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Tuesday, February 23, 2021

A Store of Value in a World that despises Value

What is True or Fundemental Value?

Value or Valore in the classical word literally means something to the Good, to the Benefit of, that which imparts strength, and well being.

For this to occur the thing of value must have USE.  And the use must benefit us.

What is the USE of Money?  It enables us to store wealth, to transfer wealth, to trade wealth.  For this it must have the quality of a unit of account, be a scalable means of payment and be stable over time in preserving wealth.

What qualifies?

Paper money certainly serves as a unit of account, and is a scalable means of payment.  It certainly DOES NOT serve as a stable store of wealth over time:

What about Bitcoin:  Well, here's Nouriel Roubini:

"Bitcoin is not a unit of account, is not a scalable means of payment, and is not a stable store of value."

Instead, he argues, it is a pump and dump scheme, where fear of missing out leads retail investors to speculate on an ever-increasing bubble.

"Risky, volatile bitcoin doesn't belong in the portfolios of serious institutional investors. Many of its retail backers are suckers being manipulated by an army of self-serving insiders and snake oil salesmen,"

It might make a great momentum trading vehicle but it has no fundamental value.

Which leads us back to Gold and silver.

Both Gold and silver serve as a unit of account, are scalable means of payment and have been stable over 5000 years in preserving wealth.

While comparisons are difficult across ages, a legionaire in Caesar's army would have been paid roughly an aureus a month, which is about 3 ounces of gold, but this would have been supplemented  by the booty of war and also land grants after a certain number of years of service.  A Private in the US army get about 20k a years or about 12 ounces, though without supplementary pay.  

Has gold held its value over the last 2000 years?  I'd say roughly it has.  Certainly better than anything else.

The trouble with gold and silver right now is that the Central Banks of the world control the value of all financial assets, and all currencies.  Bitcoin being neither an asset not a currency has the benefit of no control, so as a pure gambling vehicle it is great if gambling is your thing.

But the dollar value of Gold and Silver are being capped by the Fed.  Yet their control is against the primary trend of the free market.  The Fed needs to print infinite amounts of money to prop up the economy and pay off the infinitely increasing debt that will never be repaid.  And at the same time it can not raise rates without increasing the interest payments of the infinite debt.  So this creates the perfect market for gold and silver.

So two strong forces are in competition which right now is creating something of a stalemate in the price of gold and silver.  Central bank manipulation vs free market conditions. 

So if your goal is to get rich quick, they're not for you.  But if your goal in unstable times is to have a stable currency in your portfolio they're not a bad idea.

Saturday, February 13, 2021

Im Back: Go Real!!!!!!!!!

 After a harrowing run in with hackers and identity thieves I' ve gotten my site and hardware cleaned and reported the breach to the FBI who seems to feel like they have some solid leads on these criminals.  Let's hope.

This has led to a long delay in the relaunch of the site but most new coins have been added and uploaded.

Meanwhile one thing has been made super clear: The value of Hard Assets has never been greater.

First, with MMT or Modern Monetary Theory or Magic Money Tree, which is simply the unlimited printing of money by the world's governments to cure all the worlds woes, real hard assets shave never been more sought after by those desiring to trade their fanciful electronic chits for real things.

But second, Everything electronic can and will be hacked.  Your credit cards, your online information, your paypal, your apple pay, your bitcoin, your social security, everything is game.  Everything is hackable.

Except real hard assets.  They can be stolen by humans at gunpoint,  But they can not be hacked.

How valuable is that in a hackable world?  And wait for Quantum Computing.  It's still a few years away  but coming quickly,  Quantum Computing will hack bitcoin in seconds - and everything else.  

Obviously you can't keep all your assets in hard assets, but has there ever  been a time in human history when hard assets served both as a store of value, a safety net and a p prime source of investment income?

All hard assets with a historical track record are sky rocketing right now.   Gold coins especially so. Ancients are on fire.   Historical Gold medals have been bid out of sight.  However, gold bullion is not moving and the reason is clear.  It is a highly manipulated market by the Fed and the bullion banks,  This is beyond dispute as J P Morgan has paid several hefty fines for bullion manipulation.  IT's just that they make so much more doing it than they have to pay in fines.  

But don't let this fool you.  As the great Richard Russel used to say: "You can only manipulate the dominant trend for so long,  In the end the trend always wins."  And so will it too this time.  Meanwhile, it is best to accumulate real gold coins even bullion coins as the paper gold market can remain manipulated for some time.

But even limited issue bullion is beginning to catch a serious bid.  Have you noticed the Paris Mint coins of the mid seventies with the Sower and Hercules images have tripled in value over the last year?  As have many of the modern British Mint and Australian mint issues.  

So go real.  Go hard.  Go strong.  In a fake virtual hackable world, Real has Real Value.