In Gold We Trust - Come-se?
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gold
Jan. 27
— By Clare Black
Gold leapt to its highest level in more six years on Monday as war jitters, a fragile dollar and falling stock markets stoked interest in the safe-haven metal.
Spot gold <XAU=> hit $372.55 an ounce in European trading, its firmest level since December, 1996 and more than 30 percent higher than this time last year.
"This week could easily see further gains for gold, with a possible test of $385," James Moore of TheBullionDesk.com said.
By 11:35 a.m. EST, spot gold was quoted at $370.40/371.20 an ounce, up from $369.10/369.90 an ounce at the New York close on Friday.
Chief U.N. weapons inspector Hans Blix said that Iraq had cooperated in opening sites for inspection but had fallen short in filling in the gaps in last month's declaration of its weapons programs.
"Iraq appears not to have come to genuine acceptance, not even today, of the disarmament that was demanded of it," Blix told the U.N. Security Council in a keenly awaited update on the inspectors' work.
While Baghdad had provided inspectors with access to the sites they wanted to visit, it had failed to resolve major outstanding questions about its arms programs, put conditions on guaranteeing the safety of overflights by U-2 spy planes and failed to account for supplies of anthrax it said it had made and later destroyed.
The U.S. has made clear it will go to war alone if it cannot muster support among a deeply divided international community.
Another focal point for the market will be President Bush's State of the Union speech on Tuesday to see if a U.S.-led attack is imminent.
"Whilst geopolitical tension continues to rise, it is hard to make a case for a retreat in the gold price, especially if the U.S. dollar continues to weaken," said John Reade, precious metals analyst with UBS Warburg.
Later in the week, the U.N. Security Council will meet on Wednesday to discuss the weapons inspectors' report and on Friday, British Prime Minister Tony Blair will fly to Camp David for talks with Bush.
Some traders felt that any signs of delay to the start of a possible conflict could lead to a pull back, although the majority were looking for much higher prices.
"...we do think an upside target could begin with a "4" in front of it. After all, given that gold has risen by $30 in just six weeks, it is certainly conceivable the gold could be challenging the peaks of the of the 1993 and 1996 rallies before this quarter has ended," Kamal Naqvi, precious metals analyst for Macquarie Bank said.
The weak dollar also supported the yellow metal.
In other precious metals, silver <XAG=> moved down to $4.81/4.83, compared with $4.87/89 at New York's Friday close. Platinum <XPT=> lost $1 to $643.00/648.00, while palladium dropped to $260.00/267.00, versus $262.00/267.00.
— By Clare Black
Gold leapt to its highest level in more six years on Monday as war jitters, a fragile dollar and falling stock markets stoked interest in the safe-haven metal.
Spot gold <XAU=> hit $372.55 an ounce in European trading, its firmest level since December, 1996 and more than 30 percent higher than this time last year.
"This week could easily see further gains for gold, with a possible test of $385," James Moore of TheBullionDesk.com said.
By 11:35 a.m. EST, spot gold was quoted at $370.40/371.20 an ounce, up from $369.10/369.90 an ounce at the New York close on Friday.
Chief U.N. weapons inspector Hans Blix said that Iraq had cooperated in opening sites for inspection but had fallen short in filling in the gaps in last month's declaration of its weapons programs.
"Iraq appears not to have come to genuine acceptance, not even today, of the disarmament that was demanded of it," Blix told the U.N. Security Council in a keenly awaited update on the inspectors' work.
While Baghdad had provided inspectors with access to the sites they wanted to visit, it had failed to resolve major outstanding questions about its arms programs, put conditions on guaranteeing the safety of overflights by U-2 spy planes and failed to account for supplies of anthrax it said it had made and later destroyed.
The U.S. has made clear it will go to war alone if it cannot muster support among a deeply divided international community.
Another focal point for the market will be President Bush's State of the Union speech on Tuesday to see if a U.S.-led attack is imminent.
"Whilst geopolitical tension continues to rise, it is hard to make a case for a retreat in the gold price, especially if the U.S. dollar continues to weaken," said John Reade, precious metals analyst with UBS Warburg.
Later in the week, the U.N. Security Council will meet on Wednesday to discuss the weapons inspectors' report and on Friday, British Prime Minister Tony Blair will fly to Camp David for talks with Bush.
Some traders felt that any signs of delay to the start of a possible conflict could lead to a pull back, although the majority were looking for much higher prices.
