Is Bitcoin Standing in for Gold?

We have known early on that the prices of gold and silver are manipulated by the bullion banks acting as agents for the Federal Reserve. This is the only thing which keeps the fiat dollar in circulation. But with the availability of cryptocurrencies, the rigging may not last for long.

By Dr. Paul Craig Roberts and Dave Kranzler

The bullion prices are manipulated down in order to protect the value of the US dollar from the extraordinary increase in supply resulting from the Federal Reserve’s quantitative easing (QE) and low interest rate policies.

The Federal Reserve is able to protect the dollar’s exchange value vis-a-via the other reserve currencies—yen, euro, and UK pound—by having those central banks also create money in profusion with QE policies of their own.

The impact of fiat money creation on bullion, however, must be controlled by price suppression. It is possible to suppress the prices of gold and silver, because bullion prices are established not in physical markets but in futures markets in which short-selling does not have to be covered and in which contracts are settled in cash, not in bullion.

Since gold and silver shorts can be naked, future contracts in gold and silver can be printed in profusion, just as the Federal Reserve prints fiat currency in profusion, and dumped into the futures market. In other words, as the bullion futures market is a paper market, it is possible to create enormous quantities of paper gold that can suddenly be dumped in order to drive down prices. Everytime gold starts to move up, enormous quantities of future contracts are suddenly dumped, and the gold price is driven down. The same for silver.

Rigging the bullion price prevents gold and silver from transmitting to the currency market the devaluation of the dollar that the Federal Reserve’s money creation is causing. It is the ability to rig the bullion price that protects the dollar’s value from being destroyed by the Federal Reserve’s printing press.

Recently, the price of a Bitcoin has skyrocketed, rising in a few weeks from $1,000 to $2,200. Two explanations suggest themselves. One is that the Federal Reserve has decided to rid itself of a competing currency and is driving up the price with purchases while accumulating a large position, which then will be suddenly dumped in order to crash the market and scare away potential users from Bitcoins. Remember, the Fed can create all the money it wishes and, thereby, doesn’t have to worry about losses.

Another explanation is that people concerned about the fiat currencies but frustrated in their attempts to take refuge in bullion have recognized that the supply of Bitcoin is fixed and Bitcoin futures must be covered. It is strictly impossible for any central bank to increase the supply of Bitcoins. Thus Bitcoin is standing in for the suppressed function of gold and silver.

The problem with cryptocurrencies is that whereas Bitcoin cannot increase in supply, other cryptocurrencies can be created. In order to be trusted, each cryptocurrency would have to have a limited supply. However, an endless number of cryptocurrencies could be created that would greatly increase the supply of cryptocurrencies. If entrepreneurs don’t bring about this result, the Federal Reserve itself could organize it.

Therefore, cryptocurrency might be only a temporary refuge from fiat money creation. This would leave gold and silver, whose supply can only gradually be increased via mining, as the only refuge from wealth-destroying fiat money creation.

For as long as the Federal Reserve can protect the dollar by bullion price suppression and money creation by other reserve currency central banks, and as long as the Federal Reserve can keep the influx of new dollars out of the general economy, the Federal Reserve’s policy adds to the wealth of those who are already rich. This is because instead of driving up consumer prices, thus threatening the US dollar’s exchange value with a rising rate of inflation, the Fed’s largess has flowed into the prices of financial assets, such as stocks and bonds. Bond prices are high, because the Fed forced up the price by purchasing bonds. Stock prices are high, because the abundance of money bid prices higher than profits justify. As the US government measures inflation in ways designed to understate it, the consumer price index and producer price index do not send alarm systems into the markets.

Thus, we have a situation in which the Fed’s policy has done nothing for the American population, but has driven up the values of the financial portofilios of the rich. This is the explanation why the rich are becoming more rich while the rest of America becomes poorer.

The Fed has rigged the system for the rich, and the whores in the financial media and among the neoliberal economists have covered it up.

Copyright © Dr. Paul Craig Roberts and Dave Kranzler, Paul Craig Roberts, 2017

Before investing in cryptocurrencies, be aware that it’s not completely foolproof, or unhackable, and the government can still sequester it if it deems necessary.

