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Author Topic: The History of Gold and Silver Points to the future of Cryptocurrency  (Read 471 times)
BobK71
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March 29, 2019, 02:48:55 PM
Merited by LeGaulois (1)
 #1

I wrote the following in a discussion about gold and silver standards on another board.  Enjoy!

---------------------------------------------------

Clear eyes, my friends, clear eyes.  Over the long term, judge the true nature of a system by its fruits, not by the words attached to it, especially those uttered by central banks.

Did the dollar and other state currencies retain their values in gold or silver?  No.

Did the bankers and politicians create lots of money and debt under the standards?  Yes.

Did the gold and silver standards suppress the currency price of precious metals temporarily?  Yes, by definition, the currency price of gold/silver was fixed.

Did the elites keep installing this system over 300+ years, knowing it had 'failed' and would 'fail' everywhere?  Probably.  England's financial inflation was out of control less than ten years after the Bank of England was founded in 1690.  (It's not as if the elites have been inexperienced!)

Given this history, you have to forgive me for engaging in the wild, conspiracy-theory-nutsy speculation that, juuuuuuuuuuuuust perhaps, the elites used the metallic standards to prop up paper money and debt so they could create more of them.

Gold and silver standards did work as designed, however, when, after the bursting of a financial bubble, it was time to transfer most of the pain to the public, and away from the elites who had created the bubble in the first place, by choking the money supply, in the name of safeguarding the gold/silver standard and upholding the moral commitment to redeem paper for the same amount of gold or silver.  (Their golden goose system would have lost credibility fast if they had chosen devaluation/inflation as a response to the crisis -- i.e. they would have paid the price for the bubble.)

Absolutely brilliant.  (In reality, 'fiat money' is not worthy enough to tie the shoes of the gold standard, from the elites' point of view.  That's why, most likely, it won't last, and we're going back to something like the gold standard, except with multiple 'hard monies,' including Bitcoin.)

And true, there is no free market in money in this world.  That was my point (in response to the claim that the dollar is world reserve currency because of supply and demand.)

We should count ourselves lucky for being born in the narrow window of history when the elites lost control.  Do not lose the opportunity to profit spectacularly from it.
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LeGaulois
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March 29, 2019, 03:43:12 PM
 #2

"Gold is money, everything else is credit" J.P. Morgan

Between the crash of 1929 and 1932 people lost a lot, everything for some. Roosevelt forced the Americans to sell their gold, all that to recapitalize wall street. The Dollar has allowed the United States to live on credit.  2008 crisis, no need to explain how banks have been saved Roll Eyes
The current system is designed as such as there is no other end than a collapse. At that moment people will realize the power of gold.

Central banks created private ICO and governments participated in airdrops bounty campaigns

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March 29, 2019, 04:28:16 PM
 #3

Both Bitcoin and the gold has similar qualities Each Other because there are lots of things will be available to get investment on Bitcoin and also in Gold we are using a test commonly for future use so and comparing two gold Bitcoin also be a good investment right now

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March 29, 2019, 04:57:02 PM
 #4

In reality, 'fiat money' is not worthy enough to tie the shoes of the gold standard, from the elites' point of view.  That's why, most likely, it won't last, and we're going back to something like the gold standard, except with multiple 'hard monies,' including Bitcoin.
When we talk about fiat money in general, this is already the case: it doesn't last.

Quote
The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month. Founded in 1694, the British pound Sterling is the oldest fiat currency in existence. At a ripe old age of 317 years it must be considered a highly successful fiat currency. However, success is relative. The British pound was defined as 12 ounces of silver, so it’s worth less than 1/200 or 0.5% of its original value. In other words, the most successful long standing currency in existence has lost 99.5% of its value. (accentuated by me)
Source: https://www.dinardirham.com/the-rise-and-fall-of-fiat-currencies/

So, yes, it should be obvious: the sooner we go back to the gold standard, or even better, the sooner we adopt bitcoin on a large scale, the better it will be for everyone.
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March 29, 2019, 10:27:04 PM
 #5

Excellent points.

One of the things with transacting in gold and silver is that, often, you aren't transacting in the real deal. Under the gold/silver standards there was still a central bank, or authority, that issued notes that were representative of its value in gold/silver. That is not a trustless system, and it's next to impossible to not abuse this system through fractional reserve, and eventually defaulting on the promises of paying the bearer on demand in precious metals in physical form.

That's essentially what happened that brought the gold standard era to an end. At the end of the day, it's all an illusion.

Bitcoin is different. You don't need a central entity in order to transact with it efficiently (as opposed to the bulky nature of precious metals), and intrinsically, there can be no fractional reserve. The fungibility of currency is also preserved much better than precious metals, since purity and weight don't need to be tested.
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March 29, 2019, 10:41:25 PM
 #6

The British pound was worth about a quarter ounce of gold going back a little more then a hundred years ago.   The main reason it slipped was the decline of the British empire and with great upset it was easier for government not to maintain a solid monetary standard because of debts repayable in that would have been difficult to repay without upset.

