Swiss Demand Global Gold Recall Despite Central Bankers

In a word association game, If I said Switzerland, you might say cheese or chocolate or maybe the alps. But another common item everyone associates with the Swiss is their money. Their banks. Their currency.

Soon, that currency could change in a big way. This November, a Swiss Gold Referendum is going to a vote, and the repercussions, one way or the other, could cast a shadow of uncertainty on the US dollar. Nearly one-third of the Swiss Franc used to be guaranteed by gold reserves, not it’s less than 8 percent. If THIS VOTE goes through, the Swiss will be forced to raise the gold reserve back up to 20 percent.

Joining us today is radio host Charles Goyette. He and Congressman Ron Paul have talked about central banks at great length on his radio show. Today, we’d like to get HIS input on the Swiss Gold Referendum.

Jim Rickards: Obama Ending Alliance with Saudi Arabia and Killing the Petrodollar

At the San Antonio Casey Research Summit, Jim Rickards sat down with Alex Daley to talk about the pain ahead for the US Dollar, why we'll soon see SDRs, and other harbingers of the Death of Money.

The Single Most Important Lesson from the Casey Summit

By Louis James, Chief Metals & Mining Investment Strategist

At our San Antonio summit, Rick Rule gave a talk that, as always, was well reasoned, packed with facts, and powerfully cogent. His message was simply that bear markets are for buying and bull markets are for selling—and in the future, resource investors with staying power would look back on the current market as “the good old days” when they were able to buy great stocks cheap.

It was a great talk that no one I spoke to had any objection to nor argument against. What I did hear from some people, however, were comments along the lines of: “Yes, but he’s been saying that for years.”

Given the level of understanding of and sophistication regarding natural resource investing among Casey Summit attendees, this downbeat expression might be a sign of a bottom.

Fair enough, though I have to say that while I did get some questions about talking tax losses or reducing exposure to metals and mining stocks until the tide turns, what most people wanted to know was what the best bargains on sale now are. My answers are covered in our metals newsletters and updated in between issues.

Back to Rick’s talk. When I heard the pushback about Rick having said the same thing for years, my first thought was that he hasn’t; during the first two years of the slump that began in 2011, Rick was saying the market could go lower. He did recommend selected investments earlier, but it wasn’t until the beginning of this year that Rick and the others we featured in our Downturn Millionaires and Upturn Millionaires videos really started saying that this is the year to go long—way long.

Others have been more assertive about buying on the way down, myself included, which I have admitted in print before.

But here’s the thing: Rick and Doug and others—myself again included—have indeed made money buying when the market melts down and despair is in the air, as it is at present. That is an undisputed fact.

This got me to wondering why anyone would dismiss Rick’s remarks. I very much doubt that anyone there thought Rick was making things up, lacking in perception, faulty in his logic. Nor is it plausible that he could have been trying to trick anyone—to what end? Sure, brokers make money on all trades, winners and losers, but brokers who lose their clients’ money lose their clients. It simply makes no sense to deliberately mislead investors about the market or give bad advice on purpose. That’s a recipe for going out of business, and Rick has been in the business for decades, making a lot of money for a lot of people along the way.

No, I don’t think anyone was really doubting Rick’s sincerity or his conclusions. The hesitant ones were just so beaten up by the markets they were afraid.

This brings us back to an observation I’ve made many times myself and tried my best to stress to investors before they become resource speculators: you have to be a contrarian in our sector, buying low and selling high, and that takes a lot of courage based on solid convictions.

I suspect that some people may sabotage themselves on both scores when the market is down, not wanting to seem like zealots, blind to negative results. The thought makes me uncomfortable myself.

And yet, it’s true that resource investors must be contrarians, or they will get wiped out, and it’s absolutely true that successful contrarianism requires a very great deal of courage.

That’s when it hit me: it’s no accident that Doug and Rick make millions while others make peanuts. Anyone of reasonable intelligence could do what Rick and Doug do, but they don’t choose to. Fear can be fought, conviction can be nurtured, contrarianism can be cultivated. The ingredients and recipe for success are right in our hands… but so few people grasp them!

