The r0ach report vol 5: If there's any plausible conspiracy involving silver and bitcoin, this is it

in #money4 years ago (edited)

If anyone is familiar with the metals market, you had a few characters showing up years ago named "FOA/FOFOA". This person claimed to be some type of insider in the banks/monetary regime and said the only way out of the collapse of the dollar and debt implosion, without going through a mad max scenario, was to revalue gold and let it free float with the value of every nation's currency being a derivative of how much tonnage of gold they own. Hence the term "freegold".


I've always thought the FOA idea of revaluing gold at $55,000 was kind of absurd since India and the Arabs have so much of it. The west would just be transferring power to 3rd world nations. It makes zero sense. However, since nobody has big stockpiles of silver (or maybe they do), they could utilize silver in a currency in some manner without making 3rd world nations rulers of the world.

It's been known for a while that JP Morgan is typically the biggest or one of the biggest players in the silver market (usually trying to crash the price on purpose). However, they seem to have been acquiring large amounts of silver at these artificially low prices in which they've rigged the markets as discussed here a few days ago:

Some believe they only acquired this giant silver horde in order to dump it to try and suppress price to prop up the value of the dollar should silver go on a bull run. The other possibility is much more interesting , that JP Morgan is acting as an agent on behalf of the US government to acquire silver. Banks like this usually suppress price on behalf of the government/fed, so why not acquire as well? China has also been acquiring high amounts of the stuff lately:


It's similar to a gold confiscation in practice where they artificially rig the market price low and try to force everyone to sell, only to then revalue later. Works out the same as the 1933 gold confiscation in the end result. All the FOA stuff came out before the era of Bitcoin, so it's also possible DARPA and the NSA released Bitcoin in an effort to try and accomplish the same goal - creating a backbone currency that doesn't make India and random Arab nations kings of the world (unlike gold).

So there you have it, one way or another, gold, silver, bitcoin, or all of the above will likely be playing a large role in your future. The gold domination model of FOA really has a lot of holes in it as can be seen from what I talked about above. Unless the bankers can manage to steal all the Indian and Arab gold, it would be kinda stupid to pull off since you're just transferring your power to them. FOA also claimed silver would crash to $0.50 and it instead went from $5 to $50, so the guy is no Nostradamus even if he is some type of banking insider.

There's lots of other holes such as if you think you can instantly revalue gold to $55,000 and not send the price of silver to the moon. It would be completely impossible. All traders would instantly dump their gold for silver at that point knowing the upside on gold is generally gone while silver still has tons. So the price on both seems like it will correlate no matter which one you tamper with.

If you just let the free market play out on it's own accord, gold, silver, and bitcoin would all rise, with silver and bitcoin having similar upside potential - much higher than that of gold. The more multi-polar the world becomes instead of a US hegemony, the more likely you are to see bimetallism with silver playing a large role as well. And that's the way the world appears to be right now with the Wolfowitz doctrine completely failing and groups like China and Russia playing bigger roles.

So, having said all that, it makes sense to own a little bit of all three just in case, but I would favor a more silver heavy allocation since silver and Bitcoin has similar upside.

This is the type of allocation I would consider for myself, but I'm not a retiree or anything and this is mostly trying to maximize upside potential for traders/younger people in monetary reset:

  • 60% silver, 20% gold, 20% bitcoin
  • 50% silver 25% gold 25% bitcoin.
  • 50% silver 30% gold 20% bitcoin

I like to look at ratios between assets using buy:sell charts. The first chart presents 5 years of data if one had bought Gold (as represented by the exchange traded fund - GLD) and sold Silver (as represented by the exchange traded fund - SLV). As both of these are priced in US Dollars there is no currency impact.

This chart shows that Gold was outperforming Silver until early 2016 and then it turned over and Silver was starting to outperform. It is not clear from the chart what is going on right now. That consolidation can break either way.

Now the next comparison goes to the conspiracy angle. Would one have been better off or worse off buying Gold and selling US Dollars (here represented by the Exchange Traded Fund - UUP which tracks the US Dollar)

In the same time frame one would have been better off buying US Dollars. There was a turnaround in late 2015, which interestingly was the first time in 9 years that the Federal Reserve raised interest rates. That turnaround ran only to a little after mid-year.

Now the charts only look backwards and they only go back 5 years. To look forwards, I would be looking for these charts to show clear turnovers before I start to shift major parts of my portfolio. I do have small parts invested in Gold and in Platinum and in Bitcoin. The Silver chart looks interesting and I will explore that a little further. What I like about Silver (and Platinum) is that it has more industrial uses (than Gold) which will grow when the world economy grows

Upvoted followed and resteemed!!!

"which will grow when the world economy grows"

It looks like to me that peak CONVENTIONAL crude oil occurred in 2004, while working age labor demographic has also peaked in all nations that matter, so growth seems over to me. This is also one reason the whole debt based system is collapsing. It needs infinite growth to not implode when the interest due is always greater than the principal, making deflation or even equilibrium a death sentence.

