How has gold been neutered by ETFs? Has it? \ stacker news ~econ

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How has gold been neutered by ETFs? Has it?

405 sats \ 19 comments \ @kepford 4 Dec econ

I'm genuinely asking this question because I have seen this sort of statement many times on SN. And if you think this is true why can or can't it happen to bitcoin?

There is someone that bothers me about this thinking. Something seems off to me. Maybe it's just the wording that bothers me and its the typical oversimplification we seem to love these days.

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155 sats \ 3 replies \ @siggy47 4 Dec

I'm no expert, but I'm sure there are a trove of books and articles referenced on gold bug sites. I remember hearing these theories in the early 90s when I was into gold, long before gold etfs(2005?). Its all about rehypothecation, which supposedly is easier with etfs.

36 sats \ 2 replies \ @kepford OP 4 Dec

Ok, but does that affect any of the qualities of gold that make it useful? Or does it just affect price and the short term traders of gold?

And how is that different from any other asset? Can it be avoided by any asset? If it could would the cure be worse than the disease?

It just feels very defeatist to me. Similar to how I view many anti-capitalists. It also doesn't seem like neuturing at all to me. Seems like a tradeoff that is inevitable.

63 sats \ 1 reply \ @siggy47 4 Dec

It definitely goes to price, not utility. I think it is only an issue with "hard" assets, ie -those with limited supply. Stocks and bonds can be sliced and diced indefinitely. It is just a pricing thing, but it can be long term, I would imagine. Gold bugs think the price has been suppressed for over 100 years (federal reserve) and was made more extreme post 1971.

83 sats \ 0 replies \ @kepford OP 4 Dec

The more years I live on this planet the more I believe what is being suppressed and nuetered is human flourishing and it is by ourselves in the aggregate.

If price is the market aggregate of all the people in a market is it being suppressed or are people choosing inferior tools and price just shows us how we disagree. This is what I think about bitcoin. I would not say the price is suppressed. But it is affected by the actions of thoughts of all of us. I disagree with the market most days. But that's my opinion, not the market.

I think people get tripped up with free market people. I don't think the market is wrong. It's just what the market actors actually do with their capital. The price is just a the thermometer. I can wish it was colder or hotter but that is my desire and conviction.

Its a subtle difference. Gold is well understood by many more people than bitcoin but I would argue most could not explain why gold is as valuable as it is. They don't understand it like goldbugs. Doesn't matter. It is what it is. It does affect price though.

This is where we are with bitcoin. Over 99% of the world doesn't get it. Still. And yet, look where it is. I don't like Blackrock. I don't like the US government. But the fact that bitcoin is held by them doesn't nothing to discourage me from bitcoin's future.

People are the core issue. Always. One thing that is a constant in human history its greed. Bitcoin exploits that. Bitcoin will be fine. The state and Blackrock will try to use it. It's inevitable.

Satoshi gave us a tool. It's up to us what we do with it. I have a strong feeling we will have to fall very low to collectively realize what we have.

74 sats \ 0 replies \ @halalmoney 21h

Upon reflection, blaming the system/corruption and the like is perhaps a coping mechanism for failed predictions.

Seen today on nostr:

The world runs on three operating systems: markets, politics, and status. Everyone claims to hate the one they’re currently losing at.

37 sats \ 4 replies \ @grayruby 4 Dec

The argument is custodians aren't fully reserved. So they can sell the same gold over and over because no one ever takes custody of it.

Personally, I think cash settled futures are more of an issue for gold and Bitcoin., They move the price but neither party ever touches the asset. If they get big enough they can be the main driver of pricing in the asset.

40 sats \ 3 replies \ @kepford OP 4 Dec

Scammers are gonna scam. I don't consider this neutering gold. Do bitcoiners really think you can't scam on bitcoin? This is what baffles me. To think ETFs are a threat to bitcoin is absurd the more I think about it.

Just sell your bitcoin if you think this. Bitcoin failed before it was ever traded then.