Extraordinary success can’t be easy, or it would cease to be extraordinary. Obvious. Almost tautological. But still important; it means that while few people do make the necessary choices, almost anyone can make them.

That includes you, my dear reader—if you have the conviction.

So… What’s the difference between a fanatic and a visionary?

Honest answer: Nothing.

A visionary is a fanatic who happens to be right.

I’m convinced Rick is right, of course, agreeing as he does with the Casey consensus on our market sector. I’ve been putting my money where my mouth (or keyboard, as the case may be) is.

Only time will tell if we are right—but if you wait until it’s obvious that we’re right, you’ll miss the opportunity for maximum profit.

Tough call.

But the choice is yours, and only you can make it.

And now you have the opportunity to be seated front and center to hear Rick’s entire talk, along with over 30 other world renowned experts, in our Casey Research 2014 Summit Audio Collection.

With your Casey Research 2014 Summit Audio Collection, you'll hear three days of in-depth presentations covering the most important issues facing our economy today and learn how to survive and prosper over the coming year.

You’ll hear from world-renowned experts in economics, geopolitics, investments, real estate, investigative journalism and international law about the current political environment, the latest developments on the economy, what's going on in the investment markets, what are the most promising investment ideas, and much more..

Altogether, you’ll get over 26 hours-plus of lessons from the world’s greatest investors, delivered to your door as a CD set or straight to your computer in MP3 format.  And if you order today, you’ll get $100 off the Summit collection price.

Click here for more details.

The article The Single Most Important Lesson from the Casey Summit was originally published at caseyresearch.com.

How is Doug Casey Preparing for a Crisis Worse than 2008?

By The Gold Report

He and His Fellow Millionaires Are Getting Back to Basics

Trillions of dollars of debt, a bond bubble on the verge of bursting and economic distortions that make it difficult for investors to know what is going on behind the curtain have created what author Doug Casey calls a crisis economy. But he is not one to be beaten down. He is planning to make the most of this coming financial disaster by buying equities with real value—silver, gold, uranium, even coal. And, in this interview with The Mining Report, he shares his formula for determining which of the 1,500 "so-called mining stocks" on the TSX actually have value.

The Mining Report: This year's Casey Research Summit is titled "Thriving in a Crisis Economy." What is the most pressing crisis for investors today?

Doug Casey: We are exiting the eye of the giant financial hurricane that we entered in 2007, and we're going into its trailing edge. It's going to be much more severe, different and longer lasting than what we saw in 2008 and 2009. Investors should be preparing for some really stormy weather by the end of this year, certainly in 2015.

TMR: The 2008 stock market embodied a great deal of volatility. Now, the indexes seem to be rising steadily. Why do you think we are headed for something worse again?

DC: The U.S. created trillions of dollars to fight the financial crisis of 2008 and 2009. Most of those dollars are still sitting in the banking system and aren't in the economy. Some have found their way into the stock markets and the bond markets, creating a stock bubble and a bond superbubble. The higher stocks and bonds go, the harder they're going to fall.

TMR: When Streetwise President Karen Roche interviewed you last year, you predicted a devastating crash. Are we getting closer to that crash? What are the signs that a bond bubble is about to burst?

Warning Missing the 2014 Casey Research Summit (Thriving in a Crisis Economy) could be hazardous to your portfolio. Sept. 19-21 in San Antonio, Texas. REGISTER NOW

DC: One indicator is that so-called junk bonds are yielding on average less than 5% today. That's a big difference from the bottom of the bond market in the early 1980s, when even government paper was yielding 15%.

TMR: Isn't that a function of low interest rates?

DC: Yes, it is. Central banks all around the world have attempted to revive their economies by lowering interest rates to all-time lows. It's discouraging people from saving and encouraging people to borrow and consume more. The distortions that is causing in the economy are huge, and they're all going to have to be liquidated at some point, probably in the next six months to a year. The timing of these things is really quite impossible to predict. But it feels like 2007 except much worse, and it's likely to be inflationary in nature this time. The certainty is financial chaos, but the exact character of the chaos is, by its very nature, unpredictable.

