Gold is Bitcoin is Gold

[silverbox]

Bitcoin continues to foreshadow movements in gold. Since there's more pressure on gold, there's a divergence. Since they're both subject to similar fundamentals, that separation can only last so long.

It's finally time. Gold will follow Bitcoin upward, probably doubling before hitting a correction.

Woot!!

[1713519662]

1713519662

[1713519662]

1713519662

[1713519662]

1713519662

[molecular]

Bitcoin continues to foreshadow movements in gold. Since there's more pressure on gold, there's a divergence. Since they're both subject to similar fundamentals, that separation can only last so long.

It's finally time. Gold will follow Bitcoin upward, probably doubling before hitting a correction.

Can you put a timeframe on this? Are you saying gold will go up 30%? I somehow doubt it.

[notme]

Bitcoin continues to foreshadow movements in gold. Since there's more pressure on gold, there's a divergence. Since they're both subject to similar fundamentals, that separation can only last so long.

It's finally time. Gold will follow Bitcoin upward, probably doubling before hitting a correction.

Looks down hard to me.

[miscreanity]

Can you put a timeframe on this? Are you saying gold will go up 30%? I somehow doubt it.

My price estimates from late last year of $2,100-3,000 still hold, but they're a little low now. A doubling from current basing levels would put gold in the $3,100-3,400 range.

As for time: by the end of 2012. Unlike last year when I expected $2,100 to be broken and then a knockdown like we saw from just over $1,900, there's really no more room to the downside.

The only realistic way of continuing the illusory mechanism is by causing a full separation between paper and physical prices. That can still happen at this point, and the indication that it has taken place would be a pop in the USDX of several hundred basis points without a commensurate correction on a monthly time frame; preferably within a weekly close.

Paper gold prices would then plummet due to effectively unlimited sell-side pressure, obtained through asset freezes like that seen with MF Global, and fractionally-supplied money. Bids would be completely overwhelmed regardless of funding because more can always be supplied directly to the sellers.

On the other side, physical would rapidly go into shortage and become impossible to obtain at paper prices. It would shortly become an off-exchange item, being used for large transfers with little to no public disclosure; similar to what exists now in the oil trade (e.g. India paying Iran in gold for oil), but becoming far greater in scope.

Whether the separation will actually occur remains difficult to call. HKEx has recently acquired the LMA, throwing uncertainty into the mix. If China deems squeezing western participants for their gold an important enough direction, then it may occur - ironically from the opposite participant expected. That would mean China will have obtained massive amounts of gold at the expense of other sovereigns, again mostly western. By breaking the paper/physical connection, it would be like burning the bridge after having crossed it so as to ensure China would be the sole gold power for an extended period.

It's also possible that the separation may occur regionally, wherein a particular nation may restrict communication, trade, and travel through its borders while breaking legitimate market valuations. That would have the same effect as price caps, only through market interference rather than exclusively by legislation. The same results would occur as well - shortages of the underlying real assets.

I only know the paper/physical connection could be broken - either way, direct physical metal ownership eliminates counterparty risk. Even in the event that it does break, Bitcoin exchange rates should continue to offer insight into what the true physical gold valuation is; their fundamentals are almost identical, strengthening as Bitcoin's base inflation rate continues halving.

[silverbox]

I like how Schumer ordered Bernake to QE3 today .

[notme]

I like how Schumer ordered Bernake to QE3 today .

The closed it pretty nicely too... senator: "you said you'd QE3 if the jobs numbers weren't adequate... what is adequate"; ben: "worse and steady are no good, we need improvement".  Translation: we'll most likely be doing QE3.

Too bad it won't work.

[molecular]

Can you put a timeframe on this? Are you saying gold will go up 30%? I somehow doubt it.

My price estimates from late last year of $2,100-3,000 still hold, but they're a little low now. A doubling from current basing levels would put gold in the $3,100-3,400 range.

As for time: by the end of 2012. Unlike last year when I expected $2,100 to be broken and then a knockdown like we saw from just over $1,900, there's really no more room to the downside.

The only realistic way of continuing the illusory mechanism is by causing a full separation between paper and physical prices. That can still happen at this point, and the indication that it has taken place would be a pop in the USDX of several hundred basis points without a commensurate correction on a monthly time frame; preferably within a weekly close.

Paper gold prices would then plummet due to effectively unlimited sell-side pressure, obtained through asset freezes like that seen with MF Global, and fractionally-supplied money. Bids would be completely overwhelmed regardless of funding because more can always be supplied directly to the sellers.

On the other side, physical would rapidly go into shortage and become impossible to obtain at paper prices. It would shortly become an off-exchange item, being used for large transfers with little to no public disclosure; similar to what exists now in the oil trade (e.g. India paying Iran in gold for oil), but becoming far greater in scope.

