Digital Gold Currency Magazine is reporting that GoldMoney is suspending the ability to make and receive payments in precious metals to or from other GoldMoney customers due to the "global increase of compliance requirements for payment service providers."
This capability was the key differentiator of GoldMoney to other online precious metal storage businesses. It is an unfortunate development for gold standard advocates.
The decision was not entirely driven by increased regulations as GoldMoney also indicate that "our customers’ use of the metal payments and currency exchange services is not significant." Looks like a case of disporportionate compliance effort for GoldMoney on something that didn't drive business.
Interesting then that customers have voted and said they aren't really interested in gold as money. Possibly this may change if those customers are faced with high inflation or banking system instability, but it will be hard for GoldMoney to restart the functionality and catch up with any regulatory requirements in place at the time (assuming there is any regulatory tolerance for alternative payment systems at that time).
Freegold anyone?
This capability was the key differentiator of GoldMoney to other online precious metal storage businesses. It is an unfortunate development for gold standard advocates.
The decision was not entirely driven by increased regulations as GoldMoney also indicate that "our customers’ use of the metal payments and currency exchange services is not significant." Looks like a case of disporportionate compliance effort for GoldMoney on something that didn't drive business.
Interesting then that customers have voted and said they aren't really interested in gold as money. Possibly this may change if those customers are faced with high inflation or banking system instability, but it will be hard for GoldMoney to restart the functionality and catch up with any regulatory requirements in place at the time (assuming there is any regulatory tolerance for alternative payment systems at that time).
Freegold anyone?
Here's the man with the company that started it all(James Turk), patented the process and pushed it hard for many years. Now he has shut it down because of U.S. regulations...that's saying something big. Also amazing is that payment companies like WebMoney are growing and expanding like crazy while GoldMoney shuts down. I'd have to say that the "banking" model of digital currency payments does not work, but the cash-2-digital version from the great minds in Russia is highly successful. They've just expanded across a dozen new countries, including Mexico, Brazil and Colombia! http://t.co/s8jlKLoD I'm sorry to see GM shut it down, it's a big disappointment.
ReplyDeleteMark
Volatility?
ReplyDeleteIn the face of high and persistent inflation consumer demand may eventually result in debit cards that are linked to gold accounts, which I have seen mentioned in the past and Sprott has floated recently as well.
ReplyDeleteUsing existing debit/credit card systems to process a purchase from a merchant in local currency but deducting gold from your linked gold account, like happens when you buy overseas, is probably the quickest way to get gold as money deployed to the masses (I know your adversion to credit card system Mark).
I also wonder if GoldMoney may lose more customers from this move than they think. While customers may not currently use the payment feature, they may have chosen GoldMoney over BullionVault or others on the basis that they could in the future pay others gold in case of hyperinflation or banking holidays.
Having lost this unique differenciator, does this leave GoldMoney competing on price (arguably GoldMoney and BullionVault have similar trustworthyness re storage of the metal)?
This link is of interest because of what it says, "... Ironically, just weeks ago Dr. Edwin Vieira described how if the U.S. monetary system collapses, as he suspects it will, GoldMoney’s online payments system is the model for the states to implement themselves, independently. This part of his talk starts at about 0:49:00 of the Youtube video of his congressional lecture titled What Is Constitutional Money..."
ReplyDeletehttp://www.bitcoinmoney.com/post/14544847244/goldmoney-suspends-online-payments
From a link from that link (http://www.thebitcointrader.com/2011/12/goldmoney-is-no-longer-money.html):
ReplyDelete"I guess we'll have to use gold for store of value and bitcoin as medium of exchange."
That is really Freegold with bitcoin taking the place of fiat.
ha ha... god forbid
ReplyDeleteThank you for all of the excellent holiday reading Bron! Seems like a lot of strange things happening these days.
ReplyDeleteAre the gold backed debit cards that Peter Schiff's Europacific Bank offer equivalent to the old GoldMoney cards?
If so, is Europacific the only institution that offers this? Interestingly they only offer it outside the U.S., I guess to avoid the same regulations that stopped the GoldMoney cards.
He mentions them in this video at around the 80% mark, and it turns out they are backed by Perth mint unallocated.
I do not think the Europac gold debit cards are operational at this time. Sprott mentioned doing the same thing.
ReplyDeleteIt is a good idea but while gold still attracts capital gains tax the demand for it will be limited I think.
Hi Bron,
ReplyDeleteLove your blog.
I'm trying to gain an understanding of whether , for example, a 1 Oz Australian Kangaroo coin issued by the Perth Mint as legal tender (face value AUD $100)can be considered as currency for the purpose of say walking (into Australia) through customs or is it considered bullion, over $900 and therefore subject to GST and other taxes and duties. I've asked Customs and get vague responses, Gold dealers I know simply tell me that "it's complicated" and that I should ask Customs. I figure that the reason that one pays a premium on the bullion coins is that it is considered legal tender "currency" and can be brought through customs, tax free but I suspect that I'm wrong here. I want to bring some of these coins into the country, by hand, after an offshore trip. can you offer an opinion on the issue?
The Perth Mint's coins, whether deemed by customs to be currency or bullion, do not attract GST. No internationally recognised bullion coin or bar of 99.5% or more purity attracts GST.
ReplyDeleteThe issue of whether they are currency is relevant for that little incoming card you have to fill out. It mentions nothing about declaring bullion, just currency, bearer notes etc. As our coins are legal tender, you should add up their face value along with any cash you are bringing in and if over $10,000, then declare it.
I would suggest going to www.silverstackers.com where the issue of bringing in coins and how customs treat them is discussed in great detail. Just do a search for GST customs.