Its all tradeoffs. There are no perfect solutions. ETFs aren't our problem. People are the problem.

62 sats \ 2 replies \ @grayruby 4 Dec

Gold price has done exceptionally well since the launch of the efts. Commodities go through long bear markets sometimes I think gold bugs are just trying to find excuses for why their success in the early 2000s didn't continue into the 2010s and early 2020s.

Many probably bought in at 2k and it did nothing for a decade and then boom it doubled in 6 months. Same as people who buy Bitcoin near the top and then look like fools for 4 years.

40 sats \ 0 replies \ @kepford OP 4 Dec

I have a hard time with tradfi is doing x to y. Yeah, they are but if you didn't have a state how would you handle that? We have a democratic state and it has resulted in the what we see.

Scammers gonna scam. Buyer beware. Crypto scams are everywhere. These arguments against ETFs are kinda rich coming from bitcoiners. Bitcoin opened the door for so many scams. We can't then complain about ETFs being scams. Some might be. But I doubt it. It's tradfi doing what it does. It's nothing compared to ETH and the scams it has birthed. ETH would not exist without bitcoin.

What are we gonna do. Take over the state and ban ETFs? Really? If bitcoiners believe it's money then it seems to be it will infect every corner of all financial markets given enough time. It will be used by evil people. It will be a part of scams. People will lose it. They will get tricked. It's a tool. It's amoral.

I can think taxation is theft but if taxes are required in bitcoin this isn't bitcoin failing. It's bitcoin being money. I hope it will minimize the scummy stuff we humans do but it isn't magic. People make choices and choices have consequences.

40 sats \ 0 replies \ @kepford OP 4 Dec

Yeah, that makes a lot of sense to me. It is very hard to buy something and at the same time look at it objectively.

2 sats \ 4 replies \ @SwapMarket 19h

Paper gold can be borrowed at a prime broker and sold short. This further enables markets in futures and options. Greater financial liquidity means that the price is less of a function of physical supply/demand.

0 sats \ 3 replies \ @kepford OP 19h

Yeah, I understand that. That isn't necessarily neutering right? I would argue that the invention of telecommunications did more to affect gold than ETFs.

2 sats \ 2 replies \ @SwapMarket 18h

Derivatives make price manipulation way easier than physical commodities due to leverage and speed of settlement. Not only ETFs, but all structured products. Telecom and IT progress surely was/is a huge driver of financial markets.

0 sats \ 1 reply \ @kepford OP 18h

Funny thing is that all central banks still hold gold. Still. So do nation states. Gold isn't as practical as it once was but this is due mostly to technological advances.

0 sats \ 0 replies \ @SwapMarket 18h

because they don't trust IOUs

2 sats \ 0 replies \ @ville 22h

Just because institutions have taken interest in Bitcoin, and "bitcoin banks" may arise, it does not change the source code. Issuance remains the same, and decentralisation is up to game theoretic assumptions that play out irrespective of state adoption. Certainly nation-states could coerce certain miners to obey their OFAC SDN lists, or even themselves mine bitcoin (e.g. Iran, Bhutan). But again, Bitcoin remains global, and there is always a miner willing to include your "potentially censored" transaction for a premium.

Now. They have created IOUs and ETFs and easy ways for people to buy Bitcoin without allowing to withdraw (e.g. Robinhood), but that is merely a path-dependent phenomenon. That is, such institutions "appropriate", or assimilate, Bitcoin to their pre-existing structures. It is no surprise that they do not follow cypherpunk manifesto but their own institutional paradigm and business logic of profit-seeking. Such is capitalism.

And such institutional adoption is fine and dandy for this brings much desired legitimacy, usability, awareness, acceptance, and understanding of Bitcoin (in the long run). Certainly it brings their compliance-industry complex to it, but only within their respective domain; that is, such things existed prior to the inception of Bitcoin. Why would it change?

