Could an app be designed to solve this little gold fraud problem?

I’m tired. I’m going to bed. But first I’m leaving this link with you.

In essence the price of gold and silver is going DOWN as the demand for gold and silver is going up. No new precious metals are being added. There are actors faking supply via paperwork. I’m thinking we need an app to fix that using smart contracts, tokens and some kind of security verification system. Ok there’s mythoughts. Discuss. Now bed for me.

Such fraud will always be possible when fungible physical goods are represented digitally or on paper. Those who issue the representations and guarantee exchange between the digital and physical can run a fractional reserve scheme. An audit system may start out reliably, but will inevitably be corrupted over time.

The age of gold and silver as sound money is over. In the digital age, the required qualities of being a medium of exchange have expanded, and precious metals don’t satisfy them anymore. That leaves you with paper/digital representations of precious metals, which are really not better than fiat currencies. Crypto-currencies are the only way forward.

Correct.
Also, if you’re concerned about this fraud, buy physical at fraudulently low prices now.
One day the house of cards will go down.

That is so wrong. Nothing beats physical precious metals.
While it is true that any individual cryptocurrency cannot (at least by design) be created at will, any and all (because they’re all OSS) can be forked or others can be created from them at will. Crypto is useful as a semi-transient internet currency and that won’t change in our lifetime.

Got any arguments for that?

Which is pretty irrelevant due to the network effect.

Okay, let’s see (and I’m not judging):

  • Bitcoin - existential crisis, not negligible chance that it can become totally (as in $0.00) worthless within 12 months
  • Ethereum - 20% complete (but can re-code all other things in 20 lines of code)
  • MaidSafe - 30% complete

All of these examples have some value and that value may increase, but it’s fairly unlikely any of these networks will be around 20 years later. Gold and silver will.
In the worst case scenario silver has many industrial uses, while both silver and gold have aesthetic applications. Their value can never be 0.

When I hear “the network effect” that raises red flags. A currency needs the network effect, but money doesn’t.
Money can act as store of value, idling by for decades doing nothing. Coins can’t and won’t.
And crypto-currencies can lose their “network effect” just as easily as they gained it. Do you think none of Ethereum’s network effect hasn’t been gained at the expense of the Bitcoin network?

And we’ll see some interesting proof about the value of gold and silver if the Fed ever manages to raise interest rates.

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Good points. What do you think are qualities of money though? In my opinion being a medium of exchange is included, and right now if I go outside I’d have a very hard time to buy common goods with precious metals. I don’t know of any shops or businesses here that accept them as payment. Hence I don’t consider precious metals to be money, even though they have the store of value quality.

I also don’t mean to say that SafeCoin, Bitcoin, or Ethereum are true stores of value. Just that fiat and precious metals don’t qualify as long term stores of value or media of exchange respectively. I think only a crypto-currency has the potential to be both a store of value and a medium of exchange in this age.

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Well the usual 3 (store of value, unit of measure, medium of exchange) are commonly quoted.

You’re absolutely right - right now precious metals are in the crapper and don’t look good. Who knows, maybe they’ll stay that way. I’m betting large that will change when fiat money (not a store of value) runs out of gas.

Cryptocurrencies work online (and offline), whereas physical silver and gold don’t. Crypto certainly has advantage in that respect and if fiat crashes crypto will take on a lot of its roles (which is why I bought a lot of crypto as well).
For “currency at rest” I prefer precious metals. For transactions, crypto. I’m not saying there’s only one way to look at this and I may be wrong.

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I have a suspician that precious metals will come back to replace what cash is now when fiat fails: that is a physical currency that can be held and touched. Crypto is good but it is still electronic and reliant on electronic devices in order to be transmitted. But if you have physical currency in your pocket be it gold or silver coins or a wad of cash you can physically take it out and hand it to someone regardless of whether you have some device of whatever description or not. There is something to be said for low tech transactions.

What a coincidence that this topic popped up while a few days ago I transferred a substantial part of my savings into silver. People in the industry said it will bottom at $16/ounce, then they said it will bottom at $15/ounce… But when I noticed it hit $13.88/ounce during a little crash after a long decline, I quickly bought in at $13.92.

Maybe it’s too soon and silver (and gold, for that matter) will decline further the upcoming months. That’s OK. It just feels safe® to have 1/5 in silver, 3/5 in crypto (currently almost evenly spread over maidsafecoin, ethereum and bitcoin) and 1/5 in fiat. Not for the short term, but for the upcoming 10 years.

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Unless digitization of matter continues at the current pace! Nothing is 100% safe from change sir

Physical metals will always be in demand. Their price cannot be zero.
If iron is $1/kg and silver $0/kg, there would demand for silver in uses where silver can substitute iron and the price would go to $0.01/kg (or indeed, $0.99/kg).

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I was trying to think of ways to disprove this, and came up with the possibility of everyone living in virtual worlds in the far future, and not using physical items anymore

Okay. Well I can’t say how things will be and it’s fair to say that kind of future is unimaginable, so I can’t express my opinion on that.
But it is reasonable to expect that even that (or especially that) virtual world will require a lot of energy and compute power, which means raw materials should be on demand much more than today when half the humanity uses very few compute resources.

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Good luck reproducing that way or keeping your body alive in general.

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Just thought experiments :slight_smile:

This is definitely true, but with computers becoming exponentially smaller and more efficient, I can’t say for certain how it will affect the volume of demand for metals

Consider that those computers are often made using precious metals.

exactly, that’s what I mean.

But less and less of those precious metals over time.

We can make 1,000 computers for the same amount of precious metals as we could 10 years ago, etc so there’s a point where we need less and less of the metals over time to meet everyone’s needs

demand falls off