SELLING OUT OF PRECIOUS METALS & BUYING BITCOIN…. Very Bad Idea

There is a new trend by individuals in the alternative media community who are now selling out of precious metals and buying into Bitcoin and cryptocurrencies.  While this may seem like a good idea, especially when Bitcoin and the cryptocurrencies reach new all-time highs, it is likely a big mistake.  Now, I am not saying that individuals shouldn’t invest in cryptocurrencies.  Rather, it’s a lousy idea to sell all of one’s precious metals holdings and put it all into Bitcoin and cryptocurrencies.

Recently, Sean at SGTReport published a short video in which part of the headlined was titled as “SILVER BULL CAPITULATES.”  In the video, Sean explains how past frequent guest and precious metal analyst, Andy Hoffman, has sold out of all his silver and is now only in Bitcoin and gold.  Andy explains in his interview on Crush The Street that he sold all of his silver this summer as he really has no interest in it.  He goes on to say, “Because, in a digital age, I just don’t believe people are going to store thousands of pounds of silver hoping that the gold-silver ratio is going to come down.”

I have to tell you, not only do I find this sort of thinking, utterly preposterous, I also find it quite troubling that analysts who have been promoting precious metals for the past decade are now implying that gold and silver are no longer high-quality stores of value.  I disagree entirely with this faulty and superficial analysis.

There are several reasons why I believe it is essential to hold most of one’s wealth in precious metals than in Bitcoin and cryptocurrencies.  However, the most important factor has to do with the fragile nature of a highly technical complex system that allows Bitcoin and cryptocurrencies to function.  It takes a tremendous amount of energy to maintain and power the internet, servers and computer systems that give life to Bitcoin and cryptocurrencies.

Unfortunately, the majority of the alternative and mainstream media analysts believe in the ENERGY TOOTH FAIRY ( a term coined by Louis Arnoux).  What do I mean by the ENERGY TOOTH FAIRY?  It is the belief by a significant portion of the public and analyst community that the advanced world economies and markets will continue to prosper and grow forever.  Moreover, some analysts, such as Harry Dent, believe that if we got rid of the corrupt bankers and politicians and allow people to have a lot more babies, then economic growth will continue indefinitely.

For some odd reason, Harry Dent totally omits the impact of energy in his demographic analysis of the markets.  Does ole Harry not realize that the exponential increase in global oil production has coincided with the exponential growth in human population???  Of course not.  If he did, he would stop focusing on demographics and place his attention on what is happening in the global energy industry.

Regardless, selling out of one’s precious metals holdings might be unwise if we consider that the price of gold and silver are closer to their lows, and Bitcoin and the cryptos are reaching new highs.

PRECIOUS METALS PRICES NEAR LOWS vs. BITCOIN AT RECORD HIGHS

For example, the current gold price at $1,280 is only 10% above its annual average low of $1,160 set in 2015, while silver at $17 is only 8% higher than its average yearly low of $15.68 during the same year.  However, if we look at Bitcoin, the price is near its current high of $8,200:

Here we can see that Bitcoin has increased more than ten times from $800 at the beginning of 2017 to over $8,000 currently.  While Bitcoin traders and speculators with Dollar signs in their eyes are betting on much higher prices, let me show you another chart.  This is the first Bitcoin price spike that skyrocketed to over $1,000 in 2013:

As we can see in the chart, Bitcoin’s price surged ten times from $115 in October 2013 to $1,150 at the end of December.  If we went back to this exact time, it looked like Bitcoin’s price was going to continue higher.  However, if we see what happened after Bitcoin spiked to $1,000, there was a huge consolidation period:

One year after Bitcoin hit $1,150, it was trading at $250.  It took nearly three more years before Bitcoin surpassed its previous high.  Will this happen to Bitcoin again?  Who knows?  It is almost impossible to gauge the value of Bitcoin and the cryptocurrencies.  Yes, we could see Bitcoin continue towards $10,000.  However, we must realize that most people are not getting into Bitcoin because they understand the potential benefits of blockchain technology, but rather because the price is surging higher and higher.  There’s nothing like a skyrocketing price to bring in the speculators in huge numbers.

Recently, Mike Maloney of GoldSilver.com stated in a video that he took some Bitcoin profits and purchased silver.  He believed that it was smart to take profits from Bitcoin as it looked like it was potentially overvalued and buy silver as it was undervalued.  I agree.

Those Who Sold Their Precious Metals For Bitcoin Forgot About Our Dire Energy Predicament

As I stated at the beginning of the article, individuals who believe in a new high-tech world with Bitcoin and cryptocurrencies running the monetary system must have forgotten about our dire energy predicament we are facing.  This baffles me.  The U.S. infrastructure is falling apart while North American suffers from over 250,000 water main breaks a year, and we are going to transition into a new high-tech world of robots and cyborgs?  Who are we fricken kidding?

Has anyone taken a good look at what happened to the Great Egyptian, Mayan and Roman Empires???  They PEAKED and DECLINED… LOL.  And it was all based on their Falling EROI – Energy Returned On Investment.  The more advanced and complex a society becomes, the more energy it takes to run and maintain it.  Folks, we have run out of our CHEAP, ABUNDANT ENERGY.

I have provided many clues in previous articles, but I believe it’s a good idea to present a few charts once again.  The Global Oil Industry is cannibalizing itself just to stay alive.  We know this is happening by looking at the massive increase in long-term debt:

The global major oil companies long-term debt quadrupled from $84 billion in 2007 to nearly $380 billion last year.  Why did their long-term debt increase when they were enjoying $100 a barrel of oil from 2011-2014??  The problem is that Falling EROI is now pushing costs higher as the net energy in a barrel of oil declines.  Thus, we have a double-edged sword.

For example, these top seven major global oil companies enjoyed a combined net income profit of $100 billion in 2004 when the price of oil was $38 a barrel.  However, even though the price was higher at $44 last year, their combined net income fell nearly 90% to $10.5 billion:

So, the BIG PROBLEM now is that the world market can’t really afford high oil prices and the oil companies can’t produce oil at a lower cost.  Furthermore, if we take a look at this last chart, we can see just how bad the situation has become for the world’s major oil companies:

In 2004, these top seven global oil companies enjoyed a Return On Capital Employed (ROCE) between 20-40%.  We must remember, that year the price of oil was $38.  However, when the oil price was higher at $44 last year, these companies ROCE fell to the low single digits.  Thus, they return on capital employed collapsed.

These three charts paint a very grim future for the global oil industry.  Without the burning of oil, our economy grinds to a halt.  I would like to remind those who believe WIND, SOLAR, and ELECTRIC VEHICLES are going to save us… they are nothing more than fossil fuel derivatives.  The world needs to burn a lot of oil, natural gas and coal to produce the so-called renewable green technologies.

So, when oil and natural gas supply declines, so will the delusion of renewable energy.  Now, I am not saying it isn’t wise to own solar panels on one’s home or to have an electric car.  Instead, it’s unwise to believe solar, wind, electric vehicles, and a new high-tech world is our future.

It isn’t.