The only area with any real working age demographic growth is Africa, but they already can't feed themselves, so it's unsustainable r-selection growth that will just end in famine and plague.

Platinum to me, I want to like it, but it's difficult. For one thing, they're phasing out platinum in things like hydrogen fuel cells. Then when the whole debt based system goes bust, several of these enormous car manufacturers will probably go bankrupt and have thousands of vehicles sitting in lots to dispose of where they'll dump the catalyst platinum en masse.

For the near term over the next five years, I think gold and silver will probably perform better as monetary metals and defy the usual platinum relationships in charts even though platinum cost of production dwarfs both. That is, unless there's a large war and then platinum would probably be high in demand, but govt wouldn't allow you to trade it.

I'm mostly focused on betting against the US debt, profiting from monetary reset, US debt default, etc. I consider 1971 as a US debt default, so it's not an uncommon occurrence. I just don't really see platinum playing a huge role in all that and think the lottery tickets are silver, gold, and bitcoin.

If you're sitting on like $100,000+ in liquid money, by all means buy like an ounce or two of the stuff just for the hell of it since the price for it is good right now, and in case some random fool pumps it like palladium did, but otherwise I don't expect a new Bretton Woods for platinum.

No mention of Bitcoin's utility in allowing easy movement or storage of money across borders or storing wealth digitally in the ether - in a world where capital controls or extreme changes in crime rates occur for eg. Robbery/break and enter, assault or corruption that will continue to grow with economic decline.

Mobility of the SOV in question during this period may perhaps give bitcoin better gains and use. Fuck trying to flee your country and taking your wealth with you in a hurry when you have bags full of bullion.

The chinese show us that rich people are concerned about more than wealth preservation, but also lifetyle (moving overseas) or convenience (trezor).

Gold is highest tier 1 asset but BTC has more uses for a similar asset class.

Bitcoin is not even close to a sure thing in comparison to metals so it's very hard to recommend a higher BTC allocation than gold or silver. You have issues to deal with like the rough consensus attack and the legal system outlawing it and thus crippling it's usage and market cap.

Then the fact that you need around 50 TPS (8 MB blocks) + Schnorr signatures for BTC to be a viable global currency, and then I think the current estimate is going from 1 MB blocks to 8 MB blocks just to quantum computing proof the chain, thus making Bitcoin require HUGE blocks with the base 8 MB block size + the additional Shors/Grover's algorithm protection overhead on top of that. Or it could stay at 1 MB blocks and turn into something like the SWIFT network, who knows.

I'm not really sold on the Lightning Network, but it might have some use to alleviate some of these throughput issues. And maybe the quantum computing brute force attacks might not be an issue, but maybe they will. Too many variables still up in the air to pretend that Bitcoin is equal to metals if you're betting your savings on it and wish to avoid fiat dollars.

Bitcoin is still a speculative gamble at this point while I consider throughout all of history, paper currency is a derivative of metals and not vice versa. No matter what Bitcoin does, metals will always be at the base of Exter's pyramid with Bitcoin above them. This means I don't think it's really possible for Bitcoin to beat metals in market cap, and if Bitcoin did, you would be living in an irrational market which would then collapse.

I don't consider metals a gamble or an investment. I consider paper currency a receipt for metals just like they've always been.

I'm not going 50% anything but after reading this I did buy some silver to add to my holdings. We'll see how it goes.

Silver and gold seem to behave a lot like bitcoin chart wise, but the moves take decades instead of years to play out.

For me, I consider debt based currency just a flat out scam, and I refuse to willingly be scammed on purpose, so dumping federal reserve notes for stuff like this is really the only option. The fact that it has enormous upside while FRNs don't just makes it that much easier.

The American silver eagle has the best liquidity so it's hard to recommend anything else, especially if you live in the US, but it's definitely worth getting at least one large bar just to look at:

I like JM Bullion for buying because they accept Bitcoin and you get a discount for ordering in Bitcoin.

Investment-wise, all you really need to worry about is cost of production in the grand scheme of things. The best gold miners to my knowledge (which are few and far between) can get it out of the ground at around $900 an ounce, while others are pushing more around $1200-1250, so gold is probably around cost of production on average already.

If any type of huge metals revaluation did occur by the government, it's likely ALL metals in the ground would instantly be nationalized rendering all mining stocks virtually worthless. Either that or they would let them keep mining but tax them at 90%.

Since a lot of this mining requires diesel powered engines and we seem to have hit peak conventional crude oil in 2004, we are probably well past the point of peak gold and silver in terms of ability to take it out of the ground, and what's in the ground for us to access in the first place.

As for silver cost of production, SRSROCCO did a long post on that the other day and it seems silver is around cost of production too:

I'm buying bars because minimizing premium avoids me needing to understand the premium market. However, I do think it might make sense to add some coins for liquidity and easier divisibility especially if the price were to increase a lot. Thank you for the recommendation on silver eagles.