By Aves Hawk
There a couple of interesting pieces today that are a bit separate from the normal topics, and also some that add to previous posts. We'll start with the most relevant ones first.
No Summer Doldrums – Jim Sinclair Interviewed by King World News – Jim Sinclair is one of the most respected voices when it comes to precious metals and the financial markets. His view is that that the normal seasonal slow-down in precious metals over the summer will not materialize as most expect. He expects a possible correction of sorts, but mentions that precious metals will continue higher with or without the next QE. If QE continues, gold will continue higher due to inflation. If QE stops, the stock and treasury markets are both toast, which also powers gold higher. If there is a correction, don't expect to find too much physical at low prices. Physical metal is scarce enough at current prices let alone if there is another correction.
No Greek Restructuring Agreement Yet – Bank Run Begins – European debt problems continue. The Greeks are starting to move large amounts of money before the banks are closed with a bank holiday. Bank holidays and stock market holidays, read closures instead of holidays, usually follow major disruptions in the currency or the stock market. Have a look at the 1930s depression and other hyperinflations for some examples. Some Greeks see the writing on the wall and are moving their money now, before it's too late.
New Privacy Software for Android Phones – Red Phone encrypts cell phone calls and text messages. Supposedly the code is closed so the back-end isn't open to third-parties, which is what Skype and Google Voice suffer from. This would make Android phones even more secure than land-lines. Talk about a major piece of good news when it comes to communication privacy.
Bitcoin - An Open-source Currency – I haven't talked much about alternatives to the USD besides gold and silver. One that is really hot right now is Bitcoin. It is an open-source currency that is being used for online transactions. It seems like Bitcoin is receiving a lot of attention, and the chart in the opening article also indicates that Bitcoin looks like it might be entering bubble territory. It is in this state because some investors are confusing Bitcoin's function. Bitcoin was designed to be a currency for online transactions, a medium of exchange. This means Bitcoin should mainly be used for transactions. Because it is a virtual currency (not tangible), it is merely a form of credit, albeit open-source credit. Therefore, when it comes to online transactions, Bitcoin is a very solid alternative to other currencies that are being inflated. Because it is a type of credit, it is not suitable as a store of value. What might be happening to Bitcoin now, is that many people are hoarding them, thinking they will rise in value, which they might if demand keeps increasing. However, this is all merely speculation. Bitcoin is a form of credit and was designed only as a transactional currency. Those who are using Bitcoin as store of value may or may not be in for a surprise. Ideally, gold and silver should be your store of value while you use Bitcoin for online transaction. Anything else is speculation, which is great as long as you understand the subject matter.