Gold, Silver, or Bitcoin?

“No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”—The U.S. Constitution (Article 1: Section 10, Clause 1)

Our Founding Fathers—Franklin (1706-1790), Washington (1732-1799), Adams (1735-1826), Jefferson (1743-1826), Madison (1751-1836), and Hamilton (1755-1804)—didn’t trust the States. They didn’t trust the national government either, which is why they signed the Declaration of Independence (1776) and drafted the U.S. Constitution (1787) so carefully. Their efforts lasted 126 years, until a newly created Federal Reserve took priority over the constitutional republic.

On Friday, gold reached another all-time high of $2349.10 and silver hit $27.60. According to Bloomberg, gold’s rise has left people puzzled, scratching their heads looking for a “fundamental” reason like Fedspeak or official government data. This isn’t the gold and silver market we’ve experienced over the last eight years or so. Something big is under way, and we’re not going to get details until the price is much higher and gold and silver are difficult to find.

As reported last weekend by ZeroHedge, the interest payments on the debt are now $100 billion every four months, while the U.S. debt is rising $1 trillion every three months. How is this sustainable? And how can the U.S. dollar remain as the world’s reserve currency? It looks like we are entering the final phase of inflation, permanent destruction of the world’s reserve currency, established in 1944. Anyone who has wealth will have to decide how they’re going to invest it, and with U.S. treasury auctions failing, the most obvious possibilities are gold, silver, or Bitcoin.

Warren Buffet advised to never invest in a business that you do not understand. In the past, investors chose businesses in the global economy to buy with their dollars, businesses that were likely to succeed in a bull market fueled by money printing. Now that the dollar is failing rapidly, investors will buy businesses that they think will create money and/or value during an economic depression and sovereign debt crisis. So my goal for this post is to break down the three most obvious money-creating businesses so that you can decide what is best for you.

It’s obvious at this point that the U.S. Treasury is going out of business. Their bonds are no longer profitable because they cannot create value with inflation. They are debt contracts that eat away at your dollars faster than you can spend them. That leaves gold, silver, and Bitcoin, as the possible new money making machines. Wealth is never destroyed; it is only transferred to someone else. For the sake of this exercise, imagine I give you $67,000 to invest in something that you can only sell after five years. As of today, you have three choices:

  • 1 Bitcoin
  • 28 one-ounce gold coins
  • 2481 one-ounce silver coins

First, a thought experiment. Can something we see be valuable and saleable if it has no body or mass of its own? In other words, if you snap a digital photo of a silver coin, make a limited quantity of duplicates, and put them on a blockchain, could they be valuable in the future? Sure! People believed that a non-fungible token (NFT) was worth millions of dollars if it was recorded on a blockchain. And right now, people believe that a Bitcoin (string of binary digits) is worth $67,000.

Value is therefore whatever someone is willing to pay for something, not what someone wants to get for selling it. If you walk by a hotdog stand, and you smell the hotdogs cooking, can the owner force you to pay for the smells? Can he have the police haul you off to jail for stealing the smell of his hotdogs? Of course not! You can’t capture and monetize a smell on its own. Wait! I take that back. RollingStone reported A TikToker Made $200,000 Farting In Jars. Moving right along…

Does a reflection in a mirror have value? You can capture a mirror image on a pane of glass or a sheet of shiny metal, but the image has no body or mass of its own. The photo below is a visual representation of a real hand, but it is not a hand and it’s transient. In the same way, a string of digital bits is a visual representation of a real image or idea, as a set of numbers that can be stored and handled by a digital computer. But it is not that thing or idea. This process of creating visual representations requires a constant supply of energy. Without energy, the data is useless.

There are only two real phenomena in the universe—matter and energy.  According to Britannica, “Matter is the material substance that constitutes the observable universe and, together with energy, forms the basis of all objective phenomena. Energy, in physics, is the capacity for doing work. It may exist in potential, kinetic, thermal, electrical, chemical, nuclear, or other various forms.” A bit is not matter, or useful energy, and it does not do work. So what exactly is a Bitcoin?