TMR: Casey Research precious metals expert Jeff Clark recently wrote in Metals and Mining that he's investing in silver to protect himself from an advance of what he calls "government financial heroin addicts having to go cold turkey and shifting to precious metals." Do you agree or are you more of a buy-gold-for-financial-protection kind of guy?

DC: I certainly agree with him. Gold and silver are two totally different elements. Silver has more industrial uses. It is also quite cheap in real terms; the problem is storing a considerable quantity—the stuff is bulky. It's a poor man's gold. We mine about 800 million ounces (800 Moz)/year of silver as opposed to about 80 Moz/year of gold. Unlike gold, most of silver is consumed rather than stored. That is positive.

On the other hand, the fact that silver is mainly an industrial metal, rather than a monetary metal, is a big negative in this environment. Still, as a speculation, silver has more upside just because it's a much smaller market. If a billion dollars panics into silver and a billion dollars panics into gold, silver is going to move much more rapidly and much higher.

TMR: Are you are saying that because silver is more volatile generally, that is good news when the trend is to the upside?

DC: That's exactly correct. All the volatility from this point is going to be on the upside. It's not the giveaway it was back in 2001. In real terms, silver is trading at about the same levels that it was in the mid-1960s. So it's an excellent value again.

TMR: In another recent interview, you called shorting Japanese bonds a sure thing for speculators and said most of the mining companies on the Toronto Stock Exchange (TSX) weren't worth the paper their stocks were written on, but that some have been priced so low, they could increase 100 times. What are some examples of some sure things in the mining sector?

DC: Of the roughly 1,500 so-called mining stocks traded in Vancouver, most of them don't have any economic mineral deposits. Many that do don't have any money in the bank with which to extract them. The companies that I think are worth buying now are well-funded, underpriced—some selling for just the cash they have in the bank—and sitting on economic deposits with proven management teams. There aren't many of them; I would guess perhaps 50 worth buying. In the next year, many of them are likely to move radically.

TMR: Are there some specific geographic areas that you like to focus on?

DC: The problem is that the whole world has become harder to do business in. Governments around the world are bankrupt so they are looking for a bigger carried interest, bigger royalties and more taxes. At the same time, they have more regulations and more requirements. So the costs of mining have risen hugely. Political risks have risen hugely. There really is no ideal location to mine in the world today. It's not like 100 years ago when almost every place was quick, easy and profitable. Now, every project is a decade-long maneuver. Mining has never been an easy business, but now it's a horrible business, worse than it's ever been. It's all a question of risk/reward and what you pay for the stocks. That said, right now, they're very cheap.

TMR: Let's talk about the U.S. Are we in better or worse shape as a country politically and economically than we were last year? At the Casey Research Summit last year, I interviewed you the morning after former Congressman Ron Paul's keynote, and you said that you hoped that the IRS would be shut down instead of the national parks. There's no such shutdown going on today, so does that mean the country is more functional than it was a year ago?

DC: It's in worse shape now. The direction the country is going in is more decisively negative. Perhaps what's happening in Ferguson, Missouri, with the militarized police is a shade of things to come. So, no, things are not better. They've actually deteriorated. We're that much closer to a really millennial crisis.

TMR: Your conferences are always thought provoking. I always enjoy meeting the other attendees—it's always great to talk to people from all over the world who are interested in these topics. But you also bring in interesting speakers. In addition to your Casey Research team, the speakers at the conference this year include radio personality Alex Jones and author and self-described conservative paleo-libertarian Justin Raimondo. What do you hope attendees will take away from the conference?

DC: This is a chance for me and the attendees to sit down and have a drink with people like Justin Raimondo and author Paul Rosenberg. I'm looking forward to it because it is always an education.

