Bitcoin: Buyer Beware, This Is A Classic Bubble And Possible Fraud [View article]
The most interesting thing about Bitcoins is that the higher it goes, the more likely it is to go even higher and become a widely used currency. All fiat currency is a bubble in an important way: it only has value because many people accept it.
I don't know what the magic number is, but at some point a major company such as Amazon or Netflix will notice that there's $XX or $XXX billion in purchasing power sitting out there and all they have to do to get some of that is accept the Bitcoins. This is why it is so interesting to watch: if the Bitcoiners are able to really blow this bubble sky high and move it from beyond a tech niche into something widespread, they stand a better chance of success.
Bitcoin is clearly showing bubble behavior, but it is unlike any other previous bubble because the bubble aspect is based on it NOT being money. If Bitcoin does become money, then all the articles against it would be reduced to saying the same thing as "Swiss Francs aren't money! Canadian Dollars aren't real dollars!"
Also interesting is how global Bitcoins are. Even if you are fully convinced it is a bubble, Pets.com wasn't actively trading globally. There is very heavy participation in China, which makes up at least 4% of the market. (based on Bitcoin/CNY trades. There may also be Chinese trading BTC for USD and EUR).
Bitcoin: Buyer Beware, This Is A Classic Bubble And Possible Fraud [View article]
The Fed doesn't print money. Banks print money. The Federal Reserve later creates the reserves when it monetizes the debt. Who profits from the current system? First, the bankers, they have first access to the money. Next are the wealthy classes, the favored borrowers who have easy access to credit. The US Dollar is a debt, not a fiat currency.
Who loses? Everyone not in the early stages because they get their dollars later, after real estate, stocks, and other assets have been bid up in price.
Bitcoin is a true fiat currency. There is no debt behind it. Bitcoin distributes the money on a somewhat democratic/meritocratic basis. Anyone in the world can obtain Bitcoins by mining with the software. Running the software also keeps the Bitcoin system going by calculating the block chain. In the beginning anyone could get Bitcoins because few people were in the system. Today it is very competitive, especially at higher prices.
Why Gold, Silver And Mining Stocks Are Headed Lower [View article]
The gold bulls do not appreciate that deflation remains the dominant force, and the U.S. dollar can survive longer than they expect, in which time it may have yet another rally. The most likely path to a dollar collapse is for other fiat currencies to die first. Also, the miners have cost problems.
The bears do not appreciate that gold hasn't fallen as far as it seems because they are taking a dollar centric view. Gold is money to 3 billion non-Western people. It doesn't matter what Western hedge fund managers think, they will be out voted in the market by 2.5 billion Chinese and Indian savers in 10 to 20 years.
Fascism results when foreign governments implement anti-nationalist policies. The end of WWI saw the creation of the League of Nations and punitive punishment of Germany, in addition to the growth of international socialism. Communists initiated civil war in Wiemar Germany and the Freikorps responded. A system that does not take nationalism into account is a system doomed for failure
Today there is the euro and EU project. The EU is an anti-democratic regime that has already installed puppet governments in Greece and Italy. IMF, World Bank and others are also imposing foreign will on national governments.
Fascism develops where there is historic precedent. UKIP is as nationalist as Golden Dawn, but UKIP wants open trade with Europe and is similar to libertarians in domestic policy. Hungary is openly telling the EU and IMF to buzz off. If the EU cannot accommodate national sentiment, it is doomed.
Why Shorting Stocks Is The Worst Investment Strategy Ever [View article]
I don't think any of the commenters are the intended audience. From the article: "For those of you that are new to the term, being "short" the market means that you profit when stocks fall."
And he also wrote "What I am talking about here is being net short the market."
If you are a novice, buy and hold investor sitting in a net short position on the whole market (not firm specific risk) because you think it has topped, you are indeed cruising for a bruising.
What Everyone Must Know About The U.S. Dollar: Sea Change Coming? [View article]
USD moved up with stocks in the 1990s. Currencies have very long swings and I expect a new U.S. dollar bull market as the yen finally succumbs and the euro stays weak.
Rising energy production in the U.S. will reduce the trade deficit and other central banks will out print the Fed. In a world of low yields, currency appreciation attracts bond investors and holds yields low.
The key will be China's rebalancing. If they do it, many hard assets will collapse in price, particularly copper and other materials used in infrastructure. Even though it isn't directly dollar bullish, many people will see dollar strength as commodities are hammered. AUD and other currencies will depreciate.
During this period, I expect Europe and Japan to go through the true crisis phase that cleans up their balance sheets. China may also tackle its credit bubble. Net result could be the biggest U.S. dollar rally ever seen in history.
Depending on how politicians react, a U.S. dollar bull market could be the worst possible outcome for the U.S. because if they take it as a sign there is no problem, then the next U.S. dollar bear market will bring about the final crisis.
They will adjust based on supply/demand imbalances, not prices. If you are moving with the herd and the herd is stampeding, you're going to pay for it.
Tomorrow's Gold: Asia's Age Of Discovery [View article]
Read Michael Pettis' blog. China has imported more commodities than it needs, for example borrowers using commodities to obtain asset backed loans (otherwise they can't get bank credit). If China rebalances, it will cut down on government directed investment. Commodities may even start flowing out of China.
Tomorrow's Gold: Asia's Age Of Discovery [View article]
Awesome book, if only for a totally different way of looking at the world. I read it at the same time as Introduction to Christianity. Interesting overlaps. http://amzn.to/Z7ZJct
I don't disagree about war. My point is that there are people saying the debt alone will trigger a currency crisis in the U.S. There are nations (Russia, China, EU) looking to the future beyond the U.S. dollar, but they do not want to see a crisis yet, so they will support the system longer. When the transition comes, there will be political and military events that weaken the U.S. and trigger the currency crisis.
