3 Min. Gold News – Synopsis of Mark Yusko with Daniela Cambone at Stansberry – June 17, 2021

 

3 Min. Gold News

A Quick Synopsis for the Changing World

A synopsis of Mark Yusko, Founder, CEO & CIO of Morgan Creek Capital Management and Co-Founder & Partner of Morgan Creek Digital, with Daniela Cambone  , Editor-At-Large and Anchor at Stansberry Research.

 

Topics:

Bitcoin
Value
Price
Speculators Vs. Gamblers
Gamblers in Crypto
Gold
Currencies
Bitcoin is Digital Gold
Elon Musk
Bitcoin Vs Gold
CBDCs

Synopsis by Elaine Diane Taylor

 

BITCOIN

Mark’s call is for Bitcoin to hit $250,000 within a 5 year window.

It’s all about the value of the network.

The value of Bitcoin comes from the users, the transactions and the blocks.

Picasso once said that good artists borrow and great artists steal, so Mark says he stole the model he uses from someone in 2014 (haha). It uses Metcalfe’s Law to draw a parabola and it’s a nonlinear logarithmic regression.

Mark’s model said Bitcoin would be $10,000 US per Bitcoin in value in Nov. 2017 and the price hit $10,000 within days of his projection.

But then the price swung up to $20,000 and crashed down to $3,000.

So the price was very different than the value.

Mark’s same model says the value of Bitcoin in July of 2021 will be $100,000, and the value five years from now will be $250,000.

What’s possible is that like in 2013 and like in 2017 the price will go much above its value in the fall of this year because individuals will come in who don’t understand its value.

PRICE

One of the challenges we have is that the value of an asset or a network is relatively easy to determine because of models.

But as John Burbank said, “Price is a liar.”

Price is simply what two people decide to exchange a small amount of any asset for.

It has nothing to do with the value.

People exchange at low prices below the fair value and they exchange at high prices that are well above the fair value.

Prices swing like a pendulum and spend very little time at dead center on the true value.

Price spends most of its time too far to one side or the other.

This is also true with Bitcoin’s price – it’s rarely on the value.

VALUE

All markets migrate ownership.

The original owners are investors.

They buy the asset because it’s below its fair value and they want to hold it for the long term.

Then the traders come in.

Traders look for assets that are moving in price one way or the other, and they want a shorter duration of hold than the investors.

The problem is when the speculators come in.

Speculators only buy what’s moving, and they really only buy what’s moving up.

They use leverage (they borrow to buy) and they push the price way above its fair value.

But on top of that,  in this lastest cycle, from last December and January, we had some gamblers show up.

Gamblers usually don’t play in financial markets. They usually go to Vegas or gamble online.

But with the Covid lockdowns they didn’t have anywhere else to go, so they gambled in the stock market with Gamestop and AMC.

And they gambled in cryptocurrencies.

That’s why crypto prices got a little further away from fair value in the last few months and why we’ve had this vicious correction recently.

SPECULATORS VS GAMBLERS

Daniela notes that the difference between speculators and gamblers is that speculators aren’t foreign to the financial space.

Mark says speculators play in financial markets, where the expected outcome is not negative.

Gambling is a negative net present value activity.

If you go to Vegas and gamble a lot you will lose money because the odds are tilted in the house’s favour.

The only way to come out ahead when you gamble is to get lucky and win early, and then to stop.

GAMBLERS IN CRYPTO

It’s the same with gamblers in cryptocurrencies.

If someone gets a stimulus cheque from the government and has no knowledge about crypto other than a coin’s price is going up, then buying the crypto is a gamble.

They are gambling that they can buy it and then sell it later at a higher price to some greater fool.

If the person is foreign to crypto markets (as Daniela coined the term) they might not know what the triggers are. Or what happens when a bunch of highly leveraged speculators (who do this for a living), start to get liquidated in China. It means there are thousand point candle drops. Or three thousand point candle drops.

The average speculator and gambler will buy when the price rises and sell when it drops, no matter what the value is.

Investors will then come in and buy more when the price drops below its fair value.

GOLD

Gold has been money for 5,000 years.

Gold IS money and everything else is credit.

Money is something that doesn’t have an associated liability.

Currency, which is different than money, has an associated liability – government debt.

Governments issue currency by issuing debt.

Gold’s fair value has been determined by the devaluation and depreciation of all the other currencies over the course of history.

CURRENCIES

There have been 775 paper currencies over the history of the world.

Three quarters of them no longer exist – they literally went to zero.

The pound sterling, for example, would get you a pound of sterling silver 380 years ago. Now it would take you 174 pound sterling notes to get you that same pound of silver.

That’s a massive devaluation.

