Considering BitGold
(It's NOT A Cryptocurrency)

Dateline: 6 August 2015




I'd like to introduce you to a new idea that I think makes a lot of sense, and could well become a popular way for us "little people" (the non-wealthy) to own gold, experience the relative safety of gold ownership, and even use gold for everyday purchases.

It's called BitGold. That name—BitGold— brings to mind Bitcoin which is the most popular cryptocurrency in the world. But BitGold is nothing at all like Bitcoin, or any other cryptocurrency.

Personally, I have tried to understand Bitcoin, and I really don't get it. I want to understand it because I like the decentralized aspect of it. But the whole concept boggles my mind. On the other hand, BitGold is a concept that I can understand...

BitGold is like a bank that allows you to buy and deposit gold in small (or large) quantities. You can save the gold in your account. And you can easily sell, convert back into dollars, and withdraw it.

I opened a BitGold account yesterday. It took less than 5 minutes to set up the account. I deposited $100 into the account using my bank debit card. 

$100 purchased 2.823 grams of gold at 1% over the spot price. Buying gold in very small quantities at 1% over spot price is remarkably inexpensive. The online purchase took place almost instantly. I chose to have my 2.823 grams stored in the BitGold vault in Zurich, Switzerland.

In actuality, the gold I purchased was already in the vault and owned by BitGold. Ownership of that portion of the gold was transferred to my account. No one else can own that 2.823 grams. It's mine, and mine alone.

BitGold does not charge a fee for storing the gold. This is kind of remarkable, as it is typical for a reputable gold vault to charge a storage fee.

So how does BitGold make money? They say it is on the fees. They take a 1% fee when you purchase gold, and a 1% fee when you make a withdrawal (spend via a debit card or transfer to your conventional bank account). Their goal is to build on what PayPal has done with online payments and the enormous fees they generate.

In my case, when I deposited $100 in my BitGold account I actually got $98.63 worth of gold. They deducted $1.37. That's more than 1%. I don't understand how they figured that.

The amount of grams of gold in my account will remain steady at 2.823 grams, unless I add or take away from it. BUT the dollar value of my account is continually fluctuating, because the price of gold in dollars is continually fluctuating. For example, as I am writing this, a day after my first deposit, the dollar value of my 2.823 grams has risen from $98.63 to $99.06. Here's a screen shot of my BitGold account page...


(click for much larger view)

When you make a withdrawal, the gold is sold at the current gold price and the dollar value is credited to you. And BitGold takes their 1% fee.

If you ever want to withdraw actual gold from your account, you can do so in 10-gram cubes or 1 kilogram bars. They will mail it to you. 

What makes this concept so appealing to me is that BitGold has a lot of credibility. They have a lot of money behind them, and there are reputable people who are involved. Eric Sprott and James Turk are two such people.

Without a doubt, the absolute safest way to own precious metals is to have them in your possession. But BitGold may well be the next best way to put a portion of your savings into gold, thus protecting it from long-term depreciation. All paper currencies have been (throughout history) and are being (right now) depreciated.

Furthermore, BitGold provides almost instant liquidity, which means you can easily convert it into currency and use it if/when you want to.

I have listened to every YouTube video about BitGold. A few are misleading because they aren't really about BitGold. They just put the name in the title. If you want to learn more about BitGold, I recommend you listen to This YouTube First, and then This One. A lot of your questions will be answered in those two interviews.

If you are intrigued enough to open an account and experiment with this new concept, it's surprisingly easy to do. They ask for minimal personal information (name, DOB, e-mail, phone number, mailing address). Then a robot calls your phone and gives you a special 4-digit number. You enter the number online and your account is verified.

BitGold currently has a new-account special. They will give you .25 gram of gold when you open a new account, if you click the following link... 


BitGold.com/r/522vto


The neat thing about that special link is that when you get .25 gram of gold in your account (I don't think you even need to add any of your own money to the account to get the .25 gram), BitGold will also deposit .25 gram of gold into my account. So we both benefit. I like that (I wish I had known about that feature when I opened my account). 