I believe we are going to experience one hell of a market crash and deflation.  Not only will the oil price drop like a rock, but so will the value of most STOCKS, BONDS, and REAL ESTATE.  If you have sold your precious metals for cryptos at this time, you may find out that it was a big mistake.

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101 Comments on "SELLING OUT OF PRECIOUS METALS & BUYING BITCOIN…. Very Bad Idea"

  1. When, not if, crypto’s collapse there will be a blood bath. A smart investor would take his profits and buy gold and silver. Those that don’t will rue the day. I still firmly believe that if you don’t hold it, you don’t own it.

    Buy for cash or cryptos and stash.

    • If you don’t hold it, you don’t own it. Words to live by for sure. Folks with crypo-coins, bank accounts, and paper stocks/bonds are all gonna find out the truth of that one day.

  2. Michael Kohlhaas | November 21, 2017 at 5:37 pm | Reply

    Hoffmann is not an analyst. He’s a frigging snake oil shyster!!!

    • He should fit really right into a world running on snake oil.

    • He’s capitalizing on a treacherous trend that will end in extreme catastrophe for so many unwary investors. When the silver and gold exchange traded funds came out, I thought that was the metals price suppressors last card to play. The cyber currency craze underscores just how resourceful are the adversaries of silver coming back as money. What will be the opinion of the public of his interviewers when their money incinerates in a cyber firestorm? The old hit song comes to mind, “Go on, take the MONEY and RUN,” https://www.youtube.com/watch?v=-WCFUGCOLLU

      Instead of people sacrificing themselves of $225 for his newsletter, use the funds to put away some 90% silver dimes, the best fractionated hard silver holding. EBAY is always a ready source for smaller purchases.

      My PM cannot be hacked into and siphoned away by any computer wizard regardless of genius status as often happens with cybers like Battlestar Galactica Coin (that one will also be an ICO!) My PM also stays in unknown location in a state where civil asset forfeiture has been rescinded by the legislature! I like what an acquaintance gave as response when asked where his metal was stored, “Somewhere between the ocean and the sea.”

      • DisappearingCulture | November 22, 2017 at 8:16 am | Reply

        “My PM cannot be hacked into and siphoned away by any computer wizard….”
        On that topic, Here are the 30 Biggest Crypto Hacks:

        https://wolfstreet.com/2017/11/21/tether-cryptocurrency-hacked-list-of-biggest-crypto-hacks-money-stolen/

        • DisappearingCulture,
          the cryptographic protocol that bitcoin utilizes is an enhancement of the secure protocol when the internet was called Darpanet used in transport of military secure information. It is designed to be peer to peer ONLY! Any deviation of that standard allows it to be compromised (hacked) All the copy cats of the bitcoin block chain deviate from that protocol and thus are hacked! The Gox fiasco was the same situation, he made himself the centralized point thus allowing the funds to be taken. the Internet is decentralized and so is bitcoin therefore there is no SPoF (Single Point of Failure) but there are hackers and governments waiting for a point of entry into bitcoin for the last 10 years! But the copy cats lack the knowledge and wisdom of the original design and thus are compromised! Ethereum is a whole different species it is targeting what banks and lawyers do, CONTRACTS! So Bitcoin is designed to END government and banks monopoly of money and transactions and Ethereum is to END Banks and lawyers! With a few that are special niche requirements or novelties the rest are not acceptable as internet currency because they deviate from the protocol.

  3. Well Steve, at least its only been a several years since, “Silvers’ runnin’ on fums.”

    • Steve –I Hate Silver; Silver is the sexy girl back in school that you’re crazy for, that can get ya to do all kinds of crap for her…..but she wont screw……

  4. Hey Dinosaur Precious metals guys, if you don’t like crypto currencies then don’t buy any. Problem solved. Why or why do you spend so much time denegrating the cryptos? The entire sector is barely 240 billion. Central banks around the world are creating 200 Billion each WEEK. There is your target of wrath. I own Cryptos AND Gold and Silver. I just dumped those bow wow PM stocks that can’t give a return in a severely manipulated market. It’s called being smart. Improvise, Adapt and overcome.

    • Why are you on this site then? . .

      Cryptos need a middleman and are highly dependend on electricity and other factors.
      I think it is just stupid to invest in bitcoin. The fact that EVERYBODY is getting motivated to buy bitcoins now is a HUGE WARNING!!!
      Who ever controls the internet and power controls the bitcoin. In the future goverments can wipe out billions by just pulling the right plugs and wait until the price is zero. And who knows if there is a hidden switch to wipe out all bitcoins at once to destroy wealth and keep the fiat money system??!?
      You will see that your bitcoin-wealth is fictional and easy to steal and destroy.
      The fact that noone knows who created bitcoin should be a huge red flag.

      And further . . bitcooins might be limited . . but there will be much much more cheaper bitcoin-copy-cryptos until the bitcoin price drops and a huge crypto currency chaos brakes out where NOONE wants cryptos any more and the prices drops hard!!
      You think your granny will use cryptos in the supermarket?? NO!!!

      Now corrupt CIA-Scum and other agencys around the world can steal millions and billions while sitting on a desk. And you know what they buy with it? Gold!

      Gold/Silver is anonymous, storeable, hideable and forever worth something in every corner of our earth!!!. . until a mining company is able to mine gold in space.

      • Arno,
        I believe GLP and you believe the same but GLP lacks a little tact.
        Here in San Diego there are over 400 groceries and restaurants that accept bitcoin but not silver or gold.
        Bitcoin transfers from your wallet to another wallet anywhere in the world in less than 14 seconds. But if a grocer or restaurant owner receives gold or silver they need to test it in case it is a counterfeit before they finish transaction. Gold plated Tungsten coins weigh the same and test the same as gold but are NOT! Each coin received would have to be drilled to verify. http://www.businessinsider.com/tungsten-filled-gold-bars-found-in-new-york-2012-9
        With bitcoin the transaction takes less than 14 seconds world wide.
        Just like email it is decentralized NO one controls your email unless you want them to control yours (i.e. google.com).
        Just as trains and cars forced the acceptance of the fiat currencies so too the internet will force the acceptance of Bitcoin or it’s superior in the future. So if the world is increasingly using the internet for commerce then the importance of bitcoin will increase. If the world is decreasing using the internet for commerce then Bitcoin will decrease. Bitcoin is the cryptographic protocol of the internet, Just like your web browser uses http protocol and email uses the POP3 and SMTP protocols, skype uses VoIP protocol of the internet. Bitcoin is the internet as much as email and the world wide web and skype. So is the world moving more and more to the internet or away? What will be the future of currency? Videos? movies? Books? Libraries? Newspapers? Life is going to get very exciting!

        • This is insane . .

          First: Sure you dont use Bitcoin in the supermarket but you can cash in an ounce for a thousand dollars on every corner and go shopping for a month. Like going to an ATM.
          Isn’t it that easy? . . So it is still much much more usable than bitcoin.

          Second: We know that the internet is getting more and more surveiled and controlled.
          Why would you put the money right under their eyes?? That is exactly why they push people to move into bitcoins instead of having hidden Gold under their bathtub.
          So it can be watched and stolen . . . simple as that. After the harvesting is done they will forbit and regulate it to shreds.