A US dollar was a dollar from 1776 to 1913, but once the Federal Reserve was created and perpetuated this myth that inflation is a good thing (when in fact inflation is theft), they’ve turned the US dollar into four cents.

The Federal Reserve system has stolen 96% of the purchasing power of the dollar.

That is systematically causing a change in the value of money.

For over 5,000 years gold has been money.

It has not devalued.

One ounce of gold has bought a fine suit for a man or woman for 5,000 years. From a suit of armour to a fine suit today on Saks Fifth Avenue, its value hasn’t changed.

BITCOIN

Bitcoin is digital gold.

It has all the attributes of gold as a store of value.

But Bitcoin has three superior elements:

1. It’s more portable
2. It’s more divisible (into 2.1 quadrillion equal units called satoshis)
3. It’s less costly to secure

Daniela points out Bitcoin’s volatility in terms of wealth preservation.

Mark says Bitcoin has been an asset for 13 years and very year except for one the low for the year has been higher than it was the previous year.

So Bitcoin has held its value relative to the devaluing US dollar.

Bitcoin is the same but the value of the dollar is getting worse.

If you look at the price of Bitcoin over a day, a week or a month there’s lots of volatility. As with gold.

Gold lost 40% of its value between 2011 and 2015. It did not stop being a store of value but the price was volatile and below its value for that period of time.

Volatility in price is an indication of the average marginal buyer or seller not understanding its value.

Remember, the price is just the last two people who decided to buy or sell.

The gambler has done no work and has no knowledge.

So they have no idea what the value is.

They will sell no matter the price just to get out.

In the last month, the people buying Bitcoin were the long term HODLers and institutions accumulating.

SMART MONEY VS DUMB MONEY

The smart money is the big institutional buyers.

They usually trade at the end of the day.

The dumb money is the retail buyers.

They usually trade when the market first opens.

The smart money waits until the end of the day to they either buy (called accumulating) or sell (called distribution).

Who are they distributing to? To the dumb money who are buying in the morning on the open.

The smart money waits until the leveraged speculators are liquidated and the price drops, the dumb money sells because the price is dropping, and then the smart money buys at the lower price.

ELON MUSK

Mark has a bad feeling that Elon Musk is not only not telling the truth about not selling Bitcoin, but that he was buying when the price dropped.

For decades people have been manipulating markets. They used to do it with newspaper articles, then with bulletin boards in the 2000s, and now with Reddit posts.

They would publish positive stories about the asset after they had already bought it, in order to persuade others (the dumb money) to buy and increase the price.

Or they would post a negative story to make the price go down (so they could accumulate more).

It’s not illegal.

It’s manipulation but it’s not insider trading and its not illegal.

BITCOIN VS GOLD

Gold and Bitcoin can coexist because they play different roles.

No one can say with certainty that we’re not going to have a Mad Max event some day, where the power grid is off.

That’s where physical gold will be beneficial.

There are lots of stories in war where someone’s gold earrings or coins got them through.

There is a role for physical gold. Not paper gold. Not paper futures contracts. Not GLD. Physical gold.

That has been true for 5,000 years and will be true for 5,000 more.

Is there a role for a digital form of that same asset?

Mark believes people should take a portion of their currency and convert it to hard money – gold, silver and crypto.

This is opting out of the current financial system with a portion of your wealth to protect against the “fiat fiasco” (coined by Mark) of devaluing the value of your currency.

The central banks around the world are going to print money.

They have no choice.

They are too far in debt.

Too much debt is how every empire in history has failed.

They must either:

1. Pay it back – there isn’t enough currency even if they raise taxes to 100%
2. Default on it – they’d get kicked out of office so no politician would vote to default on debt
3. Restructure it – there isn’t anyone who would take a deal
4. Inflate it away – the only option left

Every western nation which is highly indebted, the US, Japan etc., will devalue their currency.

That means that gold, silver, precious metals, collectables – all items that are scarce will appreciate.

Bitcoin is the scarcest asset in the world today based on stock to flow, because the currencies are all devaluing.

Mark believes everyone should have digital assets in their portfolio to protect against the fiat fiasco.

Does that mean he will ditch his gold?

No way.

CBDCs

All central bankers are rushing to create central bank digital currencies (CBDCs).

This will increase the case to own gold, silver, bitcoin and decentralized cryptos.

The smartest central bankers in the world, China and Russia, are buying gold hand over fist.

CBDCs are just digital fiat.

Using CBDCs doesn’t change the current monetary policy and it doesn’t change the devaluation that’s coming.

All it does it make it easier to do transactions.

Paper money will disappear and it will all be traceable and trackable.

It will be good for limiting crime, and for capturing taxes and black market activity.

All of that will come out of CBDCs.

