Paper Money Killers are Coming
Background
Author Vince Lanci for the Soren K. Group
It is not about Bitcoin. It is about Blockchain. Bitcoin in its current form must fail. It is unscalable. It is limited by computing power. Computing power is limited by its "member voters' who are more interested in protecting their fiefdoms than expanding it. Is it a buy? Probably. Is it the end game? NO.
Do we hate Bitcoin here at SKG? YES. Are we jealous we do not own it? YES. Do we also know (not think) that the Bitcoin is itself nothing but an early adaptation of revolutionary tech? YES. Do we hope in our bitterness that Bitcoin fails like PALM did? OF COURSE! Can we be reasonable? We think so.
Picture Bitcoin and its competitors as exploiting new tech. Their "currency" is the front end of this tech. To buy bitcoins one must use USD or other FIAT currencies. Can Bitcoin itself be an exchange medium? That seems to be the trend. But we think it fails in that regard for many reasons. That is for another conversation.
Who cares if it succeeds? The point is, if Gold were the front end of Blockchain instead of Bitcoin, Ethereum, Beanie babies, or any other thing being used as a currency... wait for it: Gold can be instantly monetized at full value now. No more 50% haircuts in collateral. No more, "we have to check" delays. No more 3 days to clear your check, but 20 days to confirm your Gold.
No more second tier treatment. Tech unlocks the true value. And it is the nations with the most to gain that are leading the way. It is the nations that ironically have state-controlled banks. It is not the West. And it will not be the West until the giants get involved like Google, IBM, Amazon etc. Stay with us for more info on developments in the space.
From Golden Yuan
Then : Gold > USD > PetroDollar
- Create Gold Demand: 1944 we steer world towards gold for good reason (we have it, and Germany's lack of Gold was the cause for WW2)
- Inflate Debt: 1971 we have to monetize debt to pay for wars in vietnam and korea > go off gold standard
- Create USD Demand: 1974 cut Arab deal USD for Oil > we sell them military arms, they buy UST
Now: PetroDollar > Gold / PetroYuan
- Arabs have their own strong army, US not buying as much oil, China wants more Oil
- China wants to replace USD as world reserve, Arabs want to sell more oil (without shale competition)
- Arabs cut deal to sell oil to china in Yuan. Arabs will buy gold with Yuan
- Arab world increasing trust in China, Russia a product of implicit backing of currencies with Gold
- Arab world increasing mistrust of US intentions- ambivalent to US policies
All we are saying is pay attention to what is being done, not what is being said by these 3. They had a great teacher, the USA. From our previous piece, here is once again the pathway to the demise of the petrodollar.
Endgame- Arabs get to sell oil locally to China and Russia. avoid shale oil competition in U.S. This is underpinned by Yuan and Rubble implicit backing by Gold, increasing mistrust of US, especially since Saudi's don't need our weapons any more. [Edit- Sure they will buy them to keep appearances up, like in appeasing Trump]
The Far East is all grown up now. Lying is par for the course where it relates to keeping the world off balance while they move to dump more dollars.
Blockchain Makes Gold Golden
Blockchain is the first technology that permits P2P transactions. It is also known as "Distributed Ledger Technology". It solves the issue of credit, clearing, and segregation of customer accounts. The guy in India can someday use his tea farm as direct collateral for buying Oil in Russia. It replaces the middleman with a pipeline.
It is Biblical
B2B models begat B2P models which will Beget P2P models. Blockchain technology is the key to Gold (real estate, and anything else where you own but someone else holds title) achieving its true value in 2 important simple ways.
- Blockchain permits instant settlement of deals, which in turn makes "checking the Gold" not necessary. Gold use in deals will rise.- Bitcoin is electrons. Gold is Real. Both can be instantaneously verified now
- China, Russia, SA, and Sharia nations are using Blockchain to do deals with physical settlement, not paper.* - less available physical to grab onto in case of paper shorts needing to cover
*More on that also later as it pertains to market structure, regulatory and economic realities of "upstart" vs. incumbent competition.
Blockchain will kill the current fiat system. It is not owned by the banks and seeks to disintermediate them. They are looking for ways to become the center of this new hub, and will likely succeed as bankers are wont to do, long after western politics implodes from trade issues and a dead Petrodollar. Banks will continue to be involved in money. That is what they do. And to implement Blockchain as a pipeline to a new currency like Gold, you need global quantum computing. So perhaps the next unholy alliance will be JPMorgan Google with GoogleGold as the front end.
One thing is for certain: The market is simultaneously growing while existing barriers of entry are dropping. Marketshare is up for grabs as the market is expanding. That means Blockchain is here to kill paper money and facilitate a return to using things of real value as papers' replacement. Blockchain tech is the medium.
Enter Sharia law to enforce Gold as currency. This aligns Chinese, Russian, and Saudi interests even more.
Pic from GoldCore
For now, just keep connecting the dots please.
