What happens to gold and silver prices when world goes to a cashless society?

[Sal]

I am sure lots of us on this forum have seen the guy on Youtube that offers people on a street corner a chance to buy either a ounce or gold or a 100 ounce of silver for ridiculously low price. The point is such a small percentage (Less than 3% is my guess)  of the worlds population even know the value of gold or silver how the heck to we exchange our gold or silver for any service or product if the world ever came down to that. Does crypto have a better future value to it than precious metals do? If so where to invest (don't say bitcoin) with the same relative risk as owning gold or silver.

[Stu]

Folks would soon realise the value of precious metals in such  a scenario, the problem I see is that if folks are batering in the community, how do they verify that the PM is genuine? Most folk would want to barter for a tonne of fire wood or a trailer or what have you would be my guess. 

Holding tangible assets of anything which you can easily store is good insurance in my book. 

[breaktwister]

You are referring to a SHTF scenario when you say "exchange our gold and silver for any service or product if the world ever came down to that".  As you rightly point out, the general public has no clue as to the value of gold or silver so if the world collapsed there are other items that will be worth more as barter (e.g. food, power, tools, weapons).  I don't stack for a SHTF barter situation.  I stack PMs as a hedge against inflation and fiat devaluation, and as part of a investment portfolio across asset classes.  Gold and silver are proven historical stores of wealth so I stack for long term protection of my wealth.  It is a bonus that it is off-grid and outside of the financial system but that is not the primary reason for me.  I also like the coin designs  and the numismatic angle, and finally it is extremely satisfying to hold the shiny stuff

Of course there is also the added bonus of a chance of the fabled "moon shot" where the PM manipulation racket comes to an end and the true market price is realised, I wouldn't hold my breath for this.

[sixgun]

The videos are from Mark Dice. i suspect most of the people are suspicious there is a trick. We do not know which video clips were not used. i find it hard to believe they do not know gold and silver are valuable. Gold and silver is in pirate stories and makes jewelry. There are gold and silver covered chocolate coins. People know it is valuable.

Gold fell out of circulating currency a century ago. Silver was removed from circulating UK currency after WWII which bankrupted the country. The last countries having silver coinage coming into circulation was in the 1960's. People have been discouraged from thinking of gold and silver as money. They are the only real money. They are traded on the foreign exchanges as currencies. The reason gold and silver is managed [manipulated] and you hear about them in the media is because they are the only real money. 

i am aware of cryptos being linked to precious metals. i am aware there is crypto likely to roll out in November where the crypto units will be title of ownership to vaulted gold and silver. i am aware when this is launched 100's of tonnes of gold will be purchased and is likely to have an significant impact on price.  i have gold tied up to go into this crypto when it happens. The bearer of these coins will own allocated metal. 

For gold and silver to re-enter day-to-day currency they will have to be radically revalued. i expect gold and silver, through cryptos, to re-enter circulating currency. There may be various currencies to fit various purposes with the gold and silver title of ownership cryptos at or very near the top of the pyramid. When sovereigns were still spendable currency many of them never left the banking system and were held on deposit or used in trade between nations. i see the emergence of gold and silver title of ownership cryptos as the way these precious metals break free of the current level of suppression and are significantly revalued. Some say there isn't enough gold in the world for it to back currencies. Well there is if gold were revalued from $1270 to $60 000. 

[MIP]

Any real thing on the gold-based-cryptos field?

[Guest]

Most people wouldn't have a clue of gold and silver real value, so this is not a threat to the financial establishment. Once I showed a full sov to some friends of mine and I asked them what they would charge me if they found one in their basement. They said they would pay me to collect it, them silly buggaz! 

[Oldun]

Does anyone really think governments wont legislate/figure out/control  how to tax cryptos ? 

[breaktwister]

10 hours ago, sixgun said:

i am aware of cryptos being linked to precious metals. i am aware there is crypto likely to roll out in November where the crypto units will be title of ownership to vaulted gold and silver. i am aware when this is launched 100's of tonnes of gold will be purchased and is likely to have an significant impact on price.  i have gold tied up to go into this crypto when it happens. The bearer of these coins will own allocated metal. 

Which crypto is this?  Was there not already some kind of offering where folks could buy allocated PMs and use a linked debit card to purchase stuff?  Bitgold?     How does a crypto offering differ?   There is certainly room in the marketplace for a crypto to own this space but it needs to have the right marketing team and budget to get it off the ground.    Andrew McGuire was talking about the launch of a gold backed crypto some weeks ago but I believe there was some kind of fallout between the organising parties and it did not launch. 

