STAFF NEWS & ANALYSIS
Why Blockchain Will Render Gold Worthless
By Daily Bell Staff - October 25, 2016

 Is Gold On Its Last Legs? … I am about to make a bold call on the future price of gold . Clearly, no one knows the future, but I firmly think that the preponderance of the evidence points toward dramatically lower prices for the yellow metal over the next 24 months. In fact, I expect gold prices to drop below $1,000 per ounce by October 2018. -Nasdaq

More nonsense about gold. It never ceases. Now we are being told that the blockchain itself will erase the value of gold, which has probably existed for 10,000 years or more.

The idea here is that the blockchain provides such security that something like gold, with millennia of perceived value is going to be deemed unnecessary.

Once value can be ascertained via technology, the need for actual money metals  will be removed.

More:

Gold May Even Become Obsolete … The world is embracing new ways to create and transfer value. Ancient stores of value, such as gold, are quickly being made irrelevant by technology. One technology in particular, Blockchain, is the manifestation of high-tech creating its own means of value transfer from one user to the next.

The Wall Street Journal defines blockchain as ” a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority.”

… The structure of blockchain transactions makes it unnecessary to even know whom you are dealing with when conducting commerce, and still have full trust in the transaction itself.  Advanced algorithms are used to verify and confirm transactions, thereby creating a historical record … Blockchain technology is still in its infancy, lacking a fully realized application and having only a minor overall economic effect. However, its existence may signify that gold is on its way to becoming irrelevant in the future economic reality

The article points out that bitcoin users benefit from blockchain’s “full trust.” Of course, we know, too, that there are plenty of problems with bitcoin, as we long-ago anticipated. To place one’s full trust in bitcoin is surely a mistake.

The article makes other points about gold’s impending demise. Most significantly it points out that gold (and silver) must be in for price erosion based on inevitable higher interest rates. This is because professional traders and institutions tend to sell gold when the dollar’s “value” accrues against gold.

But tracking short-term price movements regarding money metals doesn’t make much sense in this day and age. The world itself is being destabilized by conscious forces supporting increased internationalization.

Whole populations are being merged in Europe, and soon in the US via forced immigration.  Economies are being destabilized, war is being fomented. Domestic insurrection is being surreptitiously encouraged.

In this environment, parting from gold and silver – money that has proven value – because of rate fluctuations seems questionable indeed. The Fed, for instance, has been threatening to raise rates significantly for years. The result: one tiny, upward tick.

Blockchain is an intriguing technology that has proven its validity with bitcoin and is being applied to numerous other industrial areas. But to make the leap that it will now begin to replace gold as trusted money is a truly ludicrous assumption.

Likewise, the idea that one ought to part with gold and silver because the dollar is on its way up against gold. In fact, the dollar, too, is being undermined by impending globalism. The plan apparently is to create a basket of currencies to take the place of the dollar. The world needs to be “evened out” and that includes currencies. The yuan is being promoted.

Conclusion: Gold (and silver) remains what it has been all along, a trustworthy store of value that is liquid and accepted around the world. There is a reason that Indian women where their wealth on their persons in the form of jewelry. They know exactly where it is at all times and have access to it. That’s a form of practical prosperity.

 

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Biggest Currency Reboot in 100 Years?
 
In less than 3 months, the biggest reboot to the U.S. dollar in 100 years could sweep America.
 
It has to do with a quiet potential government agreement you’ve never heard about.
 

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  • Bruce C.

    My hunch is that gold/silver will always represent physical “cash” and therefore it can not only co-exist along with any other non-physical monetary system(s), but will also always remain “king.”

    • Mstrjack

      Yes, especially silver. Silver is a useful metal. In the real world of supply vs. demand silver is King.

      • georgesilver

        Gold is King because it is used primarily for a store of value. Central banks hold Gold not Silver. Silver will possibly skyrocket like a firework and then fall back to Earth as many weak hands holding Silver sell when the price multiplies. The trick will be to catch the rise and put the proceeds into Gold.

        • I quite agree with this reply. Gold today is the only commodity which is used as a standard to measure value, IAW just as J. P. Morgan testified before the 1911 congressional Pujo Commission, “Gold is money, and nothing else“.

          Silver today is a highly useful industrial metal because of its electrical conductivity characteristic. It is a necessary metal for use in computing devices. Its price is determined in the metals markets. An Alexander Hamilton type fixed tie of the value of silver to the value of gold in order to provide a standard to measure value simply is no longer workable.

      • The problem with silver with regards to the “supply vs. demand“ question resides in the fact that above ground inventory figures for silver are extremely difficult to come by. The Chinese, some of the largest miners of silver, are notoriously secretive about their annual production figures.