BitGold also has an affiliate program that will pay you even more money for getting people signed up, but those who sign up don't get the .25 gram of gold. That is not so appealing to me.

BitGold is a new company. They signed up 100,000 new accounts last month. This is an opportunity to be a part of something new and exciting that could really take off.

Please understand that I am not recommending BitGold as a reputable and safe place for you to put your hard-earned money. What I am recommending is that you check it out and try it out. Do your research and come to your own conclusions.

Obviously, you wouldn't want to put any more money into this BitGold concept than you can afford to lose in a worse-case scenario. But, if BitGold is truly a reputable business, and the internet continues to function, it could prove to be a wise way of diversifying and protecting your finances in an uncertain economy. 

Diversification is, after all, an old agrarian concept, best embodied in that familiar aphorism.... "Don't put all your eggs in one basket." 


UPDATE

For more information about BitGold, please check out my BitGold Update blog of September 15, 2015

21 comments:

Sunnybrook Farm said...

That sounds interesting, I am having trouble putting much trust in any one in the financial world these days. Not sure if I can bring myself to try it but I can see how it works. So much is rigged for the wealthy investors and this seems to be aimed at the masses in a way.

Herrick Kimball said...

Sunnybrook—

Agreed. It's hard to know who or what can be trusted anymore when it comes to finances.

That said, I'm more and more inclined to consider financial strategies outside the traditional banking system.

Wealthy families throughout history have always maintained some allocation of their wealth in gold, and that multi-generational strategy has never let them down.

With BitGold, the wisdom of this wealth-preservation strategy can be adopted by anyone, no matter their socio-economic position. BitGold has democratized gold ownership. And the technology they are using makes it easy to "make change" when using gold for everyday purchases and payments.

If we lived in Greece during the recent bank crisis, and we had put our savings into BitGold before the banks closed,we would have escaped the hardship and tragedy. As long as credit cards were still being accepted, and the internet worked, all of our money would be available and useable. If hyperinflation came to Greece, the money in BitGold should retain it's purchasing value. Same goes if the national currency is otherwise devalued.

Many people say that America will eventually go the way of Greece. Whether we do or don't, BitGold appears to offer a degree of safety and functionality that is simply not available in any other format that I know of.

Time will tell, but this is an exciting concept. My plan is to add to my account each week for the rest of this year, while learning more about it. I'm curious to see how easily BitGold will make it for figuring my taxes next year. If I'm comfortable with the whole thing, I will use BitGold in my business, billing orders outside the country in particular.

Thanks for the comment.

Everett R Littlefield said...

I started accumulating metal of different colors about 1978 and depositing it in very innocuous locations, NOT in my house. And anyone will be hard pressed to find it even with a metal detector of the best kind. Enough said, but it will sustain my extended family of 21 souls for a few years if the greenback goes to Hades!

Got about 25 of the carrot discs finished. I'll have a lot more by next spring.
One of the best things I EVER bought was my copy of your gardening idea book!
Garden is producing prolifically and we have many things in jars waiting for cold weather to come and eat them up!

Herrick Kimball said...

Everett—

You're a smart guy (I think I've told you that before).

Thanks for the book feedback and endorsement. Much appreciated.

I cut a stack of aluminum shade discs all at once on my table saw. Cut the aluminum into squares first, then circles with a table-saw-circle-cutting jig I made years ago. It worked pretty well but I sure wouldn't recommend the procedure to anyone. Aluminum pieces flew all over my workshop. It was a violent, loud, intimidating process.

Elizabeth L. Johnson said...

I have face booked this to several people. Seems pretty interesting!! Thanks for letting us know.

Patrick Kyle said...

Herrick,
Once again, thank you for the work you do on The Deliberate Agrarian.

