Numerals, Words and Bitcoin

I came across something odd yesterday while preparing to teach my son about Roman numerals. I wanted to add some peripheral info to the lesson to make it more interesting. One thing I wanted to mention was the convention of brackets used to denote big numbers. E.g. 5 = V, 5 thousand = (V) and 5 million = ((V)). My son will never be asked about this, but it's a cool bit of extra information that illustrates that the Romans were perfectly capable of expressing large numbers. But how about fractions? I wanted to add that too, so I went online to see what I could find, because I've never learned about this myself.

That's when I stumbled upon something unexpected. The Romans didn't express fractions in general terms. Such numbers were always linked to something in the real world, like money or angles. If a fraction wasn't used, it didn't exist. Their smaller denomination coins were divided into 12, so money could be expressed in fractions of 12, but not in fractions of 10. The idea of 1/10 had no meaning in the world of money. Similarly for angles. They were given names, like the right angle. They were fractions of a circle. Angles had to add up to 360 for a full circle. For smaller measures, they had arch minutes and seconds that had to add up to 60. To talk of one tenth of a degree would have been considered eccentric and nonsensical.

Our habit of talking of fractions as something detached from anything real has come about after the Romans, and it struck me that this coincides with our habit of using words with little to no descriptive meaning. For instance, the word neighbour used to literally mean person-who-lives-near. This type of direct link between abstractions and the real world is fading. There's something going on in the general psyche of society in which abstractions are taking on a life of their own. Things have meaning, even when detached from the physical world.

This split between the real world and our abstractions has recently accelerated further. Not only can abstractions exist in a vacuum void of any link to the real world. Abstractions can have value in and of themselves. A whole generation of people see nothing strange in paying hard earned money for Bitcoin. Many will gladly spend hours of labour to attain a fraction of a number. This fraction can never be held in our hand. It has no physical properties. It cannot be used to make anything. Yet it commands a price.

It remains to be seen if this latest development will be sustained into the future, but value has for now taken on its own life in the sphere of abstractions. It's also clear that this would have been seen as extremely strange by the Romans. The Romans would never have accepted the idea that Bitcoin has value. They would also have rejected the idea of unbacked paper money. At most, they would have accepted a credit note issued by a reputable citizen and backed by something physical. But even that would have traded below par with gold or silver.

What this suggests to me is that we're on a path away from reality, and if we use God as a synonym for nature, we can see where this might be headed. There's the story of Babel that tells us that artificial constructs of society-wide proportions have a tendency to fall apart, and I very much sense that this is what's going on right now. We are drifting away from reality. Like Icarus, we're flying too close to the sun. There will be a fall and a return to reality.

MDCXXX

By Fritzbruno - Own work, Public Domain, Link

Tactical Indicators

Pigs have gotten slaughtered in the silver market this week, but that doesn't mean that the greater battle has been lost. The pigs have merely played out their role as useful idiots so that bigger guns can enter the stage. With the landmines cleared out of the way, the generals can chose to leave the battle scene or go for another round of attack. It all depends on technical indicators that all seem to forebode another round of attacks fairly soon.

First, there is the issue of physical silver, which seems to be in short supply. Many dealers are out of stock, and what little silver there is trades at enormous premiums to spot. If this situation persists, we can assume the shortage to be real and not merely a function of the sudden surge of pigs willing to buy silver at almost any price.

Turning to Google trends, we see that the interest in silver has exploded 10 times since a week ago, making it for the first time ever more queried than Tesla, Bitcoin and gold. This indicates a substantial interest in silver. It's not just the pigs. Other people are interested in silver as well, which suggests to us that physical silver may remain hard to find for some time going forward.

Then there's the odd disconnect between future prices of silver, which are going down, and physical prices of silver, which remain high. This indicate a split between the official price of silver and its real price, reminiscent of Soviet practices where the official price of cabbages had little to no bearing on the real price of cabbages. If people start catching on to this meme, faith in the futures market may break down completely.

From a tactical viewpoint, another attack on silver seems likely due to the apparent weakness in the futures market and strength in the physical market. However, silver is not where I'm positioned, and I have no plans to enter this market at the moment. My strategy limits me to gold, real-estate and index funds. I'm not going to make a hasty decision just to get a piece of the action.

Strategies should not be altered in the heat of the moment but as a calculated deviation due to insights of substance. I may for instance choose to create my own index fund from individual shares rather than owning shares through a bank created index. I may also choose to own silver coins for practical purposes so that I can pay for goods and services in the parallel economy if society goes cashless. But none of this should impact my current position. My metal of choice is gold, not silver. However, gold and silver are related, so the current battle in silver is likely to spill over into gold. It's worth keeping an eye on the action, and make some tentative stipulations as to what we're likely to see going forward.

