Venezuelans Turn to Gold Nuggets as the Local Currency Implodes
November 1st, 2021Dealing with physical gold in fractions of a gram seems extremely cumbersome, and, are vendors confident that they’re being paid in actual gold?
With the use of cryptocurrencies booming in Venezuela, I wonder if people are using any of the gold backed cryptos for the purposes described in this piece?
The most bugeyed Cryptogon readers will wave red flags and warn that these gold schemes could be scams. I understand this sentiment.
But…
If the point of using the physical gold is the protection it offers against the maniac state’s fiat emissions, it might make sense to use tokenized gold for day-to-day business operations. While tokenized gold isn’t physical gold, my guess is that there’s a good chance that alleged physical gold isn’t actual physical gold, in some cases.
If I was running a business and accepting payments in gold, I’d rather have tokenized gold than some yellow shiny stuff that came across the counter. Tokenized gold can be easily transferred anywhere, divided and, depending on the crypto, ultimately redeemed as physical gold. Allegedly physical gold, that is.
Keep in mind, actual physical gold can’t be disappeared by an EMP, a teenage hacker or a quantum computer.
Maybe business people could use tokenized gold for small amounts and eventually sweep these into a larger bar, or some other asset, for long term wealth preservation.
Via: Mises Institute:
The Venezuelan government recently lopped off six zeros from its hyperinflating currency, the bolivar. The highest denomination currency note of 1 million bolivars, worth less than $0.25, was replaced by a one-bolivar note. At the same time, a 100-bolivar note, worth about $25.00, was introduced as the new highest denomination of the bolivar. The currency conversion was designed to spare the government the embarrassment of having to issue a 100-million bolivar note to enable people to purchases everyday items without having to carry around bundles of notes, given that the price of a loaf of bread had risen to 7 million old bolivars. Of course, the arbitrary scaling down of the denomination of the currency will not slow inflation, because the new currency notes can be printed just as cheaply as the old. The bolivar has already lost 73 percent of its value in 2021 alone and the IMF estimates the annual inflation rate will reach 5,500 percent by the end of 2021.
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Agree with your thoughts there Kevin.
We say printing or printing from thin air, to describe monetary inflation. Everyone knows what it means even though outdated.
Fait currency is electronically conjured, electronically disseminated, cell towers, satellites…
Fiat Emissions