Regarding Bitcoin, I would urge caution. Some have pointed out that the transaction history of every bitcoin is contained in the algorithm of the 'coin' itself, therefore there is ultimately NO anonymity using Bitcoin. Also the the recent fiasco with MT. Gox, a Bitcoin depository, where millions of bitcoins suddenly disappeared and the proprietor is under arrest, is a cautionary episode. Add to all of this bogus bitcoin (digital) wallets with secret back doors. Caution is the order of the day.
I have similar reservations about Bitgold. As I heard one time "If you don't have physical possession of something, do you really own it?" This is especially true given that banking law states that your deposits to the bank are unsecured loans to that bank. There have also been allegations that much of the 'paper' gold and silver has been oversold. (I know of no such allegations of this in regards to Bitgold.) This means that the companies who do this sell the same ounce or kilo of gold to multiple parties for full price. This scam works great until someone wants to take physical possession of their gold.

I don't mean to be a 'Negative Nellie' and rain on the parade, but I am just deeply skeptical and cautious.

Herrick Kimball said...

Elizabeth—
The more I look into this idea, the more interesting it is to me.

Herrick Kimball said...

Patrick—

Negativity, skepticism, and caution are all good things when it comes to something new like this!

BitCOIN is a completely different animal from BitGOLD. As you say, BitCOIN can be stolen by hackers (and it can be utilized by nefarious people for unlawful purposes). That's the primary reason I've not gotten involved with it.

BitGOLD, on the other hand, can not be stolen by hackers. They may be able to get into the computer system and have access to personal information of depositors. But to get the gold, they would have to go to the Brinks vaults and physically steal it. It's impossible to hack and steal a physical asset. Also, the whole BitCoin platform is built on "know-your-customer," so it would be very hard (if not impossible) to get away with an anonymous use of the system.

I well understand that bank deposits are now considered unsecured loans to the banks. The banking system has the game rigged to their (the bank's) advantage, not their depositors. That's why something like BitGold is so appealing. It's not a bank.

As I understand it, BitGold acts as a custodian of their customer's gold and they facilitate everyday transactions via their debit card option (and in other ways). I don't think this have ever been possible before.

I TOTALLY agree that you don't own it if you can't hold it in your hands. And physical metals are a safe hedge against the collapse of economic systems. But gold is totally useless for everyday transactions. You own it, but you can't really use it, unless, of course, you take the time to find a buyer and sell it. That isn't hard to do, but it takes time.

I see BitGold as a new option for putting a portion of money outside the banking system (legally), having the relative security of gold ownership, and being able to use it when and if you need to. This is an especially appealing option as the world banking system is faltering and money in the bank generates virtually no interest.

BitGold says they have procedures in place to make sure there is oversight and that they adhere to their stated principles. They might be lying. They might change their mind and violate the trust people have put in them. In the end, this is a totally trust-based operation. But it's also a large, well-funded, stockholder-responsible operation. Not a fly-by-night, one-man show.

99% of my business is done through PayPal. They make thousands of dollars off of me every year. I trust them, and so far they have not violated that trust. When they started out, they were a nobody business, kind of like BitGold. (by the way, a high-level PayPal executive in Canada has left PayPal and is working with BitGold).

The internet is changing everything. It is a tool to track and control people, thus making us less free. But on the other hand, the new technology is providing new options (financial and otherwise) outside the way business has always been done. New options for personal freedom. This revolution is still in it's beginning stages. Everything as we have known it is in flux. I'm open to new ideas. I've got one foot in the agrarian world, and one foot in the technological world (to a small degree).

Now, if (when) the electrical grid goes down for any length of time, the technological revolution will be over. And we will have us a different kind of revolution. That could happen before the year is out, or it could happen decades from now. I'm not totally buying into any predicted future scenario (been there, done that). But whatever happens, I'll still live an agrarian lifestyle, in all it's different aspects. I don't do that because I'm prepping for disaster, but because I consider it wise and Biblical. But I'm really starting to babble here (my apologies for that).

Thanks for the comment. Excellent points.

Herrick Kimball said...

Everett—

I was imagining today that, after you pass on, those 21 family members will be digging holes and ripping up floorboards all over your property, probably even for generations to come. You will, undoubtedly, be part of the lore of the island for many years.... Everett's Treasure.

My uncle Clyde Kennedy told me shortly before he went to a nursing home that he had built a secret hiding place in the stone fireplace of his house and had quite a bit stashed there. He had just told his daughter about it. Those Depression-era children never fully trusted the banks, and rightfully so.