[sixgun]

8 minutes ago, breaktwister said:

Which crypto is this?  Was there not already some kind of offering where folks could buy allocated PMs and use a linked debit card to purchase stuff?  Bitgold?     How does a crypto offering differ?   There is certainly room in the marketplace for a crypto to own this space but it needs to have the right marketing team and budget to get it off the ground.    Andrew McGuire was talking about the launch of a gold backed crypto some weeks ago but I believe there was some kind of fallout between the organising parties and it did not launch. 

Yes there are some cryptos floating around where there is a link to precious metals. There is the BullionCoin offering. i was all fired up to get on board that but at the last minute the Allocated Bullion Exchange backed out. There was very good reason for this. The ABX was going to store the gold and silver. All gold and silver they hold is fully allocated. You buy gold and silver on that platform and you know where the metal is held and it is in your name. If you buy the metal it is actually there. BullionCoin at the last minute wanted gold and silver to be held in an unallocated form. The reason the ABX supported the venture was that the BullionCoins were title of ownership on specific metal not just a claim on metal amongst other claims. The switched to unallocated means that if BullionCoin went bust, creditors would have the first claim on the metal and not the investors. This goes against the ethos of the ABX so the partnership ended there. When the ABX pulled out so did the big investors. 

The ABX is however in an advanced stage with another cryptocurrency which will be everything that BullionCoin promised to be. The ABX is in control of this one so it will be. i have been told this is very likely to be rolled out next month (November). Assuming the investors who were intending to go into BullionCoin are still on board for the ABX crypto then we are looking at quite literally 100's of tonnes of gold going into the coin. i suspect this has already be secured on the spot market but the contracts have not been tendered for delivery yet. These contracts are indistinguishable for the 100's of tonnes of metal contracts that are batted backwards and forwards and never tendered for delivery. The problem for the market riggers is there aren't 100's of tonnes of gold available for delivery, let alone the potentially huge tonnages of silver this coin is likely to draw in. This will create a huge shock wave through the physical markets. This is the issue with the 1000's of tonnes of gold that has gone to Asia, the reserves of gold that used to be there in the past are gone, stockpiles of silver are historically very low. If there were a default in the Forex market (XAU/USD and XAG/USD) this would be catastrophic. The metal will have to be found whatever the dollar price actually paid.

[Martlet]

Asset backed crypto are suspicious to me, ether unnecessary middleman or potential scams.  The entire point of a crypto currency is to remove need for trust between parties, relying instead on the cryptographic secured blockchain to show transactions occurred.  If you step outside the virtual world you must apply a layer of trust that the assets are really being held, so you may as well buy on contract with and established dealer. 

The only benefit I can see to a gold crypto is so you can trade/hedge on the crypto-exchanges. 

[KDave]

11 minutes ago, Martlet said:

Asset backed crypto are suspicious to me, ether unnecessary middleman or potential scams.  The entire point of a crypto currency is to remove need for trust between parties, relying instead on the cryptographic secured blockchain to show transactions occurred.  If you step outside the virtual world you must apply a layer of trust that the assets are really being held, so you may as well buy on contract with and established dealer. 

The only benefit I can see to a gold crypto is so you can trade/hedge on the crypto-exchanges. 

This. Crypto gold will become comex 2.0. More tokens than ounces are guarenteed. 

[sixgun]

7 minutes ago, KDave said:

This. Crypto gold will become comex 2.0. More tokens than ounces are guarenteed. 

Well this can happen if you were in say BullionCoin where the cryptocurrency is not title of ownership.

The blockchain is seen as a step forward b/c things are more transparent and sure. Cryptocurrencies are being used as title of ownership for various commodities, so precious metals are no different. Buying and selling these is a means of buying and selling title of ownership which you can then use to get hold of the actual metal.

Futures contracts are something completely different. i have sold shares, commodities and bonds i did not have. When you go short this is what you do. You sell something in the hope of buying it back in the future at a lower price. The reason BTC and the like have been more difficult to 'manipulate' is it is more difficult to sell short. The precious metal markets can be managed b/c contracts for metal people do not have can be sold. This has to be possible and always has been possible. A farmer sells wheat futures in February for wheat he expects to harvest in September. A miner sells gold futures today for gold he expect to have mine next year. This is not the case with the title of ownership cryptos. If you don't have the crypto title of ownership coin you cannot sell it. Clearly if you are trading in a scammy coin then there will be problems but the same goes for anything. You could buy a fake gold sovereign. The main concern i have is if a government decided to steal the metal from private vaults. Security guards aren't going to fend off soldiers with M16's and tanks. There are always problems with security whether it is soldiers with guns or your local smack head who breaks in, kicks in the upstairs door and steals your silver coins out of a display cabinet. 

