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