Whether the separation will actually occur remains difficult to call. HKEx has recently acquired the LMA, throwing uncertainty into the mix. If China deems squeezing western participants for their gold an important enough direction, then it may occur - ironically from the opposite participant expected. That would mean China will have obtained massive amounts of gold at the expense of other sovereigns, again mostly western. By breaking the paper/physical connection, it would be like burning the bridge after having crossed it so as to ensure China would be the sole gold power for an extended period.

It's also possible that the separation may occur regionally, wherein a particular nation may restrict communication, trade, and travel through its borders while breaking legitimate market valuations. That would have the same effect as price caps, only through market interference rather than exclusively by legislation. The same results would occur as well - shortages of the underlying real assets.

I only know the paper/physical connection could be broken - either way, direct physical metal ownership eliminates counterparty risk. Even in the event that it does break, Bitcoin exchange rates should continue to offer insight into what the true physical gold valuation is; their fundamentals are almost identical, strengthening as Bitcoin's base inflation rate continues halving.

So you're saying that by the end of 2012 either:

• the physical market will have separated from the paper market (no physical gold to be had at paper price) or
• paper price will be beyond $3000

correct?

If so: I commend the size of your balls to put a timeframe on this. Most who believe it will happen don't.

[miscreanity]

So you're saying that by the end of 2012 either:

• the physical market will have separated from the paper market (no physical gold to be had at paper price) or
• paper price will be beyond $3000

correct?

If so: I commend the size of your balls to put a timeframe on this. Most who believe it will happen don't.

That's correct, although the paper/physical value could separate at any time between now and full reintegration of gold into the global financial system.

It might have been bold to put my money on the line in late 2011 when I expected $2,100 to be hit before the knockdown instead of $1,900, but making a claim isn't necessarily brave. While $200 wasn't a huge difference, it was proven wrong for the time. As for the options trades, I didn't quite break even; that was the last time I made any trades of size in the traditional financial markets.

What remains is the fundamental reasoning. It is fully intact and just as valid now as it was last year, only now the consequences of suppression will be even greater; nothing has changed just because it's taking longer to unfold than predicted.



A similar basing pattern is occurring as took place in 1979, just prior to the inflection leading to the true parabolic rise. The banking maneuvers are nearly identical as well, notably the withdrawal from being suppliers. As the banks (JPM) extricate themselves from short PM positions, they set up for net long holdings that will be immensely profitable over the next few years.

The difference between then and now is global participation where there were only a handful of sovereign nations heavily involved 30 years ago. Notice the two month consolidation from October to December, while today it has been a year. That means the magnitude has become much more expansive, and the pressure to maintain stability at lows even more so.

An even more impressive comparison:





What took place in the 1970s over a mere 3 years including the final culmination has now taken over a decade to get only 2/3rds of the way through the total process.

We should see a sharp move upward in gold and silver during the remainder of 2012 with a high somewhere within the $3,000 to $6,000 range, followed by another several months of correction and consolidation. I expect 2014-2015 to be the final blow-off spike, well in excess of $10,000 per ounce, the final 5 to 6-digit range depending on how extreme inflation becomes.

Thankfully Bitcoin has a Pirate providing guidance.

[silverbox]

Thankfully Bitcoin has a Pirate providing guidance.

This made me lol.

[FreeMoney]

Hey misc, interested in action on the BTC/gold ratio at the end of the year? We could make a straight bet on it (50BTC?) or we could do a future swap deal at the current rate (175BTC of yours for 1oz of mine?). Easiest to just settle in BTC, but I do have the ounce in case you disagree with kitco price by that time or whatever.

[ElectricMucus]

Hey misc, interested in action on the BTC/gold ratio at the end of the year? We could make a straight bet on it (50BTC?) or we could do a future swap deal at the current rate (175BTC of yours for 1oz of mine?). Easiest to just settle in BTC, but I do have the ounce in case you disagree with kitco price by that time or whatever.

50 btc/oz would be my guess for a endgame price for gold.
Whatever that would be in fiat would be irrelevant at this point. But that gonna take a long time.

[molecular]

Hey misc, interested in action on the BTC/gold ratio at the end of the year? We could make a straight bet on it (50BTC?) or we could do a future swap deal at the current rate (175BTC of yours for 1oz of mine?). Easiest to just settle in BTC, but I do have the ounce in case you disagree with kitco price by that time or whatever.

50 btc/oz would be my guess for a endgame price for gold.
Whatever that would be in fiat would be irrelevant at this point. But that gonna take a long time.

you might be underestimating BTC itself (value increase not caused by fiat inflation but bitcoin economy/investment growth)... or are you talking 2012-based BTC when you say 50 btc/oz?

@miscreanity: thanks for above charts and elaboration.

