RE: “Bitcoin has the glitter but it is not gold” (The New Times, December 5). The Bitcoin bubble – like all the bubbles in all the other asset classes (gold, other commodities, etc) – is probably more the product of the debasement of all major fiat currencies than the fundamentals of its innate value. People are desperate to move out of the US dollar, the euro and all other major currencies before they all collapse from years of quantitative easing and real negative interest rates that has made the real value of all these currencies look like Idi Amin’s toilet paper.
The Big Currency Collapse is coming; it is not a question of whether it will, but of WHEN. Because there is no alternative currency among the major ones to flee to, people are fleeing to anything else available, in the process bidding their prices up well beyond their own intrinsic values.
And so the paradox that, in seeking to escape obvious bubbles in financial markets, they are creating new bubbles in these cryptocurrencies to levels of other famous bubble The South Sea Bubble, The Dutch Tulip Bubble, the Dot.com Bubble, the Japanese Real Estate and Stock Market Bubble, the US Housing Bubble, etc.).
It seems as if those in charge of global finances cannot resolve bubble crises without creating a new one.
But bottom line: I hope those who have custody of our very modest reserves are properly diversified out of the US dollar, the euro, the Japanese yen, and all the other major global financial assets into things that are more tangible. And even high-net worth individuals, don’t keep too much money in Western banks, the age of banking collapses and Bail-Ins, when the deposits in your savings account can be converted without your agreement to shares in your bankrupt bank to ‘save’ it is nigh. Diversify into tangible assets.
Cryptocurrencies are just a new bubble. And getting the real gold bullion is virtually impossible. The only way you can ordinarily trade gold in Western financial markets is trading papers on gold rights not the real physical material whose control will never be ceded to you.
Restricting gold trading to paper rights means the price can be easily manipulated. It also means that you may never ever get possession of your gold.
Welcome to the new dystopian world of global finance!