Worth Its Weight In... Silver?

How can this market cap exceed global silver? [The Rude Awakening] March 14, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Worth Its Weight In... Silver? [Sean Ring] SEAN RING Dear Reader, My friend and esteemed colleague Byron King hit another one out of the park. As you well know, Byron is a geologist, lawyer, and former naval aviator. His views are both well-rounded and well-substantiated. That’s why this piece hit me so hard. Traders call this kind of analysis “relative value.” Relative value gives us an idea of where one asset trades against another. Sometimes, the difference or “spread” between the two assets makes sense. Sometimes it doesn’t. If the spread is too cheap and we expect it to widen, then we buy the spread. If the spread is expensive and we expect it to tighten, we sell it. We usually do this with, say, US Treasuries versus German bunds. (Yes, the Germans can’t say “bond” properly, so it’s “bund.” They pronounce it boond.) Or you can trade Ford versus BMW. Other traders like to look at intermarket trades, such as how stocks trade relative to bonds. But what Byron harvested for us today? Something I wasn’t even thinking about. Could something weightless, electronic, and doesn’t throw off cash flow be worth more than all the ancient Roman denarius from 221 BC until now? Dear reader, Byron is about to clean your monetary clock. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( You have [(1) item]( on hold at our warehouse: Item #: [51987]( Status: On hold Value: Approx. $300 Claim by date: 03/15 at 11:59 PM To see how to claim yours simply [click here]( our Head of Customer Experience will show you what you need to do. [Click Here To Learn More]( Bitcoin Outshines Silver: Monetary Terra Incognita, or Perhaps Jurassic Park [Byron King] BYRON KING Big news in both metals and crypto, and definitely for Bitcoin. If you follow Bitcoin, you know it’s been on a tear lately. It's been up over 60% since the beginning of 2024. Not bad for a bunch of electrons. At $60,000 just a few weeks ago, Bitcoin’s total value surpassed that of Warren Buffet’s Berkshire Hathaway. At over $72,000 the other day, Bitcoin’s market cap exceeded $1.4 trillion, which edges out the total value of global silver. What does this mean? In monetary terms, we’re in terra incognita (an unknown land), or perhaps it’s something else, like Jurassic Park. So let’s think it through… First, here’s the chart: [Top asset chart] Top ten assets [ranked by market cap - CompaniesMarketCap.com](. Now, Some Background What’s behind this chart? It’s basic math. Take all the Bitcoin out there, add them up, and multiply by the $72,000 price. There’s your $1.42 trillion. By comparison, take all the silver in markets and inventories – for practical reasons, it must be an educated estimate – times the current price per ounce (about $24.20), and it’s about $1.39 trillion, which is less than that total for Bitcoin. Everything changes over time, of course. Bitcoin doesn’t just go up-up-up, as anyone who has held it over the past couple of years can tell you, when it went down or traded in a range for weeks on end. But for now, of late, Bitcoin is rising. Meanwhile, silver has also been on a rising trajectory (along with gold) based on widespread perceptions of continuing U.S. inflation and related government fiscal mismanagement. It’s a generational flight to safety among those with much to keep safe. The long and short is that, right now, Bitcoin is the eighth largest financial asset in the world, larger even than Meta, formerly Facebook. And it’s the second largest commodity (loosely defined) after gold, which ranks far ahead at number one. All things being equal – and things are never truly “equal” – if Bitcoin hits $85,000, it will be larger than Alphabet/Google; and if it tops $94,000, Bitcoin will be bigger than Amazon. Bitcoin is big and getting bigger, but how should we think about this? Terra Incognita, or Maybe Jurassic Park? First, step back and consider what it takes to become one of the world’s largest financial assets. Some things are obvious. Gold has over 5,000 years of recorded human history. Its use as a form of money dates back to ancient Samaria and before. So, gold is a no-brainer as a key financial asset and instrument. Silver is in the same boat as gold. People have used silver for finance since time immemorial. Roman, Greek, Egyptian, Chinese, and other ancient coinages speak for themselves. The archaeology is there. Indeed, silver has long been money. Just because President Lyndon Johnson removed silver from U.S. currency in 1965 doesn’t mean the metal has lost its roots in finance. Now, look at