Another highlight is that instead of staging hundreds of booths of desperate companies that ought to be put out of their misery, we limit the presenting mining companies in the map room to the best in the business with the most upside potential. That makes this a rare opportunity to talk to these selected companies about their projects.

TMR: We recently interviewed Marin Katusa, who was also excited about the companies that are going to be at the conference. He was bullish on European oil and gas and U.S. uranium. What's your favorite way to play energy right now?

DC: Uranium is about as cheap now in real terms as it was back in 2000, when a huge boom started in uranium and billions of speculative dollars were made. So, once again, cyclically, the clock on the wall says buy uranium with both hands. I think you can make the same argument for coal at this point.

TMR: You recently released a series of videos called the "Upturn Millionaires." It featured you, Rick Rule, Frank Giustra and others talking about how you're playing the turning tides of a precious metals market. What are some common moves you are all making right now?

DC: All of us are moving into precious metals stocks and precious metals themselves because in the years to come, gold and silver are money in its most basic form and the only financial assets that aren't simultaneously somebody else's liability.

TMR: Thanks for your time and insights.

You can see Doug LIVE September 19-21 in San Antonio, TX during the Casey Research Summit, Thriving in a Crisis Economy. He'll be joined on stage by Jim Rickards, Grant Williams, Charles Biderman, Stephen Moore, Mark Yusko, Justin Raimondo, and many, many more of the world's brightest minds and smartest investors. To RSVP and get all the details, click here.

The article How is Doug Casey Preparing for a Crisis Worse than 2008? was originally published at caseyresearch.com.

War, Peace, and Financial Fireworks

By Casey Research

Politics has long been a driver of international markets and fickle financial systems alike. Everything is connected. Here are some voices from the just-concluded Casey Research Fall Summit talking about cause, effect, and war.

James Rickards, senior managing director with Tangent Capital Partners and an audience favorite at investment conferences, says the Middle East, Russia, and China are all working against the US dollar and for gold.

America’s recently improved relationship with Iran is actually bad for the petrodollar, he claims, because the Saudis and the Iranians are bitter enemies. The Russians, for their part, aren’t sitting idly by while the US imposes sanctions on them—aside from Putin being able to freeze US assets in Russia, Rickards believes that Russian hackers may already have the ability to shut down the New York Stock Exchange.

China does want a strong dollar because it still holds over $1 trillion in dollar-denominated assets. But Beijing is aware that eventually the dollar will depreciate, so it’s buying gold to hedge against a decline in the value of the US currency. Current gold reserves are estimated to be between 3,000 and 4,000 tonnes of gold; the ultimate target may be 8,000 tonnes.

Rickards thinks that we are approaching a period of extreme volatility in the US markets and recommends allocating 10% of one’s portfolio to physical gold.

Bud Conrad, chief economist at Casey Research, also is a petrodollar bear. For the past 40 years, he says, the petrodollar has bestowed extraordinary privileges on Americans, but that era is now coming to an end.

Dozens of countries have already set up bilateral trade agreements that circumvent the US dollar. Dollars as a percentage of foreign reserves have declined from 55% in 1999 to 32% today—and could reach 18% by 2019, says Conrad. Ultimately, the petrodollar will fail, which will lead to a rise in sought-after commodities, especially gold.

Conrad thinks the greatest danger we face may be a combined financial and political collapse. Current geopolitical problems are even worse than economic problems, he says, and the trend is toward more, not less, war. Wars, on the other hand, often precipitate financial collapse.

Grant Williams, portfolio and strategy advisor for Vulpes Investment Management in Singapore and editor of the hugely popular newsletter Things That Make You Go Hmmm…, wholeheartedly agrees.

War and financial turmoil have always been inextricably linked, says Williams. Both occur in natural cycles, and one often causes the other. He believes that we’re in an extended period of economic peace because the Federal Reserve has used monetary policy “to abolish the bottom half of the business cycle.”

Although that may sound like a good thing, it is not. The business cycle, argues Williams, is inevitable and natural; we need it to cleanse the economy. But the Fed has leveraged to such unsustainable levels to “keep the peace” that the inevitable fallout will be that much worse.

