Monday, 4 June 2018

Taking 1p, 2p penny and twopence out of circulation paves way for pound devaluation.

I recently head about the rumours that low denomination UK coins may be taken out of circulation. Here is one of the articles.

https://fundraising.co.uk/2018/03/15/penny-wont-dropped-copper-coins-remain-circulation/#.WxVzJ9QrLs0

There have been numerous other articles in the 'press' about this but I have heard little or no discussion verbally anywhere.

However I did find some interesting comments here on this Twitter page:
https://twitter.com/bbcpolitics/status/973595466452660225

My reply to the articles would have been this - but in order to reply to these things, it is often necessary to accept all kinds of marketing stuff and use of your information by these websites, just to make a comment. No way. So I'm writing it here:

All of these articles are talking about the shorter term practical consequences of this issue and are not saying "Why?" 
The "Why" is important. It's due to the debasement of the currency and decades of money printing by central bankers and the consequent destruction and robbery from the value of people's savings. It's a national disgrace that the penny - that used to be a big copper or bronze coin - is now worth so little that it can't buy anything. Even back in the 1970s, you could buy a decent 'Bubbly' bubble gum with a penny. Now, I never see anything priced less than 10p in UK shops.
The pound is being prepared for excessive devaluation that will turn it into a "peso." The withdrawal of these 'coppers' that are already made of cheap copper plated steel since 1992 because inflation makes copper too expensive, paves the way for the turning of the pound into a third world type of currency. The penny is not a farthing, or a halfpenny. Those are long gone. It is a penny, THE PENNY, a fundamental unit of our currency. Once it is gone, out of sight and out of mind, watch the pound plummet, until a pound is worth what a penny used to be worth.

Of course, it is also another step towards the cashless Big Brother society where we are being led by the nose. Anything that enables this is hot on the political agenda for the politicians and central bankers. 

However, when there is no cash and the other payments systems hit any kind of major problem, you won't be able to buy anything and may have all kinds of other problems - and you will never know the actual precise cause or be able to do anything about it. Your life will be outside of your control in yet another way. The card payments fiasco in May/June 2018 is a telling and scary example of where excessive belief in government and technology will lead us:

https://www.moneysavingexpert.com/news/banking/2018/06/visa-customers-hit-with-multiple-transactions-on-their-card-after-outage---heres-what-to-do-

https://www.theguardian.com/money/2018/jun/01/visa-card-network-crashes-and-sparks-payment-chaos

As for coin values, the farthing (wthat used to be 1/4 of an old penny, would be worth 2 to 7p by year 2014. So, once a coin is removed the currency is devalued accordingly.

Wikipedia writes (with a reference):
"The purchasing power of a farthing up to its demise in 1960 ranged between 2p and 7p (in 2014 GB Pound values)."

In other words, a modern 2p or even 5p coin is already likely to be worth less than what an old 1/4 penny was worth back in 1960

https://en.wikipedia.org/wiki/Farthing_(British_coin)

Of course, modern society doesn't care about these things, like it doesn't care anymore abut a lot of things that actually matter. It is too concerned with short term pleasures and material gains - and principles are all going out of the window one by one. So, watch the pound become a peso and watch your life savings and pension dissolve into nothingness over the following decades.




Saturday, 27 January 2018

Prophet-VS synth fault, some display lights, no sound.

Prophet-VS Fault on switch on, some display lights, no sound. See description below.
Published on Jan 23, 2018
Prophet-VS Fault on switch on, indicators light, then goes to 00, no response or sound. MVI 6727. Fault appeared early 2018 after the unit had functioned for 18 years. Fault came on instantaneously during playing of the arpeggiator.



Emulator III Rack mount version: some sounds and the disk space / memory screens:







Friday, 12 January 2018

Gold in British Pounds GBP in no-mans' land near key level £960.

