After posting an article on stagflation yesterday, I noticed that many were in disagreement on what inflation actually amounted to in the real world. Further, many were unaware of what digital gold actually was. I fear they may have been confused by the term "digital". Thus, today we will review the rampant inflation that we are encountering the US (and world-wide) and the effects that it is having on digital gold. But first, let's be clear on nomenclature and semantics, through a glossary of sorts...

 
What is Monetary Inflation?
Monetary inflation is a sustained increase in the money supply of a country (or currency area, i.e.the EU). The generally accepted economic,definition of inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. What many fail to conceptualize is that the price level of sand goods and services are cast in that country's (or currency area's) currency. Thus, it is really a push and pull dynamic that determines these prices. The push is the amount of actual currency that is in the economy, which is the most sensitive determinant of prices (since, in modern times,money can be electronically printed in hours, if not minutes). If you have $100,000 USD, backed by exactly 100,000 units of GDP, (let's assume 1 unit of GDP = $1 at this time) and there is $1,000,000 in existence. I, the Mr. Central Banker, while in full PANIC mode, adds 49% to the money supply (100% inflation, annualized). Let there be no misunderstand. the Fed literally added IN EXCESS of 49% of the total dollars outstanding to the USD supply since COVID started - November of 2019! 
fredgraph 27
 
So, I as the Fed banker, adds $490,000 more USD to the system and generously (you know, like in the PPP bailout schema and IRS stimulus checks) give you $7k of it. How much richer are you, economically? Let's do the simple math. You go from $1 in 2019 dollars to $0.67 + the PPP/IRS stimulus payment (let's add .$.007 for that).  That is the most rapid, most steep, most destructive jump in monetary inflation in the history of this country. That's ~100% inflation, annualized Zimbabwe had 161% inflation in 2019. We're catching up!
Now, that $1M home you were looking to buy now costs $1.4M, and the owners of that home really feel wealthier. The problem is that they are wealthier in the drastically devalued USD. Economically, they would be the same - give or take a couple of percentage points... Except.... That house didn't go up in price at all.It went down in price. Why?
fredgraph 26
Prices are going down. This is deflation, and it is the reason why the Fed is pumping so much money into the economy, debasing the dollar. Inflation combined with deflation leads to the stagflation that we discussed yesterday on Zerohedge.
 
fredgraph 28
 
What is Tokenized (Advanced Digital) Gold?
Digital Gold: Gold that is identified in digital form. This is opposed to gold that is identified in analog form. For example, when you purchase gold from a gold dealer and issued a paper receipt for said gold, it is analog. When you purchase gold from a dealer and you are issued a digital receipt (i.e.a blockchain-based token) it is digital. If the digital token is structured properly (i.e. carefully tokenized), it gives you all of the benefits of a traditional purchase, plus all of the benefits of the Internet, the blockchain and the programmability of the smart contracts (i.e. autonomous loans denominated in hard currency). One of the biggest misconceptions of digital gold is that of counterparty risk, basically, "If you don't have it, it's not yours!". Here's a 10-second tutorial on how to alleviate that misconception with VeGold, one of the better implementations of digital gold (disclaimer: I am affiliated with the proprietor of this system)..
  1. Click the "redeem" button on your phone, tablet or computer
  2. Provide a shipping address
  3. Pay for the shipping. You can use USD (or any other fiat, converted to USD) or any other digital metal you may have in your account.

Vegold redmption steps

This can be done immediately after you buy the metals (just like a traditional purchase) or next month, next year, in three years, etc. Unlike traditional dealers, you can buy and sell fractional units of gold, as little as $0.40 (forty cents) worth, and transfer that small amount for as little as 4 cents. Properly constructed tokenized gold is literally title to the physical gold, deliverable on demand. It can also be held in bearer form, and freely transferred to others within seconds.

You can also easily send and/or receive your gold tokens to anyone with an Internet connection, in any amount, within seconds and for mere pennies.

gold send or receive

These tokens that are digitally sent or received can also be redeemed for physical gold, upon demand, simply by following the steps above (after KYC, of course). This represents a colossal evolution in how physical gold is bought, sold, sent, received and traded.

Find out more about VeGold here

Now, that we're all caught up, let's jump in.
 
