Oddbean

Here's an example of why monetary verification is important (and can be expensive). The gold price is currently $2075/oz. If you buy a sovereign 1-oz gold coin, or a globally-recognizable privately-issued 1-oz gold bar, you'll generally pay something like a 3-5% markup to spot. This is basically the verification and distribution premium. Even if you buy a bunch of 1-oz items, you generally won't get the spread down too much. If there's a shortage, the premiums over spot go way up. If you buy smaller sizes, that premium will be a bigger percentage. For example if you buy 1-gram gold coins, you'll be paying a >50% markup to the spot price, which is silly. If you buy bigger sizes, like 1-kilo bars (which cost more than a typical car), you could get it down to a 1-2% premium to spot. The bigger size you go, the less verification you have that the core of the item is indeed gold rather than tungsten. You have to trust the brand and supply chain, basically. The smaller size you go, the less possible and economic it is to insert tungsten into the item. And so on some level, it makes sense that the verification premium is bigger for smaller items- you're more assured that it is indeed gold to its core. The surface area to mass ratio is harder to forge, basically. Somewhere around 1-oz is probably the sweet spot. Now, if you're buying gold in most U.S. states, including on a lot of popular online stores, you'll also pay sales tax, and you'll often have to pay the difference in terms of your payment method. So if your credit card costs the merchant 3%, then that would eat up the merchant's margin since it is razor thin, and so instead the customer often has to pay it. They could instead do a wire transfer for a sizable purchase to save some money, but many banks charge like $30 for a 1-day wire transfer. And if you're buying online, there's a shipping fee. That's usually pretty low but then goes up a bit if you add insurance because you don't want to risk your expensive coins or bars getting lost in the delivery chain or stolen from your doorstep. From the time of order to the time of delivery, it'll generally take several days. This includes time for the merchant to process the payment (gold merchants are usually a bit more careful about chargebacks and other reversed payments than the average merchant) and ship you the items. All together, including the verification premium, taxes, payment fees, and shipping, one generally pays 8-15% over the spot price to get 1-oz gold coins or bars. That means gold has to go up a pretty significant amount just to break even. And then you have collectible capital gains taxes on that price gain (which in the US is higher than the actual capital gains tax rate). If you take time (and time is money) to shop around and find ways to legally avoid sales tax and so forth, and figure out the cheapest/slowest payment methods, then you can push the premium down as close as possible to the verification premium and shipping costs. And if you want to securely ship large amounts of gold long distances, especially internationally? Like imagine HNW investors, businesses, banks, or sovereign entities? You're going to pay a sizable amount. One does not simply ship millions of dollars worth of gold without robust security. If you want someone to custody your gold, you're going to pay a fee. If you are fine with unallocated/mixed gold with multiple layers of counterparty risk, you could buy among the cheapest ETFs with annual fees below 0.2%. If you want to hold your gold in an allocated way by Brinks or something with fewer layers of counterparty risk, it'll generally cost over 0.5% per year. This goes toward the vault costs, salaries for people with guns, real estate costs, etc. Basically, there's a pretty big inefficiency in the form of 1) routine verification, 2) secure transfer of ownership, and 3) secure custody, that all comes out in the form of high costs and slow speeds. Bitcoin has fees, but they are very low in comparison. Nodes can verify bitcoin basically for free. Miners timestamp transactions to transfer ownership for a fee, and you can currently send ten million dollars worth of bitcoin globally for like $10 and have it confirmed within the hour. And you can custody bitcoin yourself, and bring it around with you globally, through ports of entry, across borders, in ways you can't realistically do with gold above a certain value threshold. When thinking about periods of above-average bitcoin fees, it's useful to keep some of the alternatives in mind. Verifying and transferring ownership of other store-of-value assets like gold and real estate is slower and a lot more expensive, requires a lot more abstraction and permission, and comes with much less portability.

Question I keep coming back to is will everyone be able to be self sovereign and hold bitcoin in self custody or will it only be for the elites? If a transaction costs 30k sats today and this remains going forward with prices increasing, you have to maintain a 1M UTXO to be efficient, does layer 1 eventually price out self custody for middle and lower classes? And is it even possible to be self sovereign on layer 2 since you have to open channels on layer 1? I think time will tell, but hoping self sovereignty is for everyone, especially those that need it the most.

