Chart: Which countries are falling behind in gold mine production
India tops the global ranking with demand nearly 50 times that of its mined supply.
Gold is going to decline 90% to 95% because bitcoin just has more advantages argues blogger Oleg Andreev.
Demand for gold will only come from industrial uses. It will cease to be a store of value or a currency alternative.
Bitcoin’s chief advantage: it is levelling the playing field by making an alt-currency that is far more democratic than gold.
Bitcoin is asymmetrical. It’s much cheaper to personally own it and keep safe, than it is for someone to come and confiscate it (regardless of the amount you have).
Libertarians who advocate return to the gold standard do not realise that the gold standard was the reason of accumulation of gold in few of the world’s biggest banks and everyone else getting worthless IOUs positioned as “sovereign currencies”. Gold is heavy and expensive to handle: only the wealthiest can afford to save a lot of it. And equally to take it by force from less powerful.
Bitcoin has had a tremdous run up, but Andreev says that misses the point.
Think of it like the internet: “The web gives us freedom to exchange information. Bitcoin gives us freedom to exchange everything.”
Creative Commons image from The U.S. National Archives
10 Comments
bill
Bitcoin runs on a network if the network goes down so does bitcoin…. solar storm comes along and takes out the network…. I think I would rather own gold at that time lol
Anthony Maw
What’s this author smoking anyways? I will believe it when I see the Chinese and Indians start hoarding BitCoins instead of gold. Besides, you can’t wear BitCoins.
Matt
Blog….signed by guy at top of Bitcoin pyramid….or so he hopes. I expect that when the phoniest bubble since mining men tried to become geeks, bursts it will be swift and serious. 😀
idigmines
An electro-magnetic pulse cannot not make Gold bullion disappear, Bitcoins are vulnerable to almost all cyber-threats. Gold will persist because it is a real asset not a virtual one. A Bitcoin is nothing more than a one-dimensional, one-directional string of ones and zeros stored in a very fragile computer memory register.
The Flash Trading fiascos on some of the big stock and commodity exchanges should give us some idea of the vulnerability of virtual assets. Bitcoin is not that revolutionary. Virtual assets like derivative contracts, option contracts, and other promises stored and transacted in a virtual environment have been around for some time and have been subject to catastrophic computer and network crashes.
Doesn’t mean Bitcoins aren’t cool. But, they do not serve the same purpose as gold to against catatrophy. They will co-exist as investments thatvservevdifferent purposes.
LAMB
Finally, the comments from the people in this column are starting to make sense – the bottom line? BIT COINS ARE NOT OF LASTING VALUE. I’ve been saying this all along – but some people seem to think this IMAGINARY CURRENCY is real. Last week over 5 days, the value of BITCOINS went from $250 , then 500, then 750 finally to $900 (in REAL money). And WHO determined this? was it Oleg Andreev, who seems to be in a position to make lots of REAL DOLLARS from this escapade?
NOTE: the value ALWAYS refers to ‘real dollars’.
His arguments are really slanted towards putting pressure on Gold Users to turn them away from GOLD – GOLD has NEVER gone down over the past several decades, starting in 1969 when it went to $35/ounce and has not stopped rising. Sure, it has had set-backs, but always pushing forward, ALONG WITH THE PRICE OF CRUDE OIL.
idigmines
The Iranians probably take Bitcoins for oil because they can circumvent sanctions by making anonymous transactions (until the govt steps in and starts tracking them). I wonder if the other oil producing countries that are not as desparate as Iran trust Bitcoins enough to give up their oil for them?
A Bitcoin is just a computer file and we all know what happens to old computer files – they disappear.
ageron
If you’re afraid to lose data on your computer, just print your private key and store that in a vault.
idigmines
How will Bitcoins be effected when the inevitable happens – the government steps in and starts tracking Bitcoins?
You don’t really believe that the govt is going to ignore Bitcoin, a perfect vehicle for money laundering, tax evasion, fraud, and all transactions illegal for very much longer do you?
Better sell those $700 Bitcoins and buy some long lasting precious metals before it is too late.
I wonder how many Bitcoins Mitt Romney has hidden in his corporate computer networks. Ooops, the backup generators failed.
ageron
Well taxes don’t stop gold, why would it stop bitcoins? When the Silk Road was shutdown, people predicted that it would crash Bitcoins, but it actually had the reverse effect: people see it as a useful Internet currency, usable for good stuff, not something that the governments will try to shutdown. The way things are going, governments seem to want to cash in (request taxes) not shut down (Germany has officially accepted Bitcoins, and require taxes, and the U.S. are heading in the same direction).
And your argument that computers are not a safe storage for money is not valid since most money on earth exists only as (computer) database entries in banks.
Rod
I would just like to say: ” A fool and his money are soon separated”. Let the fools own bit coin…I’ll take the gold!