          Money needs to be anonymous and portable to be save. Without a middleman!

          Bitcoinlovers ignore the developments in the world which head towards the complete collapse of the world and keep thinking in a Free-Internet-UTOPIA that will NEVER EXIST!!!

          You see that goverments start to brand bitcoins as the money of the criminals and taxevaders. Used mainly for illegal activitys.
          Such cases are already marketed to the masses: North Korea, ISIS, all terrororganisations, drugtraders, mafias, taxevaders, gangs all over the world.
          So “TO STOP THE TERROR AND CRIME” . . the “WILL BE FORCED” to put a brake on the use of bitcoin. And people will support it . . because terrorblablablalablabla

          So bitcoin WILL be forbidden or very strictly controlled. And the uses will be more than sorry. It is only a matter of time.
          In a world where every freedom is smashed as fast as possible is putting money through the interenet one of the stupidest ideas I have ever seen. It works great in a ideological worldview . . . But maybe after WWIII and a view decades of chaos.
          Around 2100 maybe.

          • Arno,
            Okay Lets say that what has just happened in India, in which the government limits the Gold holdings of the citizens and those who where over the limit, their gold was confiscated, Because the purchase of Gold had to be registered just like it is here, they lost their gold. What did they do when the confiscation began people sold their gold and bought bitcoin making bitcoin jump up another $1000. But it also happened in China! As a country becomes desperate for cash they will confiscate from their citizens what they need. Australia confiscated the bank accounts of it’s citizens who had not transacted their account over a time limit declaring them inactive and cleaned them out. http://theeconomiccollapseblog.com/archives/australia-seizes-360m-from-dormant-bank-accounts-and-all-50-u-s-states-are-doing-this-too
            Bitcoin HAS NO THIRD PARTY !
            There has been a concerted effort of all governments and banks to kill bitcoin for the last 10 years! Thousands of people are in prison for using bitcoin all over the world. Why does the governments and banks hate it? Because it can not be controlled just like the internet! The Internet was designed to be unstoppable! just like email which uses the POP3 and SMTP protocol, skype which uses the VoIP protocol,The World wide Webb which uses the HTTP protocol, Bitcoin is also an internet protocol. The Chinese government has been trying to kill bitcoin for 6 years and couldn’t stop it. Bit coin has been forbidden for the last 10 years in every country on earth! You can’t stop the internet! There is a bounty of 50 million dollars if someone will brake or hack bitcoin! No government or agency or bank has been able to hack it! Bitcoin from all governments and banks want it destroyed! Thousands of hackers, independent and government supported are like starving wolfs are looking for an opportunity to crash, hack or destroy Bitcoin. Bitcoin is the first currency which uses the cryptography protocol of the internet, that supports a decentralized, pseudo-anonymous, borderless, peer-to-peer digital currency with No THIRD PARTY CONTROL. Does the US government know how much bitcoin it’s citizens have NO! Does the US government know how much gold you have purchased? YES!
            Will the US government do what China, India and Australia have done?

  5. Funny. I just sold most of my bitcoin holdings and bought gold and silver. I’ll continue to speculate in Bitcoin It’s the bubble dejour and for the moment can be used to buy hard assets. Happy thanksgiving. 🦃

  6. Hey Steve

    I am a supporter, thanks for all you do, I have learned a lot from you.
    I have a question..
    I understand stocks, bonds and real estate will drop like rocks because they are in bubbles.
    But Why would oil drop if we are producing less and we need it so much for everything?
    Wouldn’t demand for oil grow going forward?
    Thanks in advance for your answer

    • Adam
      In previous articles Steve has shown that the oil industry is toast! It cannot survive by borrowing money, because the cost of operation exceeds profit no matter what the demand is; if the examples in history are true to current form then the industry will have to be nationalized, that is, owned and controlled by the government. They will then set the price just like the U.S Postal service which is owned and operated but the government.

  7. Another great explanation on your part to help clarify the current confusion that is surmounting by the day! Thank you. To be honest I was a bit taken back when Andy Hoffman did a 180 all at once. But then again he was a bit of a motormouth on a continual basis. All the best and may you and your family have a Happy Thanksgiving, Steve.

  8. LOL….Andy Hoffman and Bix Weir look good now but past is not prologue…..their 180 on PMs into crypto is beyond just troubling……these guys made jokes out of themselves…..their reputation is shot

    • Bix is still strong on Silver. Andy needs anger management.

    • Remember that the current old system is dying and the companies built on the blockchain will replace them because we need truth and honesty. This is way, way, way bigger than Bitcoin. By 2018 new company’s will start doing business. Once people see the new system start working, people will scramble to get in. You will participate eventually, so why not start now, even if it’s just a few dollars? Once you get involved, you can start to understand just how huge this change is going to be. You need silver and cryptos.

  9. You need silver in the computers that run bitcoin
    I’m surprised by alt media frenzy over bitcoin Something that trades in the ranges bitcoin has isn’t a currency but a speculative vehicle. AND 64 question, who truly controls bitcoin, another invisible hand? Most likely bitcoin ++ is a beta test for the Phoenix God’s speed

  10. It's all a psyop | November 21, 2017 at 7:18 pm | Reply

    This story about people selling up gold and buying cryptos is just a psyop. Perhaps a very few people are doing it, but nowhere like they claim. There is a WAR going on in infiltrated alternative media and in comments sections all over the internet, pumping cryptos. There is a veritable army out there constantly claiming to have made a fortune from them (anyone who made real wealth in anything does not go online and brag, even anonymously), talking down gold (“it has no intrinsic value”), muddying the waters on money vs currency, deceiving about cryptos intrinsic value due to cryptographic work, etc etc etc. If anyone has not seen this, I suggest taking the time and looking closely. RT is a good example of it. The whoppers they say and deceptions they make are literally jaw-dropping, and they are unrelenting. Cryptos are their last desperate hope of keeping people out of gold and they are failing miserably.

    I say leave the trillions of (whtever value) to the pumpers, I’m happy with my REAL, PHYSICAL, TANGIBLE gold and silver. Crypto is an unregulated game where the pumpers are the largest owners and also own the exchanges. Every scam gives you promises of riches.

    • It's all a psyop | November 21, 2017 at 7:31 pm | Reply

      Note for clarity: I did not mean THIS story by srsroccoreport as being a psyop against gold – i meant the stories “out there”. (This is one of my top and most trusted sites.) I also suspect that some within the precious metals community were inserted long ago, like “sleepers” only to be awoken at the right time, or to sprinkle a little bit of truth in with their misleading information. I seriously question the background of anyone who knows the value of gold/silver and then dumps it all for cryptos.

