Tag Archives: US dollar

BullionStar adds Ethereum, Bitcoin Cash, and Litecoin as Payment Options and Currencies

BullionStar is pleased to announce that it has added Ethereum, Bitcoin Cash and Litecoin as transactional currencies for both buy and sell orders on the BullionStar website.

Ethereum, Bitcoin Cash & Litecoin are now accepted as payment options and currenciesMany BullionStar customers are already be familiar with using Bitcoin when buying and selling gold, silver and platinum bars and coins, as BullionStar has been accepting Bitcoin as a form of payment since May 2014. BullionStar was one of the first bullion dealers worldwide to offer customers the ability to buy and sell physical precious metals using Bitcoin. Now with the addition of Ethereum, Bitcoin Cash and Litecoin, BullionStar is again one of the first bullion dealers in the world to offer customers the ability to transact in these other leading cryptocurrencies for both buy and sell orders.

With the addition of these three additional cryptocurrencies, BullionStar customers can now buy and sell physical gold bars, gold coins, silver bars, silver coins, platinum bars and platinum coins using Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BTC) and Litecoin (LTC), and by using any of six traditional currencies, namely Singapore Dollars, US Dollars, Euro, Australian Dollars, Japanese Yen, and Swedish Krona.

BullionStar constantly aims to add innovations to its product and service offerings, and the addition of Ethereum, Bitcoin Cash and Litecoin comes after careful analysis and following customer feedback. The addition of Ethereum, Bitcoin Cash and Litecoin now gives BullionStar customers extra choice when buying physical precious metals using cryptocurrencies, and allows for faster cryptocurrency transaction confirmation times.

Settle Bullion Orders in Ethereum, Bitcoin Cash & Litecoin

To pay using a cryptocurrency, select the preferred cryptocurrency in the "Currency" drop-down box at the top right hand section of the BullionStar hompage. Upon selection, all prices in the product listings will be displayed in terms of your selected cryptocurrency.

Select to pay in Bitcoin Cash, Ethereum and Litecoin

To purchase precious metals on the BullionStar website, you simply add the desired items to your shopping cart, go to the checkout and place your order.  If you have selected a cryptocurrency as currency, the checkout payment option will default to the selected cryptocurrency as well.

Upon placing your order, the order confirmation page and order confirmation e-mail will detail the cryptocurrency address to which you must initiate your payment within 20 minutes.

BullionStar will update you with a payment confirmation e-mail and an SMS text message as soon as we have received and processed your payment.

Likewise, for customers selling precious metals to BullionStar, proceeds can now be received in Ethereum, Bitcoin Cash and Litecoin as well as in Bitcoin.

Bitcoin, Bitcoin Cash, Ethereum & Litcoin as Currency

On the BullionStar website, all product prices for gold bars, silver bars, gold coins, silver coins, BullionStar Savings Program (BSP) and other precious metals products can now be displayed in Ethereum, Bitcoin Cash and Litecoin as well as in Bitcoin.

2.5 gram PAMP Gold Bar denominated in Bitcoins

Customers can also view spot prices, portfolio values and account history directly denominated in the newly added cryptocurrencies. For example, if you select 'Litecoin' from the Currency drop-down box on the top right of the BullionStar homepage, the spot prices and charts on the right hand frame for gold, silver, platinum and palladium are then displayed in terms of Litecoin (LTC) values. When logged in to your BullionStar account, your vault balance and cash balance will also be displayed in LTC if the Litecoin currency option has been selected.

BullionStar Charts

Ethereum, Bitcoin Cash and Litecoin have also been added as currencies within BullionStar Charts.

BullionStar Charts is a comprehensive charting facility which provides the ability to create price charts for precious metals, currencies, commodities, stock indexes, individual stocks (equities) and also in terms of the prices of BullionStar products.

BullionStar's charting functionality allow any two prices to be selected. For example, on the charting page select 'Precious Metals - Gold' then select 'Currency - Bitcoin Cash' to view a price chart of the gold price in terms of Bitcoin Cash.

Gold Price in Bitcoin Cash

Why Ethereum, Bitcoin Cash and Litecoin?

BullionStar has added Ethereum, Bitcoin Cash and Litecoin as transactional currencies  alongside Bitcoin because each of these three cryptocurrencies is widely-known and widely-used, and each of these cryptocurrencies is now firmly established in the marketplace.