[HawkHybrid]

53 minutes ago, sixgun said:

If you don't have the crypto title of ownership coin you cannot sell it

I disagree. you can always short sell bitcoin that you

have yet to mine. market action is not reliant on the

underlying item/commodity being sold. ( I think of

it like betting, I can always bet on an outcome and

never have to own anything that is involved in the bet)

 

HH

[sixgun]

1 hour ago, HawkHybrid said:

I disagree. you can always short sell bitcoin that you have yet to mine.  

i said "The reason BTC and the like have been more difficult to 'manipulate' is it is more difficult to sell short."

i have effectively sold BTC short but not on the exchanges where you must have the BTC to sell, unless you are something like the Mount Gox bitcoin exchange which is thought to have sold BTC it didn't have. 

1 hour ago, HawkHybrid said:

Market action is not reliant on the underlying item/commodity being sold. ( I think of it like betting, I can always bet on an outcome and never have to own anything that is involved in the bet)

HH

This is derivatives trading.  Derivatives are not really a part of the BTC market [yet].

[HawkHybrid]

there's is no difference what the underlying commodity is.

there is nothing special about bitcoin or any other item

being sold. you can always naked short any market. it's

part of the market making mechanism. there are buyers,

there are sellers, there are speculators. being more difficult

to sell short is a bad thing. free market demand and supply

should always be used to determine the trading price. you

can't claim that market manipulation is a bad thing and

then make it more difficult to sell short bitcoin.

 

HH

[Murph]

Wouldn't selling bitcoin short  require someone to pay you without expecting payment in return immediately?  Who or how many people would be willing to do this unless they are going to get them at either a lower than market price or on credit?

[Murph]

1 hour ago, shortstack68 said:

You say “when the world goes to a cashless society” I haven’t heard of this happening. Where does this info come from or is it just a guess that it might or might not?

In the meantime i’ll Continue buying gold that I can physically hold ?

It certainly looks like we are heading in that direction.  An increasing amount of people don't carry cash with them all the time and rely on electronic payments.

 

[HawkHybrid]

43 minutes ago, Murph said:

Wouldn't selling bitcoin short  require someone to pay you without expecting payment in return immediately?  Who or how many people would be willing to do this unless they are going to get them at either a lower than market price or on credit?

 

it's not that unusual. eg.

I reserve a holiday at xmas. holiday company agrees to sell

it to me but I need pay a deposit upfront. I pay my deposit

and get a contract to settle later at a fixed price. holiday

company is by contract agreeing to sell a service to me by

the expiry date, let's say 25th dec in this example.

what has happened is I've paid money now for a contract.

service delivered by a fixed date. the holiday company is

short selling their holidays in advance. if the price increases

significantly between the time sold and the expiry date, then

they lose out.

 

HH

[sixgun]

1 hour ago, HawkHybrid said:

there's is no difference what the underlying commodity is. there is nothing special about bitcoin or any other item being sold. you can always naked short any market.

When i go short shares of stock i sell stock i do not have. The stock is borrowed from someone else (Fred) to sell and there is a buyer of the stock. There is stock sold and stock bought. Everything is in balance. I owe Fred the stock. My broker has contacted me a few times about lending stock for short selling. i would get interest on the stock i lent and those who sell stock short must pay interest. 

In the futures market things are different. We are dealing with a contract to buy and sell at a specific price on a specific date. When someone sells the futures contract they promise to deliver the underlying at a specific price on a specific future date. As this is a future date they do not have to have the underlying at the time they enter the contract. They can naked short the underlying. As the contract comes up to expiration and if they do not wish to deliver the underlying then they buy an identical futures contract to cover their position. They cancel their short position out with a long position. For every long position there is a short position.

There is no futures and options markets for BTC. The best you can do with actual BTC is to buy BTC on margin from say Coinbase and then sell. This is like borrowing BTC and selling it as you would with stock in a traditional brokers. This is why the BTC ETF was a big deal b/c there would have been stock options and potentially futures in this product. It would become possible and in fact easy to short BTC

If you cannot borrow whatever it is you want to short and there is no futures market available you are struggling to actually short the product. You have to be more inventive. You could go to a large investment bank and have them create a contract where they take the other side of the deal but this is virtual BTC, a product tracking BTC is created but not actual BTC. You could create your own futures contract by promising to deliver BTC at some future date at a specific price but you have to find a willing buyer, so these will be a variable feast. It is not like the 4,448 gold contracts dumped at 4.30am this morning most likely by the BIC. I suspect you would struggle to find someone to buy BTC from you, BTC you don't have with a promise to deliver at a future date and price. Outside a regulated market it would seem a bit dodgy which is why it is not happening [to any extent].