It’s only advantage right now is that it is without a central authority. But just like any other system, the robber barons will always try to find ways to control it.

However, in the case with gold and silver, they have to raze the country to the ground first before they can haul them out from the treasury.

In short, there’s a need to neutralize all the remaining robber barons first before everything will function as they should be.

10 thoughts on “Is Bitcoin Standing in for Gold?”

    1. Not quite ’nuff’… holding precious metals is better than fake money, but there is a danger in the case of Au, because there could be a very large quantity that is being withheld: http://neilkeenan.com/sample-page/
      If this hidden treasure is released to the world market suddenly, the supply increase of Au will cause it’s price to plummet, perhaps for a long time.

  1. Try to pay with Bitcoin – hacked by the CIA – when the criminals shut the Internet down. Bitcoin is a Ponzi scheme. Always was. Bitcoin has zero intrinsic value. Bitcoin is a fraud.

    1. DEAD-ON brother! Bitcoin is nothing more than a “Back-door’ way to a NWO currency and will be COMPLETELY “Controlled” by the governments soon as they got enough “Suckers” to buy into it.
      That’s why one person I know called it “FART Money” (Laugh!!!)…and THIS fart STINKS to oblivion!
      Plus I recent learned via now removed video on YouTube that the inventors of this SCAM have every intention of “Co-operating” with GOVERNMENT control of it.
      As simply said: If you down HOLD it You Don’t OWN it.

  2. What I have seen of BITCOIN it is the currency of the underworld. + Sending Donations to Terrorist Groups, +Sending Drug Money, +Tax Avoidance, + Purchasing Child Porn and seeing it is used for all these it would also be used by Political Parties to receive donations that they don’t want to declare. Paying Politicians for service. It should be called DIRTYCOIN

  3. I will NEVER…EVER fall for that bitcoin BS, because I already KNOW that Government has every intention of “Controlling” that “Fart Money” too…They just keep on trying to SELL this chit!!! As stated by the WISE comments above BITCOIN is just a phony as Fiat currency.
    Its NO different than a debit card…Only having PHYSICAL PM’s puts the control back into the hands of the folks smart enough to acquire it.

  4. the “99%” need to stop getting into debt or living off welfare. Even middle class families fell into the trap of living off debt, and kids now are hopeless: student debt, mortgage debt, car loans, mickeymouse degree, lowend job that they can barely hold, promoting the raising of taxes/bailouts in the naieve hope it will benefit them (ie more handouts), etc. So yes the system is corrupt but ppl are playing into it with their constant dependency on it. Stay out of debt, have no more than 2 kids (overpoopulation and unchecked imigration being a huge factor), get as productive as you can, and demand an end to corruption so that what you do isnt sabotaged at every stage (like taxes or overpricing or falling interest rates for savers).

    1. Are you saying that the 99% that were “Conned” into going in debt in the first place via the “Bankoholic’s” need to stop???
      It was THEM that enslaved the 99%, Remember?
      I do agree with the point of NOT supporting “The System” of corporate power though by NOT using “Credit” to acquire things…I stopped playing the “Credit game” decades ago and LOVE it!
      I don’t keep a banking account either because as they are NOW, they cannot be trusted…Don’t buy ANYTHING new if you can acquire it Used or FREE…I don’t even own a car because they use the system’s life’s blood…OIL!
      Staying away from “The System” as much as possible is the BEST way to STOP being USED by them.

  5. It is very important to know how BITCOINS are manufactured – how do they come into being with each given a unique serial number. Can you work that one out. Somewhere I had read that it was about downloading x amount of internet data or gigabytes and once a set number of these were derived then you would be given a serial number. I.e it costs you money to download the said amount of data and hence the price( set in the amount of energy used).
    Now if you had your own way of downloading this and had solar panels to aid consumption then in affect you would be creating your own BITCOIN and then asking for your own serial numbers.
    The other point that I want to make clear here, is that the gold standard is set by the Bank of England and not the Fed as stated. Britain, although having ”freed” her colonies still rule the financial system. This is why they are in a state of disrepair.

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