Monetary inflation and digital gold 1 
This chart is the base of the entire argument of holding gold as an currency reserve. First, look at the trend of each component/line.
  • The economic world has been upended during the popping of the 2007 bubble.
  • In 2009, the Fed has doubled in balance sheet through quantitative easing, thereafter increasing it by ~700% more through today. It has added more than 30% to its balance sheet in just the last two months.
  • The broad money supply has jumped 49% in the last 6 months.Monetary inflation is at its highest level, ever, and half of the annualized inflation rate of Zimbabwe.
  • US borrowing has increased by 300% over the largest period of borrowing in the modern history of this country. There has never been a period where the US has borrowed more, or borrowed as fast.
  • Gold has tracked this monetary debasement (inflation) closely, now near an all-time high

 This is the chart,blown up to focus on just the COVID-19 period.

Monetary inflation and digital gold close up

  • Comparing the amount of US government borrowing since October ($1,226,672,000,000) to the increase in the amount of US treasuries holdings on the Fed's balance sheet ($1,795,938‬,000,000), you'd find that the Fed has not only:
    • been the buyer of all of those treasuries issued by the US (debt monetization), and
    • has also been soaking up excess treasuries from the (real) secondary markets in order to synthetically give the impression of naturally lower interest rates (the Fed has bought more treasuries than the US has issued.. Two guesses where the money to buy $1.8 trillion of US borrowings came from....

You guessed correctly, the printing of US currency. The monetary base in the US has increased by $1,592,133,000,000, or a whopping ‬49% - in less than 6 months! That doesn't even tell the whole story. You see, the Fed has been busy buying a lot more than just treasuries. It has bought ETF shares, mortgage backed securities, swapsi issued, etc. It's total asset side of its balance sheet has grown $2,636,106,000,000, again, over a period of less than six months. Money needs to be printed to fund that additional $1.8T worth of "other stuff" the Fed has been stuffing into it's knapsack.

What does this mean for gold when priced in rapidly inflating dollars? Well, over that same 6 month period, gold has climbed 16%, and the money debasement/inflation is literally just getting started.

Look at the correlation between these government activities and he price of gold

COVID correlation to VeGold 

Let's look at the price of VeGold (tokenized gold) in various sovereign fiat and crypto currencies.

 covid gold usd  covid gold cny  covid gold jpy
 covid gold eur  covid gold gbp  covid gold btc
 covid gold eth    

 Learn more about VeGold here. Read our indepth report on the truly stable purchasing power of VeGold across all currencies here. Purchase your own VeGold here (find the product you want, then clock "open").

 

Sources and citations:

Source: U.S. Department of the Treasury. Fiscal Service  

U.S. Department of the Treasury. Fiscal Service, Means of Financing: Borrowing from the Public [MTSMFBP133FMS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MTSMFBP133FMS, May 20, 2020.

Source: Board of Governors of the Federal Reserve System (US)  

Release: H.4.1 Factors Affecting Reserve Balances  

Board of Governors of the Federal Reserve System (US), Assets: Total Assets: Total Assets (Less Eliminations From Consolidation): Wednesday Level [WALCL], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/WALCL, May 20, 2020.

Source: Board of Governors of the Federal Reserve System (US)  

Release: H.4.1 Factors Affecting Reserve Balances  

Board of Governors of the Federal Reserve System (US), Assets: Securities Held Outright: U.S. Treasury Securities: All: Wednesday Level [TREAST], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/TREAST, May 20, 2020.

Source: Board of Governors of the Federal Reserve System (US)  

Release: H.3 Aggregate Reserves of Depository Institutions and the Monetary Base  

Board of Governors of the Federal Reserve System (US), Monetary Base; Total [BOGMBASE], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/BOGMBASE, May 20, 2020.

Source: ICE Benchmark Administration Limited (IBA)  

Release: LBMA Gold Price: Daily Prices  

H.3 Aggregate Reserves of Depository Institutions and the Monetary Base

We are pessimistic about today's Brexit talks. There is no chance that they will lead to a deal along the lines proposed by Prime Minister May. The E.U. has shown no signs of backing off of its position (which it would have to do to agree to such a deal) and doing so is not in its economic interests because, unlike the U.K., it has to worry about establishing precedent for other negotiations over leaving the E.U. Given the political constraints facing May, the most likely outcome is that there is little tangible profess in Brussels. Betting markets have the odds of a hard Brexit in April 2019 around 45%, they will likely rise above 50% soon.

