#Bitcoin bubble grows and grows - FT.com

When will the real "Bitcoin", i.e. #Gold, react?

 Bitcoin's soaring price

©Dreamstime

This time, Wall St is innocent.

To the long list of asset bubbles – from tulips to the South Sea Company, from dotcom stocks to US housing – economic historians may soon be adding a virtual “currency” called Bitcoin. But while it is bankers who are most often blamed for blowing up bubbles, the rise and rise in the Bitcoin price has taken place without any such intervention.

A buying frenzy has sent the value of the total Bitcoin stock past $1.5bn and the price of a single Bitcoin has doubled in less than two weeks. Having passed $100 on April 1, it peaked at $147 in the small hours of Wednesday morning.

Untethered to any real asset, the Bitcoin’s price is determined only by speculation on exchanges around the world, the largest of which, Mt Gox, reported technical difficulties on Wednesday as interest rocketed.

“Trading tulips in real time,” declared the veteran UBS stockbroker Art Cashin in a note to clients. “It is rare that we get to see a bubble-like phenomenon trade tick for tick, but all that may be changing before our very eyes.”

The currency was created four years ago by an unknown computer scientist and the limited stock of “coins” grows according to a predetermined algorithm. A small number of online services accept Bitcoins as payment but the value appears correlated less to their use than to talk on Twitter, blogs and in the media.

But the Bitcoin is nothing if not volatile. For example, a 2011 spike took the price of a single Bitcoin from $2 to over $30 – and back again.

The latest, biggest burst of interest coincided with the bail-in of depositors in Cyprus, after which Bitcoin’s advocates pitched it as an alternative to fiat currencies that can be devalued or confiscated. “It’s gold for computer nerds,” said Nicholas Colas, chief market strategist at ConvergeX.

Some finance industry entrepreneurs have leapt at the opportunity. Exante, a Malta-based asset manager, set up a Bitcoin fund last year that was largely intended as a fun punt. Wealthy investors each put in $1,000 when Bitcoins were trading at $13 on the understanding they could lose the original investment. Exante predicted that public and media interest would take off when Bitcoins were trading at $100. Managing partner Gatis Eglitis claims they are now getting 20 calls a day from large asset managers looking to invest up to $100m.

Jim Angel, professor at the McDonough School of Business at Georgetown University, is sceptical of Bitcoin’s long-term viability. “Governments don’t like competition in the currency business and if it gets too big they will clamp down,” he said. “Also, you are trusting algorithms to protect the system, and we all know that technology breaks or gets hacked.

“We are just one scandal away from Bitcoin collapsing entirely.”

read the article online here: Bitcoin bubble grows and grows - FT.com

Marc #Faber: 'I would probably choose #gold' - YouTube

Marc Faber: 'I would probably choose gold' - YouTube

How low can the #Gold and #Silver stocks go?

Brutal day for precious metals juniors, explorers

It was not a nice day to be a precious metals junior or explorer.

Author: Kip Keen
Posted: Wednesday , 03 Apr 2013

EXPLORATION

HALIFAX, NS (MINEWEB) - 
Walloped.
As the price of precious metals sank Wednesday – gold down 1.4 percent and silver down 1.5 percent at presstime – explorers with sizeable gold and silver deposits and junior gold and/or silver producers took outsized beatings.
“The sentiment is just not there,” said Haywood analyst Stefan Ioannou, speaking to the market hit juniors were taking today.
“Things are already cheap,” he said. And could, by his measure, get cheaper.
“But then there's no rush to pile back in.”
Ioannou noted that financing continues to be hard to come by, making what were already high risk assets, “super, super high risk”, he said.
“Bank's aren't picking up the phones, either,” Ioannou said, making it harder for some would-be mine developers to advance mine developments.
Indeed, 2013 has been an awful year so far for gold juniors and explorers in particular. A typical stock chart ramps down. Today such charts fell off a sizeable ledge.
No scientific poll, here, but a quick perusal of top gold and silver project developers and leading gold and silver juniors on the TSX Venture and the main board told the same story late in the trading day Wednesday.
Take some explorers with multimillion ounce gold deposits: Torex, Pretium and Seabridge. Each were respectively down 12 percent, 9 percent and 5 percent at presstime.
The take some junior gold producers: Detour Gold, Brigus Gold, B2Gold and Osisko. All were down as well, respectively 9 percent, 8 percent, 5 percent and 5 percent at presstime.
It was the same story for larger silver explorers and junior producers.
Meantime the TSX Venture headed to new multi-year lows.
It's a volatile sector where wide swings are the norm. But today was particularly brutal and reflected a lack of optimism in - and high sensitivity to - the price of gold and silver and the prospects of those companies that need to raise cash to keep projects going.
It didn't matter where your project was. It didn't matter how much cash you had in the bank or how nice your gold deposit may be or whether you had arranged financing already or had good prospects of doing so.
All the mattered – for this trading day at least - was to sell, at a discount, anything smelling of precious metals.

Brutal day for precious metals juniors, explorers - EXPLORATION - Mineweb.com Mineweb