But cryptocurrencies that are decentralized (outside the central banking system), will have an advantage in that they’ll allow us to take a portion of our wealth and get out of the fiat fiasco.

Mark Yusko can be found on Twitter.

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Thank you to Jim Rickards for including me in his bestselling book The New Case for Gold.

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Thank you to Mike Maloney for including me in his bestselling YouTube series Hidden Secrets of Money.

Coins and Crowns

words and music Elaine Diane Taylor
SOCAN/ASCAP
from the album Coins and Crowns

Coins and Crowns is featured in Episode 1 of Mike Maloney’s documentary series Hidden Secrets of Money.

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Bitcoin Barbarians

words and music Elaine Diane Taylor
SOCAN/ASCAP
from the album Coins and Crowns

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I cannot wait to travel back into the woods!

IMG_1727-1

My thoughts…

Social change, as well a most everything else, moves along a curve that looks like a bell. This bell curve is how any new behaviour is adopted by a group. First the artists and out-of-box thinkers and philosophers, then the explorers, the early adopters, the masses, the less economically able and then to those fundamentally opposed (if forced).

It’s very hard to know what an individual will do, but it is with quite a lot of certainty that you can know what a group will do in a given situation. As the group gets bigger there is less and less deviation from the plotted and predicted response. So, if you want to manipulate a group to do your bidding, the best course of action is to apply a pressure that makes them all think alike in a natural response – fear, hate, defence, offence. Governments have done this time and time again in order to foment consensus for war or other actions that benefit the government and elite at the expense of the individual citizen.

Our world is changing. It’s been in the works for many years, but those at the top will have you think you have a say in it. They will create situations that will bring about your consent, because change is easier without opposition.

We have moved from the mechanical age of step-by-step movement along thinking, production, transportation, media, reading and every other form of communication. With the advent of electricity the world went from a mechanical pushing or pulling of the next part for a result, to the instant off and on of the light bulb world.

We no longer had to rise and rest along with the sun. One switch and an entire field was in view. All at once.

We could work or play into the night. Time and space had been manipulated from the cycle of the sun and earth.

We are coming towards the final switch. The players are jostling to see whose applications will win the day. The backbone of the new financial system is already done.

Those with power want the new system to keep them in power. Those without it want to gain that self sovereignty, or gain complete power for themselves.

The United Nation’s central bank system has their blocks (and chains) in place (pun intended). What you hear in the mainstream news is meant for the masses. It’s the instructions that benefit those who write and publish that “news”.

How to start a new beginning?
How to pool from what must pass?
The water moves
A swan is swimming
To the future from the past
Feathered ripples in its path

What’s coming isn’t just a view of what’s a good investment. This is not a business cycle. It’s a whole new system. A whole new universal way of thinking, communicating and transacting business, family and life.

Whether you own physical gold, silver, cryptocurrency or Bitcoin specifically is not the real issue.

The real issue is that the “frame” you live within that determines how you think.

Perhaps you can have a bit of control over that frame if you see it being created.

I hope so.

Draft recording for the new song is done.

Elaine~

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Not Much of a Holiday (Bank Holidays and Media Persuasion)

words and music Elaine Diane Taylor

Single available on iTunes

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A Terrible Breeze    (War and Social Media)

The news comes down
A little bluebird sings
Words of war
Fire and furious things
Of testing might
‘Til no patience knows
If keeping still
Still keeps you safe at home

It’s a terrible breeze
They speak of today
Of threats that used to live a world away
We all know wind
Can blow both ways
And a terrible breeze can blow it all away

A worldwide net
Sees our village grow
Until we all forget
What each one used to know
How a blind bird’s wings
Can reach the shore
And turn the wheel of peace and war

Village fools sinking down, down, down
Debt and gold wound in numbered shrouds
Deal of a life it’s bread and clowns
Can we afford another go around?
The news comes down.

It’s a terrible breeze. The news comes down.

words and music Elaine Diane Taylor

Single available on iTunes

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AlbumCover.PreparingfortheFall

Preparing for the Fall is a live album available for digital download  — featuring Wag the Dog, Black Swan Dive,  American Pie and Gods of the Copybook Headings. Also available on iTunes, Google Music, Amazon Music and major digital distributors.

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The Gods of the Copybook Headings

words by Rudyard Kipling and music by Elaine Diane Taylor

from the album Preparing for the Fall.

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 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

from the album Coins and Crowns.

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“. The world is changing as we know it.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

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Gold, Silver and Bitcoin:

Screen Shot 2021-06-17 at 10.06.31 AM

Screen Shot 2021-06-17 at 10.06.40 AM

Screen Shot 2021-06-17 at 10.06.59 AM

via Gold Price

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.

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