Similar to now, its very unlikely the many trillions of debt will repaid with a Dollar of worth known in 2019.   The debt in future will repaid in dollars worth even less then now, making it far easier then keeping an even value.
That effect plays into Bitcoin or many prices which are not being devalued daily by that process, all costs are apparent in the mining and other stated costs.

I doubt we return to a solid gold standard, more likely a variety of alternatives but its unlikely US dollar will remain the main global reserve currency however its likely to be one of many like Sterling remains despite having no silver coins left

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March 30, 2019, 08:02:42 AM
 #7

Bitcoin is different. You don't need a central entity in order to transact with it efficiently (as opposed to the bulky nature of precious metals), and intrinsically, there can be no fractional reserve.
I agree that Bitcoin, as it was conceived originally, leaves no room for fractional reserves. But it is always in our human nature to look for loopholes and exploits. For example:

Quote
For All we know there could be fractional reserve Bitcoin happening already even before Wall Street comes in and in fact actually I would point to one specific example, which is the OKEX futures loss.
Source: https://medium.com/@whatbitcoindid/the-threat-of-fractional-reserve-bitcoin-from-wall-street-with-saifedean-ammous-caitlin-long-2d61e63ac868

It seems that exchanges currently, and EFTs in the future, may serve as hidden sources of fractional reserves built using Bitcoin.

I have no idea how big the danger is, but there is definitely a danger of fractional reserves even in Bitcoin we should be aware of.

The same dilemma is already present with the various gold ETFs. There is much discussion of whether or not the "ETF gold" is really backed up by existing physical gold.
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March 30, 2019, 12:45:44 PM
 #8

The gold and silver is being here in this world since from a very long period of time so we cannot been comparing the Bitcoin to the the silver and gold will not be right thing because the stability of gold will be more stronger than anything people are using this is a huge future investment but in today's situation cryptocurrency play the same that's why the comparison is here.

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March 30, 2019, 01:19:42 PM
 #9

The gold and silver is being here in this world since from a very long period of time so we cannot been comparing the Bitcoin to the the silver and gold will not be right thing because the stability of gold will be more stronger than anything people are using this is a huge future investment but in today's situation cryptocurrency play the same that's why the comparison is here.
You are right. Bitcoin will have a chance to be the next precious things as gold in the new era. I am sure that at the right time and the right moment, bitcoin will be the expensive things that we have besides gold and silver. I do not doubt that bitcoin will make people amaze because bitcoin can be a new source of the investment and it's different than gold and silver, and they must have at least 1 bitcoin as their investment.

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March 30, 2019, 01:29:18 PM
 #10

2008 crisis, no need to explain how banks have been saved Roll Eyes
The current system is designed as such as there is no other end than a collapse. At that moment people will realize the power of gold.
Yeah, unfortunately the crisis of 2008 was overcome with the money of tax payers. Those who were rich remained rich, the authorities whose fault the whole thing was remained in control, and it's the weaker groups like older people lost what they truly needed... People might realize the power of gold, but it's too late to turn back to gold standard anyway. This is because even a couple of decades ago there were too many financial interactions between humans to be covered by gold. There's simply not enough gold for that. That's why cryptos like Bitcoin might come in handy after the collapse or as a way to avoid the crush althogether by gradual transfer from fiat to it. There's enough Bitcoin, there's definite knowledge about the amount of Bitcoin and about the mining rates in time.

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March 30, 2019, 01:54:46 PM
 #11

I do agree with most of the historic parts of the discussion and certainly the "elites" are not even the elites anymore.

Back in the day elites were people who had strong families that are known because the lands were not really covered big and if you had a strong family in any country you reside you would be basically having your own huge lands where people live and you were not even king, say you are in ottoman empire in the biggest time of their era and there was a king on top of everything but you had a huge land in antioch and everyone knew who you were and you basically just rented the city to people and collected the cash, that was "elites" back in the day.

Moreover, in today's world the elites are hiding, they are not doing stuff with general public, they do what they do behind closed doors, they do not want or need fame at all. I don't think they "lost" control just yet, they are just hiding right now.


