Gold collapsing. Bitcoin UP.

[miscreanity]

Min-Max Ranges:

• 40-80% gold
• 10-40% silver
• 10-30% bitcoin

Why? First, gold is the metal that will be revalued and remonetised into the global financial system (Bitcoin hasn't made enough inroads yet). Second, gold is less expensive to store than silver. Third, although silver will rise with gold, there is no certainty as to when & how revaluation will occur, or whether silver will keep up during latter stages of revalutation (financial utility may boost gold for a some time, even though the natural ratio is below 20:1).

I tend to agree with your ranges, with the addition that Silver most often behaves like an industrial metal and crashes with the entire financial market (i.e. Silver is already down about 50% from the Apr '11 high while Gold is UP vs. 2011..
This is why I recommend 0-15% silver in bear markets like we are in.

Yes - the primary reason I have a 10% minimum on silver is because it allows you to remain in the metals and profit from GSR volatility without having to risk touching fiat at any point. I also consider it a backup in case I wind up somewhere like Mexico, where silver is more prevalent than gold. Other than that, industrial demand is frustratingly volatile as you pointed out.

If it gets to 30 to 1 (50 silver 1500 gold).  I might think about rebalancing.

If the opportunity arises before revaluation. That event could see the GSR at 100:1 as S3052 suggests, then there's no telling how long it might be until the ratio would decline.

S3052, could you please post some of your reasoning for your $13 dollar target for silver?

AFAIK, the reasoning is that silver is mainly an industrial metal and it will decline along with most other asset classes in a deflationary crash.

I have to agree, in regard to paper prices. Physical silver retains a very strong monetary aspect and will rise with physical gold during such an event, though perhaps not to the same extent at first.

Consider this hypothetical situation: consumer gas prices in the US go to just shy of $5/gallon and never break above. War breaks out in the Middle East, and supply to America is cut in half. The price should rise, presumably doubling in the absence of other factors. However, the price can be maintained by government decree through price controls.

Since the consumer sees no effect on prices, there is no motivation to modify consumption habits. At some point, the lack of supply will fail to keep pace with demand, causing real shortages despite a stable price. There is historical precedent: the same situation has fairly recently occurred in Eastern Europe and Russia, notably during the Soviet Union's existence.

End result: gas (silver) prices may be a somewhat reasonable $5/gal ($30/oz) - if you can get any. You might have a better chance camping out at an Apple store for the next iThing.

A situation similar to the above is guaranteed with the current path the world is headed on. There are potential ways of solving the issue, but the price will make most people question whatever faith they hold, and any hope for humanity in general.

Thanks for the feedback miscreanity! I did struggle with my 50% silver and 30% gold choices for a while, but in my case I decided to go with the more speculative play. I see a lot more profit potential with silver, and the volatility doesn't bother me as I'm not selling anytime soon. Also, I would not be the slightest bit surprised to find out that there is actually much less available silver in the world than we've been led to believe.

I keep some USD, CAD and CHF on hand as well, and I'm looking at getting some more concealable gold like necklaces and bracelets in case the time ever comes where I have to pack up and F off in a hurry - gold jewelry and small coins would be best for that. A USB stick full of bitcoins wouldn't hurt either, especially if you have to go through any sort of checkpoint. 

Sure thing. As I commented to silverbox, the silver play could be rather unpleasant if the ratio doesn't plummet - soon. Multiple times, cyperdoc pointed out that markets can go in the opposite direction you expect for a long time - we might only get one more shot at a good GSR before the dam breaks and we're stuck for who-knows-how-long.

Yeah, paper currency is nice to have. Still need to pay expenses somehow until the world regains its sanity. What if you get stripped of all your possessions and deported, or worse - incarcerated at a camp? Might want to work on a brain wallet...

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[miscreanity]

... I'd be shocked if such policies were far behind in the vassal state of Canada (and I am aware that you guys are a commonwealth of the British Crown...in theory that is.)

I'm starting to think the US has been brought back into the fold as well...

From the GGR:

Legend on right has a type; should show "Short" instead of "Long".

Managed money (hedge funds and the like) is getting absolutely raped on the silver price swings. These are the hacks who don't get BTFD. I'd be wary of the remainder of this month.

[Dusty]

I would like to know the thoughts of some of the goldbugs here in this thread (like I am) about this important news: Fascinating Reading: Larsen’s Latest on LENRs and Gold

Summary Excerpts from Lewis Larsen’s Text:

- Outlines a hypothetical Widom-Larsen Theory LENR neutron-catalyzed transmutation network that produces stable gold and platinum end-products from tungsten ‘seed’ scrap metal

- Presents published third-party data which strongly suggests that W–> Au precious metals production by WLT LENR transmutations has been observed in laboratory experiments dating back to the 1920s and is also operating on earth in nature.

