavery, because for every dollar you own, someone else is in debt the equal amount. It is shameful to have balances in most national fiats for this reason (ruble, yuan perhaps exception).

why do you see ruble or yuan a possible exception; being different from any other fiat currency?  They are all devaluating in sync with eachother across the world:
http://www.zerohedge.com/news/2014-02-25/welcome-currency-wars-china-yuan-devalues-most-20-years
http://online.wsj.com/news/articles/SB10001424052702304856504579338583232958714 (Ruble drops to 5 year low)

[rpietila]

I have the memory that ruble and yuan would not be issued through debt issuance but as "pure paper" like Finnish Markka used to be some decades ago.

JFK got killed after proposing that the U.S. moved to debt-free U.S. Notes and scrapped FED-currency.

[cspeter8]

I have the memory that ruble and yuan would not be issued through debt issuance but as "pure paper" like Finnish Markka used to be some decades ago.

JFK got killed after proposing that the U.S. moved to debt-free U.S. Notes and scrapped FED-currency.

Yes!  executive order 11110, resulting in over 4 billion worth of $1 denominated silver certificates.  I heard of that with great interest also.  Regarding the Chinese Yuan article, I misread the headline: actually their currency only devalued in the last 7 days, but is up slightly over the longer term against the dollar.

[rpietila]

The Zeitgeist would like to have a debt-free pure fiat currency. I think it is slightly better than the current system (due to moral grounds - I believe the govt is more entitled to the seigniorage that the banking cartel) but still many better systems exist.

Bitcoin is unique in that in the course of its existence, $600M is burned in mining, which has at each time been the full payment for the new coins at market value (the "value added" or "profit" to the miners in general has been very low), yet the coins are now worth $8000M, so we have been able to monetize the network value up to $7400M while ensuring that nobody gets a free ride. In more than 90% of the altcoins, this is not the case.

[Siegfried]

I see it as very unlikely that the bear market in gold will continue for much longer. The bull market was reversed only through blatant manipulation with the help of derivatives. Part of the Quantitative Easing money created is used to short gold. Gold as the ultimate physical store of value will not lose its status and will rise in fiat terms when the fiat ponzi starts crashing - yet most likely much less than BTC.
Real money thinking will move to Bitcoin, but Keynesian thinking will flee en masse to real money thinking when their views dissolve.
Most of the world still sees gold as the ultimate representation of wealth. A big proportion of the people will not shift so easily from a physical store of value conception to a digital store of value conception. People like gold, especially more so outside the western world.
Gold can easily do x10 (1000%) within the next 10 years - depending on the geopolitical and monetary unfolding.
Silver can do x50
Bitcoin can do x1000 (100,000%)

I believe you are correct.

[bitcoin_bagholder]

This is one of the reasons I expect both a very strong bull market in Bitcoin combined with a brutal bear market in gold and other precious metals. So we could see BTC / USD in the 100,000 to 1 million range or higher and 1 oz of gold dropping to 500 USD or even below 100 USD. In effect a major transfer of wealth from gold to Bitcoin, kind of like the move from horse powered transportation to motor transportation 110 years ago.

I don't believe at all that bitcoin's rise means gold's demise. When bitcoin rises and holders diversify, a disproportionate amount is going to physical gold. I think this offsets the (also large) percentage of gold hoarders dishoarding gold to buy BTC.

Fiat is the thing I don't see anyone is interested in this scenario. It is also an instrument of slavery, because for every dollar you own, someone else is in debt the equal amount. It is shameful to have balances in most national fiats for this reason (ruble, yuan perhaps exception).

This is my strategy. Once the market value of a bitcoin equals the market value of an ounce of gold, a yet to be determined amount of my bitcoins will be sold/exchanged for gold. A small percentage mind you, as I'm a believer in the long-term progressive success of bitcoin. If something catastrophic happens (fatal flaw discovered in the protocol, whatever...), I will go down with the ship, bag in hand.

[zimmah]

...