If physical silver remains hard to get, gold coins become the natural alternative, so we can keep an eye on gold vendors to see what they have in stock and what prices coins go for. I've been tracking a bank owned vendor here in Portugal, and I've noticed a sustained drop in available coins. This started about three years back, when the supply of gold wafers dried up together with one ounce coins. There's currently only gold sovereigns being traded, all at elevated prices, so it appears that the shortage in the silver market also exists in the gold market.

All of this will be interesting to follow. However, my strategy does not require me to do anything before the gold/Dow ratio falls below 5, so I'm not likely to have to do any trading anytime soon. There's at least a year or two left before we start approaching my target price.

American Silver Eagle

Public Domain, Link

Blogging as Coffee Break Chatter

I've given up on social media, and I can't say I miss it. Outside a handful of forums that sometimes share something of interest, there's too much emotion and little originality. There's also an obsession with truth that I find tiring. Truth to me is secondary to originality. It's more important that an idea is original than that it is accurate, because it's originality that sparks ideas of value. The premise may be false, but if the reasoning is original, there may be something of value in it anyway. Such thinking triggers the imagination, and therein lies its value.

The problem with social media is that it's too public. It has too much in common with newspapers where the exact truth and meaning of every little thing is discussed with a passion. This is much less the case for a blog, certainly a low key blog like this one. Here I can express my thoughts without any concern about my readers' sensitivities. If anyone finds my thoughts wrong headed or boring, move on. This blog is my coffee break chatter.

Blogging has been a great way to organize my thoughts, and I can highly recommend it for others. The fact that others can read my blog gives discipline, and discipline gives structure. Over time, a lot of things fall into place. The world becomes a less confusing place.

Coffee break

Pigs Get Slaughtered

Market actions over the last couple of days has illustrated once again how pigs get slaughtered. Without a proper strategy, these useful idiots get all excited at the worst possible time. They get into battles for which they are unprepared. Many are led astray by individuals with ulterior motives. These individuals make the pigs all excited about a cause. Then they present a plan for the pigs to follow. Fully trusting in the plan, the pigs become canon fodder for the big guns.

This is why we need a solid long term strategy. We must know what assets to monitor and which ones to stay away from. If there's a battle brewing in an unrelated asset, we stay put. It's not our battle to fight. If our chosen assets move beyond pre-determined targets, we buy or sell accordingly. We have clear entry points and exit points. We also know how to stay solvent while we wait for the right time to move. We have an income, and we have ways to profit from our assets while we're holding on to them. A long term strategy must have a minimum of risk. There must be no short term horizons after which we become insolvent.

To go into a market without such a plan is tantamount to being a pig.

Pig

By Johan Spaedtke - Own work, CC0, Link

Tesla, Bitcoin and Silver

Elon Musk is a popular man. That's evident from the way markets react to his tweets. The other day, he tweeted something derogatory about Game Stop shorts and the stock went up. Then he said something nice about Bitcoin which made it pop higher. Having been attacked by short sellers himself, it's easy to understand Musk's glee at the sight of crushed short sellers in Game Stop, but why did he tweet about Bitcoin? It seems unrelated to his businesses.

Musk's followers will undoubtedly argue that Bitcoin is technology just like Tesla, Space X and solar panels, and that's his motivation. He was simply promoting technology as the way of the future. However, there's also the possibility that his tweet was motivated by something entirely different.

Musk's Bitcoin tweet came at a time when a rumble could be heard in the silver markets. There was talk of a coordinated push, the aim of which was to send silver prises soaring. That would be bad for Musk who uses silver in the production of cars, rockets and solar panels. Higher prices for silver would translate directly into higher input costs for his products. Sensing trouble ahead for silver, Musk decided to do his part in deflecting attention to that other asset popular among his followers, namely Bitcoin.

A change in the price of Bitcoin does nothing to the price of Musk's products. Bitcoin is therefore the perfect distraction. What Musk's Bitcoin tweet reveals is the importance of Bitcoin as a tool used in the manipulation of the commodity markets. With speculation mainly taking place in virtual currencies, completely detached from the real world, Musk and his buddies can manipulate prices of commodities, unhindered by speculators. Industrialists like Musk depend in this way on Bitcoin as a means to serve themselves, and that's the true motivation for his tweet.

Elon Musk

By Duncan.Hull - Own work, CC BY-SA 4.0, Link

How to Avoid Premiums on Physical Gold and Silver

The price of silver went up by a lot today, and the premiums for physical silver went up even more. Anyone buying physical silver at the moment are paying a whopping 30% above the spot price, which means that they will have a guaranteed 25% loss if they turn around immediately to sell their physical silver back to the dealer. Premiums for gold are closer to 5% at the moment, which is the norm for both gold and silver coins, so the current premiums in silver are excessive. However, even under normal circumstances, buyers face the prospect of significant loss on their purchase if they have to return their stash to the dealer. No wonder then that people hesitate to buy physical metals. It cannot be traded. It must be held for months or years before a reasonable profit can be made.

