In La Tribune 12/02/2021
Investors in rhodium, gold and Bitcoin are categorized as the famous « people from anywhere » (David Goodhart) taking advantage of globalization. Conversely, the locals, « the people from somewhere » of the same David Goodhart, would like to defend and preserve the sovereignty of classical currencies.
If the Bitcoin market values more than 700 billion euros, gold more than 220 billion euros, silver 25 billion euros, platinum and palladium combined 22 billion euros, rhodium peaks at 16 billion euros. It is a micro-market that should not be the playground for investors, as it is so crude and industrial. Its production, like that of platinum and palladium, was hampered in 2020 by two forces. On the one hand, the pandemic which has slowed down mining work, and on the other hand, the temporary shutdown of the South African world leader’s refinery. All in all, mining supply was down by 30%. At the same time, consumption was reduced due to Covid-19, but only by 15%. A deficit was growing.
Prices multiplied by 10
As a result, since 2019, prices have increased tenfold, which is nothing extraordinary. This metal remains trapped in its mono-consumption, the catalytic converters of gasoline and diesel cars. However, for 40 years, it has been experiencing a crisis every decade, punctuated by stricter anti-pollutant regulations that impose more rhodium per car.
However, speculation was curbed in beginning of 2021. On the one hand, the world leader’s refining plant resumes service and will produce more rhodium. On the other hand, unlike the hoax said by the stupid fake-news of « rare metals », battery electric cars, whose success continues to grow, do not consume rhodium as they are not equipped with catalytic converters.
The interest of gold is also in its industrial intrinsic value and, on the investment side, the yellow metal is nobody’s debt. Repeat this sentence slowly and think long and hard . In these times, it does no harm.
No quarrels
The clarity of these two precious metals market situation contrasts with that of Bitcoin. The dispute surrounding the latter is not a controversy about its free intermediation, while that of conventional currencies would be costly; it is not a dispute about monetary sovereignty, the independence it would offer from the financial authorities, its intrinsic value, the protection it provides against inflation or extreme financial risks; it is not a dispute over the carbon footprint of the electricity used to make crypto-currencies compared to that used for paper money or credit cards; it is not a dispute over the infinite size of the financial markets, which guarantees depth and liquidity of exchanges, whereas the market size of Bitcoin is finite at 21 million units, of which 18.6 million have already been issued, but about 25% have been stolen or lost as a result of lost passwords or computer hardware .
This dispute is therefore not about an increase in demand, while its production is frozen and the quantities actually traded are small, because a limited number of deep pockets – institutional investors, Tesla, Microstrategy or the founder of Bitcoin – concentrate strong long positions; nor is it about a dizzying rise in its price due to a fashion effect, while nothing prevents the issuance of other crypto currencies with the same algorithms, the same uses and the same rules; It is therefore not that of the illiquidity of the Bitcoin market, which prohibits its use in consumer payments, as indicated by the almost zero number of transactions on the Visa network, which nevertheless accepts crypto currency; it is not the counterparty risk linked to money laundering or to the un-traceability of the cyber racket that demands ransom in Bitcoin from the hospital in Dax to stop a despicable computer attack; finally, it is not the great volatility of Bitcoin, which is usually the characteristic of fragile markets.
The problem is the love of the Tech
The problem is deeper, it is love: investors in Bitcoin are great lovers of Tech.
They love new technologies. For them, who are both technophiles and investors, Bitcoin is the mark of a cult, a belief, a faith, it makes them happy, and the increase in the value of their Grail shows that they are more powerful and more numerous than in the past. Religion has gained followers. Their path is a kind of continuation of the long scientific march of mankind: from the Stone Age, iron, steam, solar, wind, nuclear, hydrogen electricity and tomorrow a digital currency with no strings attached.
The Bitcoin quarrel is therefore only a head-on opposition between the Tech and the economy. Economists who cannot put passion, feelings or love in equation see these crypto currencies as a bad tool, a bad belief that they cover all the financial sins encountered in the past, and they are not wrong, because finally, what is Bitcoin useful for?
Usage of bitcoin is zero, nada, nothing until recently, since Tesla has just accepted crypto currency to pay for his cars. They cost between one and three Bitcoins… and the brand will give change in crypto money. Gold or rhodium but also silver metal, platinum or palladium are not accepted as payment. Neither is oil, that would be a crowning achievement.
Therefore, precious metals and Bitcoin have nothing in common. The former are tangible, the latter is a cult. It was a mistake to attach them together to « people from anywhere ».
In fact, it seems to me that investors in gold, rhodium, platinum or palladium are rather the followers of a third way, « people from nowhere » whose main focus is on long time management, while « Bitcoinnians » are « anywhere », but peculiar « people from anywhere ».
The conquest of space has become a private business
Indeed, they envision that crypto-currencies will become a must in their next scientific quests, especially in the conquest of space, which has become a private affair that will catalyze all the best of the Tech, including a crypto-currency for non-Earth use. There, in space, « these people from anywhere » will be far away from terrestrial monetary sovereignties, markets, intrinsic values, inflation… and Bitcoin, or its successor, would find there all the justifications and qualities that our time denies it.
Is this the only rational explanation for the existence of free currency crypto, i.e. detached from such Facebook or Amazon? A tool created on Earth, but for another form of civilization. Useless in the present moment, as « people from anywhere » are testing it for future use.
This takes place here and now in parallel with sovereign currencies prized by « people from somewhere » and it generates the incomprehension of their economists. It is quite normal, this currency is intended neither for their models nor for the real economy since it is an experiment for another place, even for another planet, perhaps Mars.
This is why the real stake of Bitcoin is not to be used to buy cars, but just to know if we believe in the conquest of Mars, and if we want to be part of it, or not.