“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.’

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“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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cash back real estate
Guest
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.

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mihailescu
mihailescu
Member
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$

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Dennis Stack
Dennis Stack
Guest
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

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tom
tom
Guest
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 leverage.

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Medstuff
Medstuff
June 15, 2009 6:51 pm

This is one of your best commentaries. Kudos.

Mark Herpel
Guest
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’ point of view. You say that we have to know when to sell or when to buy. Not really, I look at this as, “I don’t want my lifesaving to be sitting in a bank or in USD so where does it go?” Gold, silver even oil are all hedges against inflation and crazy changes in USD value. I don’t want any financial instrument which is pegged to, denominated in or backed by the US Dollar(I’m not alone) because I believe it’s going much lower-very soon. I believe mega inflation is on the way now. For my protection I KEEP ALL my value/saving/retirement in commodities like gold and silver. I’m not buying it to make “$100 rise in price sort of return” and sell it moving money back to inflationary dollars. I own the physical gold as my protection from failing fiat money. I’ve used digital gold currency for almost ten years now each week, it has protected my savings and kept me liquid 24/7. Especially since Katrina. It’s a good post you have written above, I like it very much but gold is a commodity where you can protect your savings, the money is exchanged for the commodity (goes in and stays in) if I need a little USD to pay a bill I take funds out to use that day. There is no, “ok I made $100 per ounce now let’s sell and buy that bank CD!”

Mark Herpel
editor@dgcmagazine.com
http://twitter.com/dgcmagazine

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Mick
Mick
Guest
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 that statement. But, he did. So, if you confuse his hype with sales, then this adage will never make sense to you… even a blind squirrel finds a nut once in awhile…

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John S. Medd
John S. Medd
Guest
June 17, 2009 12:28 pm

Mick, could you please expand on your comments. Tks

Monnie
Monnie
Guest
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?

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Scott Rowe
Scott Rowe
Member
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!

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stockcrazy10
stockcrazy10
Guest
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.”

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is new jerssey a community property state
Guest
July 10, 2009 1:48 am

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

rich
Member
August 1, 2009 2:57 pm
JPL
JPL
Guest
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
Tim Sullivan