Profits In Gold #1

Throughout recorded history, one precious metal, gold has been a preferred store of wealth and a medium of exchange. But it's inconvenient. You don't want to store gold bullion in your home and then have to shave a little piece off an ingot to go grocery shopping. Of course in places like Thailand, they do something similar-even today. Some women wear necklaces with easily detachable tiny sections of standard weight. When they need to dip into their savings, they break off a link and spend their jewelry.
Chinese merchants have scales to weigh and instruments to verify purity. Yet of everyday transactions, even in Thailand, standardized coins or banknotes are ore convenient. The notion that we cannot move our own money abroad when we want to would have been dismissed with derision by Marco Polo as he forged his way around the globe. But we certainly don't need to go back to Marco Polo. Today, in everywhere but police states, individuals and investors can still move their assets in and out legally with some reporting requirements and few other restrictions.
The problem is that it looks like U.S.A. pressure, this golden age is coming to an end. Thus, new alternates like digital currencies should be considered by PTs. Paper money first developed when gold traders found they could issue "receipts" or IOUs payable to the bearer, in return for gold deposited in their vaults. People found these slips of paper more convenient than the physical gold itself for purposes of settling day-to-day debts. Then if anyone wanted to cash in, they would simply take the paper money to the vault and demand their gold. (Of course this system didn't last long as issuers found they could easily issue ore paper than they actually held in their vaults. But that is another story.)
Digital gold operates on the same principle. The physical gold is (HOPEFULLY!) stored in a central vault, but ownership is transferred by logging in to one's digital gold account using a secure Internet connection and password. This allows the legal right to a certain amount of the gold to be transferred in an instant to somebody on the other side of the world - and it also allows the gold to be divided up into almost infinitely tiny fractions of an ounce or gram if necessary, which is much more convenient than using physical gold.
USING YOUR DIGITAL GOLD ACCOUNT
Logging into your digital gold account is quite similar to logging in to an online bank account. You can see the balance, check your statement, and make a transfer to any third party who has an account on the same system. If a third party has your account number, they can make a transfer to you.
You cannot write checks, you can just make transfer - but these transfers cost almost nothing and clear in fractions of a second, unlike transfers made in traditional banking systems.
The main difference is that the balance is held in actual gold, not in money. So it is accounted for by mass (weight). Most systems will allow you to view your balance in, or make transfers for, an equivalent amount in US dollars, Aires, pounds Esc - but these equivalent balances can change from one moment to the next based on movements in the price of gold on world markets.
The only definite, fixed balance is the one you can see in either TROY ounces or grams, depending which you prefer. So, just as if you were buying physical gold, you can lose if it goes down, or gain if it goes up. The good news is that gold prices are relatively stable and don't tend to change significantly from one moment to the next.
WHY DIGITAL GOLD IS SO USEFUL TO PTs
Digital Gold has existed since 1996 and is now sufficiently mature that we can recommend it as part of an overall PT banking strategy. There are three different types of transactions for which a typical PT might want to use digital gold:Anonymous money transfer: making small value payments anonymously. For example, you might want to pay to host a website, rent server storage space, or to pay for an anonymous e-mail service, or even buy a controversial book. This in now the definite first choice payment method for most PTs when they do little deals between each other.
Pass-Through: Moving larger amounts of money fast and anonymously around the world. You might wish to move money fro your onshore identity to your offshore account, or vice versa, without leaving a trail by transferring the money directly. As you will read later in this chapter, digital gold can help you accomplish this anonymously, cheaply and efficiently. As a trusted system linking exchangers in many different countries, each with access to their local banking systems, digital gold can be compared to something like a high-tech, Internet-based Hawala money transfer system.
Golden Egg: as a longer-term store of wealth or speculation. As a place to store your wealth offshore, buying gold without governmental interference.
Each of these types of transactions requires slightly different strategies in order to obtain maximum security and privacy at minimal cost.
HOW YOU CAN DEPOSIT AND WITHDRAW MONEYIn many ways, digital gold accounts operate like bank accounts. But because your assets are in real gold, you need a way to buy and sell that gold in order to interact with the traditional banking system. You cannot, for example, send ounces of gold via SWIFT wire transfer to account in US dollars. Instead, you must first sell the gold to someone who will give you dollars in exchange, and then you can have the buyer send the wire in dollars for you.
There are many currency exchange businesses on the Internet which will do just that for you. The gold market is very liquid so you will have no problem cashing in or out at any time. It is no more difficult than dealing with a transaction which involves two national currencies. It's really quite simple. To get funds into the system in the first place, you have three options:
1. You can receive payment from somebody else in digital gold. This may be difficult if you are new to the system, but it is now the number one preferred payment method between PTs when they make deals between themselves. It's extremely efficient because the transaction costs are low, and there is currently no reporting of such transactions to any government.
2. You can buy physical gold bars and ship them to the vault of the Digital Gold system (possible but rather complicated and probably better avoided - only practical on large transactions)
3. Finally, you can just pay money in dollars, pounds, euros or your local currency to an exchanger who will then credit your digital gold account with the appropriate amount. Obviously the exchanger will charge a small fee for this.
What is very useful is that there are man exchangers located in any countries around the world, all competing for your business. Besides the obvious payment methods of check or wire transfer, they will accept almost any other form of payment imaginable: cash, money and postal orders, credit card, Western union, moneygram, domestic Internet bank transfers, etc etc.
Withdrawing money into a regular national currency is subject to a similar process. You can spend it to another digital gold user, you can request physical gold fro the vault, or you can go through an exchanger. For accounting purposes and for the sake of explanation, we choose to think of gold as just another currency, AUG (Gold Grams). Just as we have USD, GBP, EUR, AUD etc. Indeed, gold is a currency in its own right.
CHOOSING YOUR DIGITAL GOLD PROVIDERThere are quite a few competing systems but general it is free to open an account, and there is no commitment. There is nothing to stop you having as many accounts as you like.
The established market leader is e-gold (www.e-gold.com) They have been around since 1996. It is a common and well founded compliant that their customer service is somewhat lacking, but the system functions well and they have a reliable track record of stability. Everybody who accepts any kind of digital gold accepts e-gold (rather like everybody who accepts credits cards accepts Visa) so it's probably the best one to start with.
A more recent competitor is GoldMoney (www.goldmoney.com). GoldMoney is very professionally run, more so than e-gold we believe. However, GoldMoney is smaller and less widely accepted, something more like Diners Club in the credit card business - you are limited in the places you can use it. Nonetheless, because of their more processional management, we think GoldMoney is ideal for storing larger amounts of wealth on a longer-term basis.
For ore advanced users, there's something called First metal Depository Company (www.1mdc.com) which piggybacks on the e-gold system. It is run by PTs and has its servers offshore. Effectively, it's a way of spending and storing e-gold without e-gold themselves being aware of it. It is something you should explore by yourself when you are comfortable with the first two.
Then finally there is Pecunix (www.pecunix.com) a competing system which sees reliable and very efficient, but is not widely used as yet. There are quite a number of other smaller Digital Gold operators. Some of them may be genuine, but others may be unstable or even fraudulent. After all, anyone with a bit of programming experience and a server can set up one of these systems. So in the unlikely event that you consider it necessary to use a digital gold system that is not one of the three mentioned above, we most emphatically recommend that you do some serious background checks on it first.
OPENING YOUR ACCOUNTNeither e-gold nor Gold Money will openly admit to opening "anonymous" accounts. Remember that they are seeking mainstream business as Internet payment systems, and the last thing they want to be seen as is an anonymous payment system. In fact, when opening an account you are required to submit an individual's name together with verifiable contact details and these are likely to be checked, especially if you conduct large transactions on a relatively new account.
At the very least, you can be sure that a human being will look at the data you have provided to check it appear realistic. So if you open you account in the name of Pamela Anderson with an address in Silicon Valley, you will soon find it blocked.
On the other hand, the requirements are much less onerous than those of opening a bank account these days. As for e-gold, an alter ego with a maildrop on the other side of the world should be just fine. You should have some piece of ID ready to fax to the if they ask, and your address should be capable of receiving a letter via regular mail containing a "verification code". But if you address looks genuine and you keep your transactions below, say, $10,000 they will probably not even bother to ask you to go through this process (note: obviously this policy of theirs could change at any time). GoldMoney has a clearer, more rigid policy. Up to a certain limit, they don't need an ID from you. If you want to exceed that limit, you are required to e-mail them a scanned photo ID and utility bill. They post details of the limits on their website.