The GOLD scream room

[seajay]

How and where to view crypto transaction histories https://cointelegraph.com/news/how-and- ... -histories

[seajay]

...
But, the network is here to stay, isn't it.

Maybe. The economics of BTC mining provide diminishing returns with every halving period (every 4 years). I wrote this article a few weeks ago that explains the problem with the security model (it's not too technical):

https://www.pmbug.com/threads/know-what ... unds.7919/

Under fiat currency money is debt, created out of thin air, destroyed when the debt + interest has been repaid. Is inflationary (currency debasement).

In 1933 the Fed printed dollars in order to buy up all Americans investment gold. Later they gave that gold to the Treasury in exchange for non redeemable gold certificates at $42.22/oz. So the Fed has the capacity to leverage, at $2700/oz market price = near 64x leverage factor. The market also trades derivatives that recently had 126 times more paper gold than physical gold - another 126x leverage factor. Similar to the 8000 tonnes of gold value that the Treasury own being scaled 64 x 126 (near 65 million tonnes of gold value).

The Fed is inclined to keep one eye on the price of gold, with past members having openly noted that 'when the dollar deviates away too much from the price of gold bad things tend to happen' (paraphrasing). What better way to maintain the dollar in a channel alignment with the price of gold than for the Fed to buy or sell gold. That strong point defends/protects the dollar, would be mad if that was thrown away to instead adopt bitcoin. As would it be mad to have the countries money in a public digital ledger that is far more easily hacked than it is to break into Fort Knox (steal physical gold to outside of the US).

[dualstow]

Thanks guys!

[yankees60]

How will gold react to this??!!

Capture.JPG (168.34 KiB) Viewed 14583 times

[dualstow]

Btw, it’s 2800 tonight

[Jack Jones]

I appreciate you pointing that out! Vinny's question and your response raise the interesting question of what a Bitcoin actually is.

They are tokens that allow you to transact on the system. If you have no tokens, you cannot pay miners to process your transaction, and you have no tokens to send to someone else.

[Xan]

I appreciate you pointing that out! Vinny's question and your response raise the interesting question of what a Bitcoin actually is.

They are tokens that allow you to transact on the system. If you have no tokens, you cannot pay miners to process your transaction, and you have no tokens to send to someone else.

Right, but the interesting thing is considering there being no system rather than no tokens.

[seajay]

I appreciate you pointing that out! Vinny's question and your response raise the interesting question of what a Bitcoin actually is.

They are tokens that allow you to transact on the system. If you have no tokens, you cannot pay miners to process your transaction, and you have no tokens to send to someone else.

Right, but the interesting thing is considering there being no system rather than no tokens.

The blockchain is just a distributed/shared/public ledger across the internet. A bitcoin is just a unit, a number in a ledger that is attributed value relative to other 'currencies'. Anyone can see the ledger, but to send value (bitcoin) to a address (like a bank account number) you have to use the public key (like a account number) associated to that. To send (spend/withdraw) from a address (account) you need the private key (like a long bank account PIN number). The ledger retains all past and current transactions, each new transaction is a record/block that is chained in the ledger, somewhat similar to how if you append to a existing file on a disk if finds a free block and appends a pointer to that at the end of the main files block pointers. That distributed/public ledger means no one single state has control - can block transactions (such as sanctioning Russia).

Since bitcoin became more accepted (since 2018 - after the big-up year in 2017 as it became accepted), its running similar to a 11.5x leveraged stock type holding. 8% https://www.portfoliovisualizer.com/bac ... HA1FG1GD1f (8/92 BTC/Gold) somewhat aligning with the S&P500 total return. You might for instance hold 2/48/25/25 BTC/gold/cash/TLT as a form of PP https://www.portfoliovisualizer.com/bac ... gbZTp4MgI7 Or use a leveraged PP comprised of just 50/50 stock/gold - held as 4/96 BTC/gold https://www.portfoliovisualizer.com/bac ... DjHyDwc6xE

Basically what the BRICS are headed towards, i.e. cut USD, US stocks, US Treasury's out of the equation. Trump's tariffs aid such a transition away from the Dollar, as might businesses opt to list elsewhere rather than in a more isolated US only market/location.

It's quite common for fiat based empires to last just a century. The British empire having been a exception primarily because it remained on a gold backed currency, Sovereign Pound coins, a little under a quarter ounce of gold.

[seajay]

The "West" was primarily comprised of the US, Canada, UK, some of Europe, Australia, Japan and some of the Middle East. Trump has declared tariffs on Canada, Biden already pretty much alienated the UK, as did Trump in his prior presidency alienate the EU. Australia is more aligning to trade with China. Having lost the Gaza war, and the Ukraine war as good as lost, along with further tariffs likely, the US may very well transition to being considered as just one distant region of 350 million out of a global 8 billion population (<5%).

