How blockchain could send these gold stocks soaring
Monday, 21 October 2019
By Bernd Struben
- Attention traders!
- Fine lines…and thin skin
- Meanwhile across the Ditch
- ASX 200 Ripe for a Correction
We kick off your Monday Port Phillip Insider with a question.
How many satoshis is a troy ounce of gold worth?
If you think you have the answer, jot it down before continuing.
If this seems like an odd question, bear with me. And in case you have no idea what the question even means, let me explain.
A satoshi is the smallest unit that bitcoin can be broken down to. You can think of it as one cent in dollar terms. Although the Aussie one cent (and two cent) coins were pulled from circulation way back in 1992.
It’s named after Satoshi Nakamoto. That’s the still unidentified person…or people…who developed bitcoin and the first blockchain database.
And satoshis are edging into the mainstream. You’ll now even find the term listed in the official Oxford English Dictionary.
In short, bitcoin can be broken into 100 million satoshis. Meaning, if my back of the napkin maths are correct, an ounce of gold is worth 18.23 million satoshis.
Why do I bring this up?
Because gold — the world’s oldest reliable store of wealth — is fast moving into the new world of cryptocurrencies. The world’s newest, and still unproven, store of wealth.
‘Digital asset manager CoinShares is putting gold on the bitcoin blockchain.
‘Working with wallet provider Blockchain and precious medal trader MKS (Switzerland) SA, the U.K.-based firm announced Tuesday a gold-backed network for trading tokens representing digitized physical gold, a project two years in the making…
‘CoinShares chairman Danny Masters said the product’s network security is based on the bitcoin state, with DGLD operating as a sidechain of the bitcoin network.
‘“DGLD combines the stability of the world’s most enduring asset, gold, with the security of the world’s most resilient network, Bitcoin,” Masters said in a statement…
‘“You can now have the peace of mind of Swiss vaulted physical gold, with the same convenience, but not the same layers of middlemen, as owning a gold ETF.”’
The DGLD tokens are each backed by 0.10 ounces of gold held in a Swiss vault. CoinShares states they have over US$20 million of bullion stored for the project.
But maybe you’d feel better with your physical gold held closer to home. No worries. The Perth Mint also just got into the digital token gold game.
In its 11 October media release the company states:
‘The Perth Mint Gold Token (PMGT) will be the first digital gold token on a public blockchain backed by government guaranteed gold.’
PMGT is built on the Ethereum network and it’s issued by InfiniGold.
Investors can buy and sell gold tokens on the public blockchain while their physical gold remains securely stored in the Perth Mint’s high security vaults. And for added confidence, it’s all backed by the Western Australia government.
Now it’s early days for the move to digital gold tokens. But if the trend takes off — and I believe it will — it could see a marked increase in demand for bullion from every day investors. And with a tightening global supply, that could see the price of gold soar.
This in turn will be good news for Australia’s best placed gold miners.
For Greg Canavan’s favourite gold stock plays — and his shocking conclusions on why the world has hit ‘peak gold’ — click here.
Now, to the markets…
Over the weekend, the Dow Jones Industrial Average closed down 255.68 points, or 0.95%.
The S&P 500 closed down 11.75 points, or 0.39%.
In Europe the Euro Stoxx 50 index closed down 9.21 points, or 0.26%. Meanwhile, the FTSE 100 dropped 0.44% and Germany’s DAX closed down 21.35 points, or 0.17%.
In Asian markets Japan’s Nikkei 225 is up 81.91 points, or 0.36%. China’s CSI 300 is up 0.31%.
In Australia, the S&P/ASX 200 is down 5.98 points, or 0.09%.
West Texas Intermediate crude oil is US$53.60 per barrel. Brent crude is US$59.22 per barrel.
Turning to gold, the yellow metal is trading for US$1,491.61 (AU$2,178.17) per troy ounce. Silver is US$17.57 (AU$25.66) per troy ounce.
One bitcoin is worth US$8,183.16.
The Aussie dollar is worth 68.48 US cents.
If you kept up with Port Phillip Insider last week, you’ll know all about Ryan Dinse’s premium trading service Billion Dollar Breakout Trader.
By following the money flow of the ‘smart money’, Ryan developed a trading system over many years…and millions of dollars in trades. He calls it the ‘Silent Crossover’. And it gives him a big edge in predicting when a small-cap stock is about to breakout into a much larger company.
The idea is to get into these stocks before they see a massive share price rally. And Ryan’s current trading track record shows the idea has legs. In fact, 12 of his 13 open trades are in the green.
I won’t rehash the details of Ryan’s proprietary trading system again today. You can find those in our website archives…or here.
But I do want to let you know that publisher James Woodburn has extended the special offer to join in with Ryan’s trades over at Billion Dollar Breakout Trader by one day.
That offer was slated to end at midnight last night. Now you have until midnight tonight to see if Billion Dollar Breakout Trader is the right service for you.
Fine lines…and thin skin
A glance at the calendar tells me that bringing you the Port Phillip Insider has been my daily gig for more than two years now.
But I’ve been writing sporadic editions of the Insider for much longer. Almost since my first days with Port Phillip Publishing. That was back in 2013, when it was still called Scoops Lane.