I see it as very unlikely that the bear market in gold will continue for much longer. The bull market was reversed only through blatant manipulation with the help of derivatives. Part of the Quantitative Easing money created is used to short gold. Gold as the ultimate physical store of value will not lose its status and will rise in fiat terms when the fiat ponzi starts crashing - yet most likely much less than BTC.
Real money thinking will move to Bitcoin, but Keynesian thinking will flee en masse to real money thinking when their views dissolve.
Most of the world still sees gold as the ultimate representation of wealth. A big proportion of the people will not shift so easily from a physical store of value conception to a digital store of value conception. People like gold, especially more so outside the western world.
Gold can easily do x10 (1000%) within the next 10 years - depending on the geopolitical and monetary unfolding.
Silver can do x50
Bitcoin can do x1000 (100,000%)

My take is that the Keynesians will stick with what they love namely fiat; however if they decide to go for real money they will pick Bitcoin over gold. After all why pick the asset that is "going up x10" over the one that is going up x1000? Furthermore by picking that asset that goes up x10 they have to admit they were wrong.

My take is within 10 years
Gold x0.3 or even less
Silver x0.2 or less. I expect silver to lose value with respect to gold.
Bitcoin x2000 or more.

Dude, how can silver be 5 times cheaper than it is now? It's already unprofitable to mine silver, and silver is used in industries a lot. The demand for silver can not even go 5 times lower. Even if the demand for silver (as investment) would drop to 0, silver would still be in high demand for industrial purposes. Silver prices could even rise without anyone having to invest in silver, just because the industrial demand is so high and will only increase as production of electronics increases.

Also the gold to silver ratio is incredibly low. So silver will more likely gain on gold.

Bitcoin will still outperform both gold and silver. But gold and silver will still gain value relative to fiat. I think a 10-20 time increase for gold and a 50-100 time increase for silver is realistically possible.

[AlexGR]

The trouble for gold is that Austrian / Libertarian or "real money" capital could very easily flee en mass to Bitcoin. In addition there is the indication that gold is due for a big correction, without even considering Bitcoin. If one takes a look at the inflation adjusted price of gold over the last 100 years http://inflationdata.com/Inflation/images/charts/Gold/Gold_inflation_chart.htm one sees a double top developing. If one puts all of this together one has the perfect storm for a brutal bear market in precious metals.

Official inflation numbers are problematic because the indexes are constantly re-adjusted. If you use the official indexes of 1980 or 1990, you see inflation is much larger (applying these indexes in 2014). If you want to lower inflation these days, all you have to do is increase the percentage of technological products and services in the index and say "see? the prices are going down because you can get a mobile phone for less, a better laptop for less, a telecommunications contract for less etc etc".

Growth = increase in GDP minus inflation. So it "pays" when you under-report and hide* your inflation, as you can show a larger "real" increase in GDP. Additionally no-one complains because if you give people 3% interest and they have 5% low inflation, they'll rise up and go to PMs.

So instead of trying to convince people that they are "gaining" money by leaving their money at the bank, they undereport the inflation to make it "obvious" that people will "gain". Inflation 2% (instead of 5% actual), interest 3%, so 1% "profit" instead of 2% loss. Much easier to sell it in this way.

The larger the inflation, the more visible this under-reporting is. In some countries inflation is running at 20-25% and the government is reporting like half of it. That's visible and people complain because they can see that their money are running out FAST. 3-5-7% isn't so much and people at this level are under the influence of the Al Gore frog analogy... the frog is boiling at a rate too slow to notice. By the time the frog "gets it" (after a decade of depreciated bank deposits) it'll be too late because the interest doesn't cover the losses. So it has to be some other asset that protects people from inflation. Whether gold, silver, BTC etc etc - things that either inflate to a lower degree than fiat, or that have an increase in demand which is larger than their inflation.

* There are things you can hide, and things you can't... In US coinage, right now, pre1982 copper pennies cost more than 2cents in copper value compared to the 1cent face value.

Nickels (5c coins) are also very marginal as the metal costs 99% of the coin's face value. As it crosses over 100-110-120%, hoarding of nickels for melting, or as a way to counter inflation, will start to occur.

In Europe it's extremely "fascinating" that our 1c, 2c and 5c coins have a copper look, but in fact are made of dirt-cheap iron with a copper plating. You can't make this stuff up... copper is used for plating! They want to give people the impression of "value" and that nothing changed relative to the past (abundance of copper coins for small denominations in most european countries) because if people saw the iron they would immediately understand these are "cheap" coins... But they can't afford to go copper. The money's face value cannot afford to buy the metal it's minted on.