Back when I was doing carpentry work, I had a wealthy customer who asked me to create a hiding place in the small camp I was remodeling for him. Something big enough to stash his wallet and/or a handgun in, and that wouldn't be hard to get to. He said to use my imagination. I did what he asked and he he couldn't find the hiding place. He was a smart guy- an engineer who had practical carpentry experience working for his father as a youngster. He looked quite awhile and was amazed when I showed him. The man has since passed on and I wonder if there is anything in that secret place today.

I'll never tell.

Everett R Littlefield said...

Herrick, My four kids all know where to look, and the other 17 are the various members of their families, so they each get 1/4th and will dole it out to their respective progeny.
I've told them that when the SHTF that they should all come together every day and cook two meals at one central place. Much easier to control the equal dispensing of food and resources that way. Then I told them, "What are you going to be doing with your time as there won't be no jobs to go too, no LPG to deliver, nothing. You are going to be spending your time just like my great grandfather did, trying to put food on the table and heat in the house!
I truly fear for the life they are going to be leading in the very near future. Everett

Everett R Littlefield said...

Back again, I was going to mention above that I first cut a long strip of flashing using a brake to hold it while scoring it with a sharp utility knife. Then cut the individual squares on a table top with the knife, Drill the hole, do the bending, and then trim them to round shape with a good set of metal shears. They ain't quite round but have heard none of the carrots complaining yet! If they do, They shall be devoured forthwith!! Everett

Herrick Kimball said...

Hmmm. Now that you have brought up the subject, I don't suppose the carrots would care if the shade discs were square or octagon either. I've found that a step drill bit (max. 3/8" diameter) makes a good center hole (better than a twist drill).

Do you have much in the way of accessible trees on the island for firewood? Does a lot of driftwood wash up on the shores? Or will the LP storage tank keep everyone supplied for a long time? Do you get a large boatload of it? Or a truck by ferry? Does anyone rely on coal stoves? These are things I haven't considered, being from that country to the west of you.

Pam Baker said...

Just wanted to add my two cents worth regarding the shade disc's.
Planted 66 holes ala HK on August 1st. By the 5th, I still had no sprouts. Was having early disqieting alarm bells. Took all the disc's off on the 6th to water as we have been dry up here in Southern Vermont and lo and behold, I had sprouts in most of the holes....except the five I had been checking daily! Phew!
Put the disc's back on for another day then raised them on the 7th.
Husband made a jig and cut them with a utlity knife and then usuing the same jig, put the folds in them. He did not round them off as we could not determine a need for it. Used a drill for the center hole. As we had no goldenrod stems, we used dowels. Will treat them after we pull the "cabana's". I am going to try to transplant some seedlings into my "blank" holes.
I loaned my Whizbang Garden book and don't remember to whom. I shall have to purchase another. I usually don't loan my reference books out amd I sincerely regret violating that decision!
Regarding Bitgold. It sounds intriguing but I am quite skeptical. Remember, if something sounds too good to be true, it probably is. But for your sake, I hope it is a bonafide deal.
I never understood my great grandmother's aversion of banks until I read some historical fiction and experienced some unsavory bank practices for my self. We use a local, small credit union and USAA for our banking needs.
I also came to realize that for agrarian centered folk, the "Great Depression" of the 20's & 30's didn't affect them overmuch. A good lesson to take to heart.
Respectfully, Pam
P.S. I really enjoy Mr. Littlefield's tidbits and frame of mind. You have wonderful virtual neighbors.

Elizabeth L. Johnson said...

Right, Herrick. Ditto what Pam said in her "P.S.". You have wonderful virtual neighbors, much like yourself! I really like Mr. Littlefield!

Herrick Kimball said...

Pam—
My own aversion to banks came when I understood the amazing reality of how they make their money by exploiting people. Unfortunately, very few people fully understand the wickedness of modern banking. I'll be ripping the veneer of respectability off the banking system, and revealing the evil for what it is in an upcoming blog post. I'm sure it won't make me any friends in financial circles, but the story needs to be told.

Elizabeth—
You and Pam (and other readers) would probably find Everett's Autobiography to be a good read. I know I did.

