3 Minute Gold News
A synopsis of an interview with Jim Rickards, New York Times bestselling author of The New Case for Gold, The Death of Money, Currency Wars and The Road to Ruin, by Daniela Cambone-Taub at Kitco News.
Jim is the editor of Strategic Intelligence, former general counsel for Long Term Capital Management, and a consultant to the U.S. Intelligence community and U.S. Department of Defense.
by: Elaine Diane Taylor
This synopsis is followed by my thoughts. I had a great time with Jim last week at the Sprott Natural Resource Symposium in Vancouver. Thanks to Jim, his wonderful manager Ali Rickards, President and CEO of Sprott US Rick Rule, editor and writer Byron King, and Josh Crumb and Stefan Wieier of GoldMoney. I appreciate all of your thoughts and knowledge.
Bitcoin as a Reserve Currency?
Gold and Bitcoin
Bitcoin is a form of money.
It isn’t an investment because it has no yield — there are no bitcoin investible assets or bonds.
When you buy stock in a company you analyze the company. How is the management? What are the assets?
When you buy a bond you analyze the interest rate and the credit worthiness of the issuer.
When you buy real estate there are also ways to analyze it as an investment.
But bitcoin is just money.
So when you give your dollars, yen, euros, yuan or whatever other form of money to get bitcoin, you’re just exchanging one form of money for another form of money.
Why is bitcoin shooting up in price?
One theory is that bitcoin is going up because the price of the US dollar is going down – in other words people are just expressing a liquidity preference for bitcoin over dollars. But is there evidence for that?
The US dollar is not going down while all other forms of currency are going up. So what Jim believes we’re seeing is not a loss of confidence in the US dollar, but a speculative bubble in bitcoin.
BITCOIN RESERVE CURRENCY?
The U.S. dollar is 60% of global reserve currency.
The reason it’s a reserve currency isn’t because of the dollar itself but because of the U.S. bond market.
Let’s say I’m China and I export stuff and get dollars. What do I do with them? I can’t put them under my bed. I put them somewhere and invest in something. The U.S. has the bond market.
It’s the same thing with the euro and other currencies, and things like German government bonds.
Those are reserve currencies because they have investible assets.
If I ship stuff and you pay me in bitcoin then there’s nothing for me to invest in with them. (A person would need to sell their bitcoin and buy another currency that they use to invest in something like a government bond. – Elaine~).
It can’t be a reserve currency until someone goes out and creates a bitcoin bond market. But it’s too small a market.
Another theory for the rise in the price of bitcoin is called “The Greater Fool” theory. That means I’m willing to pay $3,000 because some sucker will be willing to pay me $4,000. Someone else says they’re willing to pay $4,000 because some sucker will pay them $5,000.
That works for a while until it doesn’t.
Another theory for the rise in price is that people are buying it to use for illegal activity, trying to avoid government detection, and yet another theory is that it’s used by political refugees.
For example, if you’re in North Korea or China and trying to get your money out of the country then there’s some value in bitcoin, because the government might not let you take your capital out.
(I’ll add another theory here – the economic movement away from the system of central bank control and into a new system, to try to get relief from a system that is looting the masses. – Elaine~)
When you sell bitcoin and make a gain you need to report that on your tax return. Jim is a tax lawyer and was a tax lawyer for Citibank for many years.
The IRS is waiting but they’ll come out of the woodwork sooner rather than later.
They’ll probably subpoena one of the bitcoin exchanges. The exchange will tell the IRS to go jump off a building. Then the IRS will get a court order and shut down the exchange – freezing all the bitcoin.
Those people using the exchange are going to find that they’re out of luck and lost their bitcoin unless they come forward and identify themselves.
This is what the IRS did to Americans with Swiss bank accounts.
They’ll do it to bitcoin.
GOLD AND BITCOIN
Dollars are money.
Gold is money.
Bitcoin is money.
Euros, yen, yuan — they’re all just different forms of money.
People just have a liquidity preference – a form of money they like to use.
Using the dollar price of gold or the dollar price of bitcoin is just expressing cross rates.
Take your pick.
Speculate if you want but have 10% of your investible income in physical gold.
Jim has some physical gold, physical silver and cash. He doesn’t own any bitcoin but says good luck to anyone who does.
Jim Rickards can be found on Twitter and at James Rickards Project.
We learn in allegory.
We see a new thing and it reminds us of something we’ve seen before.
This is why stories are important. Songs, movies, books, and mentors who give us advice. This is how we stand on the shoulders of giants. We can learn through someone else and avoid a bit of grief.
This world is also fractal.
Tiny systems scale up and behave the same in bigger systems.
It’s like saying that if you watch how someone treats a person they have nothing to gain from it will show you how they’ll treat you if they feel they can no longer gain from you. Or how a young woman is told to watch how the man they’re dating treats his mother to see how he will treat you in the future.