[yankees60]

https://disciplinefunds.com/2025/02/01/ ... eading-12/

2) Bitcoin Going to $0?

Gene Fama kicked the Bitcoin hornet’s nest this week when he appeared on a podcast and predicted that it would go to $0 within the next 10 years. I think this prediction is likely to be wrong and indicative of the academic sort of thinking that most traditional financial theorists utilize. The thing is, from an asset pricing perspective, an asset like Bitcoin is virtually impossible to value. In traditional finance we like to use things like discounted cash flows or similar cash flow based metrics to value an asset. We assign multiples of revenue, EBITDA, etc. But when an asset doesn’t generate cash flow it becomes difficult to value.

Bitcoin is more like a piece of fine art than a cash flow generating corporation. And to value something like a piece of art you need a more subjective asset pricing model. Personally, I don’t have a strong opinion on that as it pertains to Bitcoin’s specific price and the primary use case I consider with Bitcoin is fiat currency insurance. That is, if you live in a 3rd world country where the risk of currency collapse is high then owning something like Bitcoin makes a great deal of sense. If you’re an American using the world’s reserve currency I don’t think that argument is nearly as compelling. But I find it very compelling from the perspective of any 3rd world economy, especially those with unstable authoritarian economies. What is insurance worth to someone? That’s a super personal question and one that an asset pricing model isn’t going to help you quantify.

But $0 is an extreme sort of prediction. And it misunderstands the huge underlying infrastructure and network effect that has developed around Bitcoin. This isn’t merely something trading on pure speculation. There’s now a trillion dollar infrastructure in Bitcoin mining, embedded (incentivized wealth) and regulatory apparatus that utilizes this asset. None of that means it can’t fall significantly and given its history it wouldn’t be remotely surprising if it falls 80%+ at times, but for it to go to $0 you’re talking about the collapse of the entire global Bitcoin mining industry, the now billion dollar ETF structure and a complete and total collapse in the confidence that supports this asset. Could that happen? I guess it could in an environment where, for instance, the power grid went out forever, but the probability of that happening in the next ten years is extremely remote in my mind.

Of course, whether any American should own Bitcoin as fiat currency insurance is a whole other question….Fama would probably disagree with my framing of it as fiat currency insurance, or I supposed he’d prefer other assets to insure that risk, but I guess that’s why I don’t consider myself a disciple of Modern Portfolio Theory.

[Jack Jones]

Bitcoin may die a fast death when the number-go-up technology narrative starts to falter. Number-go-up depends on demand-go-up, and the Bitcoin developers have decided that Bitcoin is not for everyone.

[yankees60]

Bitcoin may die a fast death when the number-go-up technology narrative starts to falter. Number-go-up depends on demand-go-up, and the Bitcoin developers have decided that Bitcoin is not for everyone.

"number-go-up technology"

First time I'd even encountered that phrase so needed to do a search on it:

https://glossary.bitbo.io/ngu/

What is NGU?
Key Takeaways
NGU means 'Number Go Up'.
Limited supply and increasing adoption propel NGU.
Bitcoin's price is not guaranteed to always go up.

[seajay]

But if you held 10/90 3x Nasdaq100 (TQQQ)/gold instead of 50/50 S&P500/gold, or 4/96 BitCoin/gold ... rebalanced once yearly and bitcoin went to zero a 4% hit is more a glitch than critical https://www.portfoliovisualizer.com/bac ... hthtPsx67X

Basically the way the BRICS are going https://www.portfoliovisualizer.com/bac ... 7jLCTp45mT ... no need for US stocks/businesses, US Treasury's, holding/trading multiple currencies in trade weighted proportions with a BRICS-PAY alternative system to SWIFT

Trump's tariffs threats to 'stick with us, America first' ... etc. are more inclined to repulse and drive towards supporting BRICS

[pmbug]

It really looks like the paper gold market is breaking down and true price discovery for physical gold is just beginning.

Reminder of recent history and big picture view of the physical gold and silver market right now:
https://www.sprottmoney.com/blog/on-tariffs-gold-prices

More analysis:
https://www.bullionstar.com/blogs/ronan ... es/?r=1035

[dualstow]

…
Basically the way the BRICS are going https://www.portfoliovisualizer.com/bac ... 7jLCTp45mT ... no need for US stocks/businesses, US Treasury's, holding/trading multiple currencies in trade weighted proportions with a BRICS-PAY alternative system to SWIFT

Trump's tariffs threats to 'stick with us, America first' ... etc. are more inclined to repulse and drive towards supporting BRICS

Do you really think so? As repulsive as Trump’s tactics can be, I just don’t see the world embracing Russia or China. I think predictions of a move to BRICS is wishful thinking on the part of some people. Not you, necessarily, Seajay, but some people.

