Bitcoin’s divisibility allows it to be broken down into 100 million units called Satoshis, with potential for further division through soft fork updates to micro-Satoshis (msats), enabling adaptation to changing purchasing power and transaction sizes.
Bitcoin’s unforgeable costliness in digital form, like gold’s in physical form, is derived from the energy expenditure in mining, protecting it from counterfeiting and giving it value.
Bitcoin’s natively digital, non-physical nature allows it to be moved at the speed of light and custodied in highly secure ways, including multi-key custody schemas similar to those used for nuclear launch codes.
Bitcoin is considered the world’s first pure money with 0% industrial use value but high monetary use value, while gold’s industrial uses provide a foundation for its value as a store of value.
Bitcoin’s 15-year history and lack of intrinsic value make it less likely to be valued in the future compared to gold’s 5,000-year history and industrial uses.
Bitcoin optimizes price discovery and serves as a unit of account better than gold due to its fixed supply of 21 million, making it difficult to inflate and enabling movement of purchasing power across both time and space without trust in counterparties.
The dollar’s value has decreased 80% since 1971 when the US temporarily detached it from gold, transforming it into a fiat currency with no underlying value.
Bitcoin’s volatility is a function of price discovery, which tends to subside as the market cap of any asset increases, with its price volatility against other assets declining as it has grown.
Bitcoin’s scalability issues make it impractical for everyday transactions, unable to process transactions like Visa or MasterCard, even with the Lightning Network.
Bitcoin’s price volatility and potential collapse make it unsuitable as a store of value, as it could easily decline to $10,000 or lower.
Bitcoin’s centralized nature and lack of decentralization make it vulnerable to government control, potentially leading to regulation following a speculative bubble crash.
Gold has shown remarkable resilience, delivering a 7-fold return over 24 years since 2000, despite frequent predictions of failure.
In the 1970s, US dollar purchasing power decreased by 75% over 10 years due to inflation, while gold price surged from $35 to $850.
The junk bond market and high-yield ETFs face significant liquidity risks, with trillions invested in potentially illiquid bonds.
Corporate bankruptcies in the US are increasing but remain below 1980s levels, with the trend turning in 2023-2024.
Rick Rule, a 71-year-old credit analyst, suggests a 250-300 basis point real yield above the 7.5% dollar deterioration rate is necessary for 10-year bonds to be attractive.
When investing in junior mining stocks, 95% are overpriced, emphasizing the importance of focusing on high-quality companies with strong balance sheets and income statements.
The junior mining space experienced extreme sentiment shifts, from negative in 2020 to suddenly positive in 2021, with companies able to raise 50x their initial funding targets.
Diversification in junior mining investing is crucial, combining royalty companies, major producers, and juniors for optimal sector exposure.
The market cap to GDP ratio has reached an unprecedented 200%+ of GDP, surpassing the 2000 dot-com bubble peak of 150%, indicating a potentially overvalued stock market.
Current market conditions, including the 200%+ market cap to GDP ratio, high inflation, and Fed’s tightening stance, suggest a possible 50-60% stock market crash reminiscent of the 2008-2009 crisis.
Previous market cap to GDP ratios of 70% in the 1970s and 120% in 2016 led to 20-year bull runs, while the current 200%+ level may signal the end of a 5-8 year bull run.
The Fed’s rate hike from zero in 2021 to 4.5% in 2022 caused the market cap to GDP ratio to decline from 200%+ to 141%, demonstrating the significant impact of monetary policy on market valuations.
The market cap to GDP ratio serves as a long-term indicator for stock market valuation, with the current 200%+ level being unsustainable and potentially signaling a major market correction.
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