Gold is kind of in no mans' land priced in GBP. I look at the 960 GBP level as being very important as well as the £960-1000 zone in general. This was the support zone before the crash of April 2013.
Gold is oscillating around this level and has been doing so since the Brexit vote:


Thursday, 11 January 2018

Is Bitcoin starting to behave like Gold in 2011?

Today's question:
Is Bitcoin starting to behave like Gold in 2011?

Well, no further comments - the chart shows what I mean. Points A, B, C, D and E are similar and the 1,2,3 upward correction looks like a typical Elliott Wave "abc" upward correction following an impulse leg down (CD on the chart):

Perhaps?


Kudos to Jim Wyckoff at Kitco who is doing frequent analysis of the Bitcoin chart nowadays; here for instance:

http://www.kitco.com/news/2018-01-11/Bitcoin-Daily-Chart-Alert-Technical-Damage-Mounting-Jan-11.html

Bitcoin charts are here:
http://www.kitco.com/bitcoin-price-charts-usd/


Monday, 4 December 2017

Will Bitcoin Destroy the Gold Market?

Will Bitcoin Destroy the Gold Market?

In the first article, I discussed whether Bitcoin and crypto currencies might present a threat to the stability of the current financial system. Now I am moving over to discussing the gold market and other alternative investments that may be among the first to feel the effects of the cryptocurrency revolution

Both these questions came to me very strongly now that Bitcoin has reached and surpassed the quite amazing price target of $10,000 per coin.

Bitcoin is the digital peer to peer currency launched around 2009 with little or no monetary value at the time. It was even discussed back then whether it would ever have any use or monetary value. Now each unit is worth approximately $10,000, varying from day to day as it trades and there are about 17 million Bitcoin units outstanding, giving a total market value of around $170 billion to the current Bitcoin currency supply. The maximum number of Bitcoins that are available to be found or ‘mined’ was set at 21 million but that process is gradual since Bitcoins are essentially mined essentially by maintain the ledger of transactions and his takes computer power and work, as does mining precious metals for instance.

Now as Bitcoin has hit $10,000, speculation has raged as to what maximum value it might reach. Some have speculated it might go to $500,000 to $1,000,000 per coin. This is extravagant in my personal view but that is not investment advice.

A good place to look is https://coinmarketcap.com/ which currently states as of 1 Dec 2017 that the total market capitalization of all 1320 of the cryptocurrencies it monitors is $332 billion, with the lion’s share in Bitcoin ($188 bn), Etherium ($45 bn), Bitcoin Cash ($24.5 bn), Ripple ($9.9bn), etc. All of the top 16 have over $1 billion and even number 50 on the list, Veritasium has a market cap of $196m!

The total crypto value is already 1/3 of a trillion! Bitcoin currently has 56% of the crypto market.

Comparing this to gold in the financial system in various forms:

Bitcoin capitalization                                               $187bn (2 Dec 2017 https://coinmarketcap.com/)
Cryptocurrencies total capitalization                        $332bn (2 Dec 2017 https://coinmarketcap.com/)
Central bank gold reserves (31,500 tonnes*)          $1.30 trillion
Investment gold (40,000 tonnes*)                           $1.64 trillion
Total investable gold (71,500 tonnes*)                    $2.94 trillion
Gold jewellery (89,200 tonnes*)                             $3.67 trillion
*Source: World Gold Council. Values calculated using 1 Dec 2017 gold price of $1279.80/oz

This table shows my hypothetical Bitcoin estimates from the previous article in comparison to the gold market:

Date
Bitcoin market capitalization
Total cryptos market capitalization
Bitcoin’s share of cryptos
No of Bitcoins in
Circulation*
Price per Bitcoin
Cryptos compared to size of gold market**
1 Dec 2017
$188 billion
$332 billion
56.6%
16.7148 million
$11,239.80
0.11x
8 Dec 2017
$269 billion
$427 billion
62.9%
16.7281 million
$16,104.20
0.17x
?
$1 trillion
$2 trillion
50%
17 million
$59,000
0.68x
?
$5 trillion
$10trillion
50%
20 million
$250,000
3.40x
?
$10 trillion
$30 trillion
33%
20 million
$500,000
10.20x

*I am allowing for the potential increase in the number of Bitcoins towards the maximum limit of 21 million.
** I am comparing the total crypto currency hoarding with the total value of all investment and central bank gold (likely almost the entire world supply of bars and coins).