It wasn’t until the 20th century that scientists split the atom and discovered its parts: protons, neutrons and electrons. They then figured out that protons and neutrons were composed of smaller particles called quarks, bound together by sticky particles called gluons that hold the universe together. As of today, gluons are the world’s tiniest known particles of matter. These bits, however, are not the bits in Bitcoin. Bitcoin is like the reflection you see in a mirror. You have to stand in front of the mirror indefinitely, or your reflection goes away. In the same way, Bitcoin transactions need a constant supply of energy or the whole idea goes poof.

In the physical world and in every economic system, there are three major forms of energy: potential, kinetic, and dissipation. Potential energy is stored. In an economy, this would be capital (money, inventory, real estate, durables, etc.). Kinetic energy is matter in motion or inertia. This would be goods and production flows in an economy. Energy dissipation happens when one form of energy (e.g. potential energy) is converted into another (e.g. kinetic energy), and this is done through services in an economy. Whenever energy changes forms, it experiences entropy, and some of its useful value is lost.

When silver and gold are mined and made into coins and bars, there is energy dissipation. Kinetic energy in the form of labor is converted into potential energy in the form of capital. When a Bitcoin is mined and stored, or transacted, kinetic energy is dissipated by increased entropy, and its usefulness in the real economy for mining, producing, and transporting goods and commodities is lost. Think about it—if energy and resources become less readily available, more expensive, or in short supply, Bitcoin will be banned because the economy will require that energy to survive. It will not squander precious energy resources on the exchange of visual representations.

Anything that can be standardized in value can be money, but visual representations cannot be standardized in nature. This is because the energy that runs an economy is a commodity that must be obtained through labor. It is not created out of nothing, and it is not free. In the Hudson Bay Territory, beaver skins were standardized and used as money. In Ancient Egypt, it was cattle. In Africa, the East Indies, and China, they used shells for awhile. In China, they used knives and cloth. Throughout history, people have used gold, silver, and copper for money. All real money has only ever been material. The shekel, livre, lire, and pound are all measures in weight.

Silver is the best reflector of visible light known to man. It is used for cars, solar technology, electronics, soldering, and brazing, engine bearings, medicine, water purification, jewelry, tableware, and precious metals portfolios. It acts as a catalyst to produce two important chemicals: ethylene oxide and formaldehyde. It used to be money before the fiat empire started controlling its price with digital contracts made out of thin air. There is no physical backing for a large number of these contracts.

Gold is a sovereign asset of nations, the supreme potential energy of economies, and it is used by nations to store wealth and trade energy. It has many other purposes which the World Gold Council explained in a series of videos two years ago:

The Golden Thread: Episode 1, The Next Frontier – traces gold’s presence in historical and current events of space exploration. We learn of gold’s protective qualities against solar radiation, its role in today’s cosmic exploration via satellites and Mars rovers, its striking use in the James Webb Space Telescope, and the confirmation of gold’s origins in the cosmos.

The Golden Thread: Episode 2, Unlocking the Extraordinary – learn about the value of gold as a material in electronics, its role in circuit boards and transistors, and its impact when applied to performance vehicles. It is also revealed how gold is central to some of the exciting opportunities on our horizon for renewable energy.

The Golden Thread: Episode 3, Making Meaning – explains the auspicious value of gold and its role in Eastern and Western culture; from the financial independence it represents to its use in elevating meaning in art. We also learn about gold’s use in the technology that will help us to solve otherwise insurmountable challenges and unlock some of the greatest mysteries to humankind.

The Golden Thread: Episode 4, Transforming Life – chronicles early alchemical thought of gold being useful to science and medicine, and the realization of some of those early hypotheses thanks to gold nanoparticles. Specific applications of gold nanoparticles, including testing, virus destruction and vaccine delivery are detailed, and we see a lens into the future of medical monitoring and wearables via “electronic skin.”

The Golden Thread: Episode 5, The Spark – gold’s hidden role as a spark of our innovation. Gold’s continually useful and surprising abilities in Research & Development are revealed, with a spotlight on the potential of gold-containing drug Auranofin. We also look at gold’s role in sparking circularity.

So what’s it going to be? Which money-making business are you buying with your $67,000 tomorrow? A string of digital bits? Silver? Gold? Or silver and gold miners? Which are the money makers? If you’re still undecided, watch this 58-minute video. Find out why the Federal Reserve is a violation of the U.S. Constitution, a banking cartel that benefits a group of insider elites, and how the corporate media facilitates partnership between the Fed and Congress.

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