He foresees serious wars to accompany the coming financial turmoil. Today’s geopolitical setup, he says, is similar to 1914’s. In 1914, France was a fading former giant (that’s Japan today); Britain was a waning superpower, no longer able to guarantee global security (that’s the US now); and Germany was an emerging industrial power huffing and puffing and making territorial claims (today, that’s China).

Rather than all-out war, Marin Katusa, Casey’s chief energy investment strategist, believes the new “Colder War” will be fought by economic means, specifically through domination of the energy markets.

While Europe is using less oil than it did over a decade ago, says Katusa, it’s depending more on Russia for its energy. North Sea oil and gas production is in decline, and Norway’s production has reached a plateau and is dropping. Russia, on the other hand, owns 40% of the world’s conventional oil and gas reserves.

The solution, Katusa says, is the “European Energy Renaissance.” As Putin tightens the thumbscrews on his energy trading partners, more and more EU countries are waking up to the fact that they will have to produce their own energy to gain independence from Russia. As the best ways to play this new paradigm, Katusa recommends three undervalued North American companies that are in the thick of the action.

To get Marin Katusa’s timely stock picks (and those of the other speakers), as well as every single presentation of the Summit and all bonus files the speakers used, order your 26+-hour Summit Audio Collection now. They’re available in CD and/or MP3 format. Learn more here.

The article War, Peace, and Financial Fireworks was originally published at caseyresearch.com.

By Grant Williams

 This week’s TTMYGH is going to be a little different.

After several weeks on the road and staring down a couple more, I am going to make an attempt to turn the presentation I have been delivering into written form, after many requests for a version that people can look at in the comfort of their own homes (and, presumably, without my annoying voice clouding the issue).

I’m hoping I can turn a very visual and fluid presentation into a more static one; but I’m sure that if I fail miserably, you’ll let me know.

This will make for a chart-heavy and consequently much longer piece than usual (though lighter on additional articles in the interest of saving your time and space this week), but let’s see if we can’t make this work.

The presentation, entitled “The Consequences of the Economic Peace,” is a look at the ramifications of several decades of easy credit and an attempt to draw parallels with a time in history when the world looked remarkably similar to how it does now.

That last time didn’t end so well, I’m afraid.

So... without further ado, here we go.

The Consequences of the Economic Peace

                                                       

The 19th century was a time of upheaval right across the world.

There were no fewer than 321 major conflicts in a century which encompassed, among others, the Napoleonic Wars, the Crimean War, the US Civil War, the Boxer Rebellion, the Opium Wars, and the Boer War.

That single century saw no fewer than 52 major conflicts in Europe alone.

Britain, as the world’s preeminent superpower, was involved in an astounding 73 conflicts in that single 100-year span. In addition, France fought 50 wars and Spain fought in 44.

How crazy was Europe in the 19th century?

Well, Britain and France fought on the same side in six major conflicts; the Spanish and the French sided together on nine occasions; and Britain and Spain found themselves in alliance in seven different wars.

HOWEVER…

Britain and France fought each other in no less than eight separate wars between 1803 and 1900; and in 1815 alone Spain and France fought each other on four occasions, while the British and Spaniards were on opposing sides six times during the century.

And people wonder why the EU is such a tricky proposition…

The serious point to be made, though, is that once it comes to war, former alliances count for nothing.

Anyway, as the 19th century made way for the 20th, Jan Bloch, a Polish banker, wrote a book entitled Is War Now Impossible?, in which he predicted that the lightning wars of the past — where cavalry ranks and infantrymen faced each other in hand-to-hand combat, deciding victory and defeat in short, brutal fashion — were to be replaced by drawn-out, grinding trench warfare.

“Everybody will be entrenched in the next war. It will be a great war of entrenchments. The spade will be as indispensable to a soldier as his rifle.”

— Jan Bloch, Is War Now Impossible?

Cheerful soul, was old Jan.