Since its commercial launch in 2015, the Ethereum blockchain platform and its Ether coin have become a dominant force in the cryptocurrency space, and as well as transaction processing, Ethereum also supports smart contract functionality and the development of other cryptocurrency platforms.

Bitcoin Cash emerged in early August 2017 as a hard fork when it was split off from the Bitcoin blockchain. Bitcoin Cash has a larger blocksize than Bitcoin and facilitates higher transaction rates than Bitcoin which generally translates to faster payments and confirmations. In the 9 months since its launch, Bitcoin Cash has seen large-scale adoption by merchants and is now a stable and expanding competitor to Bitcoin.

The Litecoin platform and its coin, launched in 2011, are also based on the Bitcoin blockchain design, and Litecoin is now well established and known for its high-speed transfers rates and short confirmation times.

In terms of cryptocurrency market capitalization (market cap) or total outstanding market value of each coin, Ethereum, Bitcoin Cash and Litecoin have among the highest values of all crypto coins next to Bitcoin, and the global cryptocurrency trading market values the infrastructure of these cryptocoin networks, and most importantly, given that exchanges are forward-looking pricing mechanisms, the crypto currency market is signalling confidence in the longer term future prospects of these four cryptocurrencies.

Trade Directly between Cryptocurrencies and Precious Metals

With the ability to buy and sell precious metals using Bitcoin, Ethereum, Bitcoin Cash and Litecoin, BullionStar customers can now trade directly between investment precious metals and cryptocurrencies without having to first convert to fiat currencies. Traders can also now take profits from these cryptocurrencies and directly buy precious metals using their Ethereum, Bitcoin Cash, Litecoin and Bitcoin.

Trading between Ethereum and bullion for example, you can now buy gold bullion bars and gold bullion coins through BullionStar using Ethereum and hold these investment grade bars and coins in BullionStar's vault. All you have to do is transfer Ethereum from your Ether wallet or crypto exchange account wallet to the Ethereum address as indicated on the order confirmation from BullionStar. The same applies for Bitcoin Cash, Litecoin and Bitcoin.

Then in the future If you want to sell these gold bars and gold coins and take the proceeds in Ethereum, you just sell the precious metals for Ethereum and have the Ether transferred to your personal Ether wallet or crypto exchange account wallet. There is no need to first convert the Etheruem to US dollars to buy your chosen gold bar and coin products. Thus the intermediate step of converting the main crypto currencies to fiat currencies, such as US dollars is redundant.

Gold Price: USD 65,000/oz in 5 years?

16 June 2021 is exactly five years from today. What will the gold price be on 16 June 2021?

Currencies are Worthless

As the world’s fiat paper currencies have lost 99% or more of their purchasing power over the last 100 years, its critical to understand that fiat paper currencies are not a suitable unit of account for accurately measuring prices.

In fact, gold is a far superior measuring stick of value than paper currencies.

A paper currency doesn’t measure anything. It merely has an arbitrary value placed upon it by the population using it. It’s not backed by anything and it can fail at any time. From historical experience, we know that the unbacked fiat paper currencies used today will ultimately destruct and become worthless. All unbacked fiat currencies throughout human history have failed.

A more accurate measurement would be to measure fiat currencies in gold. If we look at the US Dollar measured in gold, we can see that the US Dollar has utterly failed in retaining its value, as its value has plunged about 98% over a mere 50 years. It cannot therefore be seen as a store of value.

Chart of US Dollar measured in Gold. USD price instead of Gold Price.Source: Gold Price Charts, BullionStar

Extrapolating into a likely future, a future in which you will need a stack of USD 100 bills to buy a carton of milk and a couple of eggs, underlines that the US Dollar gold price is meaningless as an indicator of value. When discussing the price of gold, the key is to recognise that gold retains its purchasing power over time. If a 1 oz gold coin can buy an exclusive men’s suit today at USD 1,300 and the same 1 oz gold coin buys an exclusive men’s suit at USD 2,600 tomorrow, this only means that gold is still reflecting USD 1,300 in today's purchasing power and hasn’t gained in value. It’s the US Dollar that has depreciated vis-à-vis gold. Similarly, if the gold price goes to USD 650 and it can still buy the same suit, then it’s merely the US Dollar that as appreciated vis-à-vis gold.