      • It’s all a psyop
        SRSROCCO report is my favorite as well because the is no hyperbole just straight facts and analysis.
        I have been with the internet when it was the Darpanet and there is so much hyperbole by the media who know NOTHING about what they are talking about!
        ALL the governments HATE bitcoin and the thousands of people that are in prison for helping to brake the control of money by the governments and banks by developing bitcoin are still in prison! The Governments and banks can not control it and if they can’t control it then it must be destroyed. For 10 years there has be this war to take away the control of currency from the banks and government and make it per to per using the internet protocol and it can not be stopped so the governments and banks are coming out with their counterfeits. Just as Steve is for the Gold and Silver and oil; so is Andreas Antonopoulos for bitcoin and crypto-currencies. Everything else is hyperbole, marketing, stupidity, ignorance and propaganda!

    • You’re probably correct. Historically, in the dog-eat-dog world of investing, the little guy has always been conned into buying high and selling low. This looks the same.

  11. Great article!!!!

  12. You will make a “Technical Analyst” out of yourself yet Steve. The bitcoin charts analogy was very good BUT then you go on to criticise one of my old mentors “Ole Harry”! None of us perfect; Harry has made mistakes BUT he’s been correct about a lot of things if you look closely enough. I think a lot of his stuff has gone over people’s heads or they have been unable to correct the dots.

    I would suggest the following is a fair description of “Crypto Currencies”. It is a monetary system that existed prior to the establishment of the “Federal Reserve” Cartel in 1913.

    1. Laissez-faire

    Laissez-faire is an economic system in which transactions between private parties are free from government intervention such as regulation, privileges, tariffs, and subsidies. The phrase laissez-faire is part of a larger French phrase and basically translates to “let do”, but in this context usually means to “let go”.

    Laissez-faire – Wikipedia

    https://en.wikipedia.org/wiki/Laissez-faire

    Here are two questions:

    Does anyone in here really believe these “Laissez-faire” currencies will take over world trade?

    Does anyone in here really believe these “Laissez-faire” currencies will be allowed to continue?

    If the answer to both questions is “YES” then “CHAOS” it will be. And to top it all off, all we need is another war.

    The warmongers would probably say “BRING IT ON”.

    • I do feel some form of crypto will replace physical dollar and other countries paper in the future.
      It will be viable because of public acceptance and use not by govt degree.
      PM’s will be valued in relation to the accepted crypto so when one wishes to do business with an Amozon, one will send crypto rather than ship PM’s.
      Secure PMs storage facilities will be established and trusted offering service of converting PM’s to crypto.
      If business is to continue citizen to citizen on any scale can’t depend on everyone carrying around physical. Be very similar to when dollar was backed by PM’s and checks sent through mail.
      The difference this time is it will be people’s choice, not govt choice in what is use for commerce.

      However I do agree above is somewhat a narvana and totally dependent on viable grid energy.
      Most likely we will be living hand to mouth trading PM’s for life’s necessities.

    • States will have to step in because cryptos are too much deflationnary and volatile. However all humans are now fully engaged in speculation, we have no choice. Cryptos are the winners for now and PMs are losers : 1 daily performance in crytos equals often 2 years rise in silver for example.

  13. Are there any crypto-currencies based om gold and silver? If so, wouldn’t they make a good
    investment choice?

    • Don’t let yourself be fooled. Firstly you don’t know if there is any real metal deposited, and secondly it wouldn’t make any sense:

      Each crypto or non-crypto currency unit (token) is a derivative of a creation process, so its basically part of an ETF. This is done via ex logica (e.g. Bitcoin) or ex nihilo (e.g. Ether[ium], US$, €, ¥, …) and therefor doesn’t need any backing of its own, because it doesn’t change the logic of the foundation. PMs are the total opposite of that and stand for their own as a creation out of the use of energy and a further need for industrial use or other purpose, even as store of value (economic energy) and futhermore as the use of currency (transfer of economic value) when needed.

      Crypto currencys are just the creation out of complex societies and will die with them – only the blockchain technology will go on further.

  14. Everything is a bubble in Bubblemania including Bitcoin and potentially fake Da Vinci paintings. Just wait for the next collapse and see what happens to cryptos. At least gold is a safe bet as well as silver. Andy Hoffman is a f##king fraud and a snake oil salesman. I made those same remarks on Kerry Lutz FSN site.

  15. I remember when bitcoin went to a thousand and then back down to the two hundred’s, I would not put any more than I could afford to lose in a crypto. I would not pile thousands into it unless I had a good reason, like leaving the country. It changes in value too much to use as money.

  16. When you trade gold or silver, are you really trading these, or just pieces of paper that “say” that you have gold or silver?
    Isn’t there many more times as much silver traded as actual physical silver on the planet (2.3 to 3.5 b oz) ?
    Who can you believe?
    What is real?
    At least Bitcoin is honest – it is a pure belief fiat money, unhindered by any other manipulations or tricks by central bankers – and that is why they hate it.

    • Very well put, a honest believe in sublime nothingness (“rare electrons”; my term). That’s why stackers will take the gold (and silver) and stay a country mile (at least) away from cryptos instead.

      I’ve said this in a few other places. IMHO the authorities let this unregulated fiat experiment (that they can’t control and therefore hate, as you rightly pointed out) run for now, BECAUSE this is the modern i-tulip gold confiscation, the ultimate fiat lure for weakhanded holders of PM to give up some or all of their holdings before the hammer drops (thereby extending the survival of the unholy CONeX/LBMA manitpulative machinery for a bit longer. THAT is the value of bitcoin for THEM). Hodlers may look really good and smart NOW but they cannot and, therefore, will not all take profit from their cyber millions without crashing this bubble. Good bitcoin traders that trade in and out (taking profits and putting them into PMs) (did) make real fortunes indeed, but these guys are rare me thinks.

      Either way, I wish ALL the very best and good luck, as we ALL will need it before long. A big thanks goes to our host Steve who is a beacon of reason in a world gone bat-$#!† crazy.

  17. The difference between the two bitcoin graphs is that the second took a much longer time to achieve than the first one did, so I don’t believe it is a good comparison in order to predict what will happen. What pisses me off is how so many idiots are accepting the illusion that 1 BTC is now worth 6.5 times more than 1 Troy ounce of Gold. BTC is digital fiat, the same brainwashing method used to convince people that BTC is real is the same method used on people for years about the dollar. Don’t be fooled in adopting this garbage, sadly younger people won’t be able to resist the easy money.

  18. Hi Steve,
    I wonder what happens when at the end Oil companies go bankrupt and Big Banks will take over them , for banks money printing is no problem , they print from nothing. They will have Oil companies assets and they going to be winners.

    • Mark,

      While the Fed and Commercial Banks can print or bailout companies, they cannot print barrels of oil. The FALLING EROI is gutting everything in its path.

      steve

  19. Northwest Resident | November 22, 2017 at 12:02 am | Reply

    There are only a handful of major internet network hubs scattered around the country. Flip a switch and millions lose their internet connectivity. “Investors” in bitcoin and crypto-currency are actually gamblers betting that a) the price will keep going up and b) the government or a natural disaster or some other cause does not disconnect them long term or permanently from their digital holdings. People who think they’ve got a solid investment with bitcoin have basically placed their trust in energy intensive technology. Bad idea. Of course, those lucky few who end up making a mint on bitcoin and cashing out in time to re-invest in silver and gold will be considered geniuses.

