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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1805790 times)
cypherdoc
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September 01, 2014, 06:55:27 PM
 #11501

I. e., the price will converge to 100 USD (the nominal value) when the interest tends to zero.  This is not an exponential rise as you describe it.

I guess that this is either a misunderstanding or I'm wrong in what I think about bonds - please point out where my mistake is.

If it is a perpetual bond, such as the U.K. "consol", then cypherdoc's explanation is correct.

In practice, USA bonds are limited maturity, and can only go over the nominal value if the interest goes below zero, which has happened in other places for short times, short maturities.

Realizing that you can buy $1000 in 30 years for $4 now seems good, but you never know - dollar could have taken the way of all other fiat currencies and depreciated much more. You really needed to have foresight on the U.S. gov't ability to subdue the country and the entire world to take that bet really.

Cause it can never be paid back. Not then, not now. The bond prices are guaranteed by aircraft carriers and DU.

I was talking about selling bonds prior to maturity on the open market.

Even then, without the using of derivatives, a 30-yr at 1% rate is priced at 0.740. If the rate drops to 0.5%, it is 0.860. You can only get double or more for your money if you buy at significantly higher rates, such as 10% dropping to 5% means that your 30-year bond goes up in value: 0.042->0.215.

A linear relationship where bond value doubles with interest rate halving only exists with perpetuals.


Actually can you link to the table for these values please? Aren't the bond prices not formulaic but set by free market trade when sold prior to maturity?
A bond has a price that corresponds to a yield. Say I want a 1-year, $1000 bond to yield 1% at least. That's the same as saying I would be willing to pay $990.10 at most (1000/101) for it. The same is valid in the secondary market, it's always the same. Accepting lower yield is simply the act of paying more.

The formulas are somewhat complicated because some long-term bonds have anual payments (coupons) with a fixed yield. That's another case when a bond can be worth more than its principal: If it pays 4%/year but the market settles for 2%, the price of the bond can very well be above the promised final payment, without the need for negative interest rate.

thanks.  the other interesting point about the never ending interest rate death spiral is that existing entities that previously financed at fixed higher rates, think mortgages and corporations, develop an increasing debt burden with time that can hamper their growth.
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cypherdoc
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September 01, 2014, 06:56:23 PM
 #11502

actually, this is lame as hell, lol!



note there is nothing in there about innovation.
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September 01, 2014, 07:08:30 PM
 #11503

"The world banking system has always been messy," Obama said, speaking at a barbecue for Democratic donors in Purchase, New York. "In part, we’re just noticing now because of social media and our capacity to see in intimate detail the hardships that people banks are going through."

http://mashable.com/2014/08/30/obama-messy-world-social-media/
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September 01, 2014, 07:09:44 PM
 #11504

sh*ts gettin real:

http://www.zerohedge.com/news/2014-09-01/putin-celebrates-groundbreaking-russia-china-gas-pipeline-worlds-longest
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September 01, 2014, 07:11:21 PM
 #11505

actually, this is lame as hell, lol!



note there is nothing in there about innovation.

Certainly not pro innovation.

But I read (5) as anti innovation.

I've heard it many times off lazy people, "why reinvent the wheel", to which I always reply "because it's not round enough for me".

EDIT: gas news is BIG news.

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September 01, 2014, 07:11:58 PM
 #11506

more gold failure:



http://www.zerohedge.com/news/2014-09-01/deja-vu-someone-tell-gold-manipulating-machines-markets-shut
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September 01, 2014, 07:35:58 PM
 #11507

In the mean time, new wave of money is being handled to the worsts.

'Too big to fail' hands big banks $4.5 billion subsidy

The big four banks receive an annual subsidy of up to $4.5 billion from being perceived as "too big to fail" which should be paid for by a levy or increased capital charge, the Customer Owned Banking Association said in its second submission to the financial system inquiry.

The issue of how to reduce moral hazard when failing banks receive government support has been a hot-button issue for David Murray's inquiry. Ending the perception of "too big to fail" is also a key agenda item for the Brisbane G20 leaders summit in November.

