Back in 2016 Jacob Rothschild told his investors he was beginning to out of the U.S. dollar into gold and other currencies, this was laid out in the semi-annual RIT Capital Partners report:
“Our significant US Dollar position has now been somewhat reduced as, following the Dollar’s rise, we saw interesting opportunities in other currencies as well as gold, the latter reflecting our concerns about monetary policy and ever declining real yields.”
Several economic changes over the past months have fallen in line with last years warning about the uncertainty of the United States dollars’ future role as the global standard currency. The introduction of a new Yuan-priced Chinese oil benchmark, and additional signs of Rothschild and other wealthy globalists moving their money out America into Far Eastern markets further shows that some big changes could soon be coming in the global economy.
The available alternatives to the dollar certainly have their drawbacks as well, Ross Madden expands on a recent debate concerning two of the most popular alternative currencies, metals and cryptocurrencies.
The Free Market Showdown for Next Year’s Wealth
The US Dollar is down 12% this year. (7) People are looking for alternatives because the foretold devaluation of the fiat currency market is on the door step, knocking. The two big opportunities that emerge, that the people who make sense are talking about, are 1) metals and 2) cryptocurrencies.
Recently several gold salesmen have said cryptocurrencies are a bubble. Peter Schiff mentioned a 96% devaluation in Bitcoin could be underway. (3) I say gold salesmen not to knock their economic knowledge or integrity, but to be fair, as far as dollar alternatives go, cryptocurrencies compete directly with the metals market. Mr. Schiff competes with Bitcoin and his comments should be considered in this context.
A bunch of factors affect the short-term value of a currency, there can be bubbles and corrections, but the long-term value of everything is supply and demand. Fundamentally, the oversupply of dollars provided by Wall St. lenders is starting to overtake their demand based on their value of universal acceptance, you can buy almost anything anywhere with dollars. When people look for dollar alternatives, they will consider the universality and usability of the currency along with the long-term store of wealth their next investment should hold.
Cryptocurrency supporters don’t disparage the lasting value of gold, which is often viewed as a viable long-term store of wealth in the crypto community. The appeal of a potentially untaxable alternative to the dollar gives them a lot of favor in this freedom focused group.
There is manipulation in both Bitcoin and Gold futures, but as far as I understand it, Bitcoin creation is on a set curve that can’t be adjusted by any politician giving it a certain stability not found in fiat currencies. The potential freedom to use a limited currency outside any government’s control is appealing to millions of people, but Gold Sellers are not as friendly towards their crypto-competitors. Many gold trades have warned crypto bubble could pop any day now and expose the empty value of digital currencies. (3)(6)
Cryptocurrencies are not a reliable store of wealth, due to their volatility, which is proven with a look at this month’s Bitcoin chart. Bitcoin, which was at $600 a year ago, spiked above $5,000 as Japan rolled out their Bitcoin acceptance, only to fall to about $3,000 two weeks later, after rumors of a Chinese ban on bitcoins. (2) That’s a 40% drop, practically overnight, which could be a sign of a crypto bubble.
Bitcoin’s value spike was a result of Japan’s rollout of in-store Bitcoins acceptance. Since July 1, over 260,000 stores have started accepting Bitcoin transactions. (1) The Cryptocurrency market cap is about $60 billion dollars, with a average daily traded volume of $500 million over the last 6 months. (5) Thus like a fiat, Bitcoin is a currency proven to give you access to massive markets, you can buy almost anything in certain places, goods only indirectly accessible with gold. The cryptocurrency tradability is valuable on its own and that’s only going to increase as more online and physical vendors accept cryptocurrency.
Gold on the other hand, has a proven lasting store of value, but if you want to trade gold, all you can buy is cryptocurrencies, fiat currencies and that’s about it. Grocery stores are not accepting the little flakes of gold in exchange for eggs and bread. It’s not happening now, but even if stores wanted to put a gold balance in every store, scammers would take their fake coins to Food Lion to fool the 16-year-old cashier.
Plus, gold is an inconvenient currency, at least in its physical form. In movies and TV shows you always see them toss gold and silver coins to each other. Sometimes the person who catches the booty takes a bite to make sure it’s the good stuff, but I have never seen a legitimate gold transaction on TV. You never see an actor put the coins on a scale, maybe do a graduated cylinder test to confirm the density ratio and look up the conversion rate to his local currency. That would be a pain. It would take far too long for TV and far too long for any regular store that doesn’t deal specifically in metals.
To fix gold’s usability shortcomings, gold traders are offering new cryptocurrency backed by gold stored in the Gold Money vault. It’s an interesting concept, but any success Gold Money has, is an admission to the shortfalls of trading physical gold compared to swiping a card with access your digital account.
When choosing alternative currencies to accept, store owner and customers look for a quick and easy ways to spend money that is why the technologically advanced Japanese looked towards Bitcoin, not gold. We can expect that trend to continue around the world as spenders demand spendable alternatives to the deflating fiat bubble.
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