“A Canadian cryptocurrency exchange says about $140 million worth of customers’ holdings are stuck in an electronic vault because the company’s founder, and sole employee, died without sharing the password,” reports Paul Vigna at the WSJ. On Jan. 15, the company announced on its website that Mr. Cotten had died on Dec. 9 from complications related to Crohn’s disease while building an orphanage in India. He was 30 years old. Two weeks later, the exchange filed for bankruptcy protection in a Nova Scotia court. Quadriga said its customers have accounts with a total balance of about C$250 … [Read more...]

Central banks of countries trying to move away from dollar reserves are buying up gold in amazing numbers. Russia, Turkey and Kazakhstan were leaders in increased gold buying last, reports Henry Sanderson in the Financial Times. He goes on to write: Central banks bought a net $27bn worth of gold, driven by Russia, whose net purchases were the highest on record, according to the World Gold Council, an industry-backed body. Volumes came to 651.5 tonnes, an increase of 74 per cent on the previous year. The buying reflects continued efforts by emerging market central banks to diversify their … [Read more...]

  Market volatility and a weaker dollar has pushed the demand for gold higher. Investors are driving up the price for the safe haven precious metal. Neil Hume reports at the Financial Times: For much of 2018 gold was out of favour, hit by the strength of the dollar and interest rate rises in the US, which dented the appeal of assets such as the precious metal that offer no yield. That saw gold trade as low as $1,174 in August in spite of rising geopolitical tensions and the fallout from US-China trade war. Sentiment towards gold began to improve towards the end of the year as … [Read more...]

By tying blockchain technology to fiat currencies, stablecoins are trying to be the solution to cryptocurrency volatility. Hannah Murphy reports for the Financial Times: While stablecoins are less enticing investments for risk-hungry speculators than other cryptocurrencies, proponents argue users get the best of both worlds: the low volatility of fiat currencies together with the advantages of digital currencies, such as fast international payments, availability to anyone with an internet connection and no need to go through the banking system. And many believe their potential goes beyond … [Read more...]

The IMF is urging central banks to seriously consider digitizing their currencies. There are a number of stated reasons why governments would consider digitizing their money, but the real reason is less obvious. When money is digitized, citizens have no option to cash out their currency. If it all sits on a bank's balance sheet in digital form, governments can easily implement negative interest rates, forcing consumers to spend their money, or risk losing it. Today, depositors have a check on bank and government power over their assets because they can always withdraw their money in hard … [Read more...]

Speaking to the Financial Times, Treasury Secretary Steve Mnuchin mentioned that he would like to discuss currency devaluations by China as part of trade talks between the United States and the communist nation. Sam Fleming reports: The US Treasury secretary has warned China not to engage in competitive devaluations of the renminbi as the two countries spar over their economic relations and engage in an escalating trade war. Steven Mnuchin said in an interview with the Financial Times that the Treasury monitored currency issues “very carefully” and noted that the Chinese renminbi had … [Read more...]

I wrote this back on August 7, but it's worth posting again in light of recent crypto-volatility.  Writing in The Wall Street Journal, Andy Kessler explains the mistake Isaac Newton made with his investments in the South Sea Co. After investing well and earning 100%, Newton initially sold his shares profitably. But when the South Sea Co.'s shares began to take off into bubble territory, Newton was afraid of missing out and invested once again, ultimately losing what would be millions in today's dollars. Kessler writes of today's bitcoin investors: Why relive this painful history? Because … [Read more...]

Once confidence in a currency is lost, it's hard to get it back. Turkish central bankers are trying hard to hold the public's confidence in the lira by hiking interest rates to 24%. At The Wall Street Journal, David Gauthier-Villars explains the central bankers' efforts to maintain control. He writes: The monetary-policy decision could help ease investor concerns over the central bank’s independence from Turkey’s President Recep Tayyip Erdogan, whose call for lower rates earlier Thursday had weighed heavily on the lira. “This was much bigger than expected. It sends a signal to the market … [Read more...]