So as i say it is "The reason BTC and the like have been more difficult to 'manipulate' is it is more difficult to sell short."

If you disagree please say exactly how you would go short BTC.

 

[HawkHybrid]

40 minutes ago, sixgun said:

I suspect you would struggle to find someone to buy BTC from you, BTC you don't have with a promise to deliver at a future date and price.

 

not me personally selling a contract to deliver bitcoin

but what about someone/body of good standing in the

bitcoin community. can they sell bitcoin futures

contracts? if they can then why don't they? if they can't

that is saying a lot about the item being sold?

in a free market you can always go short. if you can't with

bitcoin then it's a rigged market. you can't sell because the

item is not worth it's market price and there won't be

enough buyers. I don't understand enough about bitcoin to

comment on how exactly to long or short bitcoin. I do

know that any market that doesn't allow freedom to buy,

sell or speculate is rigging the price.

 

HH

[sixgun]

There is no futures market for BTC. You would have to create your own one off contract with another party. Now that can be done but it would be a private contract so we will not know if it does happen or how often. 

BTC is not traded on any traditional exchanges. If someone created a BTC ETF then we could have a situation like SLV and silver where options and futures can be traded in SLV. You could short BTC through the ETF.

Buying and selling BTC is not disallowed but selling short is not the same as plain vanilla selling - you have to have something to sell, so to sell short you must borrow whatever you are selling first. Unless there is a mechanism where you can borrow BTC you cannot short it. 

[sovereignsteve]

1 hour ago, sixgun said:

If you disagree please say exactly how you would go short BTC.

 can't you trade BTC on some spreadbetting platforms now?

[HawkHybrid]

there's been recent bad press/emotions about shorting.

shorting is much needed in keeping a healthy market.

it's critics way of saying I believe the price will fall and

having never bought the item ever I'm willing to put my

money where my mouth is and bet to gain from a possible

price drop. if critics aren't allowed a say(and a way to

benefit from being right) then the market for bitcoin is

flawed, it's not a working market as traders recognise it.

it's then a biased/manipulated market.

 

HH

[sixgun]

31 minutes ago, sovereignsteve said:

 can't you trade BTC on some spreadbetting platforms now?

Yes IG does BTC spread betting and you can short 'BTC' with IG but you aren't really shorting BTC. On the face of it the spread betting companies take the spread between buying and selling prices and then lay the bet in the market but 90% of spread betters lose 90% of their money within 9 months, so they don't lay the bet in the markets. Some of the bets they lose but on average spread betters blow their accounts up and the spread betting companies pocket the lot. What happens on spread betting platforms has pretty much no connection with the real markets. Nothing is bought or sold in the real markets to affect price.

There was the incident when the Swiss Franc uncoupled from the Euro. The result was the Franc exploded upwards in price. The spread betting company Alpari went bust. It was blamed on 'client losses'. More betters will have been long the Swiss Franc and none of the bets will have been laid off in the market so Alpari got clobbered and went under. 

[sixgun]

6 hours ago, shortstack68 said:

You say “when the world goes to a cashless society” I haven’t heard of this happening. Where does this info come from or is it just a guess that it might or might not?

In the meantime i’ll Continue buying gold that I can physically hold ?

We are in a cash less society. Most of the cash is digital and not in physical form. India was a bit of a test bed when they suddenly declared the larger rupee notes no longer legal tender. The ECB is phasing out the 500€ note at the end of 2018. They claim these big notes facilitate crime. There are restrictions and hurdles to jump over on how much you can withdraw from banks and how much you can spend in cash. The mantra is that cash is used by criminals and terrorists so we need to get rid of it. The banks launder $billions. The front page of the Economist magazine from 1988 declared there would be a new currency by 2018.

A totally digital currency would benefit the banks and government. Everything can be taxed. The authorities can dip into accounts at will and turn off your account if you are naughty. Certainly the current round of fiat currencies are fit to collapse, so a problem, reaction solution of total economic collapse, extreme public distress and the solution in the form of a digital currency looks very possible.