You Call That A Crash?: TDV Week in Review December 8th, 2013
What Kind Of Crash Do You Call That?
Bitcoin “crashed” over the last couple of days. Now it’s worth a mere 200 times what it was a few months ago. That hasn’t stopped the LA Times from strutting around and thumping its chest in triumph at how right they were to mock anyone thinking hoarding bitcoins was a good idea…
People who thought that bitcoins could serve as either an investment vehicle or an alternative world currency got their heads handed to them on Thursday and Friday. That’s when the price of the attention-grabbing crypto-currency got crushed, falling from a quoted $1,200 per “coin” to less than $600. At this writing, it’s quoted on the Mt. Gox exchange at about $830.
The whipsaw validates what we wrote about bitcoins just two weeks ago: they’re useful as a medium of transfer, but even then you have to be nimble. If you were a Greek or a Spaniard using bitcoins to move money out of your home country without having to worry too much about your local foreign exchange or banking rules, and you figured on Thursday that you could get around to transferring your asset back out of bitcoins and into dollars or sterling–whoops! You lost half your stake in a matter of hours. The minimum time required to complete a trade in bitcoins is ten minutes; that’s about how long you should hold them to keep exchange rate risk low.
And if you were taken in by all the talk about bitcoins replacing gold as a storehouse of value, well, now you’ve been taken down. Much of that talk was generated by the peak quote of bitcoins last week at $1,200, which was sometimes described as equivalent to or even higher than the price of gold. That’s an absurd statement, of course: $1,200 bought you an ounce of gold bullion, but on the bitcoin market it only bought you a putative claim on the outcome of a mathematical algorithm.
Your editor has returned to the wintry wilds of central Minnesota, the adorable city of Minneapolis to be exact, where he is exposed to all sorts of cockamamy ideas and balderdash. Just tonight, for example, as I drove over the snow that the Minneapolitan government seems to resent removing from their violently monopolized streets, I pulled up behind a car at a stoplight with an “I Love Obamacare” bumper sticker.
But this little diatribe against Bitcoin…indeed, any continued bashing of the pioneering little would-be decentralized, digital currency-that-could, is looking sadder and shabbier with each “crash”. These people are laughing as the fledgling medium of exchange stumbles back thousand feet after charging most of the way up Kilimanjaro. $1200 down to $600 and bouncing back to around $800…? A bitcoin was only a couple of bucks a couple of years ago!
(And while we still love gold and silver, we note that they’ve done their own share of backsliding, even if it’s been in much slower motion…down about 40% or so off their highs in recent years…which means that it may be prime time to see about how TDV’s precious metals investment strategies could benefit you, both as longer-term investments and shorter-term trades.)
Ah, why do I let myself get upset? There are, after all, those who still wear Che Guevara t-shirts and pretend that the mega-murderous political philosophies like Marxism are respectable. I imagine that Bitcoin will hit $1 million, like a certain prominent anarcho-capitalist has recently and very publicly stated…
… and stay there forever, with “swings” in the $10,000 range…and the doggedly devoted detractors will still be saying that it is an unsustainable bubble, a joke of a currency, a Ponzi scheme, Dutch tulip bulb/South Sea II…!
I don’t pretend to know where Bitcoin is going. To plagiarize somebody white and dead, we can’t guarantee success, but we can deserve it.
Now, just so we’re clear here, I’m not saying to buy 10 bitcoins now. You should have bought 100 back when that was a night’s drinking money. Right now, I would toss no more than a few hundred dollars or so per month that way. I am enthusiastic, but I’m not financially suicidal.
If you are stuck in the USSA, then Bitcoin represents a risk on one side tied to a great, big, shiny beacon of hope in both freedom and financial survival on the other. That’s why in TDV Homegrown I’ve been sharing a few surefire tips on how to double, triple or quadruple the amount of disposable Federal Reserve notes you have lying around to shovel into this potentially life-altering opportunity.
You fellow inmates yearning to be freer and much richer, learn more about signing up here. Make financial hay while the sun shines! I just checked Bitcoin prices again and damn it if they aren’t creeping back up faster than I’d like. Don’t delay. See how you can maximize your income here in the US so you have a few shekels you can park in Bitcoin and never think about again. Between Homegrown and Bitcoin, you may be a worry-free rockstar yet.
Regards,
Gary Gibson
Editor, The Dollar Vigilante
Before we get to the review let’s have a look at what you missed in this week’s TDV Dispatch.
First this week, in my “Memory Hole”, I discussed the hypocrisy of leftist publications decrying the unpaid internship.
