Wednesday, April 19, 2006

Egold - Role in Global Commerce

Many small businesses in the U.S., Europe and Asia, each with full-time staff now operate as "digital gold currency exchange providers," doing nothing other than buying and selling digital gold currency for "fiat currencies," as gold bugs term the euro, pound, yen and U.S. dollar.

e-gold transactions — a "spend" — are completed electronically, usually using the web interface, and they always settle by weight of the metal even if denominated in some other way. A user may send (or "spend") a tiny amount of gold (a fraction of a gram, ounce or kilogram) to another user account instantly, anywhere in the world.

Even though e-gold is careful to not advocate any particular political agenda, as the Liberty Dollar does for example, e-gold could be viewed as a libertarian form of private currency.

Unlike fractional-reserve banking, e-gold holds 100% of clients' funds in reserves with a store of value. Proponents of the e-gold system contend that e-gold deposits are protected against inflation, devaluation and other possible economic risks inherent in fiat currencies. These risks include the monetary policy of countries or territories, which are perceived by proponents to be harmful to the value of paper currency.

The repository of the actual bullion bars with serial numbers and other data can be seen using the live "Examiner" function on the e-gold web site. Bullion is held in allocated storage with Brink's Global Services (part of The Brink's Company), Transguard Security Services (part of The Emirates Group) or MAT Securitas Express AG (part of the VIA MAT Group). Clients hold an unallocated share of this allocated bullion.

The user may take physical delivery of the precious metal upon payment of an additional fee. However in practice, most users permit the company to store the metal for them.

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