We are early as fuck for masses to understand this even though it is freaking simple. "But what if.... What if ..." Yeah, what if you just HFSP, and while at it, have fun staying stupid. nostr:nevent1qqsym8hq3nhyn8tju7pzxjjhknxjq0s3n8eax8we92hce2sjxdk24zspzemhxue69uhhyetvv9ujuurjd9kkzmpwdejhgq3qa2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sxpqqqqqqz7k7maf

Thanks Lyn for a great reminder of the frictions and costs of owning gold. This is a good reminder to hold onto when listening to the wonderful Kevin Muir’s bullishnesses on gold in his interview with Adam Taggart: https://podcasts.apple.com/mu/podcast/fiscal-spending-is-having-a-far-bigger-impact-than/id1715910847?i=1000639932060 . He thinks China is buying gold to shore up their reserves and the price may approach $3000.

TIL: " collectible capital gains taxes" is a thing and that "it's higher than the actual capital gains tax rate" nostr:nevent1qqsym8hq3nhyn8tju7pzxjjhknxjq0s3n8eax8we92hce2sjxdk24zspzfmhxue69uhk7enxvd5xz6tw9ec82cszyr4tpe6k6v4cp0x5vneas39cqspsxp66z04tcdve5a3vntr6hy057qcyqqqqqqg6twaxf

Special case when they can’t even comprehend the fact of the scientific evidence, so difficult to argue you hoping, but again they get caught stealing. Embarrassing. https://image.nostr.build/13d50fd7dc96865f76e0f0e954220381cf3f70b9ba4858cf10518af9ebd0ad0d.jpg

Now, corrupt deviant flat singing rodents judge the men, rather than their ideas, to make them understand how they meed you, and then how you nurture the men and their skills and knowhow. This is a mans world, ladies. 🎚️

You can’t contribute or conduct business? Who the fuck are we to judge or anything else that would hinder or sabotage your or anyone’s actions to spread falsehood and pass false judgement? Special case when caught stealing! https://image.nostr.build/c114ba8d625b3a65448d5a791559e27617b3c237c7c75a088909b600b0c6c9f5.jpg

Very well laid out thought @Lyn Alden and it's the main reason I've never pulled the trigger on a gold purchase. Fees are high and continue to add up at every step and because of that you're already in the hole immediately after purchase. Also, the idea of incurring capital gains tax on the amount required just to break even is ridiculous.

Gold has given economical stability to any currency if significant amounts are kept in central banks though. And remains the most trustworthy asset during crises. Bitcoin has its recognition and value from the people that are using it; what happens if they stop using it?!

So you stopped using gold for something new; bitcoin. And as you said (in other words) people will stop using bitcoin if there is something that is better than bitcoin at what it does; something new. Seems to me that we are in a “wait for it” phase.

That something new, that is better than bitcoin in what it does, is happening in the backstage of this world. Check this out: https://nostr.band/note1fva4q2pq6wjxj8tnyrtukx4rfzjlsghh3rm7frj29z3q2q5a65cqyef8n0

- Translated from Spanish by Argos - Anyway, as Michael Saylor says, the smart thing would be getting rid of #gold to buy #bitcoin, but when it cost so much in time, stress and resources, getting a few coins for this little citizen, it's now hard to make the change. And one consulates thinking that if countries like China and Russia or populations like the Indu and the Arab continue to find it worth..., it will still have value for a few years.

I honestly don't think you ever bought gold online. You pay with your bank account to get the lowest price and there is always free shipping when you buy over a certain amount. Only 8 US states charge tax for gold purchases. Sometimes you can even buy gold at spot at a place like costco and even use a rewards credit card, so less than spot.

Those are all important points for us to recognize when making these decisions. Another factor is the stability of metal as a physical object, existing on it's own merits. You take a piece of gold out of the market pool and even if all the markets break apart, that metal still exists and retains it's value from rarity, and can still be traded locally. The main flaw I see in digital currencies, is that for them to exist and keep their liquidity, the market pool also needs to exist and function. If and WHEN the governments in the west begin faking hacking attacks on the power grid and/or finance systems (late this year possibly), it's going to be a lot safer to hold physical assets that can retain their value intrinsically, on it's own physical merits. Power cuts might effect the price of crypto transfers and mining, which may raise the price as well, or possibly crash the whole network if severe enough. The same goes for a rare but increasingly likely solar flare taking down the network and possibly wiping out half of the crypto pool. I see crypto currencies as a transfer medium, while metals are firmly seen as a storage medium. I'm no expert though... happy to hear counters to this. A lot of this might come down to how much of these assets we are talking about. High level finance on the short term, crypto wins in my mind. But for the average person/individual it seems that metals is the best bet for storage, while digital is the best for speculation and liquidity. Although, I am still bullish on silver over the next 5 years.