E-Gold... A good idea or a waste of time?

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Greetings Y2K preppers!


I came across something by accident. Not sure if it was in a previous post or not, but who knows, it might be a worthy thread. The subject du jour is a company calling itself Gold & Silver Reserve, Inc. They operate a service they call E-gold. Apparently the Clif notes explanation is that this company has a service that permits purchasing and exchanges via precious metals. You can swap fiat money for metals and vice versa, pull out some or all of your accumulated metals, pay for goods and services with precise quantities of metals instead of fiat money, etc., minus their commission of course. It looks like these folks are basically setting up a sort of electronically exchangable currency that is directly based on real substance and not faith in a crappy system. (Can you say "gold standard"? I thought you could!) The system from what I see in their propaganda appears to be set up to allow precise metal exchanges, etc. to happen between them and you or you and other people/companies that take e-metal payments, with whatever precision you'd like out to about a ten-thousandth of an ounce.


They even have listings of what kind and how many of any specific precious-metal coin/bar/whatever they have on hand to cover the E-metal they circulate electronically.


The site's at http://www.e-gold.com/ and the Examiner link at bottom-left pops up the listing of what metals they have on hand for real to cover what e-metals they have doing the digital shuffle. The Questions and Answers page is their FAQ.


Now, the big payoff to the post... Is this idea viable? Would it be a useful tool for those of us that want to build a precious-metal collection for Y2K purposes but don't have much access to decent metals purchasers, etc.? (Where I am, the fools that have the gold are still convinced that just-above-bullion-value coins have more value than they do anywhere else.)


OddOne, looking for gold in all the weird places...


-- OddOne (mocklamer@geocities.com), May 28, 1999



Crap, let's try that link again... (Dreamweaver likes adding HTML tags to paste operations. :-p)

p>The site's at http://www.e- gold.com/


-- OddOne (mocklamer@geocities.com), May 28, 1999.

As I see it, Gold & Silver Reserve, Inc. requires trust, just as our banking system requires... You are trusting the overseer to store your precious metals, and to credit you/debit you with the correct ammounts. This is how banking got started in the first place... What is to keep them from loaning out the "unused" gold (money)...because everyone doesn't ask for their gold at the same time? In extremis, what is to keep them from absconding with all your hard earned metal?

-- Mad Monk (madmonk@hawaiian.net), May 28, 1999.

OddOne, I recently did a pretty in-depth look at this stuff -- I cashed out on my 401k, and have applied a chunk to purchase gold and silver. In a nutshell, the e-gold approach clearly violates the first of ten "commandments" on how to buy precious metals if you are preparing for a (Y2K induced) breakdown/barter scenario: Always take delivery. e-gold, like all electronic money, is a "promise to pay" that depends on a lot of things working. Having 1/10th ounce American Eagle gold coins in hand is far more useful! To see the entire list of "commandments" put together by Franlin Sanders (www.the-moneychanger.com) here is the link:

the-moneychanger commandments

For what it is worth, I did my shopping at "Afforable Jewelry and Precious Metals": www.ajpm.com

-- Jack (jsprat@eld.net), May 28, 1999.

-- Give my (eyes@a.break), May 28, 1999.

What does the "E-" in "E-Gold" stand for?

Electronic, as in ... computers.

Does "Y2K" refer to the possibility that computer errors will cause lots of stuff that's dependent on computers to fail?

You betcha.

So how do I acquire gold without risk that a Y2K problem will interfere with my use of it?

Take physical possession, so you're ownership of your gold is not dependent on computers.

Does "E-Gold" involve _your_ physical possession of gold?

AFAIK, not unless you send them a redemption order.

But -- how would that differ from simply buying gold by mail in the first place?

It's more complicated to obtain physical possession of gold through E-Gold than through a simple gold-purchase transaction. First you have to set up an account, then send them money, then send them a redemption order.

Looks to me like if what you want is Y2K-proof possession of gold, you could cut out at least one of those steps by skipping E-Gold and ordering from a just-plain-gold-dealer.