But, despite Bloch’s dire predictions, the first decade of the 20th century was blissfully peaceful, with no conflicts between European powers anywhere on the continent.

By the time 1910 rolled around, however, political tensions were rising across Europe.

The Franco-Prussian war that had so inspired Bloch had led to the creation of a German Empire and the ascension of Wilhelm II to the German throne in place of arch diplomat Otto von Bismarck. It had also made the country more bellicose.

Russia, meanwhile, had lost most of its Baltic and Pacific fleets in the Russo-Japanese War of 1905, and that defeat had led to revolution. Defeat in the Far East forced the country to turn its attentions westward towards the Balkans — a region it eyed lasciviously — as did its old rival Austria-Hungary.

Meanwhile, in 1907, Britain and France had signed the Entente Cordiale, which finally put to bed a thousand years of almost continual conflict between the two countries (or at the very least reduced the “warfare” between the two to bouts of French impoliteness countered by silent indignance with some heavy tutting on the part of the British).

In 1908, Austria-Hungary had annexed Bosnia & Herzegovina; and in 1912 Serbia, Greece, Montenegro, and Bulgaria formed the Balkan League to challenge the Ottoman Empire.

After some classic in-fighting when Bulgaria turned on its allies (only to be defeated inside a month), the Balkan League emerged victorious — a victory that disturbed Austria-Hungary, who feared nothing more than a strong Serbia on her southern border.

So here’s where Europe stood in 1914:

Great Britain, her power receding, was struggling to play the role of the world’s policeman; Germany, newly industrialised and ruled by a nationalistic leader, was puffing her chest out to the rest of the continent; and good old France was in steady decline and (no doubt painfully) reliant upon her old foe Britain for support.

And yet, despite such geopolitical turmoil everywhere, the man in the street was remarkably sanguine about the state of the world:

The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions and exclusion, which were to play the serpent to this paradise, were little more than the amusements of his daily newspaper.

— John Maynard Keynes, The Economic Consequences of the Peace

Those words were written by none other than everybody’s favourite economist, John Maynard Keynes, in his book The Economic Consequences of the Peace, a publication which made him a household name all around the world.

It’s a sad indictment of today’s society that the only way for a modern-day economist to achieve Keynes’ level of fame would be to become a serial killer or marry a Kardashian.

But I digress... let’s get back to Europe in 1914. Despite the numerous mounting problems, as Keynes had pointed out, everyday life went on as usual — and the men and women of Europe in general and the UK in particular assumed that nothing untoward would happen.

Europe’s leaders would make sure everything got sorted out.

Sound familiar?

Then, on the 28th of June, 1914, amidst all the known knowns, a young man called Gavrilo Princip stepped up to a passing car in Sarajevo and with a single shot became a Black Swan that changed the course of history when he assassinated Archduke Franz Ferdinand of Austria.

I won’t go into the details of WWI at this stage; but in case you don’t know about it, I’m told there have been several books written on the subject (Barbara Tuchman’s The Guns of Augustbeing my own personal favourite). Anyway, after four years of warfare that tore the world apart like never before, a peace was finally reached.

But it was a peace which one man in particular vociferously condemned — and that man was John Maynard Keynes.

Keynes had left Cambridge University to work at the Treasury in 1915, and he had been hand-picked to attend the Versailles Conference as an advisor to the British Government. He was staunchly against reparations of any kind and advocated the forgiveness of war debts (yeah, I know… go figure); but as it turned out, his advice to focus on economic recovery was disregarded; and Keynes resigned his position, returned to Cambridge, and set about scribbling furiously in his notebooks.

In just two months, Keynes wrote the book that would make him a household name around the world — The Economic Consequences of the Peace.

In the book, Keynes was highly critical of the deal struck at Versailles, which he felt sure would lead to further conflict in Europe — describing the agreement as a “Carthaginian peace” — and with the passing of a surprisingly short period of time, he would be proven correct.

