Are Cryptocurrencies Digital Gold?
Gold last traded at $1,328 an ounce. Silver at $17.00 an ounce.
NEWS SUMMARY: Precious metal prices hovered near 4-month highs Wednesday on a flat dollar. U.S. stocks rebounded on better-than-expected major bank earnings.
Bitcoin Sinks 50%, Below $10,000 -Bloomberg
"Bitcoin tumbled below $10,000, bringing its loss to almost 50 percent from a record set only a month ago, as increased scrutiny from regulators around the world weighs on the digital-coin craze. The largest cryptocurrency dropped 10 percent to $9,610.05 as of 9:33 a.m. in New York, its first foray below $10,000 since Dec. 1, according to consolidated pricing data collated by Bloomberg. It has fallen from a record $19,511 reached Dec. 18, and seen more than $140 billion shaved off its market value. The selloff this week brings more trauma to a digital-coin market that has lost more than $300 billion in value just since Jan. 13. After a dizzying rally pushed Bitcoin higher by 1,400 percent last year, the latest plunge cast doubt on the viability of cryptocurrencies and the blockchain technology that underpins it. The most recent signs of a regulatory clampdown have come out of Asia, a hotbed of bitcoin trading. In South Korea, regulators warned they may shut down cryptocurrency exchanges, while China is said to have intensified its curbs on trading of the digital coins. In the U.S., the Securities and Exchange Commission asked at least 15 funds to pull applications this month for bitcoin-related exchange-traded funds."
Get the facts about the cryptocurrency craze in our free 2018 Real Money Perspectives newsletter, The Future of Money.
Why cryptocurrencies cannot be digital gold -Forster/Financial Times
"I struggle to understand why so many are still cheerleading for crypto, especially the technorati. The entire edifice is so evidently internet bubble 2.0, plus a huge concomitant energy-hogging environmental impact. Digital 'assets' that can't be censored or counterfeited may be a technical marvel, but are not fit for purpose as currencies and none of it is scalable. Cryptos' underpinnings are worse than those of the dotcom era, as billions of people were already getting value from the internet at the time of that bubble. Crypto is not 'digital gold', justifying market capitalizations equivalent to the world's gold holdings. Gold and other precious metals have no substitutes - there is only one periodic table. While there may be scarcity of any given cryptocurrency, there is an infinite number of possible cryptocurrencies and so no sustainable scarcity value. Millions will be burnt financially when the bubble bursts. Everyone needs to be educated about this Ponzi-like madness."
2018: The Year of Living Dangerously -Rickards/Daily Reckoning
"I'm calling 2018 'The Year of Living Dangerously.' That description might seem odd to lot of observers. Major U.S. stock indexes keep hitting new all-time highs. 2017 went down as the first calendar year in which the Dow Jones industrial average was up for all 12 months....To understand why 2018 may unfold catastrophically, we can begin with a simple metaphor. Imagine a magnificent mansion built with the finest materials and craftsmanship and furnished with the most expensive couches and carpets and decorated with fine art. Now imagine this mansion is built on quicksand. It will have a brief shining moment and then sink slowly before finally collapsing under its own weight....What happens when you print $8.3 trillion in money and only get $2.1 trillion of growth? What happened to the extra $6.2 trillion of printed money? The answer is that it went into assets. Stocks, bonds, emerging-market debt and real estate have all been pumped up by central bank money printing....'Inflation' is not in consumer prices; it's in asset prices....Student loan debt is over $1.4 trillion, and default rates are over 20%....The tax bill will add $2 trillion or more to the deficit, something the U.S. can ill afford....A catastrophic wave of emerging-market defaults is coming....A war is coming between the U.S. and North Korea, probably by this summer."
China Downgrades US Credit Rating From A- To BBB+ -Zero Hedge
"Chinese credit rating agency Dagong downgraded US sovereign ratings from A- to BBB+ overnight, citing 'deficiencies in US political ecology' and tax cuts that 'directly reduce the federal government's sources of debt repayment' weakening the base of the government's debt repayment....'Deficiencies in the current U.S. political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track,' Dagong said adding that 'Massive tax cuts directly reduce the federal government's sources of debt repayment, therefore further weaken the base of government's debt repayment.'....'The virtual solvency of the federal government would be likely to become the detonator of the next financial crisis,' the Chinese ratings firm said....'The market's reversing recognition of the value of U.S. Treasury bonds and U.S. dollar will be a powerful force in destroying the fragile debt chain of the federal government,' Dagong said."
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