In either case, in January 2015 I was writing one instalment each week. Which found me on deck the day after the French magazine, Charlie Hebdo came under attack by two warped psychopaths. Who happened to also be brothers.
By the time the attack was over the enraged brothers had killed 12 people and injured 11 more. Why? For revenge on the editors and staff of Charlie Hebdo for having the audacity to print images of their revered prophet, Muhammad.
That’s the ultimate blasphemy in their eyes. And many others.
Yet I opted to reprint one of the offending cartoons in the Insider that week. A spot of solidarity that had a few of our staff peering anxiously out the office windows.
But in the free world we don’t let other people’s superstitions gag us. Whether it’s drawings or words.
Or at least we should not. Yet in Australia, the thin skinned are clamouring for more religious based censorship…not less.
‘Kyle Sandilands is reportedly being investigated by the ACT Human Rights Commission over his controversial Virgin Mary joke.
‘The DJ shocked listeners last month when he said Mary was not really a virgin but that “someone chock-a-blocked her behind the camel shed”.
‘Now a complaint has been made against him from a man in the ACT, which has religious vilification laws…
In his complaint, Mr [Khalil] Farah said he was traumatised by the “vile, offensive, woefully ignorant and religiously charged” comments.
‘He said he had suffered stress, trauma, and loss of sleep.’
We’ve sounded the warning on Australia’s overreaching hate speech and religious vilification laws before.
Today we sound it again.
It’s a very fine line between outlawing images of your prophet and censoring jokes — no matter how tasteless — about your saviour’s mum. Especially if his mum has the honorary title of ‘Virgin’. (I mean, the jokes kind of write themselves…)
At the end of the day, we can censor ourselves back into the Stone Age. Or we can learn to shrug off or tune out those things that may cause us loss of sleep.
Meanwhile across the Ditch
Since I’m in the thick of it already, I’ll leave off today with two headlines.
They both entail New Zealand…and how the nation reacted in the aftermath of the mosque massacre in Christchurch.
The massacre left 50 people dead. It was the first — and we hope last — of its kind in New Zealand.
Prior to the shooting rampage by a crazed white supremacist, New Zealand’s police were generally unarmed. And the public was able to own semiautomatic weapons.
Within a month of the shooting that all changed.
This headline comes from ABC News, ‘New Zealand gun laws pass 119-1 after Christchurch mosque shootings’.
As an Aussie reader there’s a good chance you agreed with the Kiwi government’s decision to ban a range of guns. As your American raised editor…I had serious reservations.
Over the weekend those reservations were rekindled.
This headline, from CNA, sums up why: ‘New Zealand introduces armed patrols after mosques shooting’.
Less guns for the people.
More for the government’s agents.
It’s almost enough to cause me stress, trauma, and loss of sleep!
Shifting back to the world of finance…
Is the ASX due for a sharp correction?
As part of Port Phillip Insider’s new Monday feature, below you’ll find the latest trading insights from market veteran Murray Dawes.
In his premium trading service, Alpha Wave Trader, Murray uses his proprietary ‘slingshot method’ to focus on extracting huge profits from stocks…as fast as he can.
Today he takes a look at the current state of the ASX 200. And the possibility of a correction in the short term.
You can scroll down and click on the image below to watch Murray’s latest video now.
To learn more about what Murray offers over at Alpha Wave Trader click here.
ASX 200 Ripe for a Correction
[Click on the picture to see why Murray thinks the ASX 200 is about to see further selling pressure in the short term.]
Technical analysis is a risk management technique rather than a crystal ball. I want to show you my trading model so you can see how I use price action to find trades with compelling risk/reward.
The first question any trader or investor needs to ask is ‘where am I wrong?’ rather than ‘how much money can I make?’
If you start asking the right questions of the market you can find suitable answers.
I’m interested in where markets change direction and how they change direction. That’s it.
It sounds simple, but once you dive down into the nitty gritty the complexity soon adds up. The best way I can show you how I simplify the seemingly infinite complexity of price action down into a simplified model is by showing you my charts.
That’s where the video comes in. If you are interested in making money consistently in the markets, then you need to understand the environment that you are trading in. Without a model of price action, you are flying blind and will be tossed around by the inevitable volatility.
The fact is none of us knows the future and no amount of tea leave reading is going to change that fact. But with a solid understanding of where other traders place their stop-losses you can figure out where the market is in and out of balance.
You can place trades with a stop-loss at a point where you know you are proven wrong. You can place your initial target at a point where you know there is a high probability it will get hit.
The current set up in the ASX 200 is showing that there is a good possibility of a continued correction in the short term. The reason: We have just seen the second weekly sell pivot after the high reached in late July.
Why does that matter? You will need to watch the video to find out.
It’s easy to explain difficult concepts on the charts rather than trying to describe it to you in words. The video is only 10 minutes long and in it you will learn how trends develop over different time frames in relation to buy and sell pivots. Where the buy and sell zones are in waves and ranges. Why the point of control is so important when developing trading plans. How to spot the most important buy and sell pivots to trade off and much more.
Editor, Alpha Wave Trader