The news announced that:
Reversal of money flows: Big institutional players exit crypto and turn to gold, says JPMorgan.
It might make sense for investors to shy away from the volatility of Bitcoin. But here’s another argument:
You’ll often see charts from Weimar Germany of gold priced in the paper mark going parabolic. What that chart doesn’t show is the sharp drawdowns & volatility that occurred during the hyper-inflationary period. Speculating using leverage got wiped out multiple times. $BTC 1/2
This current dip won’t be visible on the $BTC chart in a decade. Understand, there is no alternative. As leverage attempts to unwind in the incumbent system, things will be extremely volatile. They have to protect the system & aggressively reinflate with each subsequent unwind.
To everyone asking, I did not make the chart nor format the data. Credit to @Myrmikan, really fantastic stuff. I tagged him in the first chart but it seems not many saw that.
Here’s another article:
The End Of Paper Gold & Silver Markets
This article looks at the likely consequences of the Bank for International Settlements’ introduction of the net stable funding requirement (NSFR) for bank balance sheets, insofar as they apply to their positions in gold, silver and other commodity markets.
If they are introduced as proposed, banks will face significant financing penalties for taking trading positions in derivatives. The problem is particularly important for the London gold market, as described in last week’s article on this subject. Therefore they are likely to withdraw from providing derivative liquidity and associated services.
This article delves into the consequences of the NSFR leading to the end of the London forward markets in gold and silver. Replacement demand for physical metal appears bound to rise, and an assessment is therefore made of available gold not tied up in jewellery and industrial uses. An analysis of gold leasing by central banks, leading to double ownership of physical gold, is included.
The conclusion is that unless the BIS has an ulterior motive to trigger a chaotic financial reset of some sort, it is a case of regulators not understanding the market consequences of their actions.
Basel III & The New Role For Gold
Last week both Martin Armstrong and Alistair MacLeod wrote about the changes to the Basel III rules and how they will greatly affect the physical and paper gold markets if implemented in their current form.
MacLeod’s article from last week is an excellent primer on the definitions and inner workings of the rules, the gold market and the changes to the rules. The short redux is that the advantage to using unallocated accounts, savings accounts which are linked to gold by holding futures contracts, will end.
We’ve discussed parts of this in the past. The process of creating fake supply to control the price of gold is on the line with these rule changes.
My 2 Sats:
What does it all mean? Which one is right, gold or bitcoin? Heck, who knows? Certainly not I. What I do get is that we tend to smooth out the fluctuation of gold prices in our memories and look at the chart as if it’s a sure bet. Okay, yes, it is a lot steadier than bitcoin, but it’s not all smooth sailing.
I think the argument is moot. Both goldbugs and bitcoiners like the same stuff, hard money, store of value etc. They argue because it’s old vs new, and to be honest, it is a bit naive of us newcomers to think that an 11-year old piece of software will topple gold from the throne. I think both can and will work in parallel, since one is hard money you can touch and the other is hard money you can verify.
So, think it through. This is not financial advice. But if you do want to invest in gold, you can get some here. And if you do want to invest in bitcoin, you can get some here.