Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Blockchain: A Gold and Silver Launchpad?

Commodities / Gold and Silver 2017 May 12, 2017 - 07:20 AM GMT

By: MoneyMetals

Commodities

A new day is dawning for precious metals. Gold and silver – the world's oldest money – are "connecting" with the newest money, digital cryptocurrencies. The final outcome of this nexus is unpredictable, but it is foolhardy to ignore what is taking place.

Central governments around the globe have waged, against their own citizens, a virtual "War on Cash." Efforts by Sweden to become "cash-free;" progressive "downsizing" of Eurozone currency units; a currency recall in India that affected 1.3 billion people; solemn talk about eliminating $100 and even $50 bills in the U.S. - all in the supposed fight against "drug dealing and tax evasion."


Will Ben Be Going Bye Bye?

It's really about people control.

The War on Cash goes hand in hand with the imposition of onerous taxation levels, negative interest rates, and destruction of what little privacy we have left.

Historically, nations backed their paper currencies with gold and/or silver. Today – without a single one doing so – it might seem, as some naysayers have observed, that gold is at best a "barbarous relic;" at worst, just a "pet rock." And yet...

The War on Cash has unleashed a hydra. From the invention less than a decade ago of the "cryptocurrency" Bitcoin, to its present-day evolution, a change of monumental significance is underway.

The Foundation Is the Blockchain

Satoshi Nakamoto is credited with the creation of Bitcoin and as part of its implementation, devised the first blockchain database. By definition, a blockchain "allows connected computers to talk to each other, rather than through a central server. Using a 'consensus mechanism' the connected computers on the network stay in sync and agree with each other." Every data entry references an earlier one, agreeing with the entire chain. (Summary from an essay by Peter van Valkenburgh.)

Three years ago, David Morgan aired his views in an essay titled, "My Two Bits about Bitcoin." The technology was complex, relatively slow, and looked to become unwieldy. This was 15 months before the debut of a process that now holds the potential to turn night into day for just about any kind of online commercial transaction... and could spark a revolution for the use of "digital gold and silver."

The key (for now) is Ethereum. Ethereum is a computing platform – and a cryptocurrency... that runs smart contracts – applications that run exactly as programmed without the possibility of downtime, censorship, fraud, or third-party interference (ethereum.org).

The Potential and the Promise

Acceptance of gold and silver as a store of value and medium of exchange most likely pre-dates recorded history. Then someone (the Chinese?) got the bright idea to create a paper substitute exchangeable for, but still backed by, precious metal.

In Venezuela, one ounce of gold buys a house.

This worked swimmingly until they decided to print unlimited amounts of what David Morgan at The Morgan Report has so famously termed "paper promises." These promises are never fully honored, causing the eventual decline of a circulated currency's purchasing power to zero.

The original promise of value is accepted in good faith, but when that promise is broken through devaluation, faith evaporates, along with the value of the once-supported currency. For proof of this today, look no further than Venezuela.

Digital Metal Data Points

A number of firms work to merge cryptocurrencies with physical gold and silver. The weakness of purely digital money is that it is unbacked by anything tangible. It only works for people who have electricity and are connected to the Internet. Physical gold and silver don’t rely upon the grid and can never be “hacked.”

Cryptocurrencies such as Bitcoin cost almost nothing to transfer around the globe and they promise to be easy to transact with (akin to using a credit card). If those digital tokens can be anchored to tangible gold and silver bars, they could be more compelling as a store of value.

As you read the following passage in italics from an interview with Beautyon, editor of bitcoin-think, conducted on lfb.org., try substituting the term "digital metals" wherever you see "bitcoin." Doing so shows the potential, the promise, and very possibly – eventual reality – for the evolving union of digital metals with physical gold and silver.

Bitcoin will succeed. There is nothing any government can do to stop it... No amount of time can put the Bitcoin genie back in the bottle.... (it) is good money, and all the State can produce is bad money... Bitcoin means the final death of government fiat money. It means the end of Big Government. It means an era of unprecedented prosperity, as savings once again become the source of investment.

Will the Promise Be Honored?

The keys to the argument are that when a person purchases digital metal, it must be stored in a secure location, in physical form of a stated purity, immediately available to its designated owner upon demand. It is not being loaned to others. The price is transparent, accurate, and available globally.

The "authorities" have always sought, and will continue to try to control, peoples’ activities. But to the extent that investable physical gold and silver are removed from the control of exchanges and government coffers, and placed under "supervision" of the individual, the ability to manipulate the price and physical supply will deteriorate.

Even though this is a nice image, remember that Bitcoin itself is intangible.

This, I believe, is the potential that digital metal represents. It will operate on a decentralized, secure, transparent platform. The blockchain and the portal through which it flows could be Ethereum or a similar protocol.

And if the "promise" is not honored? Then the concept of digital metal will be dispatched to irrelevance in the dustbin of history, as other experiments which have toyed with its essence have been. But pass or fail, no amount of digital tinkering will be able to stunt demand for gold and silver. Rather, the result will have simply been to introduce millions of new holders to the virtues of physical precious metals ownership.

Unintended Consequences

Global governments, having previously removed metals' backing from the currencies they print, now attempt to force their citizens into holding only digital paper currency "wealth." How ironic it will be, if by these very actions, the ultimate effect turns out to be the unleashing of new demand waves for digital metal – redeemable for physical gold and silver.

Last week, Stewart Thomson of Graceland Updates predicted the following:

“Going forwards, India-China operated digital gold wrapped in blockchain technology will be the undisputed currency of the world gold community, a 3-billion-person-strong titanic force.... This is the beginning of the end for world gold price manipulation, and you can take that to the bank.”

By David Smith

MoneyMetals.com

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com. For the past 15 years, he has investigated precious metals’ mines and exploration sites in Argentina, Chile, Mexico, Bolivia, China, Canada, and the U.S. He shares his resource sector findings with readers, the media, and North American investment conference attendees.

© 2017 David Smith - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in