Where Does Bitcoin Fit in the Historic Ratio of Gold and Silver?

Long time investors in gold, silver, platinum and palladium as a means to protect themselves against the debilitating effects of inflation, brought on by the central bankers and their failed monetary policy, are all to aware of the fundamentals of the precious metals market and how ratios are crucial to wealth building during our current descent into economic collapse. After all the ratios are the simplest ways to analyze the blatant manipulation (suppression) of the fair market value of metals in general. Take the most suppressed precious metal for an example…

12 comments on “Where Does Bitcoin Fit in the Historic Ratio of Gold and Silver?
  1. A Gardener says:

    Ah the sweet sound of silver….
    Up to 50,000 one ounce silver coins per day!
    http://www.youtube.com/watch?v=Bz2yDdMBSEs&feature=youtube_gdata_player
    Never mind bitcoin , keep stacking Silver.

  2. Silverwillwin says:

    Bitcoin sounds a bit like paper currency. Nothing backs it except a belief.

    No – I’ll take silver instead ! It’s got real value and and owes nothing to anyone.

  3. mijj says:

    > Bitcoin sounds a bit like paper currency. Nothing backs it except a belief.

    Paper currency is created on a whim from the imaginations of authoritarian control freaks. Bitcoin is more like gold. Bitcoin, like gold, is a product of nature. Gold is a physical substance with a particular chemical composition. Bitcoin a mathematical substance and is constructed using particular mathematical criteria and algorithms. Both are inherently increasingly limited in quantity, and both need effort to be discovered (gold in physical space, Bitcoin in mathematical space).

    As money, gold and Bitcoin do not have “value”, they are tokens of purely psychological influence. If no one else shares the same psychologicy, the token has no influence, so it’s not money. (The price of something is the amount of influence needed to acquire it. Price is independent of its value. Eg. breathable air is immensely valuable, but (currently) the amount of influence (price) needed to acquire it is zero).

    Tokens of influence are useful, because the alternative, more direct, physical forms of influence (such as threats, violence, charm, barter, etc) are a more clumsy way to manage the dynamics of value. (Fiat money being the most useless form because its whimsical creation is merely a way of transferring power from the people to the center of authority (by increasing the proportion of influence held at the center). This makes it an unreliable, unstable reference. Like having a shrinking ruler)

    All Bitcoin needs to do to succeed is be useful in a way that other monies can’t. It’s useful because it exists in mathematical space, so it thrives on the internet. It’s useful because it’s beyond central control – so you can be confident that your Bitcoins won’t be frozen by some authority because you swore at the TSA. Bitcoin does have unique benefits, and those unique benefits will become more apparent as our political/economic masters become more authoritarian.

  4. Trevor Morgan says:

    The 15:1 ratio of silver to gold because that is the proportion in which we get them from the ground sounds like David Ricardo’s labour theory of value to me. Ricardo was dealing with a theory of value and not of market price. Market price is “discovered by the interplay of market forces in free and unfettered markets with no big player manipulation.
    It seems to me neither accurate level of value nor discovery of price is currently attainable.

  5. BankingThiefs says:

    @ Silverwillwin “Bitcoin sounds a bit like paper currency. Nothing backs it except a belief.”

    Bitcoin is a good example of an energy currency. If it takes £10/$15 of electricity to generate one, that’s it’s true value. I think of it as a way of monetizing energy.

  6. BankingThiefs says:

    @Trevor Morgan “The 15:1 ratio of silver to gold because that is the proportion in which we get them from the ground.”

    Not since the discovery of Mexico or the manipulation of the Hunt Bros. I invest in Mexican primary silver producers and their gold/silver ratio is more like 85:1

  7. Silverwillwin says:

    >> Paper currency is created on a whim from the imaginations of authoritarian control freaks. Bitcoin is more like gold. Bitcoin, like gold, is a product of nature. Gold is a physical substance with a particular chemical composition. Bitcoin a mathematical substance and is constructed using particular mathematical criteria and algorithms. Both are inherently increasingly limited in quantity, and both need effort to be discovered (gold in physical space, Bitcoin in mathematical space).

    Gold is a physical substance to which there is a finite amount on this earth .
    Bitcoin is a cooked up concept that can be mass produced by it’s creators , should they choose and runs the same parallels as paper currency, no matter how you slice it.

    Silver runs the same parallels as gold only it is a lot more rare do to it’s usage throughout world industry – 1940 til present day , Mexico or no Mexico.

    Silver also stands the chance of splitting away from gold and finding a completely different growth cycle as a result of world industries demand for insufficient supplies.

  8. Banking Thiefs says:

    @mijj

    >”Both are inherently increasingly limited in quantity”

    Crypto currencies have no limit, you can always start Bitcoin 2, however the cost of production like anything mined gives it a value.

    Gold and Silver are also elements so are never destroyed, unlike oil which is a compound and is destroyed from use. Oil vigilantes are probably the best barometer of monetary value.

    >”breathable air is immensely valuable, but (currently) the amount of influence (price) needed to acquire it is zero”

    Air has not been free since the introduction global warming taxes paid through your energy bills. CO2 is the air you breathe out! It’s also required by plants and trees to grow, (the carbon cycle between plants and animals) but scientific facts never get in the way of a good fleecing the sheeple plan.

  9. Silverwillwin says:

    mjjj , interesting points. Would it also be possible to add flatulating to the list of air and CO2 examples because after all it does have properties of regenerating fuel for power.

  10. nikkisnowe says:

    Wow bankingthiefs,
    You think because it takes $15 of energy to create a bitcoin that’s what the price should be? You’re an idiot. By that reasoning the hole in my backyard is valued $150 because I had a labor dig it at $15/ hour for 10 hours. Let’s see, if I post an ad for my hole for $150, how many takers do you think I’ll get? Value is subjective to what others are willing to pay for something. It doesn’t make fat rats ass of a difference how much it costs to make something in defining its value.

  11. Banking Thiefs says:

    nikkisnowe, that’s exactly how mining works, if the market pays above production cost more mines open and supply grows, then later, if the market pays below production cost mines close and supply shrinks.

    In your example if you dig a hole and it costs you $150, and there is no market for $150 holes , you stop digging.

    However if there is a market for digging holes, building foundations, sewers, bunkers etc., you will keep digging holes as long as the market rate is above your costs.

    People do make a good living digging holes! ;D

  12. nikkisnowe says:

    I never said that I was selling a foundation, sewer, or bunker. I’m saying that I have a hole in my back yard for the sake of simply having a hole. Using your logic, that hole should be worth $150 simply because that’s the equivelant value of labor it took to create it. The cost involved in creating something doesn’t have anything to do with its value once its created. Value is simply a subjective relationship between supply and demand. I don’t care how much it costs to create something, if there’s no demand for whatever you created, it’s worthless.

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