Veritaseum is a blockchain-based FinTech software development company that is opening the door for peer-to-peer capital markets through its digital asset research and technology platform.  Of particular note, is our ability to create custom tokens that represent a proportionate share of value in hard assets that can be exchanged Peer-to-Peer in bearer form, efficiently and seamlessly. The Tokens represent title to ownership in the assets.

To exemplify this, Veritaseum has created precious metal tokens: VeGLD (Gold Token), VeSLV (Silver Token) and VeSTB (Composite Stable Token) that can be widely and negotiably exchanged, and fully redeemed to the bearer. These tokens are backed, 100+%, by their assets.

VeGLD and VeSLV - Key Features and Benefits

  • 100+% backed by the asset in high quality (.9999 fine gold and silver)
  • Secure and insured with reliable depositories around the world for global redemption
  • Fully redeemable*
  • Value easily monitored through precious metals markets
  • Easily transferable to others through the blockchain, easily negotiable through market-based price discovery

VeSTB - Key Features and Benefits

  • 100+% backed by our proprietary basket of precious metals in fine quality of .999 to .9999**
  • Value stabilized to mimic performance and volatility of major global currencies (CNY, USD, EUR)
  • Reduced long term volatility and/or increased value appreciation when compared to standalone precious metals
  • Enhanced diversification to market risk exposure when compared to standalone precious metals
  • Fully redeemable for the underlying basket*
  • Securely stored and insured with reliable depositories in the US via Comex approved vaults for global redemption and delivery to nearly any area around the world. ***

VeSTBL1

* Tokens are redeemable in one-ounce increments.  Additional fees, including shipping, apply.

** The VeSTBL composite basket may also contain minerals, other commodities and futures. Basket components will be disclosed at delivery after redemption.

***.Delivery cannot be made to areas that are on the US sanctions list, or that are not covered by our insurers or the insurers of our contractors,

 

AML/KYC

To help the government fight the funding of terrorism and money laundering activities, Federal law requires financial technology (FinTech) companies to obtain, verify, and record information that identifies each person. We strive to comply fully with US anti-money laundering and know your customer rules.

NOTICE and DISCLAIMER

We have reviewed the proposed legal structure of a precious metal backed Token as proposed by Veritaseum. Based on our review, we have concluded that the precious metal backed Token as proposed by Veritaseum complies with all applicable laws of the United States including Federal and State laws, as well as corresponding International laws. The proposed Token is fully negotiable and redeemable to the bearer and would not be considered an Initial Coin Offering (ICO) under current law. It should be noted that the above notice is for informational purposes only and should not be construed as legal or financial advice as the laws are subject to various interpretations and changes and financial conditions vary from person to person. Accordingly, one should not take any actions, or refrain from taking any actions, based the above notice, and should seek the advice of counsel and/or their financial advisor before deciding whether or not to take action.

Brundidge & Stanger, P.C.

Purchase and Redemption Terms and Conditions

Definitions

Veritaseum Assets LLC: A for-profit company that develops decentralized and distributed ledger transaction technology, including the Veritaseum Platform or VeADIR (Veritaseum Autonomous Distributed Interactive Research). Veritaseum Assets LLC also provides advisory and consulting services relating to the Veritaseum Platform.

Veritaseum showcases industry leading digital asset investment software & unprecedented research reports during the Consensus conference in NYC. Use our capital to gain exposure through VeADIR, take home our research, chat with analysts. Register here.

The following are the workshops that will be held in the suite:

NEW MARKET PERSPECTIVES THROUGH BLOCKCHAIN TECHNOLOGY

  1. Cryptographic Token Valuation

What do you pay for an asset that offers no claim on an underlying business, generates no operating cash flow, and promises to pay nothing to its owners? Over the past two years blockchain-based tokenized networks have accrued billions of dollars in value. Since these networks are fundamentally different from traditional assets, traditional valuation frameworks do not apply. Yet, these tokens have a value with their own ecosystem of products and services that may be every bit as disruptive to the existing infrastructure of business operations as token platform founders predict.