The masses are connected to the internet, and on the whole they see the same memes, news and “talk” about any given subject.
So those with power can try to influence group perception, knowing that groups of people can be expected to do similar things in similar situations.
It’s easier to predict an outcome if a large group is centered around the same belief. Easier to know their belief system if it’s extreme and strong, or the group is afraid or angry.
So, get a bunch of people to behave as a group and you can manipulate the group, or at least predict how that group will behave if you give them a little shove, or create a stressful situation.
As in quantum physics, you cannot predict the behaviour of a single particle, but you can predict with some certainty what a group of particles will do in a given situation.
Get a bunch of particles to act as a group and you can influence the outcome.
We as a group in the current culture view a lot of media. Our mobile devices give us news and entertainment 24/7. We are seeing and experiencing the rise and fall of technologies, currencies, geopolitical figures and economic tension, and we’re being coerced into feeling righteous anger towards anyone who thinks differently than ‘we’ do.
If you can create a “them” then you can predict and manipulate what the “us” will do.
Mainstream media and alt media is used by powerful parties who don’t want to lose power, or want to gain it, as the new technologies are being released to the masses. It’s logical that they would be trying to get a large group to feel strong fear or anger so they will act together.
Tension is ramping. Groups are growing larger and more dogmatic. As they grow in size their point of view becomes stronger – us against you. So the individual particles are swept up into the movement of the group.
Logic and reason go out the window. Science is gone. Belief reigns.
The stories such as Game of Thrones, Harry Potter, House of Cards or Vikings, for instance, attract large audiences because individuals are attracted to the themes. The stories that become popular are those that speak to us at some deep level about current issues. Issues of trust, conquest, the rise and fall of empires, money, a great evil, loyalty.
Central banks, the banks of nations, have failed their people. Their models are outdated and they’ve borrowed into oblivion. The fox is managing the hen house. Not just that, but the fox is dressing up in chicken clothes to sway the poultry into choosing things that are against their best interest.
Not all of it is orchestrated. Some themes are just cyclical. They happen to happen at the same time.
Today in my Twitter feed I see a barrage of two stories:
1. HBO has been hacked and blackmailed re: Game of Thrones — the hackers want bitcoin.
July 31, news broke of a major cyber incident affecting HBO. According to reports, the network experienced a major cyberattack. The hackers behind it are currently demanding the equivalent of about $6 million in bitcoin, and claim that if they don’t get paid they will release 1.5 terabytes of data they stole from the network.
HBO hack may have been worse than the initial leaks of a few unaired TV show episodes suggested. A security company hired by HBO to scrub search results for the hacked files from search engines has told Google that the hackers stole “thousands of Home Box Office (HBO) internal company documents.”
2. North Korea now has small nukes that can reach the continental U.S., and is threatening the U.S. because of UN sanctions. President Trump says North Korea better cool it.
“North Korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen,” Trump told reporters at the Trump National Golf Club in Bedminster, New Jersey.
Last Sunday’s episode of Game of Thrones, Season 7 Episode 4, had one group fighting another over who will rule the mythical kingdom of Westeros.
One side used a dragon, a new technology, that swooped down and wiped out the other side with fire and fury.
Interesting to have both items going on in the same few days.
The story of the Game of Thrones rings true. It shadows some things going on in the real world today. The world (Iron) Bank of Braavos is a major funder of world wars, being brutal to its debtors who do not pay, and backing whoever can pay, thus influencing the outcome of major wars from behind the scenes.
For the bank it’s all about money. Need money? How about for a war?
Tie this with the non-stop rhetoric regarding U.S. President Trump. We hear that things are not under control, or else they’re fantastically under control. There’s chaos, or else there’s someone in charge who is willing to make large moves for the benefit of the citizens of the U.S., no matter what that bank of Bravos or some small counsel somewhere says.
Just the story of a leader being very unpredictable sets a tone for the people and for any opposition.
The UN just put on power sanctions against North Korea. The UN voted unanimously, including Russia and China. All the teams agree this is serious stuff and no one wants to push the button because no one can predict or control the outcome. North Korea replied by threatening to attack Guam.
It’s sabre rattling. When things go quiet I’ll be very concerned, ala Sun Tzu’s The Art of War.
This time the sabres are not iron (or Valyrian) – their nuclear.
Meanwhile, the IMF and Central Banks are all in deep trouble because they figured it was a fun game to borrow to expand their countries in the global economic game. The debts are so big they can never be paid back. Not with this system.
So they’re all quietly preparing for a reset. They will look after themselves. We will not see it coming. Most are not looking.
There’s a lot bread and circuses going on.
But no worries, the citizen’s attention span has been short and the government always figure things out. Right? Maybe everyone will forgive everyone’s debt and we’ll all start over again?
