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Posted on 07/28/2025 5:01:58 PM PDT by delta7
With the Trump Administration headed down the road to higher inflation and the political chaos that results, it is worth asking why there are “only” $4 trillion in notional crypto tokens, this according to the Financial Times. The rise of bitcoin and other ethereal instruments evidences a strong desire on the part of many Americans to escape a sinking ship, but also confirms the love for creating new games to enable speculation. Are the crypto tokens really a way to avoid the demise of fiat dollars?
As we noted in a recent comment in The Institutional Risk Analyst, the best returns in crypto at present are found investing in the stocks of some of the enablers. The fact that these new companies may or may not be stable businesses long term does not matter in the speculative environment that currently governs Wall Street. We are particularly fascinated by the idea that a crypto firm can generate enough revenue to survive as a bank.
Robinhood Markets, for example, is up almost 500% in the past year, proving that there is a lot more leverage for investors in the facilitators of speculation in crypto and stable coins than in the tokens themselves. Crypto laden “special purpose acquisition companies” (SPACs) and various new, “Level 2” token games linked to existing crypto “markets” are the hot ticket today.
But the larger query, beyond the issues raised by bitcoin and substitutes, is the question about the nature of money. In my new book, “Inflated: Money, Debt and the American Dream,” author James Rickards notes that Americans “no longer know what money is” and have replaced “money with moneyness.” He then describes why money is one of the foundations of civilization.
“Money is not the point of civilization and it’s far from the most important feature,” Rickards argues. “Still, it’s part of the bedrock and performs crucial roles. Money is an advance on barter. Money is an alternative to violence. Money facilitates commerce and investment, and acts as a store of wealth. Money is among the institutions, along with law, religion, and the family, that enable civilizations to be civil and avoid a Hobbesian war of all against all.”
Despite the fact that President Trump wants to make America the crypto capital of the world, and even threatens to open retirement accounts to these speculative notions, the rest of the world is migrating away from dollars back to the only true form of money that is not some form of debt, namely gold. Perhaps the most significant trend is the increasing purchases of gold by global central banks.
On July 1st, 2025, Basel III banking regulations officially reclassified physical gold as a Tier 1 asset, specifically a high-quality liquid asset (HQLA). This means that U.S. banks can now count physical gold at 100% of its market value towards their core capital reserves. Previously, gold was considered a Tier 3 asset, requiring banks to discount its value. But what is the proper discount rate for crypto and stable coins?
A stable coin is a ridiculously expensive prepaid gift card. A stable coin, for example, backed by fiat dollars, does not change your fundamental economic and financial risk from holding dollar assets. You basically pay for the privilege of using a stable coin. The public mania around stable coins is the latest evidence that humans are incapable of making rational decisions when they are part of a crowd. Long-term, we should view stable coins as marketing tools for large advertisers to acquire and retain customers.
A stable coin backed by yen or swiss francs, for example, is a very different proposition in terms of managing dollar risk, but such instruments also may fall afoul of state and federal securities laws. So how do individuals and countries protect themselves from the slow but inevitable decline of the dollar as the world’s primary money?
Owning gold or at least having exposure to the price of gold are perhaps the best options, The physical metal is independent of the fortunes of state put, yet as we learned in the 1930s, gold is vulnerable to confiscation.
More important to the analysis, however may be that fact that so few investors have yet to rebalance their portfolio to reflect the opportunity presented as gold resumes its role as the world’s primary reserve asset.How much is the current allocation to gold by global investors?
“My rough guess, excluding central banks and physical gold in private hands, would be maybe 1% of portfolios globally and perhaps half of that amount for US investors,” notes Henry Smith, Director and Investment Manager, The Keep Fund Ltd. a Bahamas SMART Fund investing in the precious metals complex. “In your grandfather’s day, a trust portfolio would be 10% minimum in gold. We’re headed back there. That means we’re headed to five digit gold and three digit silver.”
Other mainstream analysts agree with Smyth’s prognostication. “Earlier this year, we examined the structural shift in gold’s demand and geopolitically influenced pricing drivers fueling its rebasing higher, ultimately posing the question if $4,000/oz is in the cards,” said Natasha Kaneva, head of Global Commodities Strategy at J.P. Morgan, in a June 2025 research note.
“To answer the question — yes, we think it is, particularly now with recession probabilities and ongoing trade and tariff risks. We remain deeply convinced of a continued structural bull case for gold and raise our price targets accordingly,” Kaneva added.