Anonymous said...

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

(Henry Ford)

I suppose one could easily say the same of the medical sickcare industry.

Everett R Littlefield said...

Hi Herrick, No the 18,000 gal LPG tank would be dry in about a week as we go thru four of them a month. It comes in 10,000 gallon tank trucks on the ferry. No forests to speak of but lots of incidental trees. Also there are about 1200 houses that are made of wood and will burn just as good as a tree. The owners probably won't be coming back to claim them anytime soon!

Back in the 70's-80's during the oil embargo I bought a coal stove and 18 tons of coal, a ton at a time, and over the years used it all up. I still have the stove in my basement, but coal is a real hassle to get now and I'm sure the EPA tracks every ton to find out just who they can go and harass for polluting the air. Bunch of idiots as far as I'm concerned. Beside my stove , I'd venture to say there are not more than 3-4 elsewhere on the Island.

Congratulations on the marriage of your son and his new wife. Hope they are as happy with each other as you and I appear to be with our choices of marital partners! 53 for us and if she keeps up the good work, I may consider keeping for a while longer. ( Hope she does"t read that).
Take care, Everett

Anonymous said...

Hey Herrick. I would caution you or anyone else considering this BitGold account to find out if this constitutes an offshore account. Newer regulations have made it very onerous from a reporting perspective for anyone in the U.S. who owns offshore accounts. You will be required to file additional forms with your income taxes each year which may cause you more headache than your $100 holding of gold is worth to you!

Herrick Kimball said...

Anonymous—
Good question. I think this was mentioned in an online discussion and it was not considered an offshore account. The company operates in the US and I could put my gold purchases in a NY vault. But I don't know for sure. I'll have quite a bit more than a hundred in there by the end of the year. I think the BitGold concept is being embraced more outside of the US because people outside the US are more "gold savvy" and the current financial breakdown is being felt more outside the US at this time. Americans still have a lot of trust in government and the mainstream institutions. Thanks for the comment.

Sheila Gilbert said...

If we crash, and the banks go down, what's to say that the banks take your, just transferred gold money, from your bank, as they did in Greece. They lost over half of their money, from any and all of their accounts! The point is, if you transfer it, and the banks fail, I doubt that we would see any money being withdrawn by us, from our accounts for quite some time, If ever. As much as I would love to purchase some gold, I have had to stick to silver. I simply want to have something that may be acceptable, in order to pay property taxes. If a no cash system ends up being our only means of purchase, then we may all be in trouble. If it stays in card form, that's ok, However, I would never allow myself to be chipped, and if that is what it takes, then the only hope is in the Lord. I read that in October that we may get a new currency, and that it has already been printed. Who knows what to believe anymore. I'm also thinking of paying my property taxes in advance, and keep the receipt close by. This would be a better investment to me. Since mine are so small, I can do that, however many can't take advantage of that opportunity. Other than that, I'm investing in a huge propane tank, and fill it with propane, along with many small tanks the size used for gas grills. It's a no loss investment.
Right now I think it wise, to finish any "stocking up" materials needed in case we have a crash. Gas for my back up generator, kerosene for my lights, fire wood for my stoves, and getting my backup water supply enlarged. I will also add to my food storage. Even if I don't need them, it sure will be nice to not have to buy any groceries for a very long time, and that means more cash to invest in being free from all the "Moderns" lifestyle. That's a GOOD thing. Bless, Sheila

Tucanae Services said...

Mr. Kimball are you familiar with the paper American Express travelers checks? Go to the bank, they would make out checks in the demoniation you needed then withdraw the funds from your checking account. Well that is the concept that BitCoin works under. Now just add encryption to protect the transaction and that is BitCoin the way most people would use it. I use BitCoin but there are considerations that make me to do only transactions --

* BitCoin trades in a market like a stock. The USD-BTC value can vary hour by hour. Since the BTC market is small in comparison to the world GDP I don't use BTC to store value.
* What favors BTC is that its transaction costs are lower than any other method out there.
* The blockchain does not provide privacy if it is accessible.

Hope it helps.