Loading ...Russian’s Dichotomy
We have a poster here named “Russian”
He is a lurker mostly but once in a while he posts a gem in a comment
This Comment NEEDs to be on a front line Post…Some real mindbending insights here…thanks Russian
Russian
4. May 13, 2017 – 11:23 am at 11:23 am (Edit)
I’ll make two contradictory arguments (regarding gold’s prospects) just for entertainment sake. This is not my original thoughts. Just summarising different people ideas.
THIS TIME IS THE SAME:
Gold.
Gold is the only element in periodic table defies entropy. On an atomic level, it resists interacting with other elements. Ancient knew that all along using gold as a medium of exchange throughout millennia. Not to mention the fact that gold was created in a collision of two neutron stars. But that’s existential and irrelevant.
Antifragile is Nasim Taleb concept. Opposite of fragile is not robust. Which is counterintuitive and hard to relate to the physical world, but makes sense. Something that benefits from out of normal distribution move (black swan, fat tail event) is antifragile. And there is no way around of fat tail event. Black swans can’t be predicted only experienced.
Besides the risk of fat tail event, there is mean reversion. Something of smaller magnitude. And we are stretched for it both ways – price and time… So, it is coming.
Being long volatility is the only way to protect yourself.
That’s what gold miners ultimately do.
THIS TIME IS DIFFERENT:
Bitcoin
Bitcoin will succeed due to a network effect – sustainable parabola if you will. With all implications of that. The more use cases come on line for bitcoin in next two years – more users it attracts, the bigger market cap, the more talents it sucks in and so on. Presumably, all competitors will be ported into bitcoin because of that. Presumably, hard fork, if occurs, will cause correction or bear market. But won’t be a threat to the existence of bitcoin. Will the younger generations find a safe haven currency in bitcoin at the expense of gold ?
Technology.
Machine deep learning. Software writes software.
https://www.technologyreview.com/s/603381/ai-software-learns-to-make-ai-software/
Antiaging pill goes on human trial.
http://www.kurzweilai.net/scientists-reverse-aging-in-mice-by-repairing-damaged-dna
Cold fusion. Breakthrough in 2015. Now building real size model for testing. https://trialphaenergy.com/company/
Any of it or all of it together have potential to be a black swan to the upside. Yes, fat tail works both ways, sometimes you get outsized moves up or down…
Unthinkable is possible. Embrace uncertainty.
Forgot quantum computing https://www.dwavesys.com/quantum-computing
………….
FGC comment…wow eh ?
Interesting post. Stacking as I never WanaCry over bitcoin.
thank you.some good stuff is turning up on goldtent along side the great t.a
the future of gold is a great unknown.gold is an old god.the king of the old world.
is it also the once and future king?will gold return to be a major anchor of the monetary system in the next crisis,or will the new world find a new trick,any thing but gold.i believe gold will stage one more comeback and then will fade away.
It’s been knocking around in my head for a while – the implication of crypto-currencies. I said in an earlier comment that parabolas don’t usually end well. On reflection, that’s not quite true. Mean reversion does tend to bring parabolas ‘back to earth’. Bitcoin IS different, and so is anything brand new. After all, it was introduced with very low dollar value. It is currently finding its true worth. That will end up being it’s balance point – the level at which it then fluctuates up and down over an extended period of time. That value could be $200, $2000 or $20,000. Getting there via a parabolic rise does not mean it has to come all the way back down. Secondly, and this is what concerns me, will crypto-currencies suck investment away from gold ?
Good points NS but Bitcoin unlike Gold does not have a physical form. As with all new ideas BC faces some big challenges ahead. Good article below. I do not usually read Zero Hedge, but my son is in his 4th year of a degree in CS and he brought this to my attention as he is concerned about the mining issues. http://www.zerohedge.com/news/2017-03-19/bitcoins-fork-road.
The comments below sum up this issue.
The sales of mining equipment are a huge economic disincentive to maintain the status quo without a block size increase, unless the Bitcoin price surges which I don’t believe will happen unless Segwit is adopted and then this debate is over. I called 1300 as a key resistance level and it’s proving to be.
Bitcoin was largely built on the premise that economic forces and self interest would help govern the security of the network. We talk a lot about decentralization but the reality is that the hardware that powers Bitcoin is produced by a handful of companies who also control mining pools which can be used against the network.
Near lack of knowledge or of fixed opinion on cryptocurrencies on my part. I can still be pedantic though.
I’d recommend changing “does not have a physical form” to “does not have a more or less immutable tangible form” or “does not have a fixed tangible form”.
The cryptocurrencies will correlate to the material, physical world, expressing certain configurations of it (for example, this or that transient transmission of microwaves on the internet; configurations of materials on some hard disk or other storage medium here or there perhaps; and so forth).
Well how does a cryptocutrency supported by gold
Bitgold ?
http://www.zerohedge.com/news/2017-05-13/blockchain-gold-silver-launchpad
Russian is on top of (some of) the major macro forces. There are others, unforeseeable at this time (Taleb). Such as, will decisions regarding these questions be made as they have been (for us, by them), or will that power be wrested away? Centralization or decentralization? Some of these developments could bring really sweeping change. Awareness is growing and turmoil will spread the questioning. But will the right answers prevail given the media concentration and the public’s limited attention span and/or drive to the easiest answers?
Do not forget the power of the grey pound/Dollar/Yen. We have an ageing population in the developed world that does not readily adapt to new ideas, especially those involving the internet, but they do control a large amount of the worlds wealth. One day that will change, but I am not sure it is here yet. I am sure we will see more attacks on establishment websites as we have seen this week in the UK with the NHS (and around the world, Nissan etc) and that will not help this transition to crypto-currencies. I expect we will see a major bank hit soon (we have had a few small ones in the UK where depositors could not access their accounts for a few days) and that will make many people nervous of CC’s ( I know that is the opposite of what should be the case but it will not be so). Time will no doubt change this position but for now I think that Gold is the best protection.
Cashing out and moving to the sunny tropics and getting more bang for the buck seems like the easiest route. Costs a lot of money just to maintain a basic living in Canada and the only thing holding most back from early retirement is fear. Bitcoin is so up and down, some snowflakes investing will get burnt. The smart Chinaman is in it to get money out of the country and used for short term . Many other digital, harder to trace currency platforms already gaining momentum also. I guess it is taking the limelight away from gold and I think when the kaboom hits the bits will fly higher to the moon as the emotional swings in price already show its’ potential. One does not have to purchase 1 coin for $1600 to play the game, it can be 1/100th if needed so this fits anybody’s’ budget. Go buy a gold coin for 3 grand and show the wife, hard to do especially when the younger generation never uses cash and are addicted to the technology. Money will have to rotate out of some huge sector as it will have topped and the next cheap flavor of the day will be resources for the hedgies and world stage players. Everything will run out of buyers as to expensive and the firesale cheap asset will be resources and not bonds(debt).Agree with Northstar to watch the charts as bitcoin is a beast with cycles and lifeform just like everything else, maybe the channel swings will be easy to ride, worth a watch and a try when it hits the bottom trendline. We have a bitcoin ATM in our town hmmmmmmmm
Thank you very, very much Fully and Russian.