another massive play on that list of ten market caps above: Saudi Aramco. Where’s the value there? In oil, of course, meaning in a useful and valuable form of energy. Everybody in the world uses oil, and most people wish they could use more of it. It stands to reason that oil will be around for decades, if not centuries. If anyone tries to tell you that the modern oil age is over, zero-carbon, etc., just walk away because they are silly and don’t know what they’re talking about. (Long story; not now.) In other words, gold, silver, and oil have value straight out of the ground. It’s easy to think of them as key elements of global finance. Now, look at those other massive financial assets: Microsoft, Apple, Nvidia, Amazon, Alphabet and even Meta. What’s the claim to financial fame for those companies? They’re tech plays, and it’s not like they have any history as sources or stores of value. They’re all less than fifty years old; for example, Microsoft was founded in 1975, and Apple in 1976. And the others are all even more recent. As business concepts, the companies are built around a mix of digital hardware and software, with related sales operations underneath to create massive cash flow. But none of the tech companies have any roots as “money” by any classical definition. Nor do they make pretenses to be currencies. Okay, we’ve covered nine names on that top ten market cap list, bringing us back to number eight, Bitcoin. And here’s that terra incognita: Is Bitcoin anything like the other nine names? Does Bitcoin “sell” you something, like Amazon or Microsoft? No, you don’t buy books, sporting goods, or software from Bitcoin. And Bitcoin is definitely not a microchip play like Nvidia, or an iPhone like Apple. Nor is it a relational database and search engine like Alphabet or Meta; Bitcoin doesn’t generate cash by sucking up all the advertising revenue in the world. Meanwhile, Bitcoin does not produce energy like Saudi Aramco. Indeed, for the amount of, say, electrical energy required to “mine” just one Bitcoin (about 1.5Mw), you could melt about five tonnes of steel (about 300Kw each, more or less). This means that Bitcoin is a significant energy net user and not at all a net energy producer. To be sure, Bitcoin is not gold or silver. It’s not tangible. It has no mass. It’s not even fungible in the sense that an ounce of pure gold or silver is the same as any other ounce, not including metal shaped into coins, of course. In other words, there’s no Bitcoin on the periodic chart. According to Investopedia, Bitcoin is a “virtual currency designed to act as money and a form of payment outside the control of any one person, group, or entity, thus removing the need for third-party involvement in financial transactions.” In other words, Bitcoin is a mix of energy and computing power applied to blockchain code. In the end, it’s electrons in a storage device (your Bitcoin wallet, so to speak), leading to a defined, unique, and specific item within the digital ecosphere. The current cachet of Bitcoin is that it’s a form of payment, which presumes that a market system sets prices for real goods, and people will transact for those goods in this virtual currency. Well, okay, but so much for eliminating “third-party involvement.” All this, and Bitcoin is quite new to the world, conceived way back in… (checks notes)… 2009. That’s not exactly the deep historical pedigree of gold, silver, or oil. And the other large market cap plays listed above are actual businesses that predate at least 2009, even the current chipmaking darling Nvidia. As financial instruments go, and in terms of valuing an asset, Bitcoin is not just a new kid on the block, it’s an unknown play or terra incognita. And it’s probably not out of bounds to wonder if there’s a (metaphorical) Jurassic Park behind the wires here. What Could Go Wrong? Right now, lots of people are making a lot of money in a hurry from Bitcoin, right? So what’s the problem? Begin with the idea that when lots of people make a lot of money in a hurry from the same idea, there might just be problems. First comes Bitcoin's energy-intensive angle, noted above. Again, you can melt five tonnes of steel with the same electricity required to mine one Bitcoin. That’s a lot of electrons. So, one problematic issue is that Bitcoin – along with other cryptos, and definitely with artificial intelligence (AI) – is among the growing players for access to downstream electrical loads on the U.S. and global grid. And that electricity must come from somewhere. On the plus-side, people have come up with innovative energy methods for mining Bitcoin. They use solar power out in the desert; or burn “stranded” natural gas