COBA's submission attached analysis from modelling firm Macroeconomics quantifying the annual average value of the subsidy to the big four from being seen as too big to fail as between $2.9 billion and $4.5 billion, as funding costs were reduced by between 22 and 34 basis points. A separate submission by the regional banks quantified the subsidy at about $2 billion a year, using IMF assumptions.



this is all part of "Financial Repression" which they don't even bat an eye anymore talking about.  or "the financialization of the economy" is another one.  this is deflationary as it sucks capital and wealth away from productive portions of the economy into these black holes.

BIS also excludes the "systemically important" (their term for TBTF) banks from some provisions and gives special accommodation.

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Melbustus
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September 01, 2014, 08:38:35 PM
 #11508


this is all part of "Financial Repression" which they don't even bat an eye anymore talking about.  or "the financialization of the economy" is another one.  this is deflationary as it sucks capital and wealth away from productive portions of the economy into these black holes.


Don't forget talent. A number of the brightest minds end up in finance because it's so fantastically lucrative, with far far less risk than, say, a tech startup. A lot of those people are smart in ways that could be extremely valuable to society overall; eg, simultaneously technically/mathematically talented, *plus* rare creativity. Quite a shame that their most rational self-interested action is to devote decades to exploiting the details of centrally manipulated markets.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
But Bitcointalk & /r/bitcoin are heavily censored. bitco.in/forum, forum.bitcoin.com, and /r/btc are open.
Best info on Casascius coins: http://spotcoins.com/casascius
marcus_of_augustus
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September 01, 2014, 09:33:21 PM
 #11509


this is all part of "Financial Repression" which they don't even bat an eye anymore talking about.  or "the financialization of the economy" is another one.  this is deflationary as it sucks capital and wealth away from productive portions of the economy into these black holes.


Don't forget talent. A number of the brightest minds end up in finance because it's so fantastically lucrative, with far far less risk than, say, a tech startup. A lot of those people are smart in ways that could be extremely valuable to society overall; eg, simultaneously technically/mathematically talented, *plus* rare creativity. Quite a shame that their most rational self-interested action is to devote decades to exploiting the details of centrally manipulated markets.


Yes, they become very adept at finding the most efficient forms of corruption possible, at high frequency trading speeds no less ... sad waste of talent, time and resources, many call themselves "quantitative analysts" or 'quants'

cypherdoc
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September 01, 2014, 10:17:30 PM
 #11510

Once you correct for pricing of risk, it looks like investors have been anticipating a negative real rate well into the future ever since the end of the recession. Expectations lifted in the first half of 2013, but have been falling sharply this year.

http://econbrowser.com/archives/2014/08/bond-market-conundrum-redux

confusion reigns:

majamalu
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September 02, 2014, 01:37:13 AM
 #11511


for the same reasons i argue that Bitcoin will win the altcoin space as ppl gravitate to one currency for efficiency reasons and the network effect, i think that Bitcoin wins over gold.  as long as Bitcoin can remain secure, there is every reason to like it better than gold.  definitive fixed supply, portable, divisible, transportable, room for growth, intangible, not encumbered by a paper market (yet), unreachable by gvt, etc.  so no, i don't think they will go up together.  for the last 3 yrs, we've already seen them go in opposite directions.  gold has failed in its historical role as an enforcer to UST's.

Gold will have to compete against crypto, that's an excellent point. I wonder, however, if the baby boomers will feel comfortable investing in bitcoin as a safe haven. There's a lot of old people with a lot of money that would not touch bitcoin even if they think it might be a good bet, just out of fear of the unknown / technological illiteracy, don't you think?

http://elbitcoin.org - Bitcoin en español
http://mercadobitcoin.com - MercadoBitcoin
cypherdoc
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September 02, 2014, 01:42:49 AM
 #11512


for the same reasons i argue that Bitcoin will win the altcoin space as ppl gravitate to one currency for efficiency reasons and the network effect, i think that Bitcoin wins over gold.  as long as Bitcoin can remain secure, there is every reason to like it better than gold.  definitive fixed supply, portable, divisible, transportable, room for growth, intangible, not encumbered by a paper market (yet), unreachable by gvt, etc.  so no, i don't think they will go up together.  for the last 3 yrs, we've already seen them go in opposite directions.  gold has failed in its historical role as an enforcer to UST's.

Gold will have to compete against crypto, that's an excellent point. I wonder, however, if the baby boomers will feel comfortable investing in bitcoin as a safe haven. There's a lot of old people with a lot of money that would not touch bitcoin even if they think it might be a good bet, just out of fear of the unknown / technological illiteracy, don't you think?