  20. The problem with silver is it is valuable. Silver futures are worth 5 trillion and are used to keep it cheap for the companies that need it.

  21. If we have a dire energy crisis that trigger a deflationary crash, why won’t gold and silver decline in value as well? Especially if people are wanting and needing real things to feed and shelter their families?

    • The Sting,

      The reason the precious metals values will increase is due to the collapse in the value of most STOCKS, BONDS & REAL ESTATE. Investors trying to protect wealth when the BIG CRASH finally arrives will try to sell their STOCKS, BONDS & REAL ESTATE for physical gold and silver as they will be few of the only assets that will protect wealth as most assets continue to decline.

      steve

      • Steve,
        During 2008-9 downturn both gold and silver went down, Gold – likely forces selling to cover margin calls and silver – due to its extensive use as industrial metal and reduced demand. Do you think we have had a structural shift in both and this time it will be different?
        Thanks for the article and your work!
        regards,
        daniel

  22. Loose your phone, and not have your Bitcoin wallet twenty word pass phrase, bye bye digital currency.

    If you can’t hold it you don’t own it

    • You can write down the code for a bitcoin wallet on paper and “hold it.” Or you can memorize the code. Not only can you “hold it”, you can hold it in your head and not burn a huge amount of energy transporting it from one place to another.

  23. I think there is a place for crypto as part of ones investment strategy as long as you are aware of the fluctuations in price and can use profits to buy back into a metals position. I still believe there is a large upside to this market although there will be some violent corrections as we have seen in the past.

    I understand the energy argument but Ethereum (2nd largest crypto by market cap) is moving away from mining to POS (Proof of Stake) and this will happen in the next year or two – https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ

    Using POS there will be no more mining so no need to consume large quantities of electricity in order to secure a blockchain. If this move is successful I believe we would see others moving away from mining although not sure if Bitcoin would ever get this far given the battles they are facing within their community.

  24. E-sports = 50 billion $ industry. Silver = 30 billion. My biggest bet is on e-sports. The trend is your friend. Don’t fight the tape. Have fun working until you are 100. Lol

  25. Good overall analysis. Crypto’s are for payments, physical gold and silver are for wealth preservation / savings. With an economy crashing, who will pay for their daily bread in crypto’s, using a iPhone X?

    But maybe crypto’s are used to fade out failing fiat currencies. Who knows. Keeping up the complex communication structures is not possible with declining net energy, in the longer term. Crypto’s soak up surplus greed and liquidity as we speak. It’s just another derivative of the physical world. The monetary plain turbocharged.

  26. One simple fact.

    Bitcoin is nothing more nor less, than a de facto digital currency and thus yet another fictitious form of wealth, with a computer system as it’s counter party.
    Crypto digital currencies currently look, act, and move as huge bubbles.
    If it quacks like a duck…

  27. When discussing crypto, fiat and gold, one should not forget that one of the most important aspects is the efficiency of taxation money enables or prevents. Taxes are raised today in two different ways: Income taxes, that is, the increase in your nominal wealth as measured by fiat currencies is taxed via the tax return you need to submit every year. Secondly, but more importantly, your total monetary wealth is taxed via the instrument of monetary inflation. By increasing the money supply, governments have a very efficient tool to tax your financial holdings. Compare that to taxation in the middle ages or the ancient world. The taxman visited every house and assessed the tax liability individually. The introduction of fiat currencies made that practice obsolete. It is still done that way when an official from your local government inspects your property in order to assess your property taxes.

    Crypto currencies are rising partly because of the hope and desire of people to escape that taxation. In comparison, gold is not rising because the price of gold is kept in check by paper gold trading on future exchanges. That effectively discourages people from buying gold as an investment. Gold is also an efficient tool to escape taxes (the inflation tax and the estate taxes due after death) and that is one of the many reasons why the gold price is being artificially suppressed.

  28. There are several criteria conflated under the concept of money. Yes, as a medium of exchange, for some things, Bitcoin works very well at the moment.

    As a store of value, here is a quick-and-dirty energy analysis:
    Gold and silver coins require lots of energy to produce and virtually none to store and maintain.
    Bitcoin requires virtually no energy to produce, but massive amounts to store and maintain.
    Which will win as a store of value?

    • »Bitcoin requires virtually no energy to produce, but massive amounts to store and maintain.«

      Totally in reverse: massive amounts of energy to produce, much less to store and again much energy to maintain. You need more knowledge.

      • Joah,

        Agreed. Individuals need to make sure they have a sound understanding of the subject they are making an opinion. If not, they can come across as quite silly.

        steve

        • Bitcoin requires a lot of energy to acquire, but not to produce. The energy to acquire it goes into the transactions, not to the production.

          • And why, Agnes, does btc need a lot of energy to ‘produce’ it? Wouldn’t it be easier to just ‘download’ it, instead of ‘mining’ it? Huh?

            What’s the reason behind that. Making it difficult to get? So it becomes valuable?

            There’s someting fishy behind btc. I wonder who this guy is, this mr. Satoshi.

            Fiat currencies depend on growth, there’s an infinite amount of fiat currencies. You just push some buttons, and there it is. Very good in a growth environment.

            We stopped growing, so fiat currencies don’t do the job anymore. Now what?

            Yeah…. finite currencies, work well in a finite environment. That is, until maintenance on the complex communication networks stops.

            What the f*ck is the big plan behind all this? My guess is fading out fiat currencies without blowing up trade.

            Or is it just greed, surplus liquidity in the billions cannot go into stocks anymore, to prevent surplus liquidity going into physical stuff, like food, or gold, or silver? That would blow up the system because it would show the difference between the physical plane and the monetary plane to a larger public… wouldn’t it?

            And we can’t have that. The illusion of future promises has to continue as long as possible. Because the physical plane is way too small for 7 billion passengers.

            Pyramid scheme or government intervention?

            I’m on the physical plane, and it’s raining, so i cannot see what happens in the plane flying above me. Help me out.

          • houtskool:

            Thank you for thinking. You deserve answers for it. I have only a few.

            Yes, there is something fishy. Bitcoin began as an experimental game. Somehow it caught on as a valid currency and went rogue. My point in my comment relates to a concept called “conflation”, which refers to two things that are not the same, but are grouped together, often in one word, as though they are the same thing. The word I’m concerned with is the word “mining” as it is used for bitcoin. The word “mining” was part of the original experiment, and the word just stuck. It refers to offering enough computing power to bitcoin maintenance to qualify to receive a bitcoin. Why does bitcoin require more and more computing power? Each transaction is recorded on every bitcoin holder’s record. Two things to look up: a good description of how blockchain works and Chris Martinsen’s “Crash Course” explaining how an exponential curve works. Blockchain requires exponential amounts of energy and computing power, and looks to me like it is close to blowing up on bitcoin. The maintenance for the bitcoin system is becoming enormous. However, to actually physically create the “coin” itself, it’s just a few bits into the system.

            So the energy it takes to “mine” a bitcoin actually goes into the continuing maintenance of the bitcoin system, which increases exponentially. None of it goes into the actual making of the “coin” itself. But both concepts are lumped under the word “mining”. Hence the confusion.