in far-off oilfields to power computer banks; or they set up shop in Iceland with its ample geothermal power. But the point is that Bitcoin uses high levels of energy in a world where energy is becoming more difficult to produce in amounts that nations and continents demand. Then we get to the issue of degraded power grids across the world, which in the U.S. means a system that’s generally old and maxed out. In the U.S., this growing power demand is absolutely a problem. Cryptos like Bitcoin (and related energy demands like AI) are about to super-strain the grid, leading to brownouts and blackouts. Move on to the communication and financial system required to utilize Bitcoin. Yes, we have the Worldwide Web, undersea cables, overhead satellites, and more. But if you’re looking for a way not to involve third parties in transactions, this isn’t it. In so many ways, the fate of your Bitcoin is in the hands of others. The world is filled with pitfalls to global communication, both accidental and intentional; the cut communications cables at the bottom of the Red Sea stand out, for example. The takeaway on this energy point is that storing and accessing your Bitcoin will require more than minimal third-party reliance. And now we arrive at the Tyrannosaurus Rex of Jurassic Park, to cultivate that metaphor I laid out before: What happens when governments want in on the action? Because it’s foolish to think that Bitcoin is some sort of unbreakable code. There’s no such thing. The biggest and best codebreakers in the world work for the likes of the U.S. government at the National Security Agency, if not counterparts in Russia, China, and other locales. Sooner or later, someone somewhere will figure out how to pickpocket your crypto wallet. Perhaps the government's touch will be benign, in the form of merely taxing your wealth or just the “gains,” as defined by tax-writing bureaucrats. Or perhaps things will be darker, and some government actor will wage electronic warfare on you and your Bitcoin just because they can. You never know, right? (Ask a Canadian Trucker whose bank accounts were seized.) One way or another, you should accept the fact that, sooner or later, Bitcoin will come within government reach if not under government control. This is not to say don’t swim in the Bitcoin pool. It’s to remind you that this electronic creation has come along fast, in a tumultuous time of monetary and fiscal irresponsibility, certainly by the U.S. government. Understandably, many people want to escape from the hand of the government; however, it’s just too bad that the government thinks differently. (Vote harder, I guess.) As everything plays out, how will Bitcoin remain denominated? In dollars? In other foreign currencies? Well, if that’s the case, then it’s back to playing in the government sandbox. Meanwhile, think outside the Western box here. Russia, China, and many other nations are accumulating gold and silver, and they, too, can do blockchain accounting. So what happens when those nations decide to pool their metal holdings and back each ounce with a blockchain code, essentially establishing their own gold-backed cryptocurrency? Perhaps a digital, gold-backed ruble or yuan. Well, overnight your code-backed Bitcoin will have to compete against a gold-backed electronic currency. And that pulls the plug on a key aspect of maintaining underlying value. Something Big, But… To sum up, yes, many people are doing well with Bitcoin. And yes, Bitcoin just overtook silver in terms of market cap. Something big is happening. But this big Bitcoin thing is also a new financial thing with no real history. Don’t be myopic or target-fixated on Bitcoin. In the big scheme, we’re all up against traditional gold, silver, and oil, as well as geopolitical competition from other nations that may not want to play by the Western rules anymore. If you’re doing well with Bitcoin, enjoy the ride. But all rides come to an end. And don’t forget to buy into the sturdy old classics, gold and silver, with their millennia of heritage. That’s all for now. Thank you for subscribing and reading. All the best, [Byron King] Byron W. King Senior Geologist, Paradigm Press Group In Case You Missed It… The 100% Foolproof Way to Obviate DEI [Sean Ring] SEAN RING It’s the question of the age. If DEI is a known “bad,” how do we eliminate it? DEI, of course, stands for “Diversity, Equity, and Inclusion.” It’s the flagship acronym in a trio of awful things our world suffers from. ESG and CRT are the other two. Happily - and necessarily for him - Larry Fink, CEO of BlackRock, famously reversed his position on Environmental, Social, and Governance investing. Critical Race Theory