What you will learn:

  • How to assess a token platforms value from a utility use case mindset
  • How to evaluate token entities using fundamental analysis based on non-traditional valuation approaches
  • The importance of velocity and other assumptions common to platform token economies and supply/demand fundamentals

  1. Risk Adjusted Return on Digital Assets - It Ain’t Your Granddaddy’s Asset Class

    • Explain the obvious flaw in mainstream thinking regarding the perceptions of risk vs reward, particularly as it applies to volatile crypto assets
    • Comparing the historical risk adjusted return of legacy assets vs digital assets
    • Introduce VeResearch and how it is in a class of its own - distribute samples of VeResearch and physically compare it to what’s currently available

What you will learn:

  • How to accurately measure risk adjusted return in the digital asset space
  • How to discern quality research and analysis from the run-of-the-mill opinions
  1. Issues Facing the Blockchain Industry as of Today

Every new technology revolution has to cope with issues and limitations since its inception and Blockchain is no exception to the rule. The point of this part is to present the current issues that Blockchain users are facing and how these problems could be solved or avoided in the more or less near future.

What you will learn:

  • Overview of the different types of issues faced by Blockchain technology users since inception
  • Potential improvements and enhancements that could be brought by stakeholders to advance the industry
  • Predictions for the industry one, five and ten years out
  1. P2P Capital Markets for Exchanges: The Good, the Bad and the Ugly

Veritaseum develops public blockchain-based, P2P financial machines, and it is not the only company pursuing customers in this space. This workshop is a hands on introduction to the various products offered by companies such as Iconomy, Shapeshift/Prism and Veritaseum as well as Grayscale.co’s approach to engaging traditional investors in crypto investing. You will get to contrast and compare the early leaders in the space of digital asset management and investment and learn how the technology will be a boon to the most progressive market participants, and potentially the death of those who resist change.

What you will learn:

  • How Veritaseum’s VeADIR works and can be applied to exchanges, money managers, family offices and brokers
  • Actual facts from a bank’s point of view
  • Actual facts from non-bank financial institutions’ point of view (capital market participants and investors)
  1. V. Risks to Anticipate: New Competition for Stock Exchanges?

The Blockchain technologies are shaking up the industry very quickly. As an example, in August 2017, the Australian Securities Exchange (ASX) announced their wish to be soon the first mainstream financial market to adopt blockchain by replacing its old settlement and clearing system by the end of 2018 through this new technology. What many industry pundits fail to realize is that this is merely an upgrading of a legacy infrastructure. This transition is not a material threat to the legacy business model (although it will eliminate some redundant fat within the system). The real threat to legacy business models will arise  when clients of the legacy institutions and retail investors realize the power of P2P systems that allow them to circumvent exchanges, brokers and money managers en masse.

What you will learn:

  • Overview of the last initiatives launched by the main stock exchanges
  • The pros and cons of trades performed in a decentralized manner
  • The pros and cons of non-affiliated market operators and settlement facilities
  • Group discussion of potential risks and benefits – Idea exchange
  1. VI. Tokenizing Real World Assets of Any Kind

This segment will illustrate the process and benefits of bringing physical assets onto the blockchain. The team will use as examples Veritaseum’s Financial Machine, the VeADIR (Veritaseum Autonomous Distributed Interactive Research) and walk the audience through real world examples of Veritized, liquid gold that is fully redeemable for the physical metal at the redemption window. Time and resources permitting, they will also walk through a real world example (or simulation) of Veritized real estate transferable in near real-time through the blockchain. The team will also share how the Securitize.io platform performs tokenization.

What you will learn:

  • The true power of public blockchains and the prudent use of smart contracts in the conditional transfer of commodities and financial, hard, and real assets
  • Demonstration of the “sky’s the limit” potential of the technology
  • Emphasize the potential shortcomings in the current regulatory environment and anticipate the next major moves

VII. Open discussion and Distribution of Actual VERI tokens, Veritaseum Research and VeADIR Access for the Use of the Audience

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Request Access

IMPORTANT!

You must be holding more than 3,333 VERI, be an identifiable accredited investor, or be a member of a family office or qualified purchaser ($5M in assets or higher) to gain access to VeADIR beta.