"...we do think an upside target could begin with a "4" in front of it. After all, given that gold has risen by $30 in just six weeks, it is certainly conceivable the gold could be challenging the peaks of the of the 1993 and 1996 rallies before this quarter has ended," Kamal Naqvi, precious metals analyst for Macquarie Bank said.
The weak dollar also supported the yellow metal.
In other precious metals, silver <XAG=> moved down to $4.81/4.83, compared with $4.87/89 at New York's Friday close. Platinum <XPT=> lost $1 to $643.00/648.00, while palladium dropped to $260.00/267.00, versus $262.00/267.00.
-
Viana
The gold rush has started, but will it last?
The gold rush has started, but will it last?
With equities in turmoil, investors are retreating to an old-fashioned store of wealth
By William Kay, Personal Finance Editor
29 January 2003
Gordon Brown must be sick of hearing that the gold price has gone up yet again. In 1999 the Chancellor decided to sell off more than half of Britain's official gold reserves of 715 tonnes. The subsequent auctions raised about $3.5bn (£2.1bn at today's price). But the gold price has since soared from $261 an ounce to this week's Iraq-inspired peak of $371, at which level those 395 tonnes would have fetched about $4.7bn
Judging by the number of calls financial advisers have been receiving from their clients, Mr Brown is not alone in feeling that he has missed out on a classic hedge against uncertainty, wars and falling stock markets.
But Evy Hambro, director of the highly successful Merrill Lynch Gold & General unit trust, said: "Gold is still relatively cheap, but where the price ends up is anyone's guess."
Mr Brown's gamble was not looking too far out a year ago. The gold price started 2002 at $278.10, but as stock markets continued to plunge and President George Bush stoked up anti-Iraq feeling, the price took off and ended the year at $342.75.
Gold bulls take comfort from the fact that, even at this level, it is still less than half the $800 an ounce it hit in 1980 after a decade of inflation, when the Cold War was at its height and the former Union of Soviet Socialist Republics had embarked on an ultimately unsuccessful invasion of Afghanistan. At the peak of the 1980 gold fever, people queued outside jewellery shops in Britain to sell their gold ornaments and David Morgan, now chief investment manager at JP Morgan Private Bank, remembers carry bags of gold coins around the City of London accompanied by a minder to make sure he was not mugged.
Mr Hambro said: "The gold market is currently testing a whole range of prices to see where it will go. But it is below its 20-year average price and in most commodity bull markets the price goes from well below average to well above. And, unlike oil, it is very expensive to produce."
However, many advisers are still cautious. Henry Lancaster, the gold analyst at Coutts & Co, the private bank patronised by the Queen, said: "As a commodity, gold demand is mainly related to jewellery and the main countries for gold jewellery, India and the Middle East, are both quite weak. As a currency, gold has risen against the dollar but we don't think that will go much further, which leaves gold's role as a political hedge. And, once the Iraq situation is resolved, that too will decline, so we expect gold to settle at a lower price and are not recommending it."
This tug-o'-war between gold's bulls and bears has been going on ever since the metal was discovered before the bronze age 5,000 years ago. Some see it as the ultimate store of value as it is easily transportable and virtually indestructible, except by being dissolved in cyanide. Yet it is fairly soft, so can be moulded into shape for jewellery and artefacts.
There are about 145,000 tonnes of gold in the world, and another 2,500 tonnes or so is mined each year, 80 per cent of which goes into jewellery. But all the major discoveries appear to have been made, so nowadays tonnes of rock and earth have to be dug or blasted out of the ground to produce an ounce of ore.
This costs about $250 an ounce, so mines around the world are either beginning to explore more deeply or unwrap previously uneconomic mothballed mines. That, however, depends on the vital question of how long the price will stay at current levels or above.
Mr Hambro at Merrill Lynch said: "Having been a forgotten asset, gold is coming back on to investors' radar screens initially as a fringe side-bet and eventually as a mainstream holding. The rate at which this evolution to mainstream asset occurs, if at all, will be critical.
"Investors have now had three years of negative returns in the equity market, and even the most stoical are getting demoralised. After torture like this, an investment in gold or gold shares starts to look quite sensible."
The Merrill Lynch view is backed by some advisers to private investors. Graham Neale, a director of the London stockbroker Killik & Co, said: "I think gold looks quite attractive. We are going to see the price being volatile, because of expectations about when, if and how long the Iraq war will be. But the long-term fundamentals are quite strong." Mr Neale pointed to the need for the US and European countries to inflate their economies, which he thought would weaken the dollar, euro and sterling. He added: "The risks are a faster than expected resolution to either the Iraq conflict or the US and Europe's economic problems."
