Gold Backed Coin: Austria-based, Swiss-banked

Recently I covered some gold and silver IOUs issued by Ripple Singapore and NoFiatCoin. In just a few more days, we will have one more gold backed IOU hitting the Ripple exchange: GBC.

Each Gold Backed Coin (GBC) will be completely backed by 1/10 oz of gold.  This project is based in Vienna, Austria, and the bullion is stored in vaults in Switzerland.  The concept is being developed and implemented by developers Chris Glatz and Wolfgang Weinmann.  They were both early adopters and users of Bitcoin, and profited from its’ success.  They are using their success to launch a new cryptocurrency that combines the security and transparency of transactions over the Ripple network with the intrinsic value and price