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March 30, 2019, 09:46:16 PM
 #12

2008 crisis, no need to explain how banks have been saved Roll Eyes
The current system is designed as such as there is no other end than a collapse. At that moment people will realize the power of gold.
Yeah, unfortunately the crisis of 2008 was overcome with the money of tax payers. Those who were rich remained rich, the authorities whose fault the whole thing was remained in control, and it's the weaker groups like older people lost what they truly needed... People might realize the power of gold, but it's too late to turn back to gold standard anyway. This is because even a couple of decades ago there were too many financial interactions between humans to be covered by gold. There's simply not enough gold for that. That's why cryptos like Bitcoin might come in handy after the collapse or as a way to avoid the crush althogether by gradual transfer from fiat to it. There's enough Bitcoin, there's definite knowledge about the amount of Bitcoin and about the mining rates in time.

If you have notice the Russian financial proposals then you might be agree with in 19th century itself. They were proposing the gold usage to value of wealth but fact US made USD to calculate it.
Soviet Russia is not accepting it for long time. I believe in future bitcoin or gold may get accepted as mainstream wealth calculation tool for us.
Note one more in that we got bitcoin in the 2009 only exactly after the crisis time.
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March 30, 2019, 11:42:40 PM
 #13

Quote
too many financial interactions between humans to be covered by gold. There's simply not enough gold for that. That's why cryptos like Bitcoin might come in handy after the collapse

The price of gold will rise to about 10,000 an ounce is the calculation I heard by Jim Rickards, any less of a price would be too tight a standard to allow commerce easily.    You cant assume the conditions present now with gold unused  will be close to a world where dollar is a minor to backing by gold.  
This would be the largest change in economies, in politics for entire nations the world would be changing just to switch back to any kind of gold exchange over our current far extreme of debt, deficit, QE and promises via paper.   The easiest thing to note would be very likely a higher price.

Crypto will be useful I agree but in a different way to run parallel to world trade for digital exchange and I think it should be and probably will be forced to be low cost in order to be competitive vs a dozen possible alternatives in a post debt collapse world.   Competition is a good thing, again its full reversal to the reality for billions of workers now who live under political debt as money

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March 31, 2019, 05:49:35 AM
 #14

Quote
too many financial interactions between humans to be covered by gold. There's simply not enough gold for that. That's why cryptos like Bitcoin might come in handy after the collapse

The price of gold will rise to about 10,000 an ounce is the calculation I heard by Jim Rickards, any less of a price would be too tight a standard to allow commerce easily.    You cant assume the conditions present now with gold unused  will be close to a world where dollar is a minor to backing by gold.  
snip-
I have an interesting link to an article that differentiated gold and bitcoin and also compared them. (But sadly I forgot where it is)

Unlike bitcoin, gold is indeed tangible where you will also be able to use as a piece of jewelry, not just an investment.
Gold has been used as a form of currency for more than 2,000 years and considered as one of the safest and secured investments of all since the value doesn't depreciate mostly.

But yes, bitcoin is also created by mining just like gold, but there's a gap compared to gold because bitcoin is mined electronically and that is a very big discussion if bitcoin would like to ask for an investor. Gold is a physical object and bitcoin is entirely digital. Just check the article and you will know more.




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Snaic
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March 31, 2019, 06:36:40 AM
 #15

The gold and silver is being here in this world since from a very long period of time so we cannot been comparing the Bitcoin to the the silver and gold will not be right thing because the stability of gold will be more stronger than anything people are using this is a huge future investment but in today's situation cryptocurrency play the same that's why the comparison is here.
Gold and silver were and remain eternal value. The value of cryptocurrency is not yet verified by time. On the prospects of cryptocurrency, it is too early to say anything. It takes at least a hundred years to be able to say that this type of investment and means of payment is stable and in demand. So far, the cryptocurrency has not occupied a certain niche in the financial relations of society, it has just begun to develop.

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March 31, 2019, 04:11:19 PM
 #16

...in today's world the elites are hiding, they are not doing stuff with general public, they do what they do behind closed doors, they do not want or need fame at all. I don't think they "lost" control just yet, they are just hiding right now.

By 'losing control,' I meant that the elites were forced to allow gold and silver prices to go up in currency terms.  By 1971, the entire world (with the exception of Switzerland), including the core country, the US, had to officially abandon the gold standard and anything else based on it.

This was very significant when you consider that, at least in the core countries, first Britain and then the US, state currency had basically never been devalued against gold since the Bank of England was founded in 1690.
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March 31, 2019, 04:19:42 PM
 #17

Between the crash of 1929 and 1932 people lost a lot, everything for some. Roosevelt forced the Americans to sell their gold, all that to recapitalize wall street. The Dollar has allowed the United States to live on credit.

And I don't think the confiscation of gold from Americans can be repeated at this point.  In 1933 America and Americans had most of the world's gold, and gold had been officially recognized as the only true money for 60+ years by Britain and America.  (Not even silver was considered money.)  Americans still had a lot of trust in the government.

