Chart Signal: Bitcoin Breaks Down While Gold Holds Strong #soundmoney

Key Concepts

• Moving Averages: 50-day (blue line) and 200-day (red line) used for technical analysis of price trends.
• Overstretching: When a price moves significantly far above or below its moving averages, indicating a potential reversion to the mean.
• Spot Gold/Silver: Represents the current market price for physical gold and silver.
• Fundamental Value: The intrinsic worth of an asset, often tied to scarcity, utility, or underlying economic principles.
• Sound Money: Money that governments and central bankers cannot easily inflate away, often exemplified by gold.
• Government Shutdown: A situation where government operations are halted due to a lack of funding.
• Tax Breaks for the Wealthy: Policies that disproportionately benefit high-net-worth individuals and corporations.
• Community: Emphasized as crucial for providing security, food, water, energy, and barterability.
• Wealth Preservation: Strategies to protect assets from inflation and economic downturns, with gold being a primary focus.
• Mining Stocks: Shares in companies that extract precious metals; distinct from owning physical gold.
• Redeemable Gold: A system where currency can be exchanged for a fixed amount of gold, imposing fiscal responsibility on governments.
• Barterability: The ability of an asset or skill to be exchanged for goods or services.

Technical Analysis of Precious Metals and Bitcoin

The session begins with a technical lesson reinforcing the concepts of the 50-day moving average (blue line) and the 200-day moving average (red line). The speaker explains that when a price becomes "very stretched" above or below these averages, it tends to revert back towards the 200-day moving average. This is illustrated with charts of spot gold and spot silver, where prices that were extremely stretched above the 200-day moving average have pulled back and are now consolidating within a narrow range, allowing the 200-day moving average to "catch up." The 200-day moving average is described as acting like a "rudder on a boat," guiding the price. This behavior is presented as normal and not an issue for gold and silver.

Bitcoin's Technical Performance

The speaker then contrasts this with Bitcoin, noting a significant "300-40 billion dollar wipeout" that occurred recently. The Bitcoin chart, using the same time frame and moving averages, shows that Bitcoin was also extremely stretched above its 200-day moving average. However, unlike gold and silver, Bitcoin has dipped below its 200-day moving average. This is presented as a potential reason for Bitcoin's current lack of upward momentum.

Fundamental Value Distinction

A key distinction is drawn between spot gold, spot silver, and spot Bitcoin regarding their fundamental value. The speaker argues that neither spot gold nor spot silver truly reflect their fundamental value, and the same applies to spot Bitcoin against the US dollar. The core difference highlighted is the energy required for creation: energy is "used up" in Bitcoin and "held" in gold, which is indestructible and can be used an "indicate or amount of times." The fundamental value of gold is tied to the amount of "garbage governments issue" versus the amount of "sound money" that exists. The fundamental value of Bitcoin, however, is still being tested, and its true worth is not yet definitively known.

Economic Outlook and Government Shutdown

The discussion shifts to the broader economic and political landscape. The speaker notes a "cloudy economic outlook," referencing pre-existing poor "reportability" even before recent job cuts and the ongoing government shutdown, which is in its 42nd day and is the longest in history.

Impact of Government Shutdown

The government shutdown is presented as having a tangible impact, particularly on individuals who are directly affected. The speaker emphasizes that "food becomes the single biggest issue during these transitions," explaining their personal decision to become an urban farmer due to this understanding. The US seeking to halt food aid is cited as an example of these challenges.

Tax Breaks and Wealth Inequality

In contrast to the struggles faced by many, the speaker points out that "we are getting more tax breaks for the wealthy." The IRS is described as quietly retracting limits on loopholes, providing breaks to "giant private equity firms, crypto companies, foreign real estate investors, insurance providers, and a variety of multinational corporations." These breaks are in addition to the approximately $4 trillion in tax cuts signed into law previously. This situation is used to underscore the critical importance of individual independence and becoming one's "own central bank" within a community.

Community and Self-Sufficiency

The speaker strongly advocates for building community to provide "shity" (security) in food, water, energy, and security, as well as "barterability." Silver is preferred for barter, but any physical asset or talent is considered valuable. The importance of learning skills for "wealth preservation," with gold being the primary focus, is also stressed. Community is described as "arguably the single most important thing" for maintaining a standard of living and creating security.

Global Confidence and Sound Money

The speaker questions the impact of the ongoing government shutdown and potential future shutdowns on "global confidence" and the willingness of "global governments, global corporations" to buy US debt. The foundation of the global monetary system, represented by the 10-year Treasury, is depicted as unstable, likened to building a house on a "fault line." In contrast, "sound money" is presented as "bedrock."

Defining Sound Money

Sound money is defined as money that governments and central bankers cannot inflate away. Redeemable gold in the system is highlighted as requiring fiscal responsibility, as it would prevent excessive giveaways. The speaker uses the example of a "10 trillion dollar Zimbabwe note" to illustrate how unbacked currency loses value, and suggests the dollar is heading in a similar direction.

Lasting Damage of Shutdown

Even if the government shutdown ends, the speaker believes it cannot "easily undo and turn back the clock" on the "awful lot of damage" caused over the past 42 days. The trickle-down effect of people not getting paid, leading to defaults and late payments, impacts everyone. The speaker shares a personal anecdote about concerns for their daughters' travel due to airport closures caused by the shutdown.

Mining Stocks vs. Physical Gold

The discussion moves to a question about the safety of mining stocks during a market crash. The speaker, drawing on experience from "Black Monday in 1987," states that "everything melts down" during a major market meltdown, including seemingly safe stocks. They emphasize that mining stocks are "still a stock," representing shares in a business, not actual gold ownership. Mining companies are also vulnerable to external factors like additional royalties and taxes, especially in regions like Africa. Therefore, the speaker does not personally believe mining stocks are safe in a crash, nor do they believe any stock is safe.

Paper Contracts vs. Physical Assets

The speaker differentiates between paper contracts for spot gold and silver, which can be traded quickly, and the physical market, which takes longer.

Estimating Gold and Silver Value

A question arises about approximating the value of gold and silver if they regained lost value. The speaker explains that this can be done by comparing average wages in dollars to gold and silver prices in historical periods, such as 1913. For example, if one had been paid in ounces of gold instead of dollars, the annual value would have significantly increased from around $800 to potentially $800,000. The method involves dividing the average wage by the number of gold ounces to find the historical value per ounce and then multiplying by the current spot price or fundamental value. The website inflationdata.com is also suggested for similar calculations.

The Significance of 3%

The speaker addresses the recurring statement that if "3% of the population to convert to gold and silver, it would be enough." This figure is attributed to the fact that "3% caused the Revolutionary War." The speaker draws a parallel to the current situation where "1% are ruling the 99%," and suggests that 3% of the global population participating in gold and silver could provide a significant voice in the next monetary system. The speaker's preference is for "redeemable gold in the system," ideally at least 40%, meaning that individuals could exchange their currency for gold if they distrusted the system's actions.

Conclusion and Call to Action

The session concludes with the speaker thanking the audience for their time and kind words, emphasizing the importance of community and making a positive difference. The core message revolves around the need for self-sufficiency, community building, and preserving wealth through sound money like gold and silver, especially in the face of economic uncertainty and government instability. The speaker encourages listeners to "be safe out there."