Gold collapsing. Bitcoin UP.

[miscreanity]

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.

I'm expecting/hoping that at some point parity will be met and exceeded, even if briefly

People believed Ron Paul Bush'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 Bushes have carved out a niche is all. It keeps all the PM socialist dreamers from actually changing anything...

It's a universal argument that can applied be almost anywhere.

Another variant:

Developers believed Steve Ballmer's crap because he is a manager who says things they want to hear. But it's the same thing that makes him ineffective. Ballmer has carved out a niche is all. It keeps all the developer dreamers from actually changing anything...

End result: momentum continues no matter what - it can only be influenced. At least in business, the client has more influence than in politics.

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

Robespierre gave every indication of believing in what he said. It was some combination of integrity, absurdity, and horror.

I have to wonder whether chodpaba desires atrocities.

Hey cyph:


Historically, each time gold has touched the -2 sigma mark, the precious metal has rallied. Only an imaginary correlation can break completely without consequences. Back in physical reality, there are limits to how far circumstances can be pushed before it can't go any further.

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[silverbox]

Bitcoin 5.02   (down ~7%)

like i said, don't fudge the figures!

edit:  gold 1566!!!  BTC 5.09

??

I didn't when I checked mtgox it was 5.02..

edit: its 5.08 now..  I'll change it just for joo , woot btc now is collapsing slightly slower then gold!!

[cypherdoc]

Hey cyph:


Historically, each time gold has touched the -2 sigma mark, the precious metal has rallied. Only an imaginary correlation can break completely without consequences. Back in physical reality, there are limits to how far circumstances can be pushed before it can't go any further.

i have a VERY good imagination.   

[silverbox]

bedrock

bedrock?  more like butter.

oh yeah baby..

[cypherdoc]

I have to wonder whether chodpaba desires atrocities.

I desire real alternatives to the current private banking fiascos. Specifically, Public Banking. One may not 'End the Fed' without having an alternate system in place to take up the slack. And the only currently operating system that has proven effective as an alternative is Public Banking.

It is a road we will have to go down even if States seek to make a currency of PM's. Something that Utah has yet to come to grips with. PM enthusiasts would do well do abandon something that will never work for something that can work very well...

i agree with this.  i'm sure you're aware of Ellen Brown's work.

N. Dakota has totally bypassed the recession by forming the Bank of N. Dakota owned by the people and for the people.  Every state needs this as it would yank power away from the Fed and Federal gov't.

[cypherdoc]

I have to wonder whether chodpaba desires atrocities.

yes, but we have to wonder whether you desire Armageddon as that's what hyperinflation and the resultant destruction of the USD would entail for all.

[miscreanity]

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

It was just an example. I don't think it's 20:1 either. It's most likely between 25-50:1

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

It has, and it will retain that aspect. I expect Mexico and certain other regions that are richer in silver than gold to support silver more readily, at least domestically. Western nations are another story.

Private parties can make use of gold or silver for exchange right now. A main barrier is convenience - it's easier to exchange dollars, Euros, or whatever other medium is more convenient. This applies mostly to western nations. Use as a transactional medium isn't the issue; use as a means of saving is.

If metal is going to sit for a long time, 10x or more in storage costs is not reasonable. Consider the amount of storage expansion that would be necessary to house official reserves. Can you imagine how much bigger Ft. Knox or West Point would have to be to accommodate 10x the physical material? Even a 50:50 mix of gold:silver reserves would require facilities 25x the size. Space is the premium even over cost, not to mention rapidly escalating security measures that rise with the area involved.

There is nothing that guarantees a bi-metal stance. Only real market forces, which cannot be ignored, but can be delayed. Eventually, silver may surpass gold in reserves. Even platinum or rhodium may come to be used more readily.

The difference is incentive. Imagine this scenario: Facebook decides that it will only release an app for iPhone and announces this. With hundreds of millions of users, how many people will take into consideration availability of the FB app for their next phone purchase? It will assuredly not be an insignificant number.

Now imagine that I control the supply of diamonds, a la De Beers. Western governments announce that diamonds and fiat currencies may be used for transactions, and anything else will be penalized, with rewards paid for reporting unauthorized forms of payment. How many sheeple will use anything other than diamonds and fiat?

Replace diamonds with silver. How many people will use gold? Now reverse the two. How many people will use silver? The incentive structure favors one over the other, and the social herd will avoid pain to seek the path of least resistance so they can continue to eat, breed, and avoid introspection. It's a very well-examined, emergent psychosocial pattern. It's been analyzed, modeled, tested, and manipulated. It'll always be limited by fundamental factors in the end, but it can go against them until exhausted. Don't fight the flow.

[cypherdoc]

??

I didn't when I checked mtgox it was 5.02..

edit: its 5.08 now..  I'll change it just for joo , woot btc now is collapsing slightly slower then gold!!

you're like my childhood friend, John Begian.  i used to tackle him out of bounds on his 20 yd line but invariably he'd walk the ball back in and spot it on the 25 .  

i think he had strabismus or something.