            My original point, that everyone else missed, is that as energy available decreases, bitcoin will no longer be maintainable, even though is was so energy-cheap to physically produce. Gold and silver coins, which have taken lots of formerly cheap energy to produce, require no energy for maintenance, as they are reasonably inert. They will store value with little effort.

            To come full circle on your commendable struggle to understand, it had no purpose originally except as an experiment. Today, I have no ides what it is doing. No one does. It is rogue, and it looks to me ready to blow up.

    • Yes, Bitcoin requires a lot of energy to produce, and a bitcoin has absolutely no utility outside of an exchange medium. No corporation buys bitcoin to use as a component in one of their products. Many corporations buy gold and silver to use as components in many of their products. That’s the difference. And that is what people are missing. They think humanity has surpassed commodity money and entered the new digital era where nothing tangible is really necessary.

  29. The name Andy Hoffman brings to mind the old limerick that begins – “There was an old whore from Azores…”
    Apologies to all old whores.

  30. Steve If a person is to prepare for the end of oil and internet etc. wouldn’t it make more sense to first spend your money on items that are compact and inherently valueable and tradeable in that scenario such as hacksaw blades, bow saws, machetes, hand drills, ammo, snares boots fire starters, etc. before buying silver/gold that no one can eat or wear or derive energy from.

  31. Great article as always. Bottomline, the brick wall in this bubble/fantasy economy is energy. Steve is one of the few who “get it”. How long can this game continue is anyones guess. I believe it will end sooner rather than later. The mainstream news is fake, the economy is propped by fake numbers, but if you tell a lie often enough, and it also profitable to perpetuate that lie, business as usual will continue (until it doesn’t). Average people, at least the ones that can afford it, are being drawn into to stock market because it is the only thing that, at this time, is making a profit. When a downturn comes, as it ALWAYS does, those exits are going to jam up quickly! Gold, Silver, and Bitcoin are for those of us that are trying to protect our loved ones and ourselves from the inevitable. Steve, Andy, Bix, SGT and many others are trying to sort though this, and I respect them for their efforts. Just remember, no one has an absolute answer as to how this ultimately will end. BUT END IT WILL!

  32. Hi Steve,

    Again great article. There is also a lot of disinformation about Bitcoin helping the peoples in Venezuela. I am from the Caribbean and I have visited Venezuela in the past. Even back than the country had a lot of problems with their electrical grid. I can’t believe the stories nowadays I encounter that Bitcoin is being mined and groceries are being bought abroad and fly in passing by the corrupt customs and get delivered to there destination with a chronic shortage of gasoline.
    Where do they buy computers processors where they can even buy food. Sad to see but we have a lot of refugees from Venezuela and you don’t hear this in the news.
    That is what I wanted to say. I know it is of the topic discussed in your article. But I think the crumbling infrastructure in Venezuela can be used as an example for our over reliance on all the modern complex systems that we had set up.

    And again, nice article!

  33. Why do bitcoin people say blockchain is some new technology? It isn’t ! The intenet is, but blockchain is just a piece of software. A complex one, but still just only software.

    • You and many others know the answer, but in case it’s not clear to someone pondering about this; Blockchain fans need to convince you it’s a superb technology with tons of pros and no cons as they are bag holders at the moment. If they want to make a profit, their bag has to be held by newcomers. The more newcomers, the more profit for those who are already in.

      • It does not an anything to do with that, that’s just capitalism ie speculation, we do not care why, they just want to make money (ie to exploit somebody else). One more time, unfortunately, as soon as this article has been published, a new all time highs are made on cryptos with ETH just blasted the 400 USD mark. Cryptos are sucking all the money from the small guys which could have been in the PMs in some ways. Sad but cryptos are the winners… for now but I do not see anything which could reverse this trend up to now.

  34. Though I support the development of Bitcoin which is the first use of the cryptography protocol that supports a decentralized, pseudo-anonymous, borderless, peer-to-peer digital currency with No third party control. I am NOT naive to believe anything other than what it is; the currency of the internet! Checks are currency, credit cards are currency, fiat is currency. If you hold it, it increases in value BUT the moment everyone spends it, it drops in value. When the SHTF then people will spend bitcoin and the price will go down. You can watch it happen on the blockchain! The ONLY REAL STORE OF value IS NOT in a currency but in true value! SILVER AND GOLD. Even The Bank of International Settlements demand all transactions are done in GOLD!
    With the “high grade mining” and closing of silver mines and decreased production of copper, zinc and lead; the available silver will decrease!
    But the demand for silver is not decreasing! It take 3/4 of an ounce to make a solar panel! It takes 400 ounces to make a cruise missile! It takes 1 ounce of silver to make 4 cell phones and 2 billion people will be buying cellphones for the first time next year! Should I mention electric cars, satellites and rockets? YES I own Bitcoin and Gold and SILVER!!!

  35. Last joke on humanity, it takes oil to print dollars
    Would the last to leave turn out the lights?

    • I have a few German banknotes in my drawer from the Weimar hyperinflation. One reads “Fünf Milliarden Mark” (five billion marks). The funny thing about this particular note is that they used old 5 Mark notes and the “Fünf Milliarden Mark” was stamped in red ink on it. That’s the “no-use-of-oil-printing” of fiat some 94 years ago ! Weimar world, here we come.

  36. I am on the fence about cryptos and don’t own any, but I think some are poo-poo the sector on some faulty reasoning with regard to energy. The Internet will not be going away any time soon, even in an energy starved future. It’s too valuable. Maybe the web won’t exist and USENET will be slower and less reliable and most people won’t have it at their fingertips, but even if goods are crossing the oceans under sail power there will be some sort of digital global internet. Maybe it’ll be run on long wave radio and computers that are only running a few hours a day on a globally scheduled sync cycle.

    In this environment a standardized crypto currency for trade would be *more* valuable than gold. Nobody is going to want to waste energy carting precious metals all over the world. Nobody is going to trust paper certificates. Sail into Hong Kong, wait two days for the BitCoin transaction to clear, load cargo and sail out.

    I have no fully formed opinions on crypto currency. I just don’t see the detractors making very much sense. If some block of nation states backs their currency with a crytpo coin the whole game changes. I think this is quite possible.

  37. Steve,
    Once again good work, no reason why I am one of the patrons of your channel.

    If you could please share your opinion on my real case explained below;

    I have a few thousands of ounces in silver, stored o/s banking and my home, and in order to achieve that target I borrowed $19K in Dec 2015 @5%/year. After, two years that loan is due completing this December. I also have a reasonable crypto portfolio with ZERO BTC, but including CDX/Network tokens. In order to pay back $19K loan, on 1st November 2017, I sold thousand ounce silver @$21.5K and invested in crypto. At the moment, I am sitting on $32K with a plan to pay back $19K and play with crypto for a few more months and then buy back 1000 oz silver and keep playing with remaining of crypto money. Bottom line is, not that I am smart (in that case I should not have borrowed to buy silver at first place!!), play your game between crypto and other assets that you trust and stay safe financially….WHAT WOULD YOU SAY STEVE??
    Thanks
    regards
    Cheers-

  38. You guys do realize that even if you “hold” something you don’t own it either, right?

    None of you own your car or house if you have an auto loan or mortgage. Go ahead and try it, stop paying and form a defensive perimeter and say the car and house are yours, see how far you get.