    • Cash is defined as the medium with the highest liquidity. Gold and redeemable paper currency under the gold standard qualifies. Silver fails to qualify as cash, though it may be a more preferrable medium of exchange than irredeemable paper currency.

  • Demonocracy

    Blockchain = Cashless

    Everyone is pushing for N.I.R.P.

    Here is whats been on the horizon for a while now. The plan for a negative interest rate economy coupled with the excuses of combating tax cheats and other criminal activity with all of it being a cashless economy. So the freedom loving (/s) Council On Foreign Relations had a CFR live event for the author to talk about his new book, “The Curse Of Cash” on the 29th of Sept. @ 6PM ET.

    He was basically telling you why this is good for you while regurgitating the statist mantra, “If you don’t have anything to hide then this shouldn’t bother you”.

    In order to implement N.I.R.P. in the U.S. they will have to go to a totally cashless economy. You cannot have negative interest rates on depositors in banks without a run on the banks to withdraw the cash. People are simply not going to stand for paying a bank to hold their money. So to prevent this the central planners have to eliminate physical cash. This way you have no choice but to keep your money, (which now only consist of ones and zeros stored on a computer server) in a mandatory clearing house, i.e. a bank.

    Also comes with this is forced bail-ins, whereas to stave off the collapse of your bank they will use your deposit/money to prevent it’s collapse. The F.D.I.C. fund cannot cover it. In addition F.D.I.C. rules state that it does not have to give you cash back on the banks losses, it only has to give you bank stocks in lieu of your cash, which at that point the banks stocks will be worthless as the institution has failed.

  • apberusdisvet

    Blockchain is just another elite product, like the ETFs GLD and SLV to siphon off investment demand for gold and silver. If you can’t hold it in your hands, it aint worth diddley squat.

    • Tim Leary

      You can actually hold bitcoin in your hands. It’s called a cold storage wallet and is is a piece of information that enables you to take direct possession of your bitcoin. No counter party. Sure its digital, but is far superior to any paper contracts, fiat or other promises.

  • georgesilver

    When they dig up a bitcoin after 1000 years and it still has value I’ll believe it.

    Bitcoin to my mind is a clever confidence trick. First they need to show a picture of a “bitcoin” which doesn’t actually exist. Second part of the ‘con’ is to call it a “coin” when it is just a series of ones and zeros.

    A blackmarket in Gold could easily exist with guys standing on corners clinking their metal. Can you imagine a blackmarket in Bitcoin. A guy standing on the corner with a laptop selling ‘bits’. Anything using the internet would be tracked and traced. Governments could hack the system. Even the originators of Bitcoin could have a backdoor and walk off with the lot.

    Bitcoin is like a Ponzi scheme. Early adopters made money but eventually many will be holding the bag.

    • Tim Leary

      LocalBitcoins has lots of guys standing on the corners. Bitcoin is traceable but with the new technologies being established right now, the perfect private money which no government is capable of hacking will emerge. You can be an early adopter as well but most would probably just want to use it as money because it is useful.

    • JdL

      Even the originators of Bitcoin could have a backdoor and walk off with the lot.

      You want to explain how it’s possible to have a hidden “backdoor” when Bitcoin is open source?

    • SnakePlissken

      US Dollars are just a series of ones and zeros. The pieces of paper that we use make up a tiny amount of dollars in circulation.

    • The definition of money is a commodity with marginal utility that is infinite or nearly infinite and which is used as a standard to measure value.

      Under that defintion, gold is the only commodity which qualifies. BitCoin clearly does not qualify as money under the above given definition. BitCoin at best is an acceptable medium of exchange with dubious value representation.

      To explain value, it must be understood that the creation of value depends on the application of human exertion, be it physical or mental, upon natural resources to create a product which is in demand.

    • Vin Thalue

      “Walk off with the lot”. This is poor logic but it is understandable since the tech behind bitcoin is new and hard to grasp. Fist of all, there is not enough computing power in the world today to hack the blockchain. A lot of extremely technologically intelligent people can prove this. Ask yourself, why would they lie? To walk off with the lot? Well friend if they walked off with the lot it would then be worthless so aside from this being technically impossible there is also no logical incentive….US dollars have no intrinsic value, only trust and they too are not backed by anything other than trust! However, dollars have proven themselves to be inflationary where it costs more of them to buy today’s hamburger tomorrow. Blockchain is deflationary, it will cost less bitcoin to buy today’s hamburger tomorrow. I choose the latter…This tech is here to stay folks and if you are wise you will learn to embrace it or it will pass you by…

  • Sven

    Even though silver has thousands and thousands of industrial purposes. All these detractors need a great flushing.