Further increase money flows into the cryptocurrencies would likely cause significant diversion of funds out of gold.

I personally would not be surprised to see a 1 or 2 trillion dollar market capitalization for cryptocurrencies in the near future. This would reach or possibly exceed the total value of all central bank gold reserves ($1.3 trillion) and approach the total value of all investable bars and coins ($2.94 trillion). At that point, there is a danger that cryptos will be a serious competitor not only to gold but also other alternative investments in the same universe such as silver bullion, gold and silver miners (junior exploration companies and even senior producers) and even perhaps other precious metal and commodities investments, which also tend to be inversely correlated to the value of the US dollar and are used as a hedge to depreciation of the conventional currencies.

I this is already happening. Bitcoin is zooming, while gold and silver, which are other alternative forms of currency, are languishing. The libertarian political mindset is common both to precious metals freaks and Bitcoin freaks so these markets are competing for that money. Cryptos are winning, hands down. How far will it go? What will happen when Bitcoin futures open on the same platforms as gold and silver futures in December 2017?

Signs of this occurring include the World Gold Council Gold Demand Trends report from 9 November 2017, which states that overall gold demand in the 3rd quarter of 2017 had fallen 9% year on year, mostly due to less money flowing into the Gold Exchange Traded Funds (ETFs). However, bar and coin demand was up a little and central bank buying was also up.

In the more extreme scenarios, there is the possibility that cryptos could replace gold and precious metal investments as the Go To alternative investment to hedge against the conventional markets and currencies. It’s not impossible that a bubble in cryptocurrencies could cause a crash in precious metals if it continues to progress rapidly.

Right now, it’s too early to tell whether gold demand is seriously dented by cryptocurrency demand. However another sign is that the famous precious metals site www.kitco.com now has Bitcoin and crypto quotes on its front page and as of a few days ago, there is also some technical chart analysis of cryptos being done by their analyst Jim Wyckoff. This is on a site that actually sells precious metals bars and coins! Presumably this information is being presented because of popular demand and surely shows a shift of interest from precious metals into cryptocurrencies.

Famous financial author Doug Casey said in a recent Kitco interview at the Silver & Gold Summit that Bitcoin: may be the 'Gateway Drug' To Gold and that $50,000 Bitcoin was possible, especially in the light of the war on cash. I agree in some ways but I don’t think that cryptos are necessarily a gateway to gold, unless the cryptocurrencies bubble bursts, at least for a while. There could be big swings from gold into cryptos before the see saw goes the other way. It’s very difficult to call. Frank Holmes doesn’t agree with me. He thinks that stock market offerings (IPOs) are being swamped by the number of initial coin offerings (ICOs)

References:
Bitcoin: The 'Gateway Drug' To Gold - Doug Casey

Cryptos Are Taking Over Markets But Not Gold - Frank Holmes

Gold's Cycle Shows Metal May Retest Lows of $1,050 - Wells Fargo's 2018 Outlook with John LaForge

JIM ROGERS TALKS BITCOIN PRICE / U.S. DOLLAR / GOLD / FUTURE FOR THE WORLD & 2018

Poor Nerds Become Millionaires Thanks to Bitcoin. Fascinating interview with Rick Falkvinge Bitcoin Cash 'CEO' on Russia Today



© D Bellamy 2017

If you enjoy my writing, please support me at: 


https:/www.paypal.me/daveswebpages







Will Bitcoin Destroy the Current Financial System?

Will Bitcoin Destroy the Current Financial System?

This question has come to me very strongly now that Bitcoin has reached and surpassed the quite amazing price target of $10,000 per coin.