-Hydrothermal vent systems appear to be one example of a natural environment in which LENR W –> Au networks have likely operated in the distant past as well as in the present era

- Based on published data, it appears that natural W –> Au LENR transmutations may occur in Nature both abiotically and/or perhaps even biologically with certain species of bacteria

- Speculative analysis of the potential economics of future W –> Au ‘transmutation factories’ for production of precious metals such as gold and platinum suggests that, if present relative price relationship of tungsten vs. gold and platinum were to continue into the future, ‘conversion’ of tungsten into precious metals has the potential to become a highly profitable business activity. If such processes can be scaled-up volume-wise and production costs reduced further by riding the “experience curve,” LENRs might compete with conventional mining within 10 – 15 years


It's since the unveil of Andrea Rossi e-cat that I think of the implications of the evolution of LENR technologies, and the first one that came to mind to me is the production of gold.

If this is true (and I think that's only a matter of time, as we know how fast a technology evolves once it reaches mass production) that would be another great incentive to switch to something not counterfaitable like Bitcoin...

[Dusty]

You can turn lead into gold now, the trouble is the amount of energy needs is well, like 1/4 of a Sun   

Not anymore, that was the energy required before cold fusion was even remotely considered possible.

With cold fusion (LENR) more and more researched and enginereed (next year we should have two products on the market) not only, as explained in the article, turning tungsten or other material to gold become feasible with much less energy, but also energy would be almost free.

So I would not LOL so much :-D

[Dusty]

you say not lol so much but I did a double lol, I guess we will see what happens. 

Of course 

Anyway I find interesting talking about the implications on such an hypothetical scenario.

[S3052]

S3052, could you please post some of your reasoning for your $13 dollar target for silver?

I will do that soon.

[silverbox]

Sure thing. As I commented to silverbox, the silver play could be rather unpleasant if the ratio doesn't plummet - soon. Multiple times, cyperdoc pointed out that markets can go in the opposite direction you expect for a long time - we might only get one more shot at a good GSR before the dam breaks and we're stuck for who-knows-how-long.

Yeah, paper currency is nice to have. Still need to pay expenses somehow until the world regains its sanity. What if you get stripped of all your possessions and deported, or worse - incarcerated at a camp? Might want to work on a brain wallet...

Your thinking it will break in the wrong direction..  The mining rate of silver to gold is something like 10 to 1, yet the price ratio is something like 50 to 1..  Its ass backwards and if it breaks it will break towards the mining rate IMO.

[silverbox]

[cypherdoc]

OMG!

[cypherdoc]

?

[miscreanity]

I would like to know the thoughts of some of the goldbugs here in this thread (like I am) about this important news: Fascinating Reading: Larsen’s Latest on LENRs and Gold

Summary Excerpts from Lewis Larsen’s Text:

...

It's since the unveil of Andrea Rossi e-cat that I think of the implications of the evolution of LENR technologies, and the first one that came to mind to me is the production of gold.

If this is true (and I think that's only a matter of time, as we know how fast a technology evolves once it reaches mass production) that would be another great incentive to switch to something not counterfaitable like Bitcoin...

If it can be done economically, it would have essentially the same result as Off-Planet Economics. Even the time scales are potentially similar. That still leaves at least a decade or two between now and then, though - physical gold should continue its bull run until revaluation, then remain stable until LENR/OPE force a shift to cryptocurrencies.

Sure thing. As I commented to silverbox, the silver play could be rather unpleasant if the ratio doesn't plummet - soon. Multiple times, cyperdoc pointed out that markets can go in the opposite direction you expect for a long time - we might only get one more shot at a good GSR before the dam breaks and we're stuck for who-knows-how-long.

Yeah, paper currency is nice to have. Still need to pay expenses somehow until the world regains its sanity. What if you get stripped of all your possessions and deported, or worse - incarcerated at a camp? Might want to work on a brain wallet...

Your thinking it will break in the wrong direction..  The mining rate of silver to gold is something like 10 to 1, yet the price ratio is something like 50 to 1..  Its ass backwards and if it breaks it will break towards the mining rate IMO.

Prices do not necessarily reflect fundamentals - certainly not always immediately. Efficient market theory is largely bunk in the short-term, especially during periods of turmoil. With a lack of valid information and a slew of dis/misinformation, even more so. If EMH were valid right now, the miners would not have succumbed to the past year's fear/short trade.