The reason JPMorgan is right and, indeed still too cautious on their gold outlook is that the usage of gold as a reserve asset, legal tender in contracts and collateral for financial transactions is growing, yet this is a gradual process. The narrowing of the market for US Treasury collateral as central banks reduce their purchases in favor of gold is still not top of mind – yet – for US investors, but higher interest rates for LT Treasury paper will end that lethargy.
One of the chief reasons to be bullish on gold and negative on the dollar is that there is so little deliverable gold available. A lack of deliverable gold supply can create upward pressure on prices, but other factors like demand fluctuations, market sentiment, and the role of gold as a financial asset significantly influence its short-term price. Even with limited physical supply, demand and overall market conditions can moderate price increases.
“De-dollarization — a theme among foreign reserve managers and investment institutions who are typically slow to act — is a misnomer as it’s highly unlikely anyone is seriously considering of fully divesting themselves of US assets, argues Simon White of Bloomberg. “But the evolution of events this year has led many foreign investors to consider reducing their exposure to the US which had already grown imprudently large. This will take time to show up in the data.”
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Gold. It’s still there when the power goes out or an EMP event permanently takes out all electronic devices including computers.
but also confirms the love for creating new games to enable speculation.
If YOU would like to be on a CRYPTO PING LIST, please pm me.
The Crypto Ping List covers the following:
Bitcoin
Ethereum
Other coins built on the Ethereum blockchain mining
etc.
Thanks! For it - or ag'in it, it'll be a wild ride.
If YOU would like to be on a Gold & Silver PING LIST, please pm me.
The Gold & Silver Ping List covers the following:
Everything Gold & Silver
Stock market investments in mining companies,
etc.
“Gold. It’s still there when the power goes out or an EMP event permanently takes out all electronic devices including computers.”
Take your gold bars down to the local market and see if they will make change ...
This isn’t even a serious question.
Very true. I skimmed a small fortune from my investors and after my ponzi scheme went upside down the feds wanted me return it to the investors.
Being savvy, I hid it in my mother's basement.
While in jail, some maintenance dude found it and sold it for pennies on the dollar!
signed, Martin Armstrong
One of the biggest reasons to own bitcoin is to escape governmental control of the money supply and its inflationary effects.
Silly rabbit, you only bring gold for big purchases. You bring silver for smaller purchases.
That's not very right on your part.
I worked with a guy that suggested to buy stuff in preparation for a collapse. His thought was that if everything crashed, it wouldnt matter how much gold or money you had if there was nothing to buy. He recommended buying stuff like tools, guns and ammo, water purification, long term food, building materials, etc. On the other hand, if the collapse never comes, there will be one neck of an estate sale when he kicks the bucket.
That’s not what gold bars are for.
Dont trust Crypto. It just seems to be a vapour product that creates value from nothing and sells it for real world dollars.
Whomever created it gets real world dollars, while you get vapour bits and bytes that can disappear at any time.
When I hear people talk about EMPs I think of two things: They like to read apocalypse novels written twenty years ago. I also think that they haven’t really considered what the world would be like after a widespread EMP.
If a nationwide EMP went off, how you exchange ANYTHING for value would not be a primary concern. As they say, when that happens the “bag limit” restrictions are lifted. Neither bitcoin, cash, gold, or silver would get you much in trade in that world.
In fact, if an EMP was triggered over the US, it would require the detonation of a nuclear weapon over our land. Stop and consider for a second what that would mean to the world.
So…any argument against crypto or simple digital transactions that are based on an EMP going off in the US should be filed under the scenarios where lighting sets off nuclear bomb that moves the earth rotation into an asteroid that hits your house. In order words, its not worth considering.
Neither. Study your Bible.
Can an EMP take out cryptocurrency?
Don’t need to ask about gold.
An as an aside, bitcoin is one of the top valued assets you can hold. It has been around for almost 15 years.
I am stunned when I read articles or watch the business channels and I hear how people “don’t understand what it is or how it has value.” And these “investors” are responsible for billions in other people’s assets. That’s not just stupid, it’s malpractice.
I am not saying people should buy it or not. That’s not really up to anyone but the individual. I am merely saying that it’s not “new” and it’s not a “mystery”. If you consider yourself a savvy investor and you dismiss Bitcoin as easily as people do around here…you are kidding yourself. And your ignorance is stunning.; Take fifteen minutes and do an internet search. It’s not that complicated.
The biggest financial managers in the world are literally falling all over themselves to get a share of this market. It’s a long way from “tulips.”
Education yourselves.
You need six operating computers in the world to maintain the block chain. An EMP is not eliminating that. EMPs, as they work today, would take out a city. Or maybe a region (New England for example.). It’s not going to take out the nation. That is a pipe dream novelization of the real world possibilities.
...and if you don’t have electricity,no bitcoin.
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