As I write this on Word 2007, I just noticed that Bitcoin has a red line underneath it; it was not in the dictionary. I just put it into the dictionary. I wonder if the new versions of Word Processors have this word? Does the Oxford English Dictionary have it? They need to have it in there, now.

On my Dell UK style laptop computer keyboard, I have the dollar sign $ and the British pound sign £ (SHIFT 4 and SHIFT 3 respectively). Pressing CTRL ALT 4 gives me the Euro sign €. Where is the Bitcoin B with two vertical lines through it? Is it in the Wingdings font yet? It needs to be.

Bitcoin is the digital peer to peer currency launched around 2009 with little or no monetary value at the time. It was even discussed back then whether it would ever have any use or monetary value. Now each unit is worth approximately $10,000, varying from day to day as it trades and there are about 17 million Bitcoin units outstanding, giving a total market value of around $170 billion to the current Bitcoin currency supply. The maximum number of Bitcoins that are available to be found or ‘mined’ was set at 21 million but that process is gradual since Bitcoins are essentially mined essentially by maintain the ledger of transactions and his takes computer power and work, as does mining precious metals for instance.

Now as Bitcoin has hit $10,000, speculation has raged as to what maximum value it might reach. Some have speculated it might go to $500,000 to $1,000,000 per coin. This is extravagant in my personal view but that is not investment advice.

The limit is likely to be dictated by the total amount of money in other currencies that is available to be able to be put into Bitcoin. Of course, since currencies fluctuate and often depreciate and since central banks print money by doing quantitative easing among other things, the total number of currency units tends to increase over time. However the Bitcoin supply is fixed at 21 million units maximum, though this will not be reached for some years. I am going to use a number of Bitcoins of 20 million because it is a round figure and it is likely to be reached in the next few years.

We need to look at various monetary stores of value and compare them to Bitcoin. In my view, the total value of Bitcoin could go to $1 trillion as a feasible target. This is because 1 trillion is an attainable number for a valuable entity in the current world of investment. For example, Apple’s total stock market value has been threatening to reach the 1 trillion level - and this has in itself been a hot issue for the last year or two as to if or when this will happen.

We must also consider that there are numerous other crypto-currencies such as Etherium, Bitcoin Cash, Bitcoin Gold and others about to be released such as Ucoin cash. The total market value of these is the same order of magnitude as Bitcoin itself. Bitcoin’s “market share” of the total has been slowly falling since these new crypto-currencies have grown from a standing start, even though in general the value of most of them has been skyrocketing.

A good place to look is https://coinmarketcap.com/ which currently states as of 1 Dec 2017 that the total market capitalization of all 1320 of the cryptocurrencies it monitors is $332 billion, with the lion’s share in Bitcoin ($188 bn), Etherium ($45 bn), Bitcoin Cash ($24.5 bn), Ripple ($9.9bn), etc. All of the top 16 have over $1 billion and even number 50 on the list, Veritasium has a market cap of $196m!

The total crypto value is already 1/3 of a trillion! Bitcoin currently has 56% of the market.

The website http://us.spindices.com/ gives useful information about the market value of the largest American companies. All of the top 10 companies in the Standard & Poors S&P 500 index had values over $300 billion at the end of November 2017, with Apple at the top at $887 bn. The current money in cryptocurrencies is thus about equivalent to the market value one of the top 10 companies in the USA. This is significant but not yet disruptive, since the total value of the 500 companies in the index is actually about $22.6 trillion.