The initial reaction to an official revaluation of gold without concomitant activity for silver, the majority will follow official announcements and head toward gold. To be sure, many will attempt to acquire silver as well, but the herd's main focus would ensure that independent logic and sensibility are discarded.

Watch for increasing suggestion of gold as a valid monetary instrument, and official rumblings regarding smaller denominations of ~1g. Preparation of the citizenry is a mainstay of political maneuvering.

[silverbox]

Your thinking it will break in the wrong direction..  The mining rate of silver to gold is something like 10 to 1, yet the price ratio is something like 50 to 1..  Its ass backwards and if it breaks it will break towards the mining rate IMO.

Prices do not necessarily reflect fundamentals - certainly not always immediately. Efficient market theory is largely bunk in the short-term, especially during periods of turmoil. With a lack of valid information and a slew of dis/misinformation, even more so. If EMH were valid right now, the miners would not have succumbed to the past year's fear/short trade.

The initial reaction to an official revaluation of gold without concomitant activity for silver, the majority will follow official announcements and head toward gold. To be sure, many will attempt to acquire silver as well, but the herd's main focus would ensure that independent logic and sensibility are discarded.

Watch for increasing suggestion of gold as a valid monetary instrument, and official rumblings regarding smaller denominations of ~1g. Preparation of the citizenry is a mainstay of political maneuvering.

Sure, but fundamentals will be reflected at some point.  I don't think the silver gold price ratio in USD will be 10 to 1 anytime soon .  But its more likely that it will head towards the fundamentals then away from them .

I find it highly unlikely there will be an official revaluation of gold anytime soon.  Only Ron Paul is serious about returning to the gold standard, all the rest of the politicians think its bubkis, and the unwashed masses dont' even understand the issue..  The fiat ponzi can continue on for decades just fine..

[tvbcof]

...

Sure, but fundamentals will be reflected at some point.  I don't think the silver gold price ratio in USD will be 10 to 1 anytime soon .  But its more likely that it will head towards the fundamentals then away from them .

Silver is useful enough that it could command huge valuations if a severe supply issue pops up.  I would not rule out a return to the magical 7:1.  But I am certainly not counting on it by any stretch no matter what.

The fact that a good bit of the Ag supply comes as a byproduct mining more industrial and less valuable resources, a supply issue is even more possible.

I find it highly unlikely there will be an official revaluation of gold anytime soon.  Only Ron Paul is serious about returning to the gold standard, all the rest of the politicians think its bubkis, and the unwashed masses dont' even understand the issue..  The fiat ponzi can continue on for decades just fine..

Could.  I'm not ruling it out.  OTOH, a revaluation could be something which is forced upon everyone no matter what their political bent or current power base.

---

On a different topic, thank you to the poster who called attention to the transmutation possibility.  Although I try to keep some vague tabs on such things, I cannot say that I had been aware of this line of research.  As much as I wanted to find it obviously 100% scammy when I explored a bit last night, I could not bring myself to that mindset.  But the hour was late.

If transmutation of W --> Au is the best hope for Bitcoin then it does not exactly increase my hope for the solution.  It does, however, add another reason to have at least a tiny BTC position.

[tvbcof]

People believe Ron Paul's crap because he is a politician that says things they want to hear. But it's the same thing that makes him ineffective. The Pauls have carved out a niche is all. It keeps all the PM dreamers from actually changing anything... The same thing that the Grateful Dead did for the New Left.

The Pauls give every indication of believing everything they say.  It's some combination of laudable, amusing, and pathetic.

They are there to neutralize you.

Whether accident or design the end result is the same.

[cypherdoc]

Wash, rinse, repeat:

[silverbox]

this thread was started 3/13

Bitcoin  5.40

Gold 1690.


today 5/22

Bitcoin 5.08   (down ~6%)

Gold 1570  (down ~7%)

BTC still isn't up.   Gold still hasn't collapsed.

AAPL 557  (gonna be close, but support seems like bedrock at ~525)

[miscreanity]

I find it highly unlikely there will be an official revaluation of gold anytime soon.  Only Ron Paul is serious about returning to the gold standard, all the rest of the politicians think its bubkis, and the unwashed masses dont' even understand the issue..  The fiat ponzi can continue on for decades just fine..

Not a 1:1 standard, or any kind of fixed ratio.

If a company has 1,000,000 worth of actual equipment, 1,000,000 shares should be valued at ~1/share. Observe the lack of arbitrary unit denomination (€, $, ¥).