With a gold price of USD 65000, what will the USD be for Milk, Egg and Bread

As a society, we should by now have transcended the idea of measuring value in fiat currencies. Currencies are not a reliable measuring stick. Just imagine if the centimeter, meter, yard or foot were to fluctuate in length.

100 cm 100 years ago has become 2 cm today. Think about it. This is what has happened with our currencies.

The Gold Price                                  

The gold price is an interesting term because the gold price doesn’t reflect what’s happening on the physical gold market whatsoever.

In today’s marketplace, a lot of things are regarded as “gold”. On the London Gold Market alone, there’s 600 times more gold traded each day than there is gold mined globally on that same day.

All sorts of paper gold passes for “gold” on the financial markets. The vast majority, certainly more than 95%, and likely more than 99% of this paper gold is not backed by any physical gold.

“Gold” is created out of thin air as paper obligations. The demand for and supply of this paper gold has little to do with the physical gold market.

During the last couple of year, demand for real physical gold has been insatiable , however the price of gold has not reflected this huge demand. Physical gold has been flowing from the Western vaults to Asia. The Chinese in particular have been vacuuming the London vaults for gold. However, this substantial physical demand hasn't been reflected in higher gold prices because whereas Easterners have been buying physical gold, Westerners have been selling paper gold.

Given that the price of “gold” is set on the OTC paper market in London and on the COMEX futures market in New York, the US Dollar denominated gold price continued to fall between 2012 and 2015 despite the massive physical demand, and instead, it created a physical shortage of gold.

Whether physical demand is up or down 5 tons in China or India matters little when there’s 5,500 tons of paper gold traded each day in London  as visualized in this infographic. London, and to a lesser extent COMEX in the US, are the price discovery markets for gold. However, paper gold on these markets is almost exclusively cash settled with less than 1% of the contracts/futures settled with delivery of physical gold.

The gold price is therefore not dependent on the market fundamentals of physical gold but this may very well change in the future.

With China picking up all physical gold available every time the price slides, widespread shortages are a likely outcome if the gold price ever were to decrease significantly again. Given that the historic vaulting capital of the world, London, has already been running out of stockpiled gold, there just wouldn't be enough physical gold to satisfy demand if the price were to ever plunge significantly again.

It's actually been a healthy development for the physical market’s demand/supply balance  that the gold price has increased 22% in USD Year-to-Date 2016. However, we have to understand that the largest potential for a revaluation of the gold price paradoxically may be preceded by a decrease in gold prices.

When trend seeking Western investors sell their paper gold and the price slides, Easterners take the opportunity to buy physical gold at bargain prices, thereby stressing the physical market with shortages as a result. Such shortages may very well be what ultimately breaks the neck of the paper markets. Because when there is no longer any physical gold available at the price dictated by the paper markets, there will be a disconnect between the price of paper gold and the price of physical gold. Paper gold will go towards zero whereas the price of physical gold will skyrocket.

Such a revaluation of physical gold will bring the fiat paper currencies to their knees as their worthlessness as a store of value will become clear to all.

USD 65,000/oz

What will the price of gold be in 5 years’ time?

Gold is savings - Gold is wealth, and as such, the price denominated in something as inferior as the US Dollar isn't very important.

For the sake of reflection, we can play with the idea of what the price of gold would have to be if the US Dollar were to go on a fully-backed gold standard.

The US gold reserve officially stands at 8,133.5 tons although it has never been properly independently audited. At USD 1,300/oz, this would be equivalent to 340 billion dollars. The total US money supply is about 17,000 billion dollars. For each "gold backed" dollar today, there are therefore 49 unbacked dollars. The gold price would thus have to increase 50-fold to USD 65,000 if the US Dollar were to be fully gold-backed by 16 June 2021.

 

Oil & US Dollar & Gold

In the midst of upwards trending oil prices a decade ago, a US senate committee recommended actions to curb the high oil price to mitigate the negative effect on growth.

Ok, great, the oil price went from north of USD 140 in 2008 to around USD 30 now.