Besides, he’s only got 4 years.

[stuper1]

It really looks like the paper gold market is breaking down and true price discovery for physical gold is just beginning.

Reminder of recent history and big picture view of the physical gold and silver market right now:
https://www.sprottmoney.com/blog/on-tariffs-gold-prices

More analysis:
https://www.bullionstar.com/blogs/ronan ... es/?r=1035

I can understand the concern, but I don't see the evidence for it. For example, my gold ETFs are up 40% over the last year, and so is the spot price of physical gold. I don't hold PHYS anymore, but I just looked at the premium/discount history. It's still trading at a discount of -1.2% similar to the last couple years. If investors are nervous about paper gold, I would have thought that PHYS would be more popular and would be trading now at a premium, but maybe I misunderstand how these things work.

I'm all ears to hear more on this topic from you if you have more thoughts. Also, if someone like me wanted to get out of paper gold for a while until these tariff wars settle down, should I just put my paper gold money into T-bills for a while or is there a better place to put the paper gold money? Maybe mathjak's managed futures funds?

[pmbug]

... If investors are nervous about paper gold, I would have thought that PHYS would be more popular and would be trading now at a premium, but maybe I misunderstand how these things work. ...

As I understand it:

Bullion banks are the ones holding huge naked short positions on the COMEX. They usually trade short COMEX (futures) and long LBMA (spot).

There has been a spike in the exchange for physical premium to redeem metal in London (LBMA) and transport it to USA. Trump's tariffs have exacerbated the issue. The economics of the short COMEX, long LBMA have changed. COMEX shorts need to cover their positions with underlying metal.

London has announced that they can't fulfill redemption requests in a timely manner. They are trying to borrow metal from central banks if news reports are to be believed.

We are in the early stages of watching the COMEX metals futures trade deleveraging.

[stuper1]

I'm not very sophisticated in this stuff, but I understand the gist of what you are saying. My question is: if this is bad news for paper gold, why aren't we seeing it reflected in a sell off of paper gold and a higher premium on safer, similar products like PHYS? If unsophisticated people like me are already getting wind of this, I would think that the paper gold market would already be reflecting these fears, but maybe the market is less efficient than I believe.

[Xan]

Wouldn't the split be between physical gold on one side and ETFs like GLD and PHYS on the other?

[Jack Jones]

IMO, paper gold is for speculating on the gold price. Don’t fool yourself that your paper gold has the same properties as your physical gold.

[bitcoininthevp]

How big is the world's limited supply of Bitcoin?

Currently 19,820,388.71 BTC which is 94.38% of the ~21M total supply to be issued (actually 20999999.9769 BTC, but even that number isn't quite correct).

The question would be what size hard drive is necessary to hold it?

In theory a single Bitcoin address could hold all the bitcoins. And the size of the private key to secure the address is a 256-bit number, which can be represented in just 64 characters.

What size are they now up to? Have they made it to TB's?

If you mean the blockchain, that contains all transactions ever made it Bitcoin's history, that is about 723.5 GB as of today. And there are ways to store smaller versions of it available.

What composes the network? How much of it can fail before there would be complete failure or inaccessibility to your bitcoin?

The Bitcoin network is composed of nodes (computers) connected to one another over the internet. Some of the nodes are also miners, but others are non-mining nodes. There are about 22,000 Bitcoin nodes on the network right now.

Satoshi started Bitcoin as the only node (computer) and miner (also his own normal computer) on the network. There is nothing preventing this from happening again. If all other nodes and miners dropped from the network, you could be the only miner on the network and collect 3.125 BTC every 10 minutes, the current block subsidy.

[boglerdude]

bitcoin.jpg (116.93 KiB) Viewed 8822 times

[ochotona]

Exactly this. It's not proven that BTC is a safe haven. If it shoots itself in the head during a QQQ bear market, what good is it? But gold recently peaked August 2020, then went to sleep for a while. It's poorly correlated to QQQ or SPY. That's what it's useful, the non-correlation, not the CAGR.

[dualstow]

While the DOW is down 1% right now (3:00PM EST),
gold is holding fast at 2860$/oz.

[yankees60]

While the DOW is down 1% right now (3:00PM EST),
gold is holding fast at 2860$/oz.

That leads to the question of ... WHAT IS MATHJAK DOING IN REACTION TO THAT??!!