Gold is the preferred payment for oil among many producers. Both oil and fiat currencies are consumable: they can burn up or evaporate through dilution. Gold remains. In effect, providing oil and receiving gold is getting a long-term store of value in exchange for a short-term supply of a consumable good.

Oil has enabled massive wealth generation, and much of the oil has been paid for with gold. Much of the oil has also been paid for with fiat, but unlike a stock split (which is a good approximation of gold's wealth accumulating power), fiat is like a new share issuance that dilutes existing shareholders' wealth.

It's a simple fact that oil is a pervasive commodity, touching the structural basis of everything in modern life that requires energy production, and gold is highly associated with it as a payment method that cannot be artificially diluted (so far). Yet gold's value has barely risen in relation to the overall growth afforded by oil. That means, using the company analogy above, gold is trading as though its shares are perhaps 0.05/share instead of 1/share.

Relative to other asset/wealth classes, gold is unbelievably undervalued - especially when considering the above. No gold standard is necessary for revaluation - only acknowledgement of gold's monetary function. Since gold is the primary choice for a monetary metal, silver may not be in the limelight immediately. So yes, fundamentals will be, and always are reflected eventually, but the short-term (on major cycles that can be years) will probably be distorted to favor the functional capacity inherent with official recognition.

Are you willing to take the risk (possibly years) of watching gold be officially accepted in a currency capacity while silver is denied? A GSR of 100:1 is easily conceivable in that situation, even if it would be temporary. As cypherdoc can attest, it's a bitch to store a large amount of physical metal; at large scales (tons), the disparity between gold and silver storage becomes extreme in terms of both space and expense. Old money is not going to throw away an additional 10-30% in storage fees just to hold silver; they are not forced to hold silver the way industrial users are. Gold is still optimal for monetary purposes.

Hold both, but mostly gold (phase mostly out of silver on any good GSR declines). And Bitcoin

[cypherdoc]

bedrock

bedrock?  more like butter.

[silverbox]

I find it highly unlikely there will be an official revaluation of gold anytime soon.  Only Ron Paul is serious about returning to the gold standard, all the rest of the politicians think its bubkis, and the unwashed masses dont' even understand the issue..  The fiat ponzi can continue on for decades just fine..

It's a simple fact that oil is a pervasive commodity, touching the structural basis of everything in modern life that requires energy production, and gold is highly associated with it as a payment method that cannot be artificially diluted (so far). Yet gold's value has barely risen in relation to the overall growth afforded by oil. That means, using the company analogy above, gold is trading as though its shares are perhaps 0.05/share instead of 1/share.

I disagree with your 20 x undervalued example.  I think gold is undervalued, but not by 20 to 1 .

Relative to other asset/wealth classes, gold is unbelievably undervalued - especially when considering the above. No gold standard is necessary for revaluation - only acknowledgement of gold's monetary function. Since gold is the primary choice for a monetary metal, silver may not be in the limelight immediately. So yes, fundamentals will be, and always are reflected eventually, but the short-term (on major cycles that can be years) will probably be distorted to favor the functional capacity inherent with official recognition.

Are you willing to take the risk (possibly years) of watching gold be officially accepted in a currency capacity while silver is denied? A GSR of 100:1 is easily conceivable in that situation, even if it would be temporary. As cypherdoc can attest, it's a bitch to store a large amount of physical metal; at large scales (tons), the disparity between gold and silver storage becomes extreme in terms of both space and expense. Old money is not going to throw away an additional 10-30% in storage fees just to hold silver; they are not forced to hold silver the way industrial users are. Gold is still optimal for monetary purposes.

Hold both, but mostly gold (phase mostly out of silver on any good GSR declines). And Bitcoin

Silver has historically always had a monetary function as well.  I don't see the ratio ever hitting 100 to 1, considering the mining ratio is 10 to 1, not gonna happen..  As far as extra storage costs, thats minuscule compared to the value of the PM..  to say that someone wouldn't take payment in silver over gold because it will cost 0.013 percent instead of 0.01% (for gold) (monthy rates) for storage is silly .  Again the way I see it silver is undervalued and a major change in the ratio will be towards the fundamentals. 

If gold becomes offically accepted in a currency capacity, silver will also..  After all, silver (last circulated in 1964) was still used as an official currency in the US for 30 years after they took the gold away (in 1933)..

One could argue that silver is more of an official currency then gold is

[cypherdoc]

Bitcoin 5.02   (down ~7%)

like i said, don't fudge the figures!

edit:  gold 1566!!!  BTC 5.09