Nations buying gold do not want a crisis now, causing massive losses on their dollars, they want few more years to transition away from the dollar, a few more years of the U.S. shrinking in terms of global trade, and as a bonus if they can get it, a lower gold price. If you were really hoping the U.S. would collapse, you'd even want the U.S. dollar to rally for a few years.
Gold bulls have a great imagination, seeing gold at $10,000 or more. Yet many lack the imagination to see a government running up bigger and bigger deficits with no ill effects in the short-run, when Japan is staring right in front of them. Rome wasn't built in a day, and it didn't collapse in a day either. Based on the historical life cycles of fiat money, the U.S. dollar could persist until 2030 and not be an outlier.
If you're panicking over a lower gold price today, you either are leveraged, own too much (including mining shares) or reading way too many doomsday prophecies. The only thing that will speed up the transition is a third world war, and unless you are predicting that, it's going to take a lot longer for things to play out.
Bitcoin: Buyer Beware, This Is A Classic Bubble And Possible Fraud [View article]
I don't know what the magic number is, but at some point a major company such as Amazon or Netflix will notice that there's $XX or $XXX billion in purchasing power sitting out there and all they have to do to get some of that is accept the Bitcoins. This is why it is so interesting to watch: if the Bitcoiners are able to really blow this bubble sky high and move it from beyond a tech niche into something widespread, they stand a better chance of success.
Bitcoin is clearly showing bubble behavior, but it is unlike any other previous bubble because the bubble aspect is based on it NOT being money. If Bitcoin does become money, then all the articles against it would be reduced to saying the same thing as "Swiss Francs aren't money! Canadian Dollars aren't real dollars!"
Also interesting is how global Bitcoins are. Even if you are fully convinced it is a bubble, Pets.com wasn't actively trading globally. There is very heavy participation in China, which makes up at least 4% of the market. (based on Bitcoin/CNY trades. There may also be Chinese trading BTC for USD and EUR).
Bitcoin: Buyer Beware, This Is A Classic Bubble And Possible Fraud [View article]
Who loses? Everyone not in the early stages because they get their dollars later, after real estate, stocks, and other assets have been bid up in price.
Bitcoin is a true fiat currency. There is no debt behind it. Bitcoin distributes the money on a somewhat democratic/meritocratic basis. Anyone in the world can obtain Bitcoins by mining with the software. Running the software also keeps the Bitcoin system going by calculating the block chain. In the beginning anyone could get Bitcoins because few people were in the system. Today it is very competitive, especially at higher prices.
Why Gold, Silver And Mining Stocks Are Headed Lower [View article]
The bears do not appreciate that gold hasn't fallen as far as it seems because they are taking a dollar centric view. Gold is money to 3 billion non-Western people. It doesn't matter what Western hedge fund managers think, they will be out voted in the market by 2.5 billion Chinese and Indian savers in 10 to 20 years.
You Just Don't Understand Europe [View article]
You Just Don't Understand Europe [View article]
Today there is the euro and EU project. The EU is an anti-democratic regime that has already installed puppet governments in Greece and Italy. IMF, World Bank and others are also imposing foreign will on national governments.
Fascism develops where there is historic precedent. UKIP is as nationalist as Golden Dawn, but UKIP wants open trade with Europe and is similar to libertarians in domestic policy. Hungary is openly telling the EU and IMF to buzz off. If the EU cannot accommodate national sentiment, it is doomed.
Elon Musk's Big Mistake: A Tweet [View article]
Why Shorting Stocks Is The Worst Investment Strategy Ever [View article]
And he also wrote "What I am talking about here is being net short the market."
If you are a novice, buy and hold investor sitting in a net short position on the whole market (not firm specific risk) because you think it has topped, you are indeed cruising for a bruising.
What Everyone Must Know About The U.S. Dollar: Sea Change Coming? [View article]
Rising energy production in the U.S. will reduce the trade deficit and other central banks will out print the Fed. In a world of low yields, currency appreciation attracts bond investors and holds yields low.
The key will be China's rebalancing. If they do it, many hard assets will collapse in price, particularly copper and other materials used in infrastructure. Even though it isn't directly dollar bullish, many people will see dollar strength as commodities are hammered. AUD and other currencies will depreciate.
During this period, I expect Europe and Japan to go through the true crisis phase that cleans up their balance sheets. China may also tackle its credit bubble. Net result could be the biggest U.S. dollar rally ever seen in history.
Depending on how politicians react, a U.S. dollar bull market could be the worst possible outcome for the U.S. because if they take it as a sign there is no problem, then the next U.S. dollar bear market will bring about the final crisis.
Country Risk For Precious Metal Jurisdictions [View article]
Gold's Correction Is Not Over [View article]
Tomorrow's Gold: Asia's Age Of Discovery [View article]
Tomorrow's Gold: Asia's Age Of Discovery [View article]
Gold's Correction Is Not Over [View article]
Nations buying gold do not want a crisis now, causing massive losses on their dollars, they want few more years to transition away from the dollar, a few more years of the U.S. shrinking in terms of global trade, and as a bonus if they can get it, a lower gold price. If you were really hoping the U.S. would collapse, you'd even want the U.S. dollar to rally for a few years.
Gold's Correction Is Not Over [View article]
Gold's Correction Is Not Over [View article]
If you're panicking over a lower gold price today, you either are leveraged, own too much (including mining shares) or reading way too many doomsday prophecies. The only thing that will speed up the transition is a third world war, and unless you are predicting that, it's going to take a lot longer for things to play out.