[silverbox]

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

It was just an example. I don't think it's 20:1 either. It's most likely between 25-50:1

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

It has, and it will retain that aspect. I expect Mexico and certain other regions that are richer in silver than gold to support silver more readily, at least domestically. Western nations are another story.

Private parties can make use of gold or silver for exchange right now. A main barrier is convenience - it's easier to exchange dollars, Euros, or whatever other medium is more convenient. This applies mostly to western nations. Use as a transactional medium isn't the issue; use as a means of saving is.

If metal is going to sit for a long time, 10x or more in storage costs is not reasonable. Consider the amount of storage expansion that would be necessary to house official reserves. Can you imagine how much bigger Ft. Knox or West Point would have to be to accommodate 10x the physical material? Even a 50:50 mix of gold:silver reserves would require facilities 25x the size. Space is the premium even over cost, not to mention rapidly escalating security measures that rise with the area involved.

There is nothing that guarantees a bi-metal stance. Only real market forces, which cannot be ignored, but can be delayed. Eventually, silver may surpass gold in reserves. Even platinum or rhodium may come to be used more readily.

The difference is incentive. Imagine this scenario: Facebook decides that it will only release an app for iPhone and announces this. With hundreds of millions of users, how many people will take into consideration availability of the FB app for their next phone purchase? It will assuredly not be an insignificant number.

Now imagine that I control the supply of diamonds, a la De Beers. Western governments announce that diamonds and fiat currencies may be used for transactions, and anything else will be penalized, with rewards paid for reporting unauthorized forms of payment. How many sheeple will use anything other than diamonds and fiat?

Replace diamonds with silver. How many people will use gold? Now reverse the two. How many people will use silver? The incentive structure favors one over the other, and the social herd will avoid pain to seek the path of least resistance so they can continue to eat, breed, and avoid introspection. It's a very well-examined, emergent psychosocial pattern. It's been analyzed, modeled, tested, and manipulated. It'll always be limited by fundamental factors in the end, but it can go against them until exhausted. Don't fight the flow.

Again your making an assumption that silver wouldn't be used as an official currency.  It always has been historically, no reason for it not to be in the future, your argument that storage is too much is just silly, its a drop in the bucket 1/10000th of the value of the metal, silver was stored as a store of value for the last few thousand years, what exactly has changed?? 

Utah passed a bill to accept.. wait for it gold AND SILVER...  as legal currency..   Not just gold, as you argue is how it will be done in the future.. It's just silly to assume that only gold will be used

[cypherdoc]

what's this?  gold bugs arguing amongst themselves?  woot!!!

[miscreanity]

i have a VERY good imagination.   

I know

I desire real alternatives to the current private banking fiascos. Specifically, Public Banking. One may not 'End the Fed' without having an alternate system in place to take up the slack. And the only currently operating system that has proven effective as an alternative is Public Banking.

It is a road we will have to go down even if States seek to make a currency of PM's. Something that Utah has yet to come to grips with. PM enthusiasts would do well do abandon something that will never work for something that can work very well...

It doesn't matter whether the Federal Reserve system is in place, or public banking. Replacing the banking system is different from replacing the currency unit. Banking is separate from, and rests atop the foundational monetary unit. Distribute the banking system however you want, but unless control of the base money is distributed as well, then to be blunt - you may as well be pissing in the wind.

Precious metals act as a fundamental force, limiting banking from becoming overly reckless. The same is occurring in the Bitcoin system: exchanges, lending and depository functionality is being built using Bitcoin as a base.

yes, but we have to wonder whether you desire Armageddon as that's what hyperinflation and the resultant destruction of the USD would entail for all.

It's the last thing I want, but like a race condition, the financial system has gone past the point of being able to stop the runaway process of inflation before it causes major problems.

A crash is inevitable, but an attempt at throwing an exception is being made. The problem is that the exception being thrown is resulting in more of a BSoD than a drop to a CLI with an error.

There are other servers running, so the slack will be picked up. I still wouldn't want to be on one of the crashed ones, even if they don't look like they've crashed.

[silverbox]

Utah passed a bill to accept.. wait for it gold AND SILVER...  as legal currency..   Not just gold, as you argue is how it will be done in the future.. It's just silly to assume that only gold will be used

Only, without an actual banking system to accommodate all the day-to-day things that have to happen with PM's as currency it will remain little more than a curious historical footnote, with no real effect on the way the economy of Utah operates...

of course.  But gold and silver are like peas and carrots.. Where one goes so does the other.  Even the Utah legislature managed to not fuck it up

[tvbcof]

I desire real alternatives to the current private banking fiascos. Specifically, Public Banking. One may not 'End the Fed' without having an alternate system in place to take up the slack. And the only currently operating system that has proven effective as an alternative is Public Banking.

It is a road we will have to go down even if States seek to make a currency of PM's. Something that Utah has yet to come to grips with. PM enthusiasts would do well do abandon something that will never work for something that can work very well...

i agree with this.  i'm sure you're aware of Ellen Brown's work.

N. Dakota has totally bypassed the recession by forming the Bank of N. Dakota owned by the people and for the people.  Every state needs this as it would yank power away from the Fed and Federal gov't.

For the record, I'm down with chodpaba and cypherdoc on this one.