Bitcoin capitalization
$187bn (2 Dec 2017)
Cryptocurrencies total capitalization
$332bn (2 Dec 2017)
Procter & Gamble market value
$229 billion (end November 2017)
Bank of America stock market value
$276 billion (end November 2017)
Apple Inc stock market value
$878.22 billion (on 1 Dec 2017)
Central bank gold reserves total
$1.35 trillion (32,754 tonnes on 1 Dec 2017 gold price of $1279.80/oz)
UK M1 money supply
$1.13 trillion (£853 billion)
UK government debt
$2.07 trillion (£1.56 trillion, 81.58% of UK GDP)
UK GDP
$2.54 trillion (£1.91 trillion)
US M1 money supply
$3.59 trillion
US Federal Reserve balance sheet
$4.42 trillion (up from under $1 trillion in 2008 because of QE)
US banks total balance sheet
$16.6 trillion
US government total debt
$20.574 trillion (2 Dec 2017 http://www.usdebtclock.org/)
US S&P500 total stock market value
$22.6 trillion (end November 2017)


It doesn’t seem out of order to imagine Bitcoin’s market cap going to 1 trillion with 50% of the total market, giving $2 trillion in cryptos and a Bitcoin price of $60,000 per coin. This would give Bitcoin a capitalization similar to Apple Inc, the most valuable company in the world and a value approaching to that of the total central bank gold reserves.

What would be the implications of this? This really means that $1 trillion would have exited the conventional financial system and gone into Bitcoin and perhaps $2 trillion into cryptocurrencies in aggregate. This would divert that money from the economy and perhaps numerous other markets, such as the gold market, the commodities markets, the stock market, the government and other debt markets as well as from savings accounts and bank deposits.

What level of money flow into cryptos would endanger other investments and how would this happen?

Well, $2 trillion flowing into cryptos would be equivalent to about 9% of the value of the S&P 500 stock index. It is also greater than the value of any individual company, more than the value of all central bank gold reserves, more than the UK money supply and about 12% of the total money in US banks. This would surely start to move markets. Of course the flow into Bitcoin is coming from the whole world but it could be concentrated in certain areas, especially where there is a perceived need to move money out of another asset that is insecure.

I see several dangers. Excessive money flows into Cryptocurrencies could cause:

1.       Diversion of funds out of the precious metals, the mining stocks and other ‘alternative’ markets;
2.       Fall in value of weak or vulnerable national currencies that are being converted into cryptos;
3.       Hyperinflation in vulnerable countries.
4.       Diversion of funds out of general stock markets – possible stock market crash;
5.       Diversion of funds out of pension funds by savers causing bankruptcy of funds;
6.       Draining of bank savings accounts causing bank illiquidity or insolvency;

I think item (1) is already happening. Bitcoin is zooming, while gold and silver, which are other alternative forms of currency, are languishing. The libertarian political mindset is common both to precious metals freaks and Bitcoin freaks so these markets are competing for that money. Cryptos are winning, hands down. How far will it go? What will happen when Bitcoin futures open on the same platforms as gold and silver futures in December 2017?

So how about a vulnerable economy like Venezuela (Items 2 and 3)? Here are some stats from the IMF compared to crypto values:

Bitcoin capitalization                             $187bn (2 Dec 2017)
Cryptocurrencies total capitalization      $332bn (2 Dec 2017)
Venezuela GDP                                   $215 billion (2017 IMF estimate; down from $236bn in 2016)
Venezuela total savings                         $9.1 billion (2017 IMF estimate; down from $15.4bn in 2016)

We see a large shrinkage of Venezuelan savings and GDP over the past year, measured in US dollars. That might be due to a fall in the Venezuela bolivar currency but could also be due to money leaving that country and into Bitcoin. Already, Bitcoin’s value is approaching the total GDP of this crisis-ridden country and it could easily absorb all of Venezuela’s savings of $9.1 billion.

There is actually a strange parallel between the inflation rate in Venezuela and the price of Bitcoin. Is this a coincidence? I think possibly not.

There will always be poor mismanaged nations that will get hit by the markets. However, what about the world’s financial system that itself is debt ridden and riddled over recent decades with asset bubbles, crashes and market manipulation by the central banks by bailing out their chosen friends when they lose money?

So at what point might we see items 4, 5 and 6, where the largest sectors of the investment sectors and the mainstream financial system could be endangered.

