Topic: Gold collapsing. Bitcoin UP. - page 652. (Read 2032266 times)

Hmm. Agreed.

Edit: Like the Hunt brothers and silver. You corner the market, you crash it. Is this the idea?

If nobody is going to back their currency with gold, then there's no reason not to hyperinflate your currency. Let's see how much QE Switzerland will enjoy! Global hyperinflation here we come!

I think physical mining is the largest determination.   Paper or futures contracts is more short term effect, certainly possible but not why gold has fallen for so long now.
The largest buyer of gold is China.  The largest producer of gold is China and also I think the largest importer and maybe largest store of gold would be China.   China has reported they have no increase in gold holdings, they dont export any gold and they operate the most mining but it amounts to nothing according to them.    That dynamic whatever is happening there, is far more significant then what Chicago or London is upto

https://www.bullionstar.com/blog/koos-jansen/total-chinese-gold-reserves-nearly-16000t/
http://www.businessinsider.com/gold-reserves-by-country-2012-8?op=1&IR=T

I think surveys are already showing a 50% in favour of gold backing to the Swiss will not go ahead.    The market will have already kept track of the likelyhood of such things and I dont believe that much of the recent gold rise is really to do with this vote. 
When scotland was voting it had some surveys showing it was possibly viable to go ahead with its split.  It kicked up quite alot of dust before the vote.   Basically the surprise now would be if the swiss vote was yes and we have a big surprise move to the upside possibly.
I also dont think it will occur, the population are not especially frightened of their tracking Euro or general moves.  On general principle it would be best to go ahead but most people now see gold as archaic, any change to that attitude would be major news worth investing in

Also access to markets.  Paper gold made it possible to invest with a click of a button in your trading account, in IRAs, 401ks, and funds.  It opened a huge market.  If paper breaks away from physical, there will presumably be an underlying upwards pressure (why physical is breaking away) but this will be countered by a downward pressure as the closure of paper markets limit access to gold back to those willing to hold phys.  Hopefully, some of the 100% backed funds will actually turn out to be 100% backed, in which case the paper markets may not close -- at the end of the day, some of the paper will still be around, and others will have force-converted to USD "payable for all debts public and private".

But the act of forced-conversion (conversion without actually buying physical gold, thus driving the price up) might tarnish paper gold's shine as longs realize that they hold all the risk of a downside squeeze with none of the rewards of the same on the upside.

+1!
Cypherdoc, Peter R. and the other cracks in this thread: what is your opinion?

Cypherdoc I'm curious what your thoughts are on Counterparty, if you have any at all...

Very soon everyone here is gonna realize we don't need no stinkin SC's nor do we need no stinkin gold.

Sunday is a big moment for gold.

It has been hovering lately and a no vote will probably see it tumble.

Bitcoin OTOH has been a little uppish.

If gold dumps on a 'no' vote and btc maintains or rises, this may finally signal the divergence that Cypher has been calling for.

I'd also add this. The resources are needed in part to maintain the integrity of the protocol. Without secure mining the protocol is useless.

It can also be leveraged down too though...

Though the result you predict seems likely...Not all would agree.

The presumption that ~21M will be reached always seems a bit odd.  This may not ever occur, 2140 is a long way off.  The notion that they already exist, is a false one.  They do not exist until they are awarded from the coinbase transaction in the block reward.  Until then they are at best theoretical.

So consider whether a monetary system based on gold could exist without more gold mining, and whether it could with bitcoin.

History tells a different story, gold is still used as money by many of the worlds most powerful players.  In fact, gold is demanded in payment by key members of OPEC.  At one time, in the late 70's, oil bid directly for gold and ran the price to $850.  Now, they have the opportunity to get their gold much less expensively via paper contracts.  A default will mean non-payment to those who supply the life blood of the world economy, namely oil.  If there is a paper market failure we will see the advertised price of gold, which is really just a reflection of the value placed on the paper contract, go very low.  Meanwhile we will see a private market price on gold that goes to astronomical levels as the world economy grinds to a halt.  The value placed on gold (and probably bitcoin) may go to levels unfathomable to the mind.

Maybe. As you say, "low cost" so it isn't clear the resources would be huge.

But ultimately, as with anything, its only "wasted" if there is a better alternative. If you are going to use gold as a form or money (or even merely store of value) than it is essential that trust be maintained by continually trying to break it. This is very similar in essential, underlying function to Bitcoin's PoW. You can't declare (by "fiat") that the oceans contain no gold or that asteroids contain no gold, or that Bitcoin miners will nicely and fairly take turns collecting the free coins that are being distributed.

But it is true that if there is something else that is more efficient as a store of value than gold (like say Bitcoin), then mining isn't necessary. Indeed if that happens the price of gold will plummet, and mining will essentially stop.

Makes sense.

That's an interesting perspective, Smooth.  With commodity money like gold, resources are consumed mining for more of it; indeed, it is the production that results from these efforts that signals the scarcity of the commodity to the market.  Bitcoin is fundamentally different because its supply is defined a priori at the protocol level; no resources need to be consumed to verify scarcity.  

I think I twisted the argument Andolfatto was making, and sort of made it wrong in the process.  But it is still true, at least when viewed through a certain lens, that gold mining is more wasteful than bitcoin mining.  

Consider the discussion earlier in this thread about extracting gold from the oceans.  If a breakthrough were to occur that enabled low-cost recovery of a portion of the millions of tons of dissolved gold, it would significantly depress gold's market price and distort the memory function of the "gold ledger" (the % of the total gold supply held by each individual would be distorted by this event).  It would also result in a huge amount of resources being directed at extracting gold from the ocean.  From the perspective of the economy as a whole, these resources would be wasted (it would have been better for the economy in aggregate had the ocean contained no additional gold).  In fact, the waste would be amplified due to the economic distortions caused by the subsequent (and unexpected) inflation.  But from the perspective of the individual sea-gold miner, it is in his best interest to consume resources to extract the gold...and so resources will be consumed nonetheless.

Gold is a "barbarous relic" partly because of this misalignment of incentives regarding gold mining and the unpredictability of new supply. With a system like bitcoin, the incentives of the miners are more strongly aligned with the incentives of the economic majority.  If a miner tries to produce more bitcoins than permitted, his blocks are simply ignored by the network.  

TL/DR: A monetary system based on bitcoin would be more efficient than one based on gold.  

leverage

Could you please elaborate a bit on that?

Paper = more supply, how more supply can make prices higher?

this is what all the goldbugs want you to believe.

it was the paper market that allowed the elevation to today's values in the first place. 

it's over.

Perhaps but also in the larger trend collapsing faith in the paper markets. It is not the perceived value of the metal that is dropping but the perceived value of the paper contract. The fact that the backwardation exists is a sign that the holders of the metal don't trust the integrity of the futures.