e-gold?

So I just found out about e-gold.com which is an online payments system, like paypal in effect. Their catch is that your account with them is backed by gold. Yes gold. Actually gold, silver, platinum or palladium, but gold is the main one. So you open an account and basically buy a chunk of gold that they hold title to (through sub contractor). Initially I thought it was like a currency that was floated somehow and was backed by gold - just like in the old days. But it’s actually tied directly to the spot price of gold as far as I can tell. So, it’s just like buying gold and having someone hold onto it for you, but with the benefit that it’s quite easy to send other people money, in their currency, online. The concept is interesting but the problem, from my perspective, is that they charge you a 1% maintenance fee and then transaction fees as high as 5%. Compared to the gold etf (GLD) and Everbank’s select metals accounts which have significantly lower fees, but perhaps are less liquid (and Everbank has the $5k minimum).

So, I don’t know how great a deal e-gold.com is as a payment system - their schtick is that in its way it’s an investment as well, but if you’re going that route, I think you’re better off going with the GLD or Everbank and opening up a paypal account. What I think is cool about e-gold, though, is all the stats they give you - they tell how much gold they currently have in circulation and reserve and who is holding the metals and the also tell you statistics on how much gold has been spent recently and bands of how much metal is held in individual accounts. Now that’s transparency for you!

I don’t know who should be using that service, but it’s got some kind of cool to it. Just not quite sure which kind.

Mar 8th, 2007 · Comments RSS · · · · · Tags: finance