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Author Topic: Gold is Bitcoin is Gold  (Read 7845 times)
miscreanity
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April 04, 2012, 03:18:42 AM
 #1

For several months now, I've been suspicious of Bitcoin's price movements in relation to precious metals futures - particularly gold & silver. With the recent Reuters story "Bitcoin, the City traders' anarchic new toy", the alarms have grown even louder.

Time permitting, I'll have a more in-depth analysis of the large price moves that seem to occur in Bitcoin within one day prior to major moves in gold and silver. The correlation has been highly predictive for months now.

In conjunction with more long-term analysis and indicators, it seems to be very possible to front-run the market manipulation. Since both Bitcoin and the precious metals are inevitably constrained by a limited supply, this should be no surprise.

This connection may remain for a long time. Maybe a fund could be implemented to capitalise on the pattern?
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cypherdoc
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April 04, 2012, 03:23:13 AM
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nice title.  can't wait to see your evidence.
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April 04, 2012, 03:44:54 AM
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nice title.  can't wait to see your evidence.

Yes.  Chart me please.

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owowo
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April 04, 2012, 04:49:14 AM
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yes, chartporn please.

meanwhile, somthing to read:
http://www.zerohedge.com/news/chris-martenson-explains-how-gold-manipulated-and-why-thats-okay
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April 04, 2012, 02:08:22 PM
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expect a tome, lol. 
MatthewLM
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April 04, 2012, 05:44:45 PM
 #6

The recent fall in gold and silver didn't happen with bitcoin.

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miscreanity
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April 05, 2012, 04:36:03 AM
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The recent fall in gold and silver didn't happen with bitcoin.

Not in the same manner, no. Remember that this is a seemingly strong correlation, not a hard rule.

On April 1st, Bitcoin had approximately a ~3.5% drop - gold then experienced about a 2.5% decline from high to low on the 3rd, with additional pressure on the 4th marking nearly 4% so far this week.



See any similarities between the Bitcoin waterfalls on April 2nd & 3rd and the gold waterfalls from November through December 2011? The patterns are evident on Bitcoin dailies also.



What's interesting to note is that Bitcoin trades 24/7/365 and the initial Sunday waterfall attack took place just prior to Asian markets opening.

An additional note is that the attack on gold occurred on the Commitment of Traders reporting day, right after the period cut-off.

Finally, the "First Waterfall Attempt" happened at midnight UTC - very similar to the patterns from March 28th (after another apparent effort at creating a bull trap) and on April 1st where the pressure visibly began. I've noticed these "midnight strikes" occur frequently, and there are other patterns of time-based moves as well.

Pay attention to the shaped wave oscillation from March 28th to April 1st where the price jumps up, stabilises, then drops the same magnitude as the rise. That happens with extremely tight supply and is indicative of a concentrated interest attempting to exert control for gain. What gets me going is that this is exactly the same method used in gold futures trading.

When comparing the Bitcoin hourly chart to the gold daily, the patterns are visibly similar - not exact, but similar. There is an issue of market scale, Bitcoin being microscopic next to gold (the entire Bitcoin market is worth only 26,000 troy ounces of gold - less than 1 metric ton). Therefore, it makes sense that patters we see in Bitcoin on a shorter time-frame would take somewhat longer to emerge in gold.

The percentage changes are still similar, though. At least with initial moves. As can be seen with the multiple waterfall attempts in Bitcoin, that happens with far greater effect in gold. This is only possible because of the complete fabrication of supply in gold via derivative contracts - Bitcoin's equivalents are minute by comparison.

We would have to see options and mining contracts traded widely, and directing price action more than actual Bitcoin trading in order to have the same situation as gold. If gold contracts and derivatives disappeared, causing gold trading to be done exclusive with the physical supply available and verifiable, we would have Bitcoin's charts in gold.