My love/hate relationship with gold has a reasonable significant 'hate' component because I fear the potential for gold to be used even more distructively than our current fiat regimes.

I will state again that I like distributed crypto-currency solutions along the lines of the trail blazed by Bitcoin the best from a theoretical point of view because it can fail if it is abused by those who have achieved the power to do so.

From a practical standpoint, a publicly owned banking system run as a service to the citizens of a political state seems the most tenable near-term solution.  I 'one world currency' with no cash alternative is, I fear, the most likely near term outcome however.

[miscreanity]

Again your making an assumption that silver wouldn't be used as an official currency.  It always has been historically, no reason for it not to be in the future, your argument that storage is too much is just silly, its a drop in the bucket 1/10000th of the value of the metal, silver was stored as a store of value for the last few thousand years, what exactly has changed?? 

Utah passed a bill to accept.. wait for it gold AND SILVER...  as legal currency..   Not just gold, as you argue is how it will be done in the future.. It's just silly to assume that only gold will be used

I'm suggesting that silver may not be officially monetized immediately alongside gold, particularly in western nations. Silver can still retain a monetary function unofficially, but the western herd largely remains blissfully ignorant of this.

Nothing has changed in regard to gold and silver themselves. What has changed is awareness and knowledge regarding them. The transition period is more likely to be asynchronous on multiple levels, as the move is a process and not instantaneous.

Utah is one state. There are others making strides toward gold and silver monetization. However, where there are some places with sensible leadership, that doesn't apply across the board - and certainly not to individual citizens, many of whom are no doubt unaware of that legislation in Utah to begin with.

On top of the fact that Utah is one state, the overarching federal pressure is antagonistic toward precious metals in general. Whether gold and silver are officially monetized at the same remains to be seem. Maybe they will be, maybe they won't. In some countries silver may be monetized before gold is. The potential is greater for western nations to reluctantly re-monetize gold alone only due to irresistible pressure, rather than both metals at the same time. Further along, silver may then be re-monetized due to additional pressure.

Yes, it's possible for both to be official currencies again, and for them to be made official at the same time. I just think it's more likely that the metal which is under official control will be monetized first because the state is loathe to give up control and will only do so where it sees some semblance of control can be maintained. With existing reserves of gold, a measure of control is possible - with no reserves of silver, control is uncertain. Hence, official acknowledgement will probably not be as forthcoming for silver.

[cypherdoc]

I 'one world currency' with no cash alternative is, I fear, the most likely near term outcome however.

how's the first attempt at that working out?  uh, Euuuuro...

[cypherdoc]

I just think it's more likely that the metal which is under official control will be monetized first because the state is loathe to give up control and will only do so where it sees some semblance of control can be maintained. With existing reserves of gold, a measure of control is possible - with no reserves of silver, control is uncertain. Hence, official acknowledgement will probably not be as forthcoming for silver.

no wonder they don't like Bitcoin, 'eh?

[cypherdoc]

I will state again that I like distributed crypto-currency solutions along the lines of the trail blazed by Bitcoin the best from a theoretical point of view because it can fail if it is abused by those who have achieved the power to do so.

that's probably one of the few good points you've made around here.  thanks! 

[tvbcof]

I 'one world currency' with no cash alternative is, I fear, the most likely near term outcome however.

how's the first attempt at that working out?  uh, Euuuuro...

The Euro was specifically NOT a 'one world' currency.  But it's very possible that it is working out exactly as planned...

Economic blocks such as the BRICs and various pesky S. American states could throw a stick into the works.  What bothers me is that a truly global solution through which all economic transactions are checkpointed is a pretty compelling solution to most nations of modest size and that trend is likely to steepen as we start running out of cheap resources.  It might even be the only possibility for retaining the reigns of power in a lot of countries so the pressure to cooperate here may be overwhelming.

[silverbox]

I just think it's more likely that the metal which is under official control will be monetized first because the state is loathe to give up control and will only do so where it sees some semblance of control can be maintained. With existing reserves of gold, a measure of control is possible - with no reserves of silver, control is uncertain. Hence, official acknowledgement will probably not be as forthcoming for silver.

This is a good point, assuming that the Federal government would ever give up fiat...  (roflmao)  

The US treasury does actually have silver reserves, however they are very small compared to gold.

[cypherdoc]

I 'one world currency' with no cash alternative is, I fear, the most likely near term outcome however.

how's the first attempt at that working out?  uh, Euuuuro...

The Euro was specifically NOT a 'one world' currency.  But it's very possible that it is working out exactly as planned...

Economic blocks such as the BRICs and various pesky S. American states could throw a stick into the works.  What bothers me is that a truly global solution through which all economic transactions are checkpointed is a pretty compelling solution to most nations of modest size and that trend is likely to steepen as we start running out of cheap resources.  It might even be the only possibility for retaining the reigns of power in a lot of countries so the pressure to cooperate here may be overwhelming.

but you know what i mean...

it's been impossible for the Euro region to combine their fiscal policies alongside their monetary policies.  and i don't see any evidence that it will happen; in fact, plenty evidence for the opposite.

it would be worse on a worldwide basis.