    • What is the great flushing of what you speak…???

  • Tim Leary

    I think bitcoin will help gold with establishing a larger free market of competing honest currencies you can actually hold in your hand and be your own bank without the counter party risk. This new cryptocurrency ecosystem complements precious metals and enables uses that are undoubtedly necessary in the 21st century and beyond.
    Think about the relationship of gold to silver. Do you think silver will render gold worthless? That is ridiculous! It actually helps to establish a market and as we have seen recently, metals such as platinum are gaining investor attention as well.
    This same thing is happening on a far more advanced and sped up level in the world of crypto – and litecoin is not going to render bitcoin worthless.
    The 21st century cryptocurrency and precious metals platform can provide an actual answer to world money with any feature you can imagine, e.g. gold backed micro payments.

  • timothy price

    Sometimes it is difficult to imagine our complicated system which is overwhelming us today, will persist much longer. Solutions to the difficulties are not forthcoming.
    Am reminded of “The Canticle of Leibowitz” by Walter Miller, a futuristic ScifFi which takes place after the “period of simplification”…. or nuclear war, as it turns out to have been. Simple articles which are beautiful, rare, enduring, and useful retain value.

  • James

    Bitcoins would make economic sense if they were backed by real money. Why can’t there be a silverbit, backed by an ounce of silver, and a goldbit, backed by an ounce of gold? A fixed rate of seigniorage could be charged if you want physical delivery, but who wants physical delivery when the digital bits are so much more convenient? The reason the digital bits are so much more convenient is because they do not exist in the real world the same way as the real money does, with so much mass and volume.

    • robt

      Well, there is such a thing, at least for gold, and you trade grams of gold and can make payments in gold. I don’t know if a silver one exists, but it if it doesn’t it probably will.
      But the problem with any electronic trading exchange is trust – how many exchanges have just flipped a switch, or been hacked, and you have nothing – no gold, no bitcoin, no recourse. Also, if you visit the LocalBitcoins forum you will see endless complaints and warnings about scammers. Just the fact that an exchange, or most exchanges, may be honorable is no protection against those who may not – and there are many hackers who inhabit these exchanges that empty wallets – or maybe the whole exchange.
      The sight of an ‘investor’ who flew from England to Japan to stand outside the empty Mt Gox exchange offices for weeks, with no result, was pathetic. 500 million dollars vaporized for thousands of account holders. Mt Gox at the time was the premiere and largest exchange, and there have been many other smaller failures.
      The whole point of gold is that it is real, not virtual. Anything virtual is just an IOU, dependent on a counterparty that you don’t know and have never met.
      Bitcoin, or any virtual vehicle is just a derivative of money, with any money just a derivative of gold, no matter what you’re told. Bitcoin should be recognized for what it primarily is – a speculative vehicle.
      The only people who tell us that gold is worthless are the ones that want to exchange yours for evanescent bits and bytes, or paper IOUs.

      • James Solbakken

        I agree about trust being fundamental to allowing all these essentially financial intermediary systems of money. Paper money can be backed by gold and silver, but how do we know they haven’t printed up more money than they have to back it up in specie? Digital money has the exact same problem The more trust in society the more opportunity to enjoy the benefits of financial intermediation. If we can’t trust the fiduciaries to honor their fiduciary duties, we have no choice but to fall back on the real thing itself and pay the freight of the inherent relative inconveniences and inefficiencies. It’s a pain in the rear end to schlepp around the world with pounds of gold in our pocket or purse, but if we can’t trust anyone we have no choice.

    • Tim

      Bitcoin is backed by the computational power of a supercluster and people running it creating consensus – a valuable blockchain information.
      Now, to get an idea about the network size which is still growing look at one of the first and recent google results from December 2015 stating: The Bitcoin Network is 11000x Faster than the Top 500 Supercomputers Combined.

      • James

        Does that still represent counter-party risk? I used to write simple visual-basic macros in Excel, but that’s about all I know about software programming.

  • SnakePlissken

    Blockchain is too nerdy. I keep all my money in Beanie Babies.

    • Christan

      If history repeats itself your going to be rich snake

  • guard4her

    Just Google “bitcoin hacked”. End of story.

  • The point to understand is that gold has no price. Gold is the standard by which value is measured, just like a yard stick measures linear distance.

    It is a fallacy to quote a price for gold using Federal Reserve Notes as the value standard. A quote of $1,500 FRN per ounce of gold must instead be read as $1 FRN has the value of 1/1500 of an ounce of gold.

  • CBINC CBIINC

    How does this dumbass put value in something that is gone if you dont pay your power bill, or your internet company or the grid goes down. ITs dummies like this that lose all their money in scams…his gene pool is on the shallow end

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