Click here to continue reading this article from Things That Make You Go Hmmm… – a free newsletter by Grant Williams, a highly respected financial expert and current portfolio and strategy advisor at Vulpes Investment Management in Singapore.

Two Estimations Of Chinese Gold Demand

jessescrossroadscafe.blogspot.com

I found it interesting that these two estimations of Chinese gold demand arrive at similar answers from two different methods and assuming two different start dates.

Before anyone asks, Koos Jansen has addressed the notion of 'round trips' of gold on the Shanghai Exchange in some detail.   It is not the same sort of bullion game that is the hall mark of the Comex.

The first chart is from the data wrangler Nick Laird at Sharelynx.

The second chart is from GoldSilver.com.

I don't think anyone knows the exact amount of physical gold that China and the BRICS are absorbing.   And how much unencumbered gold remains in many of the Western vaults either.

One has to chuckle at 'analysts' who just ignore what of the more significant trend changes in the international money markets.   The BRICS are buying tonnes of gold and adding them to their reserves?  Nothing to see here.  Just the usual hijinks of the uninformed and unsophisticated.

But no matter how one looks at it, there was a profound change in the metals markets around 2006, and that it is somehow involved with what has been called a 'currency war.'  As it has done in the past, the nature of the global reserve currency system is changing.

Gold is flowing from West to East.

QE Rules As Central Banks Grow Balance Sheets

PayPal Adoption Ushers in a New Era for Bitcoin

Central banks around the world have not been shy in their opinion towards bitcoin. Although intrigued. They recognize the threat that it presents the current fiat system.

They would like nothing more than to see it shut down, unfortunately for them, not only is this incredibly difficult, but it appears unlikely, as the free market moves more and more towards adoption.

Major banks, likely due to the uncertainty in future regulation towards bitcoin, have remained predominately on the sidelines, with the exception of a few banks, which have actively targeted and shut down some of their customers' accounts. Accounts which were used in bitcoin transaction.

An alternative form of banking and one of the largest, if not the largest player in the online transaction world is PayPal. Owned and operated by the owners of eBay, the largest eCommerce platform, have long pondered over the future of bitcoin.

Until now, they have simply discussed its future with mild interest, content to sit on the sidelines and see how things unfolded. Until now.

Paypal has annouced a huge partnership with the three main players in the bitcoin payment processing space; Bitpay, Coinbase and GoCoin. CoinDesk reports:

PayPal has announced partnerships with three major payment processors in the bitcoin space – BitPay, Coinbase and GoCoin.

Though the online e-commerce pioneer stopped short of integrating bitcoin into its digital wallet or payment processing services directly, the move marks PayPal’s first formal offering to the bitcoin community.

In a blog post penned by senior director of corporate strategy Scott Ellison, PayPal revealed that online merchants will now be able to accept bitcoin via all three companies through its PayPal Payments Hub, its product that enables customers to accept credit cards, mobile carrier payments and other payment methods through a single integration.

Ellison lauded BitPay, Coinbase and GoCoin for their commitment to ensuring consumer protections on their platforms, while suggesting that the offering will appeal to a number of its key customer groups, writing:

“We believe digital goods merchants will be excited to work with these industry-leading companies to sell ringtones, games and music and get paid with bitcoin.”

Notably, the announcement follows the decision of PayPal subsidiary Braintree to partner with Coinbase earlier this month.

PayPal is available in 193 markets and 26 currencies. With 143 million active registered accounts and $6.6bn in revenue at the end of 2013, the e-commerce giant brings the potential for new users and new business to the bitcoin economy.

The next step for Paypal now, is a full blown integration into their existing system. A step that could blow the value of bitcoin through the roof.

Like gold, bitcoin has been scorned and despised by central bankers due to the direct threat to their fiat currency system. A threat in which I for one, welcome with open arms. Bring on the competition and let the free market decide.

The Storm is Approaching

"New houses were built in every direction, and an illusory prosperity shown over the land, and so dazzled the eyes of the whole nation, that none could see the dark cloud on the horizon announcing the storm that was too rapidly approaching."

- Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds, 1841