“Gold Dollars: America’s New Legal Tender” Peter Schiff

By Travis Johnson, Stock Gumshoe, June 15, 2009

This ad is another one that piggybacks on Peter Schiff — as they did a few months ago, the folks at the Money Map Report are trying to sell their newsletter subscription by giving away a copy of one of Schiff’s books as part of the deal — and their promise is quite similar to the last time, too. Still, the ad is pretty compelling and lots of folks have asked me about it, so I thought I’d take a quick look today.

In this case, it’s his newer book, the Little Book of Bull Moves in Bear Markets … and you could, of course, always buy it for $12 at Amazon, or pick it up at any library. But if you subscribe to the Money Map Report for $50, they’ll throw a copy your way.

The Little Book of Bull Moves in Bear Markets is not terribly different from Crash Proof, Schiff’s somewhat older and better-known book (an updated version is coming out in the Fall)– it goes through his basic positions (the Fed is a bunch of crooks, you need to get out of the dollar, everyone should own gold and dividend-paying foreign stocks, don’t buy real estate, etc.)

But more importantly, for the purposes of this teaser ad, Schiff talks about what the Money Map folks call “gold dollars.”

What is that, you ask? Well, there’s the teaser, then there’s the truth. Here’s the teaser:

“You can now use this gold-backed cash to potentially double your savings over the next 6-9 months, automatically

“Gold expert Peter Schiff shows you how, for free”

In addition to referring to this investment as “Gold Dollars” or “America’s New Legal Tender,” you might have also seen it teased as “Liquid Gold” — I’m going to have to start a Stock Gumshoe Thesaurus at some point so I can keep up with these folks!

And more tease …

“Experts are calling America’s new legal currency ‘Gold Dollars.’

“Because each ‘dollar’ is backed by one gram of pure, 24-karat gold…

“You’ll be able to use this money just like regular dollars. You can buy anything from shoes to wine, cars to houses.

“The only difference?

“Since the money is backed by physical gold (stored in Fort Knox-like security), it could prove the smartest “investment” you ever make.

“The purchasing power of each “dollar” goes UP whenever gold rises. The value of your savings account could soar…

“You don’t have to move all your savings, or make any big decisions. You can start with as little as $30. Converting to “Gold Dollars” takes about five minutes. Anyone can do it online, securely, using your regular savings account.

“And one of the country’s leading gold analysts, Peter G. Schiff, will show you exactly how, for free.”

OK, so that sound enticing, eh? And the little bit at the top about “U.S. Treasury Approves” makes it seem like it’s something to do with the government, right?

Well, it’s not. This teaser is, very similarly to the last time we looked at one of these, referring to GoldMoney.com, which seems to be Peter Schiff’s preferred electronic gold exchange.

In fact, in that book Schiff includes a pretty strong endorsement of the product, here’s the quote:

“GoldMoney may be the best monetary system ever, and if governments don’t adopt it, I predict it will be widely used as a commercial service.”

I don’t know if he’s right or not, and Schiff is much more definitive than most people about the impending demise of fiat currencies (that is, currencies, like the dollar, that are just a system of paper exchange and aren’t backed by physical gold or anything else), so it’s easy to get sucked into his argument because he espouses absolutely no uncertainty. Just keep in mind that lots of smart people disagree with him. They might be wrong, of course, but so might he — the future is unknowable, even if the logical argument that the dollar must decline is a compelling one. Gold, despite the fact that it has been a medium of exchange for millennia, is also essentially just a currency whose value is dictated by psychology in addition to supply and demand — it is rare and pretty and has some use, but in the end, like everything else, it is essentially worth only whatever someone will give you for it, and that can vary widely.

GoldMoney is essentially a gold and silver exchange, located electronically on the Isle of Jersey for tax and privacy reasons. They hold gold and silver in vaults in the UK and Switzerland, and use an electronic system to allow their customers to buy and sell grams of gold back and forth — as a medium of exchange in some cases, or just a way to easily hold precious metals in others. They buy and sell by the gram and milligram, and are audited by accountants and make sure that each customer’s account is backed by real metal. They make money on fees — a transaction fee when you buy gold that can be up to several percent, and tiny (index fund-like) annual maintenance or storage fees. You can find all the basic information about them on the GoldMoney.com website.

Is it a new “legal tender?” Well, I suppose it could be — people can use GoldMoney to transmit their electronic gold rights back and forth in exchange for goods and services. There are other varieties of this kind of exchange, too, including competitor e-gold, a service that more aggressively tries to be a medium of exchange (you can accept e-gold on your website for payments, for example). E-gold got into trouble with money laundering charges a couple years ago, but appears to be at least somewhat rejuvenated now, not sure if they’re out of the regulatory woods yet.