Key here is the separation of the trading instrument versus the underlying asset: Bitcoin trades as itself; IOU paper contracts trade for gold. Removing Bitcoins from trade would cause immediate and powerful distortions in related markets; removing physical gold from trade and nobody is the wiser so long as the underlying asset is not sought. Bitcoin is currently free from such obfuscations, but could easily develop that kind of shell structure within the next few years. Bitcoin: accept nothing less.

I would be willing to bet putting my head in a crocodile's maw that very same financial lineage is attempting to game the Bitcoin system as is doing so in precious metals and various other markets. Even without the time yet to analyse data sets, the markets feel too alike for it to be mere coincidence. Having called the major bottoms in both gold and Bitcoin, they were again too similar to be chance.
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April 07, 2012, 11:18:03 AM
 #8

the human brains excels at finding patterns and similarities amongst them

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April 07, 2012, 01:20:39 PM
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the human mind excels at seeing patterns and conjuring similarities amongst anything
FTFY

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miscreanity
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April 07, 2012, 07:50:07 PM
 #10

It's only Saturday, so we'll have to see whether there's more pressure on Sunday. I expect nothing less, along with a round of HFT traders committing murder from London on Bitcoinica longs with forced margin calls.



Another weekend assault, once again beginning at midnight UTC; almost exactly the same pattern and motive as is present with gold price manipulation. The London & Wall Street junkies get to keep playing even on the weekends these days. Why should the leverage game be any different just because it's Bitcoin? That's a rhetorical question.



If the correlation holds as well as it has in past weeks, gold will be hit heavily for a decline into the mid-$1500s - possibly even a short stint to or below the $1525 level. The amount of new shorts piling in would be unbelievable; watch for the COMEX open interest to absolutely explode. I wouldn't put 500,000 out of range. I'll be keeping a close eye on the commercial shorts as well; any sign of significant covering would suggest preparation for an epic upward move. As always, the CoT cut-off should stand as the time target for the $1500s push to be complete, allowing nearly a full week to cover shorts (and tracks).

This is exactly the kind of action that would occur during a paper/physical separation - the only problem is that it's virtually impossible to know precisely where they rupture. It's like ripping a sheet of paper in half: you know approximately where it's going to tear, but it's almost impossible to pick the actual starting point.



When the opposition starts catching onto your strategy & tactics, it's time to change your methods - if you can change the rules, so much the better (think FrankenDodd). There will always be a tell somewhere, though. I think it's blindingly obvious that the banks' own traders are making use of the same methods in Bitcoin as they are in traditional markets, front-running grander moves.

For however long this pattern maintains, I'll be making use of it. Any means of forewarning is a powerful weapon in a trader's arsenal, and dismissing any possible advantage without first-hand experience reeks of arrogance and a dinosaur destiny. If these forced margin call tactics continue to work, we may be greeting JP Bitcoinica in the near future instead of a free market.
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April 07, 2012, 08:28:32 PM
 #11

Do you think this is being done for profit, or are people testing strategies in bitcoin before using them in the commodities markets? You should look for truncated "waterfalls" in bitcoin that do not appear in gold. Also consider that the ratio of "bitcoin time" to "gold time" may not be constant at 1/24. How would you explain this ratio?
miscreanity
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April 08, 2012, 03:29:07 AM
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Do you think this is being done for profit, or are people testing strategies in bitcoin before using them in the commodities markets? You should look for truncated "waterfalls" in bitcoin that do not appear in gold. Also consider that the ratio of "bitcoin time" to "gold time" may not be constant at 1/24. How would you explain this ratio?

I think it's a combination of profit & testing, maybe even with an intent to suppress. Bitcoin is immensely appealing across multiple levels of the global economy; anyone with a reasonably deep understanding of finance can connect the dots and realise the potential threat Bitcoin poses to the existing paradigm.

Thanks for bringing up truncated waterfalls (indicative of probing) - I have seen them, but haven't compared much with gold because of the difficulty in connecting smaller moves; it's the major flows that have been predictive, not so much probing action. When something finally breaks a major level of support or resistance, then it's time to pay attention.