Certainly such "bitcoin banks" and institutions follow and do what they do best, i.e. are dishonest and take advantage of people where possible, e.g. BlockFi, Celsius). This is a human aspect, not a bitcoin aspect. I expect this to continue.

As such, learning curve takes a steep and costly one for some, who leave it to such entities. Either such an entity does not have proof of reserves, or they disallow withdrawal as a reaction to a political circumstance, or by default (e.g. Robinhood). In such a scenario, "Backfire" effect occurs; people will want to withdraw their assets either way.

Then, if impossible, they change providers and maybe even self-custody. It is a process. Some people might still rely on reliable third-party services, some community-custody (e.g. Fedimint; second-party custody) services and others self-custody. This is all to say that such institutional adoption is a good thing for those who genuinely are better with those options. Seriously.

So is Bitcoin neutered? No. But the biggest threat to Bitcoin is not 51% attack but a lack of understanding and education of Bitcoin to the extent it enables ordinary people to handle their money safely. But the necessity that people have for Bitcoin will force people to use alternative channels acquiring it, i.e. in the most "extreme" cases: decentralised marketplaces that exchange the real thing and not IOUs.

Necessity could be sudden backslide of democratic countries into authoritarianism who disable withdrawals, or even freeze and confiscate their bitcoin. Exchanges may even lose the assets on their own mishaps. The history is full of these events; it is merely a matter of time as such.

Necessity could be the need to send money abroad but existing and future regulations prohibit this because of classification of a high-risk third-country (e.g. currently, from outside EU to anywhere in the world, especially Africa, Middle East...).

People need alternatives and they learn. Doing this, they learn to take all their assets to another place. Or sell existing ones, and buy new ones off Bisq or similar.

That said, no: ETFs do not neuter bitcoin but make just another channel for people to participate in the the price action, which make other people attend to it more. Awareness of Bitcoin brings awareness of the "establishment" a la status quo. This brings people to learn and use better practises for future, i.e. self-custody and not ETFs. And again, this is just a multitude of pathways for people to learn about Bitcoin. As I see it, the existing institutions may fail the person who needs Bitcoin out of necessity. The one who didn't need it, like an investor, then I guess they were already financially and otherwise privileged enough from the get-go.

0 sats \ 0 replies \ @halalmoney 7h

From nostr, juraj:

Make markets brutal again.

These days it seems like traders are children and are always complaining the markets are not fair, there's manipulation, whales, insiders, illuminati, the spooks, high frequency traders and algorithms, sandwiching and MEV bots, ...

People somehow don't understand that the purpose of markets is not to be a merry go round children olympics.

Trade and price discovery. A whale screwed you over? Seems they had a better opinion on the price than you. We thank you for your service of being on the losing side of the price discovery. You gave world information.

If you think you have any kind of right to win based on wrong opinion, you don't understand markets. That's not true. If you don't know how to be a network engineer, don't expect people to pay you to take care of their networks. There's no right to do everything.

Markets are about the edge. If you don't have it, you don't add anything to the price, except for liquidity. You are gambling and the odds are not in your favor. Good.

0 sats \ 0 replies \ @Angie 14h

No elijas haz ambas, para muchos inversores la estrategia óptima es una combinación : 80-90% en EFTs de Bitcoin spot ( para exposición principal,sencillez y en cuentas de jubilación). 10-20% en Bitcoin directo ( billetera ledger o trezor ), esto te da: exposición real a la tecnología, un seguro fuera del sistema tradicional ; Está mezcla cubre tanto la exposición financiera eficiente como la soberanía real y el entendimiento profundo del activo. El rey Salomón tuvo muchísimo oro y aún así dijo que todo era vanidad y un esforzarse tras el viento proverbio 1:17 . Así que se feliz haz lo que te plazca

0 sats \ 0 replies \ @Solomonsatoshi 4 Dec

Watch this video and stop your spouting dangerous and ignorant nonsense about ETFs being harmless.