Gold is a dying yellow rock.
As a former gold bug myself, its a little painful to admit when you’re wrong, but I was wrong. It is now absolutely clear that gold served as money for a really long time, but it has now caught a incurable disease, and will soon be demonetized completely.
And because we cannot trust governments, we each individually have to figure out how best to protect ourselves from the inflationary policies that are only going to increase in the decade ahead.
Change is inevitable - the stubborn investor suffers as the world changes around them.
Gold is Inefficient (Analog) - Bitcoin is Efficient (Digital)
Extraction of gold from the earth’s crust is painful and backbreaking work.
The original “proof of work” however, and its been extremely beneficial to mankind overall.
Having a hard money that represents labor is the largest factor in the expansion of civilized society, and a massive driver of technology following the industrial revolution, but there’s been one problem in the last 50 years…
Gold is analog
When something uses analog tech, its subject to noise, which distorts the value of the signal.
The signal gold displays is under constant distortion.
Nobody knows exactly how much gold is out there. No audits are available verifying how much gold is above ground, and supply below ground is a wild card. Some speculate there are unlimited supplies of gold in space.
Additionally, Central Banks are the largest hoarders of gold, yet they suppress the natural price discovery process via governmental dictates.
Bitcoin is digital
Digital tech is immune from noise when engineered properly, and is pure signal.
The signal Bitcoin displays is pure signal, when you look at the code itself.
Humans may try to distort the signal with their lies, noise, FUD, etc, but at is core Bitcoin is a contained system that can be completely audited by anyone with minimal amounts of technology.
Instead of a handful of Central Banks managing the money via gold and its red-headed stepchild - fiat currency, the Bitcoin network is completely distributed worldwide. Even better, it is managed voluntarily by individuals who reach consensus based on agreed upon rules.
Game over - digital dominates analog technology.
Energy Input Costs For Gold Miners Are Rising
Gold miners face huge risk when it comes to their energy inputs.
Oil is the lifeblood of the mining industry. Thousands upon thousands of earth moving vehicles powered by diesel fuel are necessary to extract those gold flakes out of the earth, and its only going to get more expensive.
Because inflation is here to stay, and agree with it or not, there is an emerging war on oil. Governments must inflate away their massive debts, and the only way to do it barring and admission that its over is by inflation. We all know they aren’t just going to close up shop, so expect ridiculous money printing.
But won’t that help the price of gold itself?
Generational Differences Insure Gold Miners Demise
Its quite possible gold does have a nice run-up from the $2,000 USD price as inflationary pressure continues.
But gold has competition now.
For decades, people have been storing their wealth in two vehicles which continue to protect from money printing, stocks and real estate.
While they aren’t as liquid as gold, they have been able to keep pace with the ever increasing money supplies shoved upon society by Central Banks and government.
And we haven’t even gotten to the latest in savings technology, Bitcoin.
Unlike gold mining, Bitcoin can run off of any number of energy sources. In fact, Bitcoin miners constantly they to find the cheapest energy, as their profit margins increase if their input cost decrease.
Add it all up, and gold is doomed.
- Rising energy inputs
- Analog technology
- Captured pricing mechanism
- Unauditable supply
- Rigorous competition from several asset classes
- Zero counterparty feature matched by Bitcoin tech
- Generational shift change - young people aren’t gonna buy shiny rocks
The final nail in the coffin will come when Central Banks seek to unload every last ounce of gold for the remaining Satoshis out there in the marketplace.
Game over, gold miners.