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Hugo Salinas Price is one of the most successful businessmen in Mexico. He also happens to be a brilliant monetary system analyst. In his latest essay, he explains why Governments and Central Banks largely ignore Bitcoin and cryptocurrencies, choosing instead to focus their efforts on containing the price escalation of gold and silver.
Note: The latest price attack on gold and silver is largely a paper gold/silver market operation. Outside of the massive quantities of gold being imported by India every day right now, very little physical gold is changing hands. Yesterday I saw commentary accompanied by a chart that showed “a record outflow of cash from the largest gold fund.”
Again, the withdrawal of cash from GLD does not at all trigger physical gold selling. Most of the cash that piled into GLD over the last 6 months has been leased from the Bank of England or ECB or counterparty to the massive quantities of BIS gold swaps since July. When enough cash leaves GLD, the gold lease expires or the BIS swap unwinds—not one ounce of gold is moved from the vauts]
Contrary to the promoters of Bitcoin, and to the myth to which the believers in Bitcoin ascribe, Bitcoin has significant counterparty risk. As Mr. Price asserts:
Bitcoin relies on the continued existence of a worldwide electronic Internet. In the event of WAR, the Internet will go down instantly. Goodbye, Bitcoins!
Furthermore, as Price explains, Bitcoin is imaginary money and nothing more:
Bitcoin has a monetary value, only because the – unknown – founder said that it had monetary value, and a few simple souls accepted that statement. Once a few repeated the mantra “Bitcoin is money”, its “monetary value” began to rise. Fundamentally, Bitcoin is nothing more than a satisfying game to play.
Note, I do not have any problem whatsoever with treating Bitcoin like any other speculative trading vehicle that relies on the greater fool theory for the buyer of Bitcoin to make money. But please do not buy and hold Bitcoin thinking that it is a monetary and wealth preservation asset similar to gold.
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