Is any of this a magic way to restore your savings? Well, only if you buy the “electronic gold” now and the prices go up dramatically, which of course, they might not. Oh, and then you have to know when to sell if you want to harvest those returns, unless you’re going to try to live a fully gold-denominated financial life.

Gold is actually down significantly over the last several weeks, which will hopefully remind folks who are new to the gold market that the price can go down as well as up. I personally hold some gold as a way to diversify my savings (I don’t really think of gold as an investment, it’s just a way to hopefully store some “value” in case the dollar declines — for speculation or investment I’d go with gold miners, not the actual gold, since the miners can actually make money and compound returns, while physical gold just sits there and “is.”) I’m perfectly happy with a few coins and a safe deposit box, however — I don’t need to have an electronic version, and I am not worried enough about the United States or about my privady that I want to have my “wealth” (such as it is) stored in a tax haven. Other people doubtless live in very different circumstances than I, and think differently.

So what do you think? Would you like to engage in this gold “currency” and electronically manage a gold and silver account with digital gold that represents the real stuff sitting in a vault? Do you like physical precious metals in general? Care to speculate on where gold prices will be in six months? Let us know with a comment below.


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39 Comments on "“Gold Dollars: America’s New Legal Tender” Peter Schiff"

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cash back real estate
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June 15, 2009 12:38 pm

I agree, it is wise to diversify and hedge with gold as an insurance to a degree that you feel comfortable with.

I am concerned about our national debt and how this will impact everything down the road. No one knows what the future will bring.

mihailescu
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mihailescu
June 15, 2009 12:52 pm

something is sreewing in what he sait one gramm of gold for each dollard there is 28.3gramm in one oz of gold make the math that mean 28.3$ for one oz not 950$

Dennis Stack
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Dennis Stack
June 15, 2009 1:04 pm

Great reporting! I saw the blurb entitled “Liquid Gold” over the weekend and was about to forward it to you, but you were already on top of it.

DS
Kansas City, Mo. 64123

tom
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tom
June 15, 2009 1:12 pm
I have a GoldMoney account. The founder James Turk is a true friend of gold and someone I respect. It is not as easy as it sounds. You can not do electronic fund transfers. To add money you must do an overseas wire transfer which my bank charges $50 for. You can buy gold or silver at spot but my feeling is that the fees are equivalent to a retail premium in the small amounts I can afford. One nice thing is you can swap your cash holdings into other other currencies which is kind of like Forex without the… Read more »
Medstuff
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Medstuff
June 15, 2009 6:51 pm

This is one of your best commentaries. Kudos.

Mark Herpel
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June 15, 2009 7:30 pm
Above you state, “Is it a new “legal tender?” Well, I suppose it could be — people can use GoldMoney to transmit their electronic gold rights back and forth in exchange for goods and services.” NO, legal tender is currency which the government forces you to accept. GoldMoney is private digital gold currency, there are about a dozen of them operating today. I interviewed James Turk about two years ago and he corrected me several times saying GoldMoney is not and never has been legal tender. Also you are looking at this, and discussing it from a sort of ‘stock/equities’… Read more »
Mick
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Mick
June 16, 2009 11:59 am
I think you guys are missing a big point. Peter Schiff did stumble upon something that most of you would not believe. Last week, two Japanese fellows tried to smuggle about $135 BILLION in US bonds into Italy from Switzerland. That event was a big tip off. What’s about to happen (in a few days) will be shocking. If you’re in the markets, get out. Get out of the US dollar, now! When Schiff said “legal tender”, it was not an exaggeration. How he found out about this is a mystery. I was shocked to see him come out with… Read more »
John S. Medd
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John S. Medd
June 17, 2009 12:28 pm

Mick, could you please expand on your comments. Tks

Monnie
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Monnie
June 17, 2009 11:21 pm

Does anyone know the gold mining stock touted by Daily Wealth as the biggest gold discovery in America in 20 years?

The mine is in southern Alaska.

Anyone know the stock?

Scott Rowe
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Scott Rowe
June 22, 2009 7:03 pm

I just finished a study by Bob Prechter which shoots down the myth that gold will outperform a sagging economy. Since 1792 the only period it didn’t follow equities was basically after the fixed price of $35/oz was dropped. It does perform slightly better during inflationary periods but he predicts it will fall in price with other commodities in what he foresees as a deflationary period – not an inflationary one. You have to like a contrarian!

stockcrazy10
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stockcrazy10
June 23, 2009 11:35 am

The bonds seized in Italy were counterfeit according to the U.S. Treasury (reported by Reuters).

“U.S. Treasury says Bonds Seized in Italy are Fakes
Reuters, By David Lawder; Fri June 19, 2009
WASHINGTON, June 19 (Reuters) – A purported $134 billion in U.S. government bearer bond certificates seized by police near the Italian-Swiss border are fake, the U.S. Treasury said on Friday.