-- No Spam Please (No Spam Please@anon_ymous.com), May 28, 1999.

Lets see if I have this right,Somebody is going to trade me their gold,which is going to double,triple,go to $1000,$2000,$[pick a number]an oz.in exchange for my paper money,which is going to be worthless come y2k.??What wonderful,compassionate people.

-- treading litely (rs@marketwatch.com), May 28, 1999.

Gotta agree with Jack,

just bought a bunch of gold and silver from Monex - took physical delivery.

They have an atlas account where you can buy e.g. gold at 20% up front with the price locked in at today's figure

i.e. $2000 will buy you $10,000 worth of gold at $270'ish (the markt rate).

They store the gold for you or it goes to an intermediary.

if gold goes up to say $540 an ounce you can either collect $8000 profit or take physical delivery of $20,000 dollars worth for $10,000.

I'm still thinking about this strategy...

anyone evr tried it???

-- Andy (2000EOD@prodigy.net), May 28, 1999.

The caveat - get out before rollover - don't trusk those pesky puters!

-- Andy (2000EOD@prodigy.net), May 28, 1999.


>They have an atlas account where you can buy e.g. gold at 20% up front with the price locked in at today's figure

>i.e. $2000 will buy you $10,000 worth of gold at $270'ish (the markt rate).

That's just buying on margin. Fine if the price goes up ...

>if gold goes up to say $540 an ounce you can either collect $8000 profit or take physical delivery of $20,000 dollars worth for $10,000.

... but if gold goes down to, say, $216/ounce, you get a margin call telling you that your $2000 is gone and if you want to keep the gold on your account, you have to pay more money.

>I'm still thinking about this strategy...

>anyone evr tried it???

Lots of folks, in the late 1920s U.S. stock market.

-- No Spam Please (No_Spam_Please@anon_ymous.com), May 28, 1999.


In fact, you'll get the margin call before the gold price drops to $216. At $243/ounce, a 10% drop in price of gold, your stake has already dropped 50%, from $2000 to $1000. You'd probably be asked to ante up more about that time.

Say ... Andy, are you one of the folks arguing that the big governments are manipulating the gold price, keeping it artificially low? If so, why would it be a good idea to buy on margin a commodity that will wipe out your investment if those governments decide to push the gold price down by just 20%?

-- No Spam Please (No_Spam_Please@anon_ymous.com), May 28, 1999.

No Spam - you are right, I would only consider this play if I thought gold was going to go up.

The fact is that gold IS being manipulated, from all the reading I've done on USA Gold and Gold Eagle and indeed this forum. I believe at some point in time (who knows?) the ability to constrain the price by dumping and rumours of dumping will not work any more, when the markets begin to tank the potential for a skyrocketing in the price of gold and silver piggy-backing is there - so yes, it's a gamble, it really is futures without going through COMEX or London.

Thanks for pointing this out.

-- Andy (2000EOD@prodigy.net), May 28, 1999.

Just a reminder. The Central Fund of Canada (CEF on AMEX) is a silver/gold holding company that keeps it's reserves in some big bank in Canada. You can play the gold/silver market without taking possession. Of course, in the event of FUBAR (easier than TEOTWAWKI), may be tough to trade.

-- Dave (aaa@aaa.com), May 29, 1999.

Michal Hyatt's latest book, THE Y2K PERSONAL SURVIVAL GUIDE, has a good treatment of this. You have to first understand the following concept: If you fear what Y2K will do, then you have to start thinking in terms of how to PROTECT your money, not GROW it. All conventional thinking is focused on the latter, not the former.

Gold and silver have historically retained their value when compared to other commodities (nice table in the book, contrasting the pros and cons). Keeping the denomonations small, as in the case of one-tenth ounce American Eagles, ensures maximum utility if you have to use them for bartering.

That the-moneychanger web site by Franklin Sanders is an absolute must (Hyatt highly recommends it). Visit it, you will get a great education.

-- King of Spain (madrid@aol.com), May 29, 1999.

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