Philippa Gee, investment strategist at the Midlands adviser Torquil Clark, said: "We have been getting quite a number of calls about gold. My concern is how long they want to invest for. There is an argument for gold as a short-term alternative to cash, but over nine to 12 months I don't see the strength and conviction there. I believe it is better to put money slowly into the stock market."
Phil Clemence, investment director of Towry Law Investment Managers, said: "People entering at this level must realise that it is an extremely specialist area and it should not take up a significant proportion of anyone's portfolio. I think there are better options around if you are worried about political risk, such as index-linked gilts."
In the end, though, the gold rush will be brought to an end by the gold mines themselves. As Mr Hambro put it: "The producers always prick their own bubble. Eventually they will put more gold on the market, which will bring supply and demand into equilibrium."
The biggest reservoir of gold in the world is sea water. The only trouble is, no one has worked out a way of extracting it.
GOLDEN OPPORTUNITIES WAYS TO INVEST IN THE PRECIOUS METAL
* Coins, wafers and bars, which can be bought from specialist dealers. Gold wafers can be as light as one gram costing about £8.20.
* Funds such as the Merrill Lynch Gold & General, which was the most successful unit trust of 2002.
* Pool accounts, where many investors' money is used to buy bullion.
* Accumulation plans, which work like other types of savings schemes, in that people put in a regular amount every month for at least a year.
* Futures contracts, firm commitments to take or make delivery of specified quantities and qualities of gold on a prescribed date and at an agreed price. Losses can be unlimited.
* Options, giving the holder the right but not the obligation to buy ("call" option) or sell ("put" option) a specified quantity of gold at a pre-determined price by an agreed date. Losses limited to the option price.
* Customised deposit accounts, which use futures and options contracts to benefit from the gold price, but are guaranteed to pay back the original sum invested. Coutts bank arranges these for clients.
With equities in turmoil, investors are retreating to an old-fashioned store of wealth
By William Kay, Personal Finance Editor
29 January 2003
Gordon Brown must be sick of hearing that the gold price has gone up yet again. In 1999 the Chancellor decided to sell off more than half of Britain's official gold reserves of 715 tonnes. The subsequent auctions raised about $3.5bn (£2.1bn at today's price). But the gold price has since soared from $261 an ounce to this week's Iraq-inspired peak of $371, at which level those 395 tonnes would have fetched about $4.7bn
Judging by the number of calls financial advisers have been receiving from their clients, Mr Brown is not alone in feeling that he has missed out on a classic hedge against uncertainty, wars and falling stock markets.
But Evy Hambro, director of the highly successful Merrill Lynch Gold & General unit trust, said: "Gold is still relatively cheap, but where the price ends up is anyone's guess."
Mr Brown's gamble was not looking too far out a year ago. The gold price started 2002 at $278.10, but as stock markets continued to plunge and President George Bush stoked up anti-Iraq feeling, the price took off and ended the year at $342.75.
Gold bulls take comfort from the fact that, even at this level, it is still less than half the $800 an ounce it hit in 1980 after a decade of inflation, when the Cold War was at its height and the former Union of Soviet Socialist Republics had embarked on an ultimately unsuccessful invasion of Afghanistan. At the peak of the 1980 gold fever, people queued outside jewellery shops in Britain to sell their gold ornaments and David Morgan, now chief investment manager at JP Morgan Private Bank, remembers carry bags of gold coins around the City of London accompanied by a minder to make sure he was not mugged.
Mr Hambro said: "The gold market is currently testing a whole range of prices to see where it will go. But it is below its 20-year average price and in most commodity bull markets the price goes from well below average to well above. And, unlike oil, it is very expensive to produce."
However, many advisers are still cautious. Henry Lancaster, the gold analyst at Coutts & Co, the private bank patronised by the Queen, said: "As a commodity, gold demand is mainly related to jewellery and the main countries for gold jewellery, India and the Middle East, are both quite weak. As a currency, gold has risen against the dollar but we don't think that will go much further, which leaves gold's role as a political hedge. And, once the Iraq situation is resolved, that too will decline, so we expect gold to settle at a lower price and are not recommending it."
This tug-o'-war between gold's bulls and bears has been going on ever since the metal was discovered before the bronze age 5,000 years ago. Some see it as the ultimate store of value as it is easily transportable and virtually indestructible, except by being dissolved in cyanide. Yet it is fairly soft, so can be moulded into shape for jewellery and artefacts.