To me, that would require a real mainstream mania in Bitcoin and the cryptos that would divert several trillion dollars or more from the other investment markets. Essentially most people are probably not spending Bitcoin so it is hardly functioning as a currency. In my view is functioning as a hoarded asset, much like gold in the early 1930s during the Great Depression. Ten trillion dollars equivalent going from conventional currencies into cyptos would probably be a major threat.

Some hypothetical levels for Bitcoin compared with today:

Date
Bitcoin market capitalization
Total cryptos market capitalization
Bitcoin’s share of cryptos
No of Bitcoins in
Circulation*
Price per Bitcoin
% of size of major US markets**
1 Dec 2017
$188 billion
$332 billion
56.6%
16.7148 million
$11,239.80
0.8%
?
$1 trillion
$2 trillion
50%
17 million
$59,000
5%
?
$5 trillion
$10trillion
50%
20 million
$250,000
25%
?
$10 trillion
$30 trillion
33%
20 million
$500,000
75%
?
$21 trillion
$70 trillion
30%
21 million
$1,000,000
175%

*I am allowing for the possible increase in the number of Bitcoins towards the maximum limit of 21 million.
** I am comparing the total crypto currency hoarding with the size of the main US stock and bond markets using $20 trillion US debt and $20 trillion valuations of S&P500 ($40T total). One could instead use a figure for the total world money supply of approx $90 trillion in which case the percentages would be less.

I personally would not be surprised to see a 1 or 2 trillion dollar market capitalization for cryptocurrencies in the very near future.

I would think that if either of the bottom two scenarios were to arrive, then the world’s regulated financial system would be in some danger and the effects on our over indebted fragile western world economies would encourage government action to curtail the crypto markets or at least cap them.

We know from the Roosevelt gold confiscation in 1933 and other executive orders passed over the years that governments can turn on a dime and enact arbitrary laws at any time. The effects of these on peer to peer decentralized systems like the cryptocurrencies are difficult to judge.

In the meantime it will be fascinating to see what happens in the crypto market. Some hedge funds are already invested in Bitcoin. Bitcoin futures are scheduled to start trading in mid December 2017. What will be the effect if financial institutions can bet against Bitcoin in the futures market? Will crypto currency Exchange Traded funds come soon? The mainstream is not quite there yet. The cryptos are still at the Wold West stage.

In a fascinating interview on Russia Today (linked below), Rick Falkvinge, the ‘CE’ of Bitcoin Cash, the Bitcoin Cash 'CEO' discusses cryptocurrencies versus the current financial system. He sees deep and lasting implications for the conventional system and a sea change in the monetary world. I also link to an interview with the evergreen investor Jim Rogers that talks about this and all kinds of topics.

In the end, we cannot tell whether this initial bubble of speculation will take a hit before the mainstream comes in with products or whether it will just add to the current mania. A useful comparison might be the Internet bubble of 1999--2000. Even though there was a big wipeout in valuations of internet companies in 2000-2002 due to unrealistic expectations and a bubble mentality, the internet continued to grow at a steady pace and became the universally used utility that it is today, with major new corporations coming into existence even since the initial bubble ended. We have to wait and see whether similar events can happen in the crypto market and whether it will become part of the mainstream money universe.


References:

Poor Nerds Become Millionaires Thanks to Bitcoin. Fascinating interview with Rick Falkvinge Bitcoin Cash 'CEO' on Russia Today.

JIM ROGERS TALKS BITCOIN PRICE / U.S. DOLLAR / GOLD / FUTURE FOR THE WORLD & 2018


© D Bellamy 2017

If you enjoy my writing, please support me at: 



Tuesday, 28 November 2017

Northern Dynasty chart compared with Novo and Garibaldi

Novo Resources and Garibaldi Resources just had big runs and fairly big cool offs on their charts, something like Northern Dynasty did about 10 months ago.

I always wonder what to do when a chart has an initial big run and blow-off top. Northern Dynasty might be giving clues but I really need a chart that did this 5 years ago for a useful comparison: