Profits In Gold #2

The only other thing to remember is that the systems will track and record you IP address (see the chapter on communications security). This is mainly for their own security and to prevent fraudsters from using their systems, but of course the information will be there on file if anyone should ever find out about the existence of your account and obtain a court order. Bear this in mind: it is best to use an anonomizing service, or to carry out your transactions from a public Internet terminal.
None of the systems we mentioned have a Big Brother mentality, but you have to remember they are functioning within the system, so to avoid being closed down they MUST make the right noises about cooperation. You will not find them promoting confidentiality as a marketing proposition. As far as we are concerned, that is so much the better for us. PTs should not be associated with systems that openly promote anonymous transactions, because "secret accounts" will inevitably attract the attention of Big Brother.
Perhaps more importantly, the payment systems have to protect themselves against used in fraudulent transactions, of which are abundant on the Internet. For this reason they are likely to be suspicious of anyone actively seeking anonymity. Blend in with the average user, though, and we think you will do just nicely.
EXAMPLES OF TYPICAL PT DIGITAL GOLD USERSDanny Akes a Small Anonymous Payment It's often easier to illustrate using examples, so we will start with Danny. Danny is in Phoenix, Arizona - just testing the waters, having never used digital gold. He is aware that the encrypted email provider Hushmail accepts e-gold, and he wants to use this payment method to pay them $100 for services, rather than having a link to Hushmail on his credit card statement.
First he will need a throw-away email account, or at least one not directly related him. With this, he will sign up for an e-gold account, which will be opened online in seconds. Then he locates the website of a suitable exchanger (some are recommended in our resource section). In this case, let's assume he selects an exchanger based in Florida, and their fee for this transaction is 4%. He buy a money order for cash in Phoenix for $104, mails it to the exchanger, and within a few days they have received it and transferred $100 to his e-gold account.
Then all he has to do is log in his email account, transfer the money to Hushmail's e-gold account, and voila! Transaction completed. If Danny is really security conscious he can now ditch the e-gold account and use a new one for the next transaction, but that's probably unnecessary. He can keep the same account for the coming months and maybe use it to receive some money anonymously for little trades he does on Ebay.
Rory Want to Move Money OffshoreRory from Dublin, Ireland already has an e-gold account and wants to use it to transfer funds to his secret account in Latvia. Obviously if he wires the funds direct from Ireland, that would not look good. Instead, he visits the websites of some exchange businesses and locates several which he thinks would be suitable: in the UK, the USA and Australia. Wires to these countries, he figures, will not attract attention because they fit into the normal pattern of his business, and are not headed for known offshore locations.
Over the course of some months, he randomly sends wires and bank drafts of between $3,000 and $7,000 from his business accounts at several different Irish banks, to each of these three exchangers. On receipt of the money, they credit his e-gold account as instructed. All in all, he wires out maybe $100,000.
At the same time, he has located another couple of reputable exchangers located in Estonia and Finland to complete the other end of the transaction. Periodically, Rory logs in to his e-gold account and makes a transfer to the accounts of these exchangers, then he fires off an encrypted email to them giving his Latvian bank details. The exchangers send Euros to Rory's Latvian bank account. Of course, if the Irish tax authorities were really desperate to unravel this set of transactions they could. But it would require court orders in the UK, USA, Australia, Estonia and Finland, and it is very unlikely they would bother.
For extra security, Rory could pay a nominal fee (perhaps 1%) to a straw an who would claim ownership of the e-gold account if required, and he would have a contract with Rory for consultancy services, programming work, website design or something similarly intangible.
How much does this cost Rory? Buying and selling e-gold depends on market conditions, but a fair estimate suggests that he could get quite a decent rate by emailing the exchangers in advance and explaining that he needs to make regular transactions. In this case he might be able to pay 2% in and 1% out. That's a total of 3% (ignoring any movements in the gold price) which we think is a very reasonable price to pay for the privacy afforded.
Note that in the above case, if Rory is simply transferring his own tax-paid saving, then he is doing absolutely nothing illegal. Like most civilized countries, Ireland has no restrictions on what you can and can't do with money you have legitimately earned. But if he is involved in making false tax declarations or trying to avoid court orders, the above process could quickly be construed as money laundering. Needless to say, we strongly recommend against that. If you do everything in good right when you have no tax emergencies or claims pending, then you can do everything by the book and totally legally. Much better.
Giles Want a Golden Offshore NesteggGiles is seriously, independently wealthy. His family founded one of London's landmark department stores and made their fortune before selling out to an international chain. Giles is British but now lives in Monaco.
Giles would like to keep some assets in gold, as part of a diversified portfolio. But he's what his friends call a "privacy freak" so he want to avoid buying it through the more conventional channels. Because what he wants is a long-term holding, he decides to go for GoldMoney rather than e-gold because of their better corporate governance. He opens an account with them, named G-WIDGET ACCOUNT, and provides them, unbeknown to her, with a copy of the passport of his Filipino maid.
He locates an exchanger in nearby France and calls him on the phone. Although the exchanger doesn't normally take cash, he's a small businessman out to make a buck and see no harm in doing so, given the profit potential of the situation Giles offers him. Giles therefore loads up 100,000 euros in his car, drives to meet the exchanger, and the transaction is carried out then and there. Giles watches as the exchanger transfer the GoldMoney to G-WIDGET, and then he logs in fro his laptop as a double check. The transaction goes well and Giles makes a mental note to repeat this transaction soon and increase his holding in GoldMoney.
DEALING WITH EXCHANGE PROVIDERSThere are quite a number of exchangers which make it their business to get your money into and out of the digital gold systems. Most are small businesses and are not related to the companies managing the actual systems.
Some of these outfits are better than others. If in doubt, try to check around on Internet chat groups or with other PTs on the reputation of a specific exchanger. We are including a list of exchangers who we believe are reputable and well-established in the resource section.
The other issue to consider is that exchange providers are subject to different regulations in different countries. For example, those in the USA are treated as money transfer businesses and are required to obtain ID on clients for most transactions. Nonetheless, you might still want to use a US exchanger, though, if you are doing business in the US obviously getting money to and from them in such a case would be quicker, cheaper, and ore private than using a foreign exchanger. PTs know how to be creative and solve ID problem.
Some of the exchangers in other countries are prepared to conduct business anonymously but they will need to be reassured that you are not just another fraudster or hacker trying to launder your ill-gotten gains. We suggest you email several and only deal with those you seem comfortable with, who are on your wavelength.
DOES THE GOLD REALLY EXIST?This is an obvious question to which any prudent user requires an answer. Since you cannot physically see or touch the gold, how can you be sure it really exists? How can you be sure you are not just placing blind faith on someone's word? (as in the case for example when you pass US dollars around).
But there is no general answer to this question digital gold as a whole. There are a number of competing digital gold systems and some are more secure than ethers. Before using them, it is important to carry out "due diligence" and satisfy yourself as to the authenticity of claims. Clearly the amount of time and effort you put into this will vary depending on whether you are depositing $100 or $1 million. What we really like to see is an independent, regularly updated third party audit by a trusted name such as a major accounting firm. At the moment, there is only one digital gold system which offers this:
GoldMoney, which is audited by Deloitte and Touche. Additionally their gold is stored in the UK by a third party of international repute - the secure storage company ViaMat - who are able to confirm this. Therefore, we consider GoldMoney to be the best for long-term storage of value if that is your aim. You could keep your "mother lode of gold" or "golden egg" with GoldMoney.
E-Gold has published audits in the past but they are not out-of-date. Nonetheless, e-gold is a well-established system that our associates have been using for several years without any problems. On the internet reputation is everything because bad news travels very fast - and e-gold has developed an excellent reputation. Therefore we can cautiously but responsibly recommend it.
An example of what can go wrong was a scam called Osgold, which ran for well over a year and developed a huge following. To any logical PT observer, it was clear fro the beginning that Osgold was a scam - typical signs were that it was not clear who ran it, it was impossible to speak to anyone on the phone, and the gold that supposedly backed the system was held at some secret location which they never revealed for security reasons.
Needless to say, eventually Osgold went belly-up and a lot of people lost money. But it would not have taken a rocket scientist to figure out it was a scam fro day one. A five minute visit to the Osgold website revealed many dubious claims to anyone with an ounce of common sense. So it would be unfair to tar other digital gold systems with the same brush. There are scammers in every business.
SURVEILLANCE OF DIGITAL GOLD TRANSACTIONSAt present Digital Gold is a relatively free economy, small enough to be unregulated. Because it is international in scope, it would be very hard for any government to regulate. Most governments have no idea it even exists.
There is no known reporting of transactions within Digital Gold systems. However at the time you are cashing in or out, your transactions do have to go through the regular banking system of some country or another, and there of course they could be monitored.
We imagine that all systems will keep permanent records of the IP address (that of your internet provider) so anyone with access to those records will be able to ascertain exactly where the transaction was made from. We can also assume that they monitor the part of the world you are in. For example, if you have an address in the USA on file but the account is accessed fro the Ukraine, that could be cause for further investigation.
The other issue you need to be aware of is security. If a hacker or Big Brother has installed a malicious program such as a keyboard logger on your system, it would be possible for the to steal your passwords, But of course this risk applies to all forms of internet bank, not just to Digital Gold. It is therefore very important for users to maintain good levels of computer security (see the separate chapter on computer security)
BLENDING INWhat is a typical transaction size? Most digital gold transactions will be relatively small, but low five figure dollar amounts are not unusual and should pass below the radar. Six or seven figure transactions (over $100,000) certainly happen quite often too, but they are probably big enough to stand out and maybe receive some extra attention. If you were seeking privacy, you would not want that unless you had a well-established account with a history of larger transactions.