There are about 145,000 tonnes of gold in the world, and another 2,500 tonnes or so is mined each year, 80 per cent of which goes into jewellery. But all the major discoveries appear to have been made, so nowadays tonnes of rock and earth have to be dug or blasted out of the ground to produce an ounce of ore.
This costs about $250 an ounce, so mines around the world are either beginning to explore more deeply or unwrap previously uneconomic mothballed mines. That, however, depends on the vital question of how long the price will stay at current levels or above.
Mr Hambro at Merrill Lynch said: "Having been a forgotten asset, gold is coming back on to investors' radar screens initially as a fringe side-bet and eventually as a mainstream holding. The rate at which this evolution to mainstream asset occurs, if at all, will be critical.
"Investors have now had three years of negative returns in the equity market, and even the most stoical are getting demoralised. After torture like this, an investment in gold or gold shares starts to look quite sensible."
The Merrill Lynch view is backed by some advisers to private investors. Graham Neale, a director of the London stockbroker Killik & Co, said: "I think gold looks quite attractive. We are going to see the price being volatile, because of expectations about when, if and how long the Iraq war will be. But the long-term fundamentals are quite strong." Mr Neale pointed to the need for the US and European countries to inflate their economies, which he thought would weaken the dollar, euro and sterling. He added: "The risks are a faster than expected resolution to either the Iraq conflict or the US and Europe's economic problems."
Philippa Gee, investment strategist at the Midlands adviser Torquil Clark, said: "We have been getting quite a number of calls about gold. My concern is how long they want to invest for. There is an argument for gold as a short-term alternative to cash, but over nine to 12 months I don't see the strength and conviction there. I believe it is better to put money slowly into the stock market."
Phil Clemence, investment director of Towry Law Investment Managers, said: "People entering at this level must realise that it is an extremely specialist area and it should not take up a significant proportion of anyone's portfolio. I think there are better options around if you are worried about political risk, such as index-linked gilts."
In the end, though, the gold rush will be brought to an end by the gold mines themselves. As Mr Hambro put it: "The producers always prick their own bubble. Eventually they will put more gold on the market, which will bring supply and demand into equilibrium."
The biggest reservoir of gold in the world is sea water. The only trouble is, no one has worked out a way of extracting it.
GOLDEN OPPORTUNITIES WAYS TO INVEST IN THE PRECIOUS METAL
* Coins, wafers and bars, which can be bought from specialist dealers. Gold wafers can be as light as one gram costing about £8.20.
* Funds such as the Merrill Lynch Gold & General, which was the most successful unit trust of 2002.
* Pool accounts, where many investors' money is used to buy bullion.
* Accumulation plans, which work like other types of savings schemes, in that people put in a regular amount every month for at least a year.
* Futures contracts, firm commitments to take or make delivery of specified quantities and qualities of gold on a prescribed date and at an agreed price. Losses can be unlimited.
* Options, giving the holder the right but not the obligation to buy ("call" option) or sell ("put" option) a specified quantity of gold at a pre-determined price by an agreed date. Losses limited to the option price.
* Customised deposit accounts, which use futures and options contracts to benefit from the gold price, but are guaranteed to pay back the original sum invested. Coutts bank arranges these for clients.
-
Viana
In Gold We Trust - Come-se?
In Gold We Trust
From gun-wielding libertarians to radical Muslims, an unlikely global cabal is plotting financial revolution. And they're putting their money where the Web is.
By Julian Dibbell
Thirty miles south of Florida's Cape Canaveral lies the town of Melbourne, home to the Action Gun pistol range, where, on a balmy Thursday afternoon, James Ray stands calmly firing round after Glock 9-mm round at a photocopied image of Adolf Hitler. Ray supplied the target himself. He purchased it on the Web site of one of his favorite nonprofit organizations (Jews for the Preservation of Firearms Ownership), and its ideological content is not what you'd call subtle: Against the background of a standard ring target, the Führer stands in full Sieg heil mode, his arm up high and his sternum right in the bull's-eye, above a caption that reads ALL IN FAVOR OF GUN CONTROL RAISE YOUR RIGHT HAND. By the time Ray has had enough of the Glock, the target is nicely perforated. Then he picks up his .44 Magnum hand cannon and blows Adolf pretty much to bits.