[ElectricMucus]

Hey misc, interested in action on the BTC/gold ratio at the end of the year? We could make a straight bet on it (50BTC?) or we could do a future swap deal at the current rate (175BTC of yours for 1oz of mine?). Easiest to just settle in BTC, but I do have the ounce in case you disagree with kitco price by that time or whatever.

50 btc/oz would be my guess for a endgame price for gold.
Whatever that would be in fiat would be irrelevant at this point. But that gonna take a long time.

you might be underestimating BTC itself (value increase not caused by fiat inflation but bitcoin economy/investment growth)... or are you talking 2012-based BTC when you say 50 btc/oz?

@miscreanity: thanks for above charts and elaboration.

It is my opinion that most people in this forum underestimate gold. Not just because of the intrinsic and historical value but also because of unique physical properties. It can be used for tangible nanomoney both in virtual and physical form and it is the only element which has the property along with a single stable isotope.

[FreeMoney]

Hey misc, interested in action on the BTC/gold ratio at the end of the year? We could make a straight bet on it (50BTC?) or we could do a future swap deal at the current rate (175BTC of yours for 1oz of mine?). Easiest to just settle in BTC, but I do have the ounce in case you disagree with kitco price by that time or whatever.

50 btc/oz would be my guess for a endgame price for gold.
Whatever that would be in fiat would be irrelevant at this point. But that gonna take a long time.

you might be underestimating BTC itself (value increase not caused by fiat inflation but bitcoin economy/investment growth)... or are you talking 2012-based BTC when you say 50 btc/oz?

@miscreanity: thanks for above charts and elaboration.

It is my opinion that most people in this forum underestimate gold. Not just because of the intrinsic and historical value but also because of unique physical properties. It can be used for tangible nanomoney both in virtual and physical form and it is the only element which has the property along with a single stable isotope.

I own gold and think it's great. But it is already valued really really highly. There is hardly room for value growth at this point. Any major price increase will be because of a depreciating dollar. Bitcoin is so small and new that a few guys learning about it could double demand. Earth would need to spawn a new densely populated moon for that kind of demand increase in gold.

[cypherdoc]

Hey misc, interested in action on the BTC/gold ratio at the end of the year? We could make a straight bet on it (50BTC?) or we could do a future swap deal at the current rate (175BTC of yours for 1oz of mine?). Easiest to just settle in BTC, but I do have the ounce in case you disagree with kitco price by that time or whatever.

50 btc/oz would be my guess for a endgame price for gold.
Whatever that would be in fiat would be irrelevant at this point. But that gonna take a long time.

you might be underestimating BTC itself (value increase not caused by fiat inflation but bitcoin economy/investment growth)... or are you talking 2012-based BTC when you say 50 btc/oz?

@miscreanity: thanks for above charts and elaboration.

It is my opinion that most people in this forum underestimate gold. Not just because of the intrinsic and historical value but also because of unique physical properties. It can be used for tangible nanomoney both in virtual and physical form and it is the only element which has the property along with a single stable isotope.

I own gold and think it's great. But it is already valued really really highly. There is hardly room for value growth at this point. Any major price increase will be because of a depreciating dollar. Bitcoin is so small and new that a few guys learning about it could double demand. Earth would need to spawn a new densely populated moon for that kind of demand increase in gold.

this is true.  i noticed miscreanity didn't take your bet.

[ElectricMucus]

Just head over to kitco.com and ask in their forum what they think of BTC. You will find that, the amount of people willing to do the same thing you did (selling gold to buy BTC) is surprisingly slim.

Here is an interesting relation


(bullion, bitcoin)
this might weaken my point because it shows polarity declining during the BTC hype but it also shows how immensely popular gold still is. (Mind you kitco is way less important for the popularity of gold than the bitcoin forum is for BTC). If and when the Bitcoin Forum shoots above kitcos popularity we can continue this discussion


You may be right that in the longterm BTC is more undervalued than gold, in respect to fiat money. But in face to face comparison there isn't that much room for BTC to gain value over gold. The situation is similar to 2008 where people popped up saying the gold bull market is over.

[cypherdoc]

if i waited for confirmation from the crowd then just how would i make money?

[ElectricMucus]

if i waited for confirmation from the crowd then just how would i make money?

Depends on what you consider money.

Do you trust Bitdaytrade? (I don't)
But if you are I would suggest using some of your BTC to short gold, since you seem to be certain it will crash, while BTC will soar. (I neither)

That will make you money. Or are you in it to convert it all to fiat some time? 

[cypherdoc]

you haven't been following my thread:  https://bitcointalk.org/index.php?topic=68655.msg1026490#msg1026490

i still have all those positions.

[ElectricMucus]

you haven't been following my thread:  https://bitcointalk.org/index.php?topic=68655.msg1026490#msg1026490

i still have all those positions.

oh well, how long are you planning on keeping it?