“Based on the photograph we’ve seen online, they are clearly fake. And not even good fakes,” said Stephen Meyerhardt, a spokesman for the Treasury’s Bureau of the Public Debt.”

is new jerssey a community property state
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0

Is it new jerssey a community property state?any ideas?

rich
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August 1, 2009 2:57 pm
JPL
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JPL
October 30, 2009 10:40 pm

Hi, Curious,
You asked to be corrected if you’re wrong.
Mike responded about your spelling.
Mine is about the actual values.
1 troy ounce weighs 31.1034768 grams and you already know there are 12 troy ounces per troy pound.

Take care,

JPL
10-30-2009

Tim Sullivan
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Tim Sullivan
November 1, 2009 10:37 am
A few two cents remarks. Two recent BDF (Bought Deal Financings) in the Gold mining stocks. GBG/Great Basin Gold with decent prospects but of course no earnings. Strong mineralization in their Nevada veins and now processing instead of farming out their ore processing. Also the bulk of the last week’s BDF to go towards funding the development of their S/African property a shallow pit operation? Last week GBG made a strong rally off $1.45 to finish @ $1.60 in trading on the day the BDF was announced at the end of that day’s trading. Surprisingly resilient on Fri trading after… Read more »
G.S.Tinsley
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G.S.Tinsley
November 22, 2009 10:55 pm

So, I’m confused about the relationship of the Money Map Report to Peter Schiff. Is he part of that group, or are they just using his books and name without an endorsement. Someone else I trust recommended using the brokerage firm, Euro Pacific Capital, Mr. Shiff’s company.

John Ng
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April 17, 2010 11:22 pm

I wish I have enough cash to use portion of it on physical gold. It is not for making profit but as a hedge on inflation. If I had the foresight to sell my bank shares and bought gold I would have thousands to buy gold now, but the bank shares were tempting me with something like 6% yield and I did work for the bank!

MikeG
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MikeG
May 1, 2010 7:10 pm

Just wanted to say THANK YOU for writing about this. I've received their marketing on this several times now, and as you indicated in your write up, it does sound intriguing. You've helped me to clearly understand what it is they are offering or promoting, and that's invaluable. Thank you!

freddo
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freddo
August 13, 2010 12:37 am
ive been saving gold for 55 years at no cost to myself.everytime i find a piece i put it away for a rainy day. i also went panning in australia for recreation and operated a small hobby dredge for 9 years out in the bush on picnics with my family. all this gold has accumulated and will be refined soon as im 70 years old now. i sold my house at top of market and chose a wise stockbroker in london who specialises in the ftse 100 and in selected others. we both make steady money and i reinvest all… Read more »
Gold Investment
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November 22, 2010 6:46 pm

I agree with many of the ideas stated in this article. However, I think that investments are made easier when you have the most up-to-date information. I have found that gold investment newsletters have made it easier with my gold commodity investments.

Gravity Switch
Admin
11
June 15, 2009 1:39 pm

I don’t think they meant to be literal with a dollars/gram connection — GoldMoney transacts in grams and milligrams, and I imagine you can probably buy using most any major currency.

curious
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curious
June 15, 2009 2:13 pm

i believe that gold is quoted in TROY onces

there are 12 TROY onces per lb
not 16

there are 453.6 grams per lb

so 453.6/12 = 37.8 grams per TROY once

$950/37.8 = $25.13 per gram when gold is $950 per once

please correct me if i am wrong

Gravity Switch
Admin
11
June 15, 2009 1:41 pm

Interesting — thanks for sharing your experience, Tom. Yep, I think for “normal” sized accounts the transaction fee (to buy gold, I don’t think they charge to sell gold) is about 2.5%, in addition to the much smaller storage/maintenance fees.

Mike
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Mike
June 15, 2009 11:55 pm

You might like to investigate XETrade.com. They have very low (~7$) fees for wire transfers and let you trade in most any currency. I’ve been using them for 7 years now and they have always been way more competive that banks I have to use here in NZ.

hth

James Bloyd
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James Bloyd
October 21, 2009 10:03 pm

I also have an account with GoldMoney, partly because James Turk is the founder and partly because it is a real bank as apposed to what we have here in the US under our fractional reserve system.

To everyone else, GoldMoney does NOT use Gold Dollars. Nor does it advertise itself as a way to make money. If you come across anything like that, it’s probably a scam. There are sure to be more scams around gold as the rally continues, so be cautious.