Yes, Jim Ray is a gun freak. But as it happens, the purpose of today's visit to the pistol range is not to huff powder fumes or celebrate the Second Amendment. He's here to show that there's a type of money you can believe in without also having to believe in the authority of the state. He's here to offer a glimpse of a world in which wealth resides ultimately not in flimsy pieces of government-issue paper but in rock-solid slabs of $279-an-ounce metal. He's here, in short, to demonstrate the vanguard of monetary technology: a 5,000-year-old form of cash called gold.
Or in this case, e-gold, the world's first 100 percent precious metal-backed Internet currency, with which Ray pays for his outings at the gun range and a lot more besides. The private currency was launched five years ago and is now operated by two separate but tightly linked companies: e-gold Ltd., incorporated in the Caribbean island state of Nevis as a holding company for the system's assets, and Gold & Silver Reserve, headquartered in Melbourne, which takes care of everything else. Both are closely held and managed by e-gold chair Douglas Jackson. In addition, Jackson has forged a partnership with Islamic entrepreneurs to launch e-dinar, which is foreign owned.
Jim Ray works for G&SR as "lead evangelist." He draws his monthly salary in e-gold; each gram sitting in his Web-based account gives him title to a gram of real gold held in vaults in London and the United Arab Emirates. Sometimes he trades his e-gold for e-silver, e-platinum, or e-palladium - the other, far less popular, metal-backed currencies offered in the e-gold system. More often, he trades it for US dollars through G&SR's OmniPay exchange service or one of the couple dozen independent exchange providers who make their living selling e-gold for dollars, marks, yen, and other national currencies at the standard 4 to 6 percent markup over the spot price of gold. But otherwise, he spends the stuff like cash, giving it straight to whoever will take it.
And people do. Ray's .44, his Hitler target, the bullets in his Glock - all were paid for with instant, online transfers to the sellers' e-gold accounts. And when he settles up today at the Action Gun cash register, he'll have this afternoon's $18 shooting fee charged to his tab, which he'll pay in e-gold when he gets back to his desktop. He'll point, he'll click, he'll type in some account numbers and a password and, in the blink of a clock cycle, approximately 2 of the 1.7 million grams of solid gold in the system's reserves - a gleaming hoard of 141 brick-sized ingots - will change owners.
"It's the only foreign currency without a nationality," says e-gold's Jackson. On an average day, his company's clients make 8,600 transactions, trading roughly $1.6 million worth of e-gold for goods, services, and cash worldwide. Those numbers are more than double what they were 18 months ago, and so are most other statistics. As of November, there were 287,965 accounts in the system, up from 134,150 at the beginning of 2001, and the amount of emetal in those accounts, worth more than $16 million, was close to twice what it had been the previous November. In a sector littered with the corpses of failed online currencies and other exotic emoney systems - Beenz, Flooz, DigiCash, CyberCash, CyberCent - e-gold is quietly thriving.
Ray calls it "the little payment system that could" - the operative word, of course, being little. The company's financials ($5.47 million in revenue; 114,000 funded accounts) are Popsicle-stand caliber compared with the figures posted by emoney media darling PayPal, with its $80 million to $100 million in revenue and its 10 million customers. But with fewer than two dozen employees and a marketing budget close to zero, Jackson's corporate structure runs lean and, as of the summer of 2000, profitable. The company finally got its first competitors in 2001 - GoldMoney, E-Bullion, 3PGold, OSGold - attracted to the gold-backed digital currency space by low barriers to entry and the smell of black ink.
The product's appeal? "Fundamentals," says Ray. For online consumers, especially those making international purchases, e-gold offers an ease of use and a degree of anonymity that credit cards can't match. And for some merchants, of course, the only selling point e-gold needs is that there are people who want to spend it. After a German customer inquired about e-gold, Vince Lee, president of TealPoint Software, added the payment option. "It's not a big part of our business," admits Lee, whose company is probably the largest of the couple hundred mostly mom-and-pop operations that take e-gold online. "But in this climate, you can't really afford to turn any customers away."
From gun-wielding libertarians to radical Muslims, an unlikely global cabal is plotting financial revolution. And they're putting their money where the Web is.