Under these conditions, it made sense for the elites to try financial repression (legally forcing Americans to turn in their gold for the previous fixed price of $20+ per ounce) as a major support for their system.  The reality is almost the exact opposite today, so I don't think they will try that trick again.
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March 31, 2019, 04:48:41 PM
 #18

Excellent points.

One of the things with transacting in gold and silver is that, often, you aren't transacting in the real deal. Under the gold/silver standards there was still a central bank, or authority, that issued notes that were representative of its value in gold/silver. That is not a trustless system, and it's next to impossible to not abuse this system through fractional reserve, and eventually defaulting on the promises of paying the bearer on demand in precious metals in physical form.

That's essentially what happened that brought the gold standard era to an end. At the end of the day, it's all an illusion.

Bitcoin is different. You don't need a central entity in order to transact with it efficiently (as opposed to the bulky nature of precious metals), and intrinsically, there can be no fractional reserve. The fungibility of currency is also preserved much better than precious metals, since purity and weight don't need to be tested.

Thanks, these are good points too!  The architecture of money that I envision is:  (and BTW this includes 'fiat money', which IMO is in reality a flexible gold standard, if we define the gold standard by its true nature which is the suppression of gold prices to support the issuance of paper money and debt by the elites.  Books like 'Gold Wars' and 'The Gold Cartel' have exposed serious evidence of the elites' use of derivatives to suppress gold and silver under the 'fiat' system.)

At the base level, you have hard money like physical gold and Bitcoin which are trustless, anonymous and fungible (and maybe Bitcoin is more convenient than gold, but remember Bitcoin is just code and data, where unlimited new altcoins can be created.)

Above that level, there is central bank money.  Central banks of core countries are wise enough not to abuse their power to issue this money too obviously.  This issuance is, in reality and over the long term, dependent on the amount of hard money each central bank holds, one way or another.

Above that level, there is debt (or equivalent) issued by major governments and institutions like commercial banks, big corporations and pension funds.  The elites in core countries are eager to protect the trust in this 'money' too, but this is not as important as central bank money.

And very roughly speaking, above that level, there all sorts of 'stores of value' which are outer-ring financial assets like stocks, lesser corporate bonds, real estate, etc.  These are the least safe, especially at times like these.  The elites will protect these when possible, and abandon them when necessary, especially if the crash can be blamed on reasons that don't trace back to the nature of their system, in public opinion.  The system tries to portray gold and Bitcoin as being among these assets, when in reality they are different beasts all together.

The outer layers around Bitcoin have not yet been built, and I don't think they will look superficially like those around gold, but they will, and will work essentially the same as those around gold, even though they might be advertised as something totally different in the story for the public.

For example, when it's time to reduce the money supply to control the dollar price of Bitcoin, it won't be the old story that 'we have to live up to our moral responsibility to redeem dollars for the same amount of gold, since only gold is real money.'  It will be something like 'Bitcoin prices rising is a sign the public is losing faith in the dollar, and this is followed by disastrous financial crashes, so we must reduce the money supply to restore faith in the dollar.'

In reality, whichever story is used, comes out to be the same thing.
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March 31, 2019, 05:25:50 PM
 #19

The gold and silver is being here in this world since from a very long period of time so we cannot been comparing the Bitcoin to the the silver and gold will not be right thing because the stability of gold will be more stronger than anything people are using this is a huge future investment but in today's situation cryptocurrency play the same that's why the comparison is here.
Gold and silver were and remain eternal value. The value of cryptocurrency is not yet verified by time. On the prospects of cryptocurrency, it is too early to say anything. It takes at least a hundred years to be able to say that this type of investment and means of payment is stable and in demand. So far, the cryptocurrency has not occupied a certain niche in the financial relations of society, it has just begun to develop.

I wouldn't say gold will always hold a good value, what if asteroid mining becomes viable in the future?  The price of gold and other precious metals may plummet as the market gets flooded.




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March 31, 2019, 05:59:36 PM
 #20

The gold and silver is being here in this world since from a very long period of time so we cannot been comparing the Bitcoin to the the silver and gold will not be right thing because the stability of gold will be more stronger than anything people are using this is a huge future investment but in today's situation cryptocurrency play the same that's why the comparison is here.
Gold and silver were and remain eternal value. The value of cryptocurrency is not yet verified by time. On the prospects of cryptocurrency, it is too early to say anything. It takes at least a hundred years to be able to say that this type of investment and means of payment is stable and in demand. So far, the cryptocurrency has not occupied a certain niche in the financial relations of society, it has just begun to develop.

I wouldn't say gold will always hold a good value, what if asteroid mining becomes viable in the future?  The price of gold and other precious metals may plummet as the market gets flooded.

I do believe even if asteroid mining becomes viable, it wont affect gold price too much. Gold is still gold which is still one of the most favorite asset to invest by most people in this world. It will not be easy to change people's interest from something to a new thing.




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