    Try taking something out of a store and saying “I hold it, I own it”.

    Ownership in this world is by title, not whether you are physically holding onto something or not.

    • True, but unlike this one person in this thread, most shrimps/stackers will not have attached any debt to their PM holdings (I hope for them).

  39. The reason I’m not into cryptos is because they are nothing more than a medium of exchange, just like the dollar, yen, or euro. If they ever stop being accepted as a medium of exchange, then they, like the dollar, essentially don’t exist in the sense that they would have no utility and therefore no value. I heard one person describe it this way: Bitcoin came into existence ex nihilo in 2009, gold and silver have been around since the creation of the universe.

    So there’s not exactly a long history as money there. Meanwhile, Gold and silver have served civilized societies as money for thousands of years except for the past 46 years or so. Now you can bet that the past 46 years are the beginning of new monetary paradigm of a shift away from commodity money. Or you can bet that the past 46 years are a grand monetary experiment by elite politician and central bankers which is ultimately coming to an dramatic end due to absolute failure. If you think the current era of money is on the verge of collapse, why would you bet that a society fleeing one non-commodity currency would flee into another?

    Despite all of the energy it takes to produce a bitcoin, a bitcoin is still useless outside of an exchange medium. And where will the human mind turn once the current paradigm collapses. It will turn completely to real goods. Real goods meaning tangible commodities that can be utilized outside of a medium of exchange, i.e. gold, silver, copper, nickel, canned goods, cigarettes, you name it. And then some of these real goods will once again emerge as a medium of exchange.

  40. Re: “Because, in a digital age, I just don’t believe people are going to store thousands of pounds of silver hoping that the gold-silver ratio is going to come down.” Andy Hoffman

    Some months ago, I’m guessing upwards of a year or so, Andy Hoffman stated, in one of his podcasts, that gold should be between $10,000 and $15,000 per oz (at that very moment), and silver should be somewhere between $1,000 and $4,000 per oz (this is not a typo). Using Hoffman’s numbers, if one assumes only 1,000 pounds (= 16,000 ounces) of silver, and not the ‘thousands of pounds’ he references, and then we assume the low side of his “$1,000 to $4,000” price range, we get 16,000 oz x $1,000 = $16M. The high side would be 1,000 x $4,000 = $64M. Of course, if one had, lets say, 10,000 pounds of silver ( = 160,000 oz), then 160,000 oz x $4,000 = $640M. While this may only be chump change for Hoffman, the average person might find this tarnished metal to be of value.

    My guess is that in the future one will be happy to have some silver, let alone “thousands of pounds”.

    Lest I forget, is silver not an important component of all things technological, including cryptocurrencies?

  41. pennies onthedollar | November 23, 2017 at 8:31 pm | Reply

    Energy intensive blockchain monetary system meets thermodynamic oil collapse. My little RX 470 6GPU mining rig is consuming about 1100 watts of power dual mining ETH to the tune of a about 1 Ethereum per month. You put out your nets when the fish are running. I wonder about the stability of the blockchain networks when the power outages start. I don’t worry too much about my metals.

  42. Another PMs supportive article vs cryptos : so cryptos are exploding higher and PMs are doing nothing at best (probably will fall hard soon because of poor COTs which are 100% reliable).
    I was wrong when I said this site will go full cryptos at the end of 2017 when bitcoin will trade around 8000 USD. We need sinclair, gartman, this website are many more going full long cryptos are giving up PMs in order them to rise. Unfortunately it does not happen, so PMs will continue to rise : ETH at 1000 and BTC above 10 000 by year end : GUARANTEED.

    • New all time highs today, it will be the same on every weekends and public holidays.
      Cryptos are the main competitors to PMs are clearly winning.

    • Good call on the $10k by year end. I hope you’re right on ETH too. Would be nice to see it double up in a months time. I find it a bit funny how people talk about bitcoin can’t be money or won’t work – all while it is actually working and people are literally getting rich being early adopters of this new tech. To each their own I guess.

  43. It was always stated(from the PM Lobby) that the East wants all Gold.Yesterday i read that China and Russian wants to trade oil with gold in exchange.And so on…

    We heared Russian want to go out from the Dollar.And so on…

    But nothing had any effect to the gold price.When the US-dollar falls what happen with the chinese bonds?Nobody seems to have big interest in increasing gold prices.The chinese could have do it a long time ago if they want.

    Look to the miner stocks.In a long way falling.This means not that we get higher prices.And no money flow in low cost developer who have the future gold in the ground.

    So for me this means to buy cryptos and don’t listen to the PM-Lobby.They told us year for year nonsense.Gold and silver manipulation is obviously an interaction between the big buisness banks.

    The EROI statement is right.But where is the time frame?Human life is limited.All my money in cryptos and i could lay in florida in the pool and drink some long-drinks.What about the long time price silver.Ten years over and your purchasing power is away.

    • Are you full cryptos now ?

    • I feel your pain. However, I think you need to re-visit history. The London Gold pool was very similar in nature to today’s gold and silver suppression. When it broke Gold went from $42 Dollars to over $1900 in 2011. In 2011 Obama met with the bankers and the PM suppression scheme went into over drive. Here we are 6 years later. There is a parable in the Bible about 7 years of famine and 7 years of bounty. My thought is that our time to prepare is almost up. Look around..the world is teetering on the precipice of extreme upheaval. Be patient and follow your own judgement. What made you jump into PMs initially? Do those reasons still exist? If not..sell out and go into what makes financial sense for you. No one forced anyone to make a PM purchase. I assume you’re an adult and accept the ramifications of adult decisions, perhaps it’s time to stop bitching on the internet.

  44. No not much.50 Litecoin.Maybe i go to 100.But i will buy some other Coins.
    But i buy in small portions.It was a big mistake to buy 80 kg silver.I was really stupid.
    Mayby i can use the half kg bar as a paperweight.

    A fried of mine had 60 000€ in cryptos.And another one from the bitcoin forum was an early adaptor who bought for 4000€ many years ago.
    Now he has round about 3 Million €.He is maybe 30 years old.

    • For sure cryptos has been the greatest bull markets in history.
      That’s sad to have missed it (same for me). In no way a PMs bull market will ever be 1/10th or 1/100th of the cryptos. Silver will maybe a ten baggers and maybe some mines will make 100 baggers but that’s the ultimate bullish scenario. I have no idea how high cryptos can fly but the major test IMO will be when a real credit contraction will take place.
      I do not consider it is safe for common people to buy 100 000 or 1 million of cryptos but for people with small amounts such 10 000 I consider 100% cryptos is a good bet.
      Pms are not for small savers but for multi millionaires and billionaires, gains have been and will be (if ever) very modest.