Very true. But just like I say Bitcoin is golds Black Swan, it could be The Boomers Black Swan.

But if the youngins want that to happen, they better get crackin.
majamalu
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September 02, 2014, 02:04:52 AM
 #11513


for the same reasons i argue that Bitcoin will win the altcoin space as ppl gravitate to one currency for efficiency reasons and the network effect, i think that Bitcoin wins over gold.  as long as Bitcoin can remain secure, there is every reason to like it better than gold.  definitive fixed supply, portable, divisible, transportable, room for growth, intangible, not encumbered by a paper market (yet), unreachable by gvt, etc.  so no, i don't think they will go up together.  for the last 3 yrs, we've already seen them go in opposite directions.  gold has failed in its historical role as an enforcer to UST's.

Gold will have to compete against crypto, that's an excellent point. I wonder, however, if the baby boomers will feel comfortable investing in bitcoin as a safe haven. There's a lot of old people with a lot of money that would not touch bitcoin even if they think it might be a good bet, just out of fear of the unknown / technological illiteracy, don't you think?

Very true. But just like I say Bitcoin is golds Black Swan, it could be The Boomers Black Swan.

But if the youngins want that to happen, they better get crackin.

I think in the long run Bitcoin has the upper hand, but what if we have to deal with a scenario of widespread panic next week? Isn't it possible to see gold climbing to new highs, even if it is for the last time?

http://elbitcoin.org - Bitcoin en español
http://mercadobitcoin.com - MercadoBitcoin
cypherdoc
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September 02, 2014, 02:13:07 AM
 #11514


for the same reasons i argue that Bitcoin will win the altcoin space as ppl gravitate to one currency for efficiency reasons and the network effect, i think that Bitcoin wins over gold.  as long as Bitcoin can remain secure, there is every reason to like it better than gold.  definitive fixed supply, portable, divisible, transportable, room for growth, intangible, not encumbered by a paper market (yet), unreachable by gvt, etc.  so no, i don't think they will go up together.  for the last 3 yrs, we've already seen them go in opposite directions.  gold has failed in its historical role as an enforcer to UST's.

Gold will have to compete against crypto, that's an excellent point. I wonder, however, if the baby boomers will feel comfortable investing in bitcoin as a safe haven. There's a lot of old people with a lot of money that would not touch bitcoin even if they think it might be a good bet, just out of fear of the unknown / technological illiteracy, don't you think?

Very true. But just like I say Bitcoin is golds Black Swan, it could be The Boomers Black Swan.

But if the youngins want that to happen, they better get crackin.

I think in the long run Bitcoin has the upper hand, but what if we have to deal with a scenario of widespread panic next week? Isn't it possible to see gold climbing to new highs, even if it is for the last time?

well, here we are, Monday night futures:

gold down



dollar up

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September 02, 2014, 02:21:49 AM
 #11515

Quote
this is deflationary as it sucks capital and wealth away from productive portions of the economy into these black holes.

Growth can occur during inflation of the monetary base and growth can even occur during deflation.
  Politics doesnt want you to realise that but its another confusion put there, similar to triumphantly saying 'we reduced the deficit'  well thats still crap because a deficit means you are increasing the debt still.
  A reduced deficit is alot of trouble because one day we have to run massive surplus and for many years now it has not happened, we just increase debt and hope to heck inflation will wipe out the value

The reason for poor growth is a reduced currency value realised in exchange for good business but government always has enough money to spend too much.  Most business is forced to cut back varied by its sucess

Quote
Monday night futures:

gold down  usd up

If they each diverge 2% then the value of gold has not changed

cypherdoc
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September 02, 2014, 02:44:08 AM
 #11516

gold down moar
cypherdoc
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September 02, 2014, 03:36:26 AM
 #11517

here's the Building Construction Index.  topped in March:



DJ Heavy Construction Index.  topped in April:

cypherdoc
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September 02, 2014, 03:41:37 AM
 #11518

USD breaking up and thru another resistance level.  oh my traderCJ, oh my:

cypherdoc
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September 02, 2014, 03:49:40 AM
 #11519

here's the 10 yr weekly Heavy Construction Index.  you see that we've failed to clear the previous peak in 2008.  that's trouble:

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September 02, 2014, 04:09:45 AM
 #11520

gold down moarer
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