Massive debt usually leads to war. Someone takes someone else’s stuff. Hard to overthrow your government, or address corruption, when you’re at war and chaos is coming.
The internet is the new technology that has changed the world.
It’s decentralized, meaning it’s not formally lead by any one nation. It’s run collectively. A hive. A bit of artificial intelligence, in that it’s a group-think and not an individual-think.
Seems it would be even more important for someone with power to try and influence one group instead of a mass of individuals.
Like the printing press brought information to the masses and took control of ideas from the church, the internet has brought information and control over movement of data, ideas and value, including digital money and cryptocurrencies. It’s moved this control from nations to the masses.
This new technology has changed the world as we know it. Everything. The way we think and move and relate.
As more and more people are feeling shafted by the current (soon to be past) system — they are getting out of Dodge and into something decentralized.
They are doing what they can to leave the system.
As the current one comes to a close it is squeezed, and the looters loot more and more brazenly as their fear ramps up.
The trouble is that the very system the masses are turning to is not secure. It’s the wild west. The wild universe. Buyer beware.
All new systems are kumbaya until they’re not.
There is no security in digital anything. It works fine until it suddenly does not and all is gone. Your digital wallet is offline, but the whole electric grid can be hacked. May never happen. May happen tomorrow. There’s not much security in that.
Like any closed system, everyone piles in and sacrifices for the greater good at first, and everyone benefits.
Then someone with power figures they can loot without cost. Then they harvest the system, and looting increases until it falls apart.
They give the masses free bread and entertainment, shouting that everything is fine. Nothing to see here. Until they’ve taken the last coin. Then they run and disappear.
Same game just another board.
Physical gold is a different thing.
Gold is the only form of money that has historical security. The government can back its purity, like Canadian Maples, but it’s not used to buy bread and it’s not the nation’s currency. It can be melted and rebranded. It lasts forever. Not hackable or traceable.
Gold is a shield.
Physical gold in hand is a shield against government and world craziness.
And who wouldn’t want a shield when there are dragons about?
Elaine Diane Taylor~
August 9, 2017
Gold is $1,271.20 U.S. per ounce today.
Bitcoin is $3,300.60 U.S. today.
I just returned from a trip through the interior of British Columbia, Canada to meet with my independent gold supplier, and purchase another round of 100% raw gold nuggets and flakes for the line of fine bullion and glass jewelry I’m creating. It’s important that the gold is ethically sourced and fair paid.
I love the wild. I love how nature moves and grows and dies all in a cycle of geometry and math.
I’ve played music these past months with musicians in B.C., Alberta and Manitoba, writing and creating, but nothing recorded yet. When the time is right it’s going to be amazing fun.
Thank you for reading.
Here’s what I’m making:
This pendant has 2 grams of pure nugget and flake gold bullion. Straight from the wild rivers along the Gold Rush Trail in British Columbia, Canada. Unrefined. Encased in boro silicate glass. Hand torched in my studio. Available soon.
Not Much of a Holiday (Greek Debt and Media Persuasion)
words and music Elaine Diane Taylor
2015 Intelligentsia Media, Inc. All rights reserved.
Single available on iTunes
The Greek bank holiday and long lines to get a few euros for the day. Debt deals behind closed doors. The media telling us what opinions to have. China building islands in the South China Sea and claiming all the international waves. More dealing to come. More standing in line for those who owe. Who owes? There’s a long line of nations in debt and this is far from done.
Preparing for the Fall live boutique album available on iTunes — featuring Wag the Dog, Black Swan Dive, American Pie and Gods of the Copybook Headings.
Coins and Crowns
words and music Elaine Diane Taylor
Intelligentsia Media Inc. All rights reserved.
from the album Coins and Crowns available on iTunes
The Gods of the Copybook Headings
words by Rudyard Kipling and music by Elaine Diane Taylor
2014 Intelligentsia Media Inc.
from the album Preparing for the Fall available on iTunes
The copybooks of the early 1900s gave us all the wisdom we need. The sayings that were copied are the truths, the gods, of our world. All the empires who followed the gods of the marketplace instead have fallen, and there’s terror and slaughter when the gods of the copybook headings return. The lyrics are by Rudyard Kipling. One of my gurus.
Another Week on Wall Street
words and music Elaine Diane Taylor
2013 Intelligentsia Media Inc. All rights reserved.
from the album Coins and Crowns available on iTunes
See the bankers wave their Wall Street wands and conjure piles of paper green. Naked short selling is like betting that your neighbour’s house will burn down. But in this scenario it happens to burn down. If the bankers win then we lose the whole world as we know it. I wrote this in 2009, with a lyric “A little grease (Greece) is floating out to sea, and little pigs (Portugal, Italy, Greece and Spain) are bobbing up and down, they’ll send a storm and we’ll see, when the tide goes out who’s naked on the beach“, and it’s coming on now. The world is changing as we know it.