About the author: Vince Lanci has 27 years’ experience trading Commodity Derivatives. Retired from active trading in 2008, Vince now manages personal investments through his Echobay entity. He advises natural resource firms on market risk. Over the years, his expertise and testimony have been requested in energy, precious metals, and derivative fraud cases. Lanci is known for his passion in identifying unfairness in market structure and uneven playing fields. He is a frequent contributor to Zerohedge and Marketslant on such topics. Vince contributes to Bloomberg and Reuters finance articles as well. He continues to lead the Soren K. Group of writers on Marketslant.
-Soren K. Group
Why Sharia Gold and Bitcoin Point to a Change in Views
- New gold-backed currency OneGram launched
- Backed by one-gram of gold, uses blockchain technology
- OneGram is first in wave of new Shariah, tech-savvy gold products
- 2017 sees big changes for gold thanks to Shariah gold and blockchain
- Gold investors should prepare for tightening in supply
- Bitcoin and shariah gold demand suggest change in retail investor thinking
Technology, shariah gold and bitcoin point to changing views
Ramadan Kareem rang out across Dubai and the rest of the Muslim World this weekend as the holiest month in the Islamic calendar began. For 29-30 days over a billion Muslims around the world practice sawm (fasting), charity (zakat) and salat (prayer). This period is a time of spiritual reflection, increased devotion and worship as well as a time to come together with loved ones for both the break fast meal (Iftar) and pre-fast meal (Suhur).
Ramadan is obviously observed in different ways around the Muslim world. Here in Dubai a non-Muslim will experience a place full of both celebration and reflection, with events happening every evening that are there to welcome everybody. The month also sees a number of companies launching Ramadan promotions ranging from bank accounts (free banking for six months, anyone?) to spa treatments (2-for-1 massage?) to huge packs of dates (the first food to break the fast).
As part of the celebrations, a new gold-backed currency has been launched, here in Dubai. It is a new currency known as OneGram (OGC) backed by one gram of gold and can be used for digital payments. There is a fixed number of OGCs and digital transaction fees (minus admin costs) will be reinvested to buy more gold. According to the managers, “the amount of gold backing each OGC will increase with time.”
OneGram has been launched by a private company of the same name. The company claims to offer a proof-of-stake blockchain that is ‘’further anonymized’ than Bitcoin. Reports state that ‘developers employ zero-knowledge dual-key stealth addresses and ring signature protocols toward ‘instant, untraceable, unlinkable, trustless transactions.’
Shariah Gold Standard
In December we witnessed the launch of the Shariah Gold Standard. Announced in Bahrain by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council, the Standard is the first ever set of guidelines for the 2 billion Muslims looking to invest in gold-based financial products.
As we explained in December:
According to Islamic texts, gold is a ribawi item, which means that it must be sold on weight and measure, and cannot be traded for future value or for speculation. In order for a gold instrument to be Shariah-compliant, the precious metal must be the underlying asset in related transactions.
When the Shariah Gold Standard was launched, one of the world’s leading investors Mark Mobius labelled it as a “godsend” that was both “innovative and revolutionary”. Currently the Islamic Finance market accounts for 1% of the global GDP, and is growing at nearly 20% per year. The new AAOIFI issued guidelines are expected to propel demand for gold as more companies (such as GoldCore) launch Shariah-compliant gold investment products. The combined use of both innovative Shariah gold investment standards and new technology could boost demand by around 500-1000 tonnes per annum.
The launch of OneGram is part of the new wave of gold financial products that we are beginning to see as a result of the Shariah Gold Standard. Muslims have long looked for more gold products to be made available to them in the $2 trillion Islamic financial markets.
A gold-backed cryptocurrency is not just a positive sign for Muslim investors, it is also a positive sign for those who are looking to invest outside of the financial system. Of course, investing in physical gold has long been available for both Muslims and non-Muslims for many years, but this recent announcement says a lot more about the demands for safe-haven investing than previous changes in financial markets have.
A new safe-money standard?
Right now it seems the world is paying attention to a financial and geopolitical situation that is proving to have one too many cracks to fix and fill. But, in the background, there is a growing awareness of how we can protect ourselves when those cracks turn into canyons.
There is something in the air that suggests we might be seeing a turn in the way savers and investors are beginning to view their money. The launch of technologically advanced, shariah compliant gold-products is an early indication of this. But when one also considers the recent performance of bitcoin, then we see that the desire to hold money outside of the financial system with reduced counterparties is growing.
The size of the bitcoin market might be minuscule compared to gold, and gold’s market size minuscule compared to that of the dollar, but times are changing. The increased accessibility to these sound-money, safe-haven assets is a sign that the most powerful financial group in the world – the people on the street – are harnessing ways to gain control of their investment portfolios.
Ultimately we believe bitcoin is a complementary asset to gold, but time will tell. Whilst watching and waiting on bitcoin, gold investors should feel assured that launches of gold-backed products such as OneGram are not only validation of the modern approach to investing in gold, but also validation of their decision to invest in gold.
This is good news for gold investors who have chosen to invest in not only the ultimate form of financial insurance but also one that is finite and physical. As awareness and demand grow, it is not unreasonable to expect to see some tightening in the availability of physical gold, which will have a positive impact on the price.
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