By Julian Dibbell
Thirty miles south of Florida's Cape Canaveral lies the town of Melbourne, home to the Action Gun pistol range, where, on a balmy Thursday afternoon, James Ray stands calmly firing round after Glock 9-mm round at a photocopied image of Adolf Hitler. Ray supplied the target himself. He purchased it on the Web site of one of his favorite nonprofit organizations (Jews for the Preservation of Firearms Ownership), and its ideological content is not what you'd call subtle: Against the background of a standard ring target, the Führer stands in full Sieg heil mode, his arm up high and his sternum right in the bull's-eye, above a caption that reads ALL IN FAVOR OF GUN CONTROL RAISE YOUR RIGHT HAND. By the time Ray has had enough of the Glock, the target is nicely perforated. Then he picks up his .44 Magnum hand cannon and blows Adolf pretty much to bits.
Yes, Jim Ray is a gun freak. But as it happens, the purpose of today's visit to the pistol range is not to huff powder fumes or celebrate the Second Amendment. He's here to show that there's a type of money you can believe in without also having to believe in the authority of the state. He's here to offer a glimpse of a world in which wealth resides ultimately not in flimsy pieces of government-issue paper but in rock-solid slabs of $279-an-ounce metal. He's here, in short, to demonstrate the vanguard of monetary technology: a 5,000-year-old form of cash called gold.
Or in this case, e-gold, the world's first 100 percent precious metal-backed Internet currency, with which Ray pays for his outings at the gun range and a lot more besides. The private currency was launched five years ago and is now operated by two separate but tightly linked companies: e-gold Ltd., incorporated in the Caribbean island state of Nevis as a holding company for the system's assets, and Gold & Silver Reserve, headquartered in Melbourne, which takes care of everything else. Both are closely held and managed by e-gold chair Douglas Jackson. In addition, Jackson has forged a partnership with Islamic entrepreneurs to launch e-dinar, which is foreign owned.
Jim Ray works for G&SR as "lead evangelist." He draws his monthly salary in e-gold; each gram sitting in his Web-based account gives him title to a gram of real gold held in vaults in London and the United Arab Emirates. Sometimes he trades his e-gold for e-silver, e-platinum, or e-palladium - the other, far less popular, metal-backed currencies offered in the e-gold system. More often, he trades it for US dollars through G&SR's OmniPay exchange service or one of the couple dozen independent exchange providers who make their living selling e-gold for dollars, marks, yen, and other national currencies at the standard 4 to 6 percent markup over the spot price of gold. But otherwise, he spends the stuff like cash, giving it straight to whoever will take it.
And people do. Ray's .44, his Hitler target, the bullets in his Glock - all were paid for with instant, online transfers to the sellers' e-gold accounts. And when he settles up today at the Action Gun cash register, he'll have this afternoon's $18 shooting fee charged to his tab, which he'll pay in e-gold when he gets back to his desktop. He'll point, he'll click, he'll type in some account numbers and a password and, in the blink of a clock cycle, approximately 2 of the 1.7 million grams of solid gold in the system's reserves - a gleaming hoard of 141 brick-sized ingots - will change owners.
"It's the only foreign currency without a nationality," says e-gold's Jackson. On an average day, his company's clients make 8,600 transactions, trading roughly $1.6 million worth of e-gold for goods, services, and cash worldwide. Those numbers are more than double what they were 18 months ago, and so are most other statistics. As of November, there were 287,965 accounts in the system, up from 134,150 at the beginning of 2001, and the amount of emetal in those accounts, worth more than $16 million, was close to twice what it had been the previous November. In a sector littered with the corpses of failed online currencies and other exotic emoney systems - Beenz, Flooz, DigiCash, CyberCash, CyberCent - e-gold is quietly thriving.
Ray calls it "the little payment system that could" - the operative word, of course, being little. The company's financials ($5.47 million in revenue; 114,000 funded accounts) are Popsicle-stand caliber compared with the figures posted by emoney media darling PayPal, with its $80 million to $100 million in revenue and its 10 million customers. But with fewer than two dozen employees and a marketing budget close to zero, Jackson's corporate structure runs lean and, as of the summer of 2000, profitable. The company finally got its first competitors in 2001 - GoldMoney, E-Bullion, 3PGold, OSGold - attracted to the gold-backed digital currency space by low barriers to entry and the smell of black ink.
The product's appeal? "Fundamentals," says Ray. For online consumers, especially those making international purchases, e-gold offers an ease of use and a degree of anonymity that credit cards can't match. And for some merchants, of course, the only selling point e-gold needs is that there are people who want to spend it. After a German customer inquired about e-gold, Vince Lee, president of TealPoint Software, added the payment option. "It's not a big part of our business," admits Lee, whose company is probably the largest of the couple hundred mostly mom-and-pop operations that take e-gold online. "But in this climate, you can't really afford to turn any customers away."
-
Viana
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