Jeff Berwick checked in from St. Kitts, where he’s working on some very interesting initiatives, to discuss Bitcoin and China in “Vigilante’s View”.
Ed Bugos followed with his “TDV Portfolio: Review & Outlook”, and his feelings about Bitcoins.
Jayant Bhandari joined us with a look at the Hong Kong Stock Exchange.
Next, Jeff took us around the world of the absurd in his weekly “Other News from TEOTMSAWKI and TDV Related Tidbits”.
Finally, we profiled Paco Ahlgren.
If you’re interested in receiving articles like these, consider our weekly subscriber-only publications, like our Issue, Dispatches, and Homegrown. You may subscribe here.
Here’s what we wrote about this week…
MONDAY, December 2
Crony Capitalism Drives Airport Security
Wendy McElroy on the TSA’s latest crime against freedom.
“A major change is occurring in one aspect of airport security. The change? The TSA will no longer be monitoring exit lanes at one-third of American airports; the TSA withdrawal is likely to extend to all airports over time. Exit lanes are the means by which passengers who have completed their travel leave the airport terminal. TSA agents had been policing the lanes to prevent passengers from walking the ‘wrong’ way and re-entering the terminal. Now that task is left to airport security because, as TSA deputy administrator John Halinski explains, ”We firmly believe that exit-lane monitoring is not a screening function, but rather an issue of access control.” Apparently, Halinski believes the ‘S’ in TSA stands for ‘Screening’ because ‘Security’ definitely includes access control.”
TUESDAY, December 3
TDV Latin America (TDVLA) Editor, Adil Elias, with our first article published totally bilingually in English & Spanish versions.
“To fully understand how societies operate, one must go back to where everything started, to the very beginning, from the days when people left the caves and started to come together to form small tribes.
In order to survive, people started gathering for food, then sharing it, and trading it between themselves (natural human interaction), people were minding their own business living their own lives, taking care of their young, as it is normal in any species. But there was always someone who wanted to control them all, whom we call a sociopath in these days, but that’s a subject for another day. In this article we will talk about their historical antagonists.”
WEDNESDAY, December 4
The continuing tale of Michael Fielding’s journey.
“We arrived after a beautiful sunset on November 11th following a few days of heavy winds, high seas, and cloudy skies as we crossed the Gulf Stream. I only mention the clouds because we drained our batteries and couldn’t start my engine for the approach. But Sovereignty’s a sailboat and we were ready to go ashore, so we sailed in from the South along the main ship channel. Another captain called it the “washing machine”, and I can’t think of a better description. We were getting beat up by the wind and waves, fighting to stay in the channel and praying we could make our way to anchor without the motor. Even worse, there was barely any charge left on our only working laptop/chartplotter, so I was doing my best to navigate based on memory from the one night I spent here in July of 2012.”
THURSDAY, December 5
Jayant Bhandari on the HSX.
“I have devoted the last 8 years analyzing companies in the junior resource sector. I still make horrendous mistakes. I forget to appreciate and account for crucial information that I realize later—when I have lost money—was glaring at me. This does not only happen when there is a lack of information or when I am misled. Sometimes I miss crucial information because I either pigeonhole myself in a restrictive thinking-pattern or emotionally align myself in ways that hinder me from seeing the obvious. And it is very easy to fall for the hype in the market and pay attention to only one aspect, in a linear thinking pattern. Moreover, staying rational can be very hard when the trend of the market is such that time-consuming rational analysis might become your undoing.”
FRIDAY, December 6
Did the Chinese Government Just Admit Bitcoin Poses a Risk?
Jeff Berwick China’s reaction to Bitcoin.
“Overnight Wednesday-Thursday in North America the bitcoin price dropped as the People’s Bank of China announced banks cannot offer bitcoin services and btcchina.com , leading bitcoin exchange, went down.
Overall, the announcement was akin to the announcements by FinTrac and FinCen out of Canada and the US, respectively. Essentially, advising bitcoin exchanges to know their customers, the People’s Bank of China moved to protect the yuan and assure state banks did not get involved in bitcoin because it could possibly, in the future, pose a risk to the financial system.
The announcement follows a near 90-fold increase in the virtual currency’s value since it was created in 2009. Bitcoin dipped to the $800 range after the announcement, but climbed back above $1,000. After having appreciated in price from $125 to more than $1,200 in the matter of the past few months, the crash that everyone has been waiting for is underway with Bitcoin prices dipping to under $650 and currently around $750. ”
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Thanks as always for reading or subscribing!
Managing Editor
Source: http://www.dollarvigilante.com/blog/2013/12/8/you-call-that-a-crash-tdv-week-in-review-december-8th-2013.html#6134
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