has largely been dismissed as nonsense, and rightly so. As I pondered getting rid of DEI, I was reminded of a speed reading course I took as a broker. I hated reading our dull research, and I thought I could “absorb” it faster by speed reading. A few years later, Tim Ferriss published an article on speed reading. Many of his readers were skeptical. Though I rarely write comments, I thought I’d chime in. I want to share it with you today. Talking With Tim [Here’s what I wrote]( with minor adjustments: Let me add something I learned when I took my first speed reading course. I did it as an institutional broker for a large investment bank in London. I hated reading the (useless) research our economists were sending out, so I wanted to cut my time getting the “house view.” My instructor shared this with us: He was teaching a class in Oxford. His first student came into the room and sat very near him. Seinfeld would have called him a close talker. The kid was staring at the teacher’s lips, and the teacher, quite unsettled by this, moved away as subtly as he could. The student noticed this and wrote on paper, “I’m sorry, but I’m deaf. I need to read your lips to understand you.” The teacher now realized why his student was on top of him and was calm. As the tuition began, the first speed reading assessment came in. On average, most people read about 250 words per minute, or about as fast as we talk, as we sound the words in our head as we read. This kid came in at 1,500 words per minute. The instructor was astounded. Now, after trying and improving a few times, most people can get over 1,000 words – I hit over 1,100 per minute – but it takes a couple of tries. This kid was doing 1,500 per minute every time, without the tuition. The instructor told the rest of the “normal” people in the room to try to stop reading the words, just look at them, and trust their brains to do the rest. The deaf student, reading his lips, starts furiously writing on paper, “Do you mean to tell me that people who can hear sound out the words in their heads when they’re reading?” The instructor nodded affirmatively. The deaf student then wrote this: HAHAHAHAHAHA! If one is deaf (I now see), one can’t assign a sound to a word. They just look at shapes. In fact, one of our exercises to get us accustomed to this was to turn the book upside down and to “read” the gobbledegook. Much like Su Doku, which is NOT a numbers game but a game played with numbers, you need to get nine shapes in a square, row, or line without repeating. We’re using numbers to do this, but really, it’s about the shapes. Stop saying the words in your head, and your speed will improve 3-4x… See, the “disabled” have much to teach us. [URGENT: Your New Crypto Book Is Awaiting Shipment]( [James Altucher]( If you’ve kicked yourself for not investing in cryptocurrency… Watching Bitcoin go from $61… To $1,000… To over $60,000… Then pay close attention. Famous crypto millionaire James Altucher just released a brand-new book on crypto… [And he’s releasing a limited number of books to folks who click here now](. We have a copy reserved in your name, and we just need to hear back from you. [Click here now to see how to claim your copy](. [Click Here To Learn More]( The Solution The solution is to hire the right people and discover their “superpowers.” In this case, we found out that deaf people - or at least, people who are born deaf - can’t subvocalize when they read, making them high-speed readers. When we see the “golden arches,” we immediately think, “McDonald’s.” If we put a bunch of corporate logos in a line, we’d know each one on sight. People who can’t subvocalize read text like we “read” logos. It happens instantaneously. One way to discover employees' superpowers is to simply ask them. Formally, companies can ask them through open dialogue or skill assessments. It may be as simple as granting more autonomy to employees on their projects. But most people instinctively know this stuff is best done informally. Companies can conduct more team-building activities or encourage skill-sharing through workshops. Of course, this is much harder than separating resumés by race, color, or creed, and that’s why companies avoid it. Wrap Up DEI is easy. Figuring out your employees’ superpowers is much more challenging. Companies would tick boxes instead of improving over time. That’s why Boeing’s wings keep falling off, Deadspin media fired its staff and shut down, and Silvergate tarnished. Finding the best in a company’s employees doesn’t require taking the hard road but taking one less traveled. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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