However, there are some ways around this that few seem to realize. We don't have to return our gold or silver to the dealer if we can sell it to friends and relatives, or we can borrow cash with our stash as security. This requires a general awareness among our friends about the true value of gold and silver, and it requires them to be in a healthy financial position. Our network needs to have a reasonable net worth. But apart from this, no special goodwill or trust is required. If our friends agree to buy our stash for a price above spot, it's a straight forward deal with no debt involved, and if we borrow from our friends with 100% security, there's no risk of default. If we don't repay our debt, our friends retain the security.

If done correctly within a circle of relatives and friends, gold and silver can be kept in circulation inside our network for decades without any need of a dealer. Premiums are only paid to dealers when there's a need or desire to add to our stash beyond what's available inside our network, or there's a need or desire to lower our total exposure to the metals.

I've done this with success over the last ten years, so I know that it works as it should, and I expect it to work well for me and my loved ones into the future. I have lent money to friends with security in their gold, and I've bought gold from my son when he needed money for an apartment. Going forward, I see things continuing along the following lines:

Instead of putting money into saving accounts with banks, family and friends buy physical gold, either from dealers or from individuals inside their network. They add to their stash until they are ready to make a major investment. Since they cannot borrow money in a bank with precious metals as security, they turn to their network for help. Someone with access to credit in a bank steps up and proposes a deal: "Let me hold your stash, and I'll lend you X amount of cash at Y% interest." This individual is able to get credit from the bank for a little under Y%, and will therefore make a small profit. The borrower has had the advantage of better return on the metal than would have been possible in a savings account, so the deal is tolerable, especially because the stash remains inside our network so no premium is lost. The stash is returned to the borrower in predetermined portions with every repayment.

No-one runs any risk with such a scheme, and everybody gains because banks cannot exploit us with their sub-par savings accounts, and metal brokers cannot make money on what's circulating inside our network. The scheme encourages prudent investment and savings habits, and renders everyone better off over time.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link

First Rule of Brainwashing is Constant Repetition

The first rule of brainwashing is a constant mind-numbing repetition of a narrative. As such, there's no difference between brain-washing and indoctrination. In both cases, the aim is to make the target repeat the message without question, first to themselves and secondly to everybody else. The victims become in this way part of the operation. The message is spread through repetition. However, since no real thinking went into accepting the message, there's no way for the victim to argue coherently for the narrative. The victim will therefore respond with anger if the narrative is challenged. Since this is inevitable, the brainwashers must encourage this type of reaction. The second rule of brainwashing is therefore to elevate anger against dissenters to a virtue.

Seen in this light, it's interesting to see the constant repetition of the mask-wearing narrative on TV, often combined with simmering hatred towards anyone not wearing their mask correctly. Top politicians denounce the dissenters, subtly encouraging their minions to approach such people with anger.

Guantanamo Bay detention camp

By Shane T. McCoy, U.S. Navy - (copied from http://en.wikipedia.org/wiki/Image:Camp_x-ray_detainees.jpg so that the image can be used on Wikinews.), Public Domain, Link

The whole mask wearing thing is as taken straight out of the Guantanamo Bay play book. First they break the weak. Then they empower the weak to go after the strong. The feeble minded become the lords of the strong willed. Society as a whole becomes an upside down world where the corrupt rule over the strong by the help of an army of feeble minded minions.

Public schools used to encourage independent thinking, but is now little more than indoctrination camps for the young. True science has been replaced by pseudo-science. Instead of facts, children are presented with heroes that must be worshipped without question.

Greta Thunberg

Eco-anxiety - By Anders Hellberg - Own work, CC BY-SA 4.0, Link

The propaganda is now so deafening that it hurts. Mainstream news has become unbearably painful to watch. The situation is claustrophobic. However, there's cause for optimism. Confidence in politicians an journalists have fallen off a cliff. There's an awareness of what's going on. Even the most brainwashed among us are catching on to the fact that none of our moral superiors know anything of substance. They have no real answers. They go about harassing us, blaming every little thing, real or imagined, on us.  They are our tormentors.

To protect ourselves, we withdraw from social media, we start teaching our children at home, we make it clear to friends and family where we stand and why we don't trust anyone anymore. The message is spreading. Things are about to change. Fear and compliance is about to be replaced by fearless anger directed at the people who so cynically thought they could manipulate the whole world into an image of their own liking.

Execution of Robespierre

By Unknown author - This image comes from Gallica Digital Library and is available under the digital ID btv1b6950750j, Public Domain, Link