We're well into 2016 - the year the more dire YouTube videos five and six years ago from alternative media personalities said would be catastrophic. Some of these people were peddling gold coins or water purifiers, but aside from that possible misalignment of objectivity, they turned out to be more or less... well, ahem... they turned out to be more or less right.
Never thought you'd read that here, did you?
Certainly, there are no zombies in the streets. No alien invasions. No unexpected coups- err, okay, bad example given the recent news coming from Turkey. Or the rise of an outsider candidate in the most contentious presidential race of a generation... the race protests and riots... the displacement of millions and immigration wave rocking Europe... so, fine, the nutty trafficwraiths of YouTube a half decade ago were right: 2016 is a meltdown year.
And, maybe, a make or break year for the individual paying attention objectively.
GOLD AND BITCOIN HELP US DETERMINE HOW 'HEALTHY' OUR ECONOMY MIGHT BE
This is where Bitcoin and gold become very useful for comparison's sake, even if you haven't yet become a Bitcoin bug or a gold aficionado (hang around me enough, you'll end up desiring both - be sure to read my recent piece on how to buy your first Bitcoin).
When we want to determine if something is good or attractive at this particular moment in time, we usually look to the past.
"Back in my day, we had to walk five miles in the snow to school..."
"Before the Internet, businesses were forced to do x, y, and z..."
"Before they carried antibiotics on their expedition..."
That sort of thing. So before fiat currencies like the US Dollar and euro, and things like PayPal, people around the world of various cultures and eras basically always used gold - and sometimes silver - as a monetary tool for value transfer and value storage. Gold or silver coins in the pocket, gold bars in the bank vault. Worked for thousands of years, in hundreds of cities.
The US Dollar has a 45 year market history since its current post-Nixon iteration, the Euro has an even shorter 17 year market history since its introduction to global markets, and cryptocurrencies such as Bitcoin are only - at most - six to seven years old. Similarly, many bond products that took off in the 1980s and bundled synthetic financial products that came along even later have relatively short market histories.
So how do we figure out the relative performance of such new inventions? We have to compare to what people used to use, in one way or another. Since gold has more than 5,000 years in economic use within human societies, let's go with gold.
Even today, in an era where precious metals have been officially de-monetized, gold is a huge market: $70 to $80 billion of the shiny yellow metal trades each day globally, and the total gold market is valued at around $9 trillion.
If you look at BitGold's constantly updated gold price chart, it's clear the major fiat currencies - the US Dollar, the Euro, the Chinese yuan, and so forth - have caught more than a little cold. Is this a flu? Is it something even more serious?
The math is dire: gold is up 17.18% against the almighty buck over the past year. Gold is up 14.64% over the same time period against the Euro; the metal's up 26.83% against the yuan. And against the Russian ruble? Gold is up 29.82% against the Russian ruble over the past year!
These are "tech stock" returns coming from... gold. An inert metal that sits in a vault.
What is going on? This suggests a growing loss of confidence in some of these major fiat currencies, and/or a growing desire to find "safe havens" - basically, people are afraid, so money is diversifying itself. Gold may not have an old rich lady's face printed on it, and it is shiny and scary, but the surprisingly stable 5,000 year purchasing power history of gold is suddenly becoming... as I wrote above... almost tech stock sexy all of the sudden.
Consider, for example, that legendary billionaire investor George Soros is heavily invested in the gold industry now, and that he's not the only billionaire who has caught a taste for gold recently.
Further, BitGold and its parent company Goldmoney have quietly amassed more than one million passionate users. These users spend, save, and send payments denominated in actual gold grams using the company's technology.
I put up a video recently showing off some of the gold cubes I bought from them with a cryptocurrency, Ether. Gold cubes bought with a non-government created, non-fiat digital currency that gets mined out of the cryptographic ether, no pun intended. We are clearly living in the future. A few minutes watching Ethereum's blockchain stats dashboard one night with a glass of wine (or something even more potent) in hand will convince you beyond any doubt you are living in a Philip K. Dick novel where the nerds won and the banks are about to collapse "Mr. Robot" Season One style...
BITCOIN'S GROWTH STORY
I got so annoyed answering individual emails from readers about how to buy Bitcoins that I put up that piece explaining how to do it, but I still get emails. Bitcoin is slowly starting to take off in its own time and in its own ways, it appears. And its growth from $0 in 2009 when it launched to a $10.7 billion market cap currency as I file this - as well as the untold millions of people on the Internet who already use it - suggest a movement away from traditional financial platforms and banks, toward Bitcoin and its newer relatives.
If rising gold prices are showing us how fragile and unhealthy the major currencies are becoming, Bitcoin's rise shows the amount of discontentment with the traditional banking tools and systems themselves.
It's too early to tell how big or significant all this might become one day, but at least according to William Mougayar (author of The Business Blockchain), it's entirely possible that "the next Google" could emerge from a blockchain technology like Ethereum or Bitcoin. Watch my recent interview with him below:
Not financial advice. No warranties or guarantees provided; not a recommendation to buy or sell gold, Bitcoin, or any other asset. At time of publication, I do hold some ethers and bitcoins in my long term portfolio. In the past, I have done some freelance consulting for BitGold.