But now, mainstream economists are disappointed that the sliding oil price hasn’t had much positive effect on growth and instead tell us that a decreasing oil price is a double-edged sword at best and a threat to the US economy at worst. This despite the US being a net importer of oil, importing about 20 % of its oil consumption.

oil production US

Source: Cornucopia

According to most mainstream economists, a fall in prices, oftentimes mislabelled as deflation, is a horrific thing that must be avoided at all costs.

Before countering the deflation scare, let us first establish that deflation by definition is a shrinkage in the money supply whereas price deflation is the resulting effect of the general price level for goods and services when the money supply decreases.

The mainstream economist argument is that price deflation is bad because people are said to hold off consumption anticipating even lower prices in the future. Really?

Do people hold off their oil consumption because of falling prices? Do people hold off their consumption of food if prices are anticipated to fall? Are people waiting to buy a mobile phone if the price of the product is anticipated to decrease in the future?

Global oil production has increased, with a corresponding price decrease, in recent years due to innovative technological advancements.

The decreasing price of oil is, despite its negative short-term effects on the producers, a positive event enabling the economy to operate more efficiently. Less resources and costs are needed to produce and consume 1 litre of oil today compared to a year ago. The resources liberated from the increased efficiency can instead be put into something else and thus increase productivity further.

US Dollar

We already know that the banking system is inherently incentivizing reckless debt behaviour to the extent that banks have got to increase their balance sheet continuously, for the fractional reserve based monetary system not to collapse.

Savings used to be the backbone of an economy. With savings, it was possible to accumulate capital used for investments. Nowadays, savings has nothing to do with investing as the money is simply created out of thin air as debt by commercial banks and called capital.

Today, debt, and particularly US Dollar denominated debt, is used as a store of value around the world. This skews everything.

A strong US Dollar is to be expected in such a system.

The US Dollar will continue to strengthen until… it collapses.

The US has been running a trade deficit for some four decades by now and has in the process accumulated a humongous national debt.

How is that even possible?

According to Economics 101, the currency of a country running perpetual trade deficits is supposed to depreciate to balance the trade. With a depreciating currency, imports will be more expensive and exports will be cheaper for others to buy. The trade deficit will thus decrease.

This doesn’t happen in the US though. Why?

The reason is that the value of the US Dollar, functioning as a reserve currency, is dictated by the (savings) demand for the US Dollar in the rest of the world. The US doesn’t have a choice on whether to run a trade imbalance or not. It’s the net producing countries (read China) exporting to the consuming countries (read USA) that is dictating to what extent the US can utilize the exorbitant privilege of issuing debt in the world’s reserve currency.

It’s the demand of the US Dollar as a reserve currency that sets the pace. For the US Dollar to function as a reserve currency, the US is required to run trade deficits for the purpose of distributing US Dollars to the net producers/savers.

When savers save in the same medium as is used for the Medium of Exchange, a collapse always follows the monetary expansion when the debt savings are undone. The trigger point of this may very well be when the flow of physical gold dries up. Freegold is instructive in explaining the mechanism that is likely to correct the current imbalance between the paper world and physical world.

The Prudence of Saving in Gold

Following a collapse of our monetary system, it will be vital to own gold as a store of value. Paper assets will no longer matter. For us to get a glimpse at life beyond this transition, India may provide a good example since basically the whole population are avid gold savers.

In India, people have protected their wealth with gold over generations. For Indians, gold is an asset class that bridges inequalities by giving individuals a shot at protecting themselves against foolish government policies. The government does everything in their power, with the Indian trade deficit as their go to excuse, to have people surrendering their gold. The government has introduced a gold monetization scheme, there’s gold import duties, documentation requirements for buying gold and campaigns to convince people to open bank accounts.

Who’s right? The government or the people?

Let’s compare the track record of the Indian Rupee versus Gold. At the start of 1960, 1 gram of gold cost 5.37 Indian Rupees. On 1 February 2016, 1 gram of gold cost 2,443.59 Indian Rupees excluding the premium stemming from the 10 % import duty. The Indian Rupee as measured in gold has thus lost about 99.8 % of its value since 1960.

Indians don’t expect the government to take care of you from cradle to grave, they realise that they need to save to educate their children and to look after their aging parents and themselves when retiring.

Isn’t the world upside down when prudent savers have to fight the government’s reckless policies to keep their wealth?

When fiat money hyper-inflates, paper gains or paper deficits will no longer matter. Owning physical gold will.