Gravity Switch
Admin
11
June 15, 2009 8:25 pm
Thanks Mark, good point. I think they’re probably stretching the point that it’s legal, and that it can be used as a medium of exchange. Certainly lots of exaggeration in there. I agree with you that gold is better thought of as a savings vehicle than a speculative investment, but to tease it as a huge winner and a way to save your wrecked retirement accounts, as Money Map has here (not necessarily Schiff’s position) is to imply that you’re betting on a huge gain in gold, not just a stable value versus inflation. Trading in and out of gold… Read more »
Mark Herpel
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June 16, 2009 10:58 am
Yes, thanks for those comments, you are correct there is WAY to much exaggeration on his part in trying to push those products. You can’t say gold will be a big winner, no one knows. I agree, he’s not alone many use this tactic. I remember Howard Ruff in the 70’s saying almost the exact same thing. Even Ralph Borsodi in 1944 singing the same tune. We can’t predict the future. I don’t agree that gold should ever be promoted as a way to get back lost funds, no no. Also, there could be inflation or deflation on the horizon,… Read more »
MJay
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MJay
June 19, 2009 4:27 am

probably NAK. Northern Dynasty…

Long Term…. hmmm

Short term, the greens are on their case….

There are better stocks…

Canplats, Claude, Euro gold fields etc

enjoy..

Nick
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Nick
June 20, 2009 4:17 pm

You say “If you are in the markets, get out. Get out of the U.S. dollar, now!” Out of the markets and the dollar and into what?

freddo
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freddo
August 13, 2010 12:51 am

be careful about your nuts, oftentmes you must crack open those nuts and what you find in real life is that the nut for which you have spent good earned money , are rotten and inedible. similarly some sellers of stocks are selling rotten nuts as choice nutritious food and are nothing of the sort. choose wisely and ask for free samples. freddo

spreadtrader
Member
0
spreadtrader
June 26, 2009 12:02 pm
What’s the “study” and where can I find it? Published? Documented? What “myth” are we talking about? I think it’s a FACT that gold has gone up about 300% in the last 10 years while the S&P has gone down about 30%. Would you call a 30% decline in 10 years a “sagging economy”? The “only” period it didn’t follow equities was after 1971? You mean…..like now? Why is the period before August 15, 1971 even relevant, since that commenced the period when gold has been permitted to float above $35/ounce? When is this deflationary period going to start, because… Read more »
spreadtrader
Member
0
spreadtrader
June 26, 2009 3:10 pm

Regarding deflation/inflation:

http://www.ft.com/cms/s/0/e1fbc4e6-6194-11de-9e03-00144feabdc0.html

Of course, anyone who listens to Alan Greenspan is not playing with a full deck.

Gravity Switch
Admin
11
June 26, 2009 8:01 pm

I do love this story — they haven’t even printed treasury bonds for years, but I guess there’s still a good market for counterfeits.

Mike
Guest
0
October 30, 2009 3:32 pm

Knowing that my reply is sooooo late,since the time frame was June 2009,and now is Oct.2009 The only thing I can correct you on ,is, the spelling of the word ounce(not once)Each time you leave out the letter “U”–and also when you refer to “there are 453.6 grams per lb”–it should state:”there are 453.6 grams per TROY pound —keep the word TROY in the text,so everyone will know what is being discussed! Of course we know now that gold is going up,around/close to $1100.00 per troy oz.

Mike

K.
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K.
February 13, 2010 12:12 pm

There is approx. 372.2 grams in one Troy Pound.

12 Troy Ounces in a Troy Pound.

31.1 grams in a Troy Ounce!

MajorDave
Guest
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MajorDave
May 2, 2010 6:46 pm

Enter text right here! There are 31.1 grams in a troy ounce. There are NOT 453.6 grams in a troy pound; only 12 x 31.1, or 373.2 grams in a troy pound.

Gravity Switch
Admin
11
November 23, 2009 10:22 am

I don’t know if they ever made an agreement with him (I don’t guess they would have to — they can just buy his book and give it away, it’s cheap). But no, as far as I know Schiff has no direct relationship with Money Map, which is yet another of the Agora-related newsletter publishers.

Schiff’s firm is a traditional full service broker, mostly focused on buying overseas stocks for US investors. I know they charge pretty steep commissions, and know some folks who use and like them, but am otherwise uninformed.

Evvy
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Evvy
July 27, 2010 1:41 am

I cant afford gold either, but I've been buying physical silver hand over fist for the last six months. I believe its just as much an inflationary hedge as gold is. And many econimists believe that it has been way underpriced for a long time compared to gold. They say the silver market has been supressed by huge leverage holdings of JP Morgan. All I know is that it's relatively cheap and a very easy way to accumulate svings outside of the USD.

Robert Michael
Guest
0
November 11, 2011 12:35 am

Curious-You Are wrong. The 31.1grams per oz figure is the right one-simply google troy ounce-my figure is rounded,of course-the above, more detailed answer is correct-Pawn Shops just round off to 31.1grams/oz as I did. Must say, you have Me “Curious” as to where you pulled the 453.6gs/lb from-you failed to explain that part-the 12 troy ozs/lb is the ONLY part of your equation that is correct, sorry.

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