    • By the way, it was the same for nasdaq, that made some millionaires but not so many because usually, after many gains early adopters sold “too early”.
      For me the biggest mistake I made was ETH 1 year ago, it was not so risky to put a few monies there because gains had been quite small.

  45. When I look at the bitcoin curve I’m reminded of this pithy quote:

    “The greatest shortcoming of the human race is our inability to understand the exponential function.”
    Albert Allen Bartlett

    That aside, bitcoin is like any other currency in most ways. As such it is a short term means of speculation and exchange. The problem with bitcoin is simple: it isn’t money!

    Characteristics of MONEY:
    1 A medium of exchange and a unit of account
    2 Portable
    3 Divisible
    4 Interchangeable (fungible)
    5 Durable
    6 A store of value

    IMO bitcoin is solid on the first three points. Its interchangeability is currently questionable as it is not recognized even on common storefronts, although its exchangeability into other currencies mitigates this. Bitcoin further deteriorates on the 5th point as the value of bitcoin with no internet access is precisely ZERO. The last point is the deal breaker, however, as bitcoin is only a store of value insofar as its value is speculated upward, it’s acceptance is not curtailed by The State, and it remains limited in quantity.

    So before you get rid of all your PMs, understand that you are exchanging them for a primarily speculative instrument.

    • Johny Comelately | November 25, 2017 at 2:20 pm | Reply

      Bob,

      I believe you are mistaken with your reasoning that Bitcoin is not durable or a store of value.

      1. Durability:
      I highly doubt the Internet will go down. Sure, it may go down regionally and temporarily. But globally forever? We will live in a MAD MAX world if that happens. At that point, good luck eating your silver.

      2: Store of value:
      Part of the value of Bitcoin is that the blockchain ledger is durable and immutable. One can verify every Bitcoin transaction ever done and have trust in the consensus of the ledger’s accuracy.

      3: Silver
      I agree that silver is a great investment. I now believe both cryptos and silver is great. It’s a beautiful thing if you can convert crypto profits into tangible wealth like silver!

      • One thing we will both likely agree on: the USD and other government controlled fiat are a far worse long term prospect then cryptos or PMs. That aside, I should have given more basis for my conclusions:

        1) The internet can come down as a result of malevolent State action. A Madd Maxx scenario need not be the case.
        2) Cryptos are only durable to the extent that they are hack resistant. Given the “hackability” of the US Dollar by the Federal Reserve cryptos are a better bet even though they have not been 100% to date. Also realize that said hackability can also be a goal of a desperate central State.
        3) PMs have a long track record…it’s tough to argue that point! As a consequence, cryptos still have yet to be proven as a true store of wealth. In other words…PMs are a “tough act to follow.”
        4) Cryptos are only inflation proof relative to two points:
        a) the degree that the originating governing body keeps to their promises. Realistically, I don’t see these promises breaking down any time soon, if ever.
        b) more importantly, every crypto added to the currency market, at least in theory, has inflationary effects. IMO point 4b is the biggest argument against crypto being a store of value.

        Again, all that said, BOTH have their place! Let me suggest a recent Mises.org inverview with Mises Venezuela where they discuss the benefits of bitcoin. Some digging might be in order but it’s out there…about 1-2 months ago if I recall.

        • Johny Comelately | November 25, 2017 at 11:01 pm | Reply

          Hi Bob.

          Very good points, but I’m not sure about 4b. I think there’s a difference between printing more of the same dollars and having competing currencies when it comes to measuring inflation.

          You definitely put thought into your arguments and I will look up that Mises interview. Thanks!

    • That’s because it is not money that it can increase so much.

  46. Johny Comelately | November 25, 2017 at 1:59 pm | Reply

    Hi Steve,

    I think you have Cryptos and Bitcoin wrong!

    1. While it takes lots of energy to produce a Bitcoin and other Crypto tokens, they promise HUGE energy saving gains when using blockchain technology. The energy savings far outweighs the cost of the Bitcoins.

    2. While it does take a lots of energy to produce Bitcoins and other crypto tokens, it is rather insignificant in the grand scheme of things. Cliff High noted that it takes more energy to launch a single space shuttle than all the energy put into crypto mining combined up until now!

    3. While the rise in price and price volatility of crypto currencies certainly has to do with some speculation, PRODUCT ADOPTION RATE has more to do with the underling price action. In 2011 hardly anyone was in crypto currencies. In 2017 less than 1% adopted them. By August of 2018 it is estimated that 3% will be in this space. If we look at a typical product adoption curve and overlay the price action of Bitcoin, we realize that we’re nowhere near bubble territory!

  47. Good article as usual.

    Makes perfect sense, eg the early stage of a civilisational cycle, learning how to utilise a new source of energy yields massive return, then the end stage requires a lot of energy input to yield ever lower return, eg how much financial energy (QE) in the debt-based Petro dollar system is required to produce not even an integer of economic growth? How much debt is required for a degree etc

    Signs are clear the post WW2 US Empire system is set to crumble

    Cryptos play a role in facilitating e-commerce in the future, and it’s good to see you understanding it from the inside via CDX Steve, but I have similarly been aghast at hearing comments from people like Mike B saying they’ve sold all their Silver

    Gold and Silver coins/bars are finished products, eg all the energy required to produce them has been utilised

    What people don’t also grasp is that we have had such an upsurge since the advent of the PC in the 1980’s in Technology adoption and incorporation into peoples lives (social media being the Apex), this trend can and probably will oscillate back towards Technology-free for many people which requires less energy, in which case Paper Crypto Wallets and of course Junk Silver and Gold/Silver coins will be of value – especially in a world where there will be Blackouts and disrupted Energy supply

  48. I did this years ago, buy bitcoin:sell gold.
    Who looks stupid today?

  49. Regarding the valuation of Bitcoin I want to point to an article that appeared recently in Seeking Alpha

    https://seekingalpha.com/article/4129543-bitcoin-one-way-go-true.

    The article points to the role of Tether Ltd. (Who has ever heard of it?) This company issues (NOT mines) a cryptocurrency coin ‘Tether’ that can be converted back an forth to USD without going through a regular bank. For every Tether 1 (one) USD is supposedly deposited at Tether Ltd. That is at least what the company claims and that is the reason why the cryptocurrency is called Tether since it is tethered to the USD. So far that back and forth exchange seems to work just fine.
    You also can now take a Tether and exchange it into a Bitcoin at the Cryptoexchange Bitfinex, also run by Tether. Ltd. It was shown in the article that the volume of circulating Tether coins and the value of Bitcoin is roughly proportionate on a log-log scale. A juicy detail: The daily transaction volume between Thether Ltd and Bitcoin is 700 Mill $!!! Tether coins in circulation more than 800 Mill USD equivalent ON A DAILY BASIS. So, 7/8 of the issued coin volume is transacted every day. Isn’t that amazing? Oh well, the Tether company steadfastly refuses to submit to an audit. No surprise here.

    I’d rather stick with my gold.

  50. Hello Steve, hello people.
    Today I saw this: http://www.whatdoesitmean.com/index2455.htm
    about the amount of energy production of bitcoins and its next future.
    And I bring it to share it…

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