The ratio isn't a hard rule: most times gold has followed Bitcoin within a 24 hour period, but the timing for certain period expirations is different; e.g. CoT reporting periods, options expiration & delivery notification dates, etc. With Bitcoin, there are no such periods as of yet. It's been an elastic range, but so far the longest I've noticed (again, unscientifically) has still been within 3 days.

Part of my intention for starting this thread was to have solidified documentation to ascertain the validity of the correlation. For a while, it was like seeing a shape in the dark - I didn't know if it was real or not, but lately the moves have been growing much more obvious. Due to other obligations, I have yet to run a direct comparison using hard data.

Also: the additional decline in Bitcoin to a low of $4.66 over the past few hours approximates $1525-1530 in gold.

There's a very cursory contrasting of Bitcoin weekly and gold yearly.

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April 08, 2012, 06:57:51 AM
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Interesting, I think this thread needs a sanity check though. Nasdaq composite during the dotcom bubble looks alot like gold during the 1979-80 bubble.
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April 08, 2012, 08:30:55 AM
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Key here is the separation of the trading instrument versus the underlying asset: Bitcoin trades as itself; IOU paper contracts trade for gold. Removing Bitcoins from trade would cause immediate and powerful distortions in related markets; removing physical gold from trade and nobody is the wiser so long as the underlying asset is not sought. Bitcoin is currently free from such obfuscations, but could easily develop that kind of shell structure within the next few years. Bitcoin: accept nothing less.


THIS^ is the strongest counter to the argument of "anyone can fork the chain" I have heard thus far.

I would be willing to bet putting my head in a crocodile's maw that very same financial lineage is attempting to game the Bitcoin system as is doing so in precious metals and various other markets.

They're just jealous they didn't discover the key to alchemy before we did.

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miscreanity
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April 08, 2012, 05:36:01 PM
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Interesting, I think this thread needs a sanity check though. Nasdaq composite during the dotcom bubble looks alot like gold during the 1979-80 bubble.

Sanity checks are always welcome as long as the assumptions they're based on are valid. Lots of patterns have fractal similarity, but their causes are more important than the resulting price patterns. Gold is both structurally and functionally dissimilar to equities, so price movements during different periods may look similar but be caused by different variables (otherwise gold would've behaved the same as NASDAQ during the dotcom bubble). Gold and Bitcoin are structurally different but functionally equivalent, so the same inputs should produce similar outcomes.
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April 08, 2012, 08:25:26 PM
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Blue= Monthly nasdaq composite close Nov-95 to Feb-2012
Red= Monthly Unadjusted Gold Ounce/USD Jan-1976 to April-1992


Should we use gold to predict Nasdaq?

arepo
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this statement is false


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April 08, 2012, 10:25:57 PM
 #17



Blue= Monthly nasdaq composite close Nov-95 to Feb-2012
Red= Monthly Unadjusted Gold Ounce/USD Jan-1976 to April-1992


Should we use gold to predict Nasdaq?



from this graph alone it looks rather like Nasdaq leads gold.

this sentence has fifteen words, seventy-four letters, four commas, one hyphen, and a period.
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beardman
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April 08, 2012, 10:42:27 PM
 #18



Blue= Monthly nasdaq composite close Nov-95 to Feb-2012
Red= Monthly Unadjusted Gold Ounce/USD Jan-1976 to April-1992


Should we use gold to predict Nasdaq?



from this graph alone it looks rather like Nasdaq leads gold.

Nasdaq graph starts 19 years after the start of the gold graph.
arepo
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this statement is false


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April 09, 2012, 03:14:47 AM
 #19

oh, thanks for the x-axis  Tongue

this sentence has fifteen words, seventy-four letters, four commas, one hyphen, and a period.
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notme
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April 09, 2012, 03:16:50 AM
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oh, thanks for the x-axis  Tongue

Blue= Monthly nasdaq composite close Nov-95 to Feb-2012
Red= Monthly Unadjusted Gold Ounce/USD Jan-1976 to April-1992

Thanks for reading Tongue.

Seriously arepo, you seem pretty critical lately.  Is everything alright dude?

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