Market Overview

The Flaws And Fears Of Gold Trading Are About To Become History


Gold provides investors with a degree of protection against currency debasement, it is a smart insurance against inflation, and it provides economic stability in times of geopolitical uncertainty. Yet, despite the obviously inherent benefits in gold, many investors have lost a great deal of money on gold investments. For most of the investors that lost money on gold investments, the major culprit was the fact it was often easier to buy gold than to sell the bullion. This piece looks at how a blockchain startup is planning to neutralize some of the biggest fears of gold trading and investments with a 100% gold-backed cryptocurrency.

Inherent risks in gold ETFs and Funds

Gold ETFs or mutual funds are simply paper forms of gold investments that are backed by physical gold, gold certificates or gold futures. The performance of gold ETFs typically tracks the underlying gold asset.

One of the inherent risks in gold ETFs is that the performance is less the annual management expense, which can range from 0.3% to 3%. Gold ETFs are also easily traded but you can expect to pay broker fees, which can range between $5 and $50 on each trade.

The bigger risk is that the fund/fund provider of your ETF might become insolvent (some funds are not 100% invested in physical gold) and your money and gold will go down the drain.

Inherent risks in gold certificates

If you want to avoid the risk of insolent ETFs, you may want to consider investing in gold certificates. Gold certificates are typically issued by banks and you can exchange them for physical gold or cash equivalent from the issuing bank.

The problem, however, is that the financial system is not fail-proof and even the too-big-to-fail banks can actually fail. The last global financial crisis revealed the weak points of many financial juggernauts – even though gold certificates are less likely to fail than gold ETFs, some certificate issuers can still go bust.

Inherent risks in Physical gold

Physical gold appears to be a better investment vehicle gold investors than the aforementioned two – your gold bars and coin are tangible and you don’t have to worry about the insolvency of a fund manager.

The inherent risk in investing in physical gold is that storage tends to be expensive and the expense will eat into your profit margins. Insured gold costs will cost about 1.5% of the value of the gold you plan to store per year. If you store the gold at home, you'll need to consider an increase in your home insurance premium. The worst part is that you'll have a hard time selling the gold if you choose self-storage because it has been removed from the registered circulation and there'll be doubts on its purity.

Goldmint introduces digital gold

GoldMint is about to end the inherent risks that make investors afraid to hold gold cryptocurrency that is backed by gold to give you the stability that gold offers without the aforementioned flaws. The GoldMint project is a blockchain-based platform providing investors with gold-backed cryptoassets called GOLD.

GoldMint's GOLD seeks to provide a stable coin backed by physical gold in the world of highly volatile cryptocurrencies.

Take all the inherent advantages of gold; stability, security, valuable, non-degradable; combine it with the transparency, digital form, transferable, divisible, and secure properties of blockchain and you'll have GOLD. GOLD is the first-ever token that is 100% backed by gold.

In essence, GOLD provides cryptocurrency investors a unique opportunity to use a digital asset 100% backed by gold to hedge their cryptocurrency investments. The best part is that you get all in inherent hedging advantages that traditional gold gives without going through the stress of buying, storing, insuring, or losing management fees on your gold holdings.

The best part is that one GOLD token is the same as one ounce of gold on the LBMA stock exchange. Hence, you don’t need to make any special calculations to know how much traditional gold your GOLD is worth at any point. In addition, you can use your GOLD holdings to as collateral to secure loans, escrow services, and as guarantees. You'll also appreciate the straightforward nature of fees associated with GOLD transactions— GoldMint asks for a 5% fee on GOLD purchase and 3% when you sell GOLD.

It might also interest you to know that GoldMint will also release MNT, which is its alt-coin token for facilitating smart contracts and transactions. MNT owners can expect to receive 75% of the commission accruable from GOLD transactions.

Custody Bot could trigger a massive disruption in gold trade

The global gold trade is mostly a closed-end deal under the direct monopoly of a handful of financial juggernauts. GoldMint is planning to disrupt the global gold trade industry with Custody Bot, which is a blockchain connected robot programmed to inspect, store (temporary and long-term), and transfer physical gold, jewelry, coins, or gold bullion.

Since GoldMint has decided that its GOLD tokens must be backed by physical gold, it needs to ensure the safe storage and accurate valuation of gold holdings in order to assuage the fears of potential investors. Custody Bot solves the problems of authenticating, valuing and storing gold. It is outfitted with an automatic gold retrieving mechanism, measuring scales, and spectrometer to weigh and analyze the quality of physical gold. The best part is that Custody Bot is linked to a public blockchain to ensure the automatic and transparent recording of gold transactions.


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