rpietila Wall Observer - the Quality TA Thread ;)

[findftp]

because if people saw the iron they would immediately understand these are "cheap" coins...

No they don't. Yet.

But it really show the worthlessness of FIAT IMHO.

For a hobby I do searching with a metal detector.
It is really funny to dig up perfectly year 1766 coins and see the degradation in time.
1800+ coins are already mixed with iron because they rust a bit.
1900+ are worse and you are very lucky to find an intact euro "copper" coin because 2006 "copper" coins are already looking like cauliflower.
In 20 years time you won't find a euro "copper" coin but you'll still find intact year 1700 coins.

It really made me think about our current monetary system while walking on the beach etc.

[1714751007]

1714751007

[wachtwoord]

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.

A success in Bitcoin will take away part of the market of gold for sure.

[CoinRocka]

CHOO CHOOOOOOOOOOOO   

[nioc]

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.

A few years ago a law was passed in the US making it illegal to melt down pennies and nickles.  There is also a law against taking more than $5 worth of pennies out of the US.  People still hoard copper pennies on the hope that the US will do away with pennies and they will be able to melt them.

[AlexGR]

A few years ago a law was passed in the US making it illegal to melt down pennies and nickles.  There is also a law against taking more than $5 worth of pennies out of the US.  People still hoard copper pennies on the hope that the US will do away with pennies and they will be able to melt them.

...and others just melt them anyway, because they know the law can't be enforced, especially in small operations involving a few people.

Refining to purity is what requires a larger operation. If you just melt the coins into bars or cubes, it's not 99.9% copper, so you have to ship the bars to the refinery to make them 99.9... if you do that, then you are using two heat cycles one for initial melt and one for refining (=more energy expended) so in that regard there is a loss. But it's still cheaper than moving them to Canada for melting (as they used to).

[SlipperySlope]

Here is the three-day resolution chart on Bitstamp showing the pause around $650 that some observers expected. When the rally penetrates this resistance, the next pause could be near $800. If it takes the rest of this month to do that, then I expect the bubble to get going in July and rapidly ascend beyond the all-time-high of $1163.

[Wary]

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.

Why an ounce? Both ounce and bitcoin are arbitrary: gold can be measured in carats or grams, and bitcoins can be millibitcoins or decibitcoins or whatever. Isn't it better to compare market caps of gold and bitcoin?

[BitChick]

Here is the three-day resolution chart on Bitstamp showing the pause around $650 that some observers expected. When the rally penetrates this resistance, the next pause could be near $800. If it takes the rest of this month to do that, then I expect the bubble to get going in July and rapidly ascend beyond the all-time-high of $1163.

So be it.

[Its About Sharing]

SlipperySlope - Very interesting numbers you got, as well as the current resistant point. I'm very similar to you via my Gann chart.

Notice current resistance (double red ring we have been bouncing off) and if your follow my chart out and up, you get 800 by mid June (Max) and the topside looks around 900 in late July.
Very rough numbers, not as much about price projection as it is about resistance/support points. Current support would be the red and black line below us.

[bitcoinsrus]

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.

Why an ounce? Both ounce and bitcoin are arbitrary: gold can be measured in carats or grams, and bitcoins can be millibitcoins or decibitcouns or whatever. Isn't it better to compare market caps of gold and bitcoin?

$6,470,120,039,345
gold market cap

btc market cap
$ 8,249,485,143   

[Apple market cap - $555.44 Billion]

Divide gold m.c by btc m.c and you get 784.305920574 (gold is that many times more than bitcoin)
if 1 bitcoin is currently $645 then if we had gold market cap, 1 btc would be $505,877.31877
------------------
doing the same for apple m.c, ($555,440,000,000 around) divide by  $8,249,485,143
is 67.3302624796 (apple is this many times greater than btc m.c)
so if 1 btc is $645 now, then if we had apples market cap, 1 btc would be $43,428.0192994

[Wary]

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.

Why an ounce? Both ounce and bitcoin are arbitrary: gold can be measured in carats or grams, and bitcoins can be millibitcoins or decibitcouns or whatever. Isn't it better to compare market caps of gold and bitcoin?

$6,470,120,039,345
gold market cap

btc market cap
$ 8,249,485,143   

[Apple market cap - 555.44 Billion]

So the time to diversify to gold will come when they'll match, i.e. when bitcoin will be half-million each.

[shmadz]

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.

Why an ounce? Both ounce and bitcoin are arbitrary: gold can be measured in carats or grams, and bitcoins can be millibitcoins or decibitcouns or whatever. Isn't it better to compare market caps of gold and bitcoin?

$6,470,120,039,345
gold market cap

btc market cap
$ 8,249,485,143   

[Apple market cap - 555.44 Billion]

So the time to diversify to gold will come when they'll match, i.e. when bitcoin will be half-million each.

no way dude. I have some gold and silver but I quit buying the second I heard about bitcoin.

imagine I have (I wish) 200 bitcoins. let's say I've been securing them myself for several years now and have multiple levels of security for my various wallets.

now let's say I want to diversify and move half of that into gold. that would be $500,000 X 100 bitcoin = 50 million dollars worth of gold. price is currently at about 1244 so that would be around 40 thousand ounces or about 1.244 metric tonnes of gold. ( not sure why those numbers work out that way, just weird?)


point is, where the hell are you going to safely store a ton of gold? and how much is it gonna cost you?

also, I thought this was an extremely good talk about bitcoin and gold and money in general and this conversation reminded me of it.

https://www.youtube.com/watch?v=aQTI1OFFFdw

Highly recommended.

[Wary]

point is, where the hell are you going to safely store a ton of gold? and how much is it gonna cost you?

If you have a ton of gold, you can rent Fort Knox. I'll be empty by then anyway

[AlexGR]

One of the mind-blowing properties of gold is its weight... most people do not really understand it because they haven't had the "luxury" of dealing in any significant quantity. Yet if one took a 2lt soft-drink bottle and filled it up with gold dust, that bottle would weigh approximately 40kg.

Storing 1 ton of gold requires something like a 37cm cube that one can fit in a safe or even a ...backpack. Silver stacking is a real problem in terms of sizes, but gold... well... not really. This weight/space relation allows gold to be hidden in many resourceful ways, if one is so inclined to hide it.

[zimmah]

point is, where the hell are you going to safely store a ton of gold? and how much is it gonna cost you?

If you have a ton of gold, you can rent Fort Knox. I'll be empty by then anyway

I'd rather build my own Fort Knox instead of trusting the owners of the real Knox. I don't want to get knox'd

[dnaleor]

point is, where the hell are you going to safely store a ton of gold? and how much is it gonna cost you?

If you have a ton of gold, you can rent Fort Knox. I'll be empty by then anyway

I'd rather build my own Fort Knox instead of trusting the owners of the real Knox. I don't want to get knox'd

 

[10c]

I don't want to get knox'd

 

[xxnewbiecoinerxx]

INTERESTING READING:
What Are the Main Drivers of the Bitcoin Price? Evidence from Wavelet Coherence Analysis http://arxiv.org/pdf/1406.0268v1.pdf

[zimmah]

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.

A few years ago a law was passed in the US making it illegal to melt down pennies and nickles.  There is also a law against taking more than $5 worth of pennies out of the US.  People still hoard copper pennies on the hope that the US will do away with pennies and they will be able to melt them.

Theoretically if you illegally melt a large amount of pennies, sell the copper, and use the copper to buy more pennies. You could make a nearly infinite amount of money.

That is, if you can get pure copper pennies for a penny....

[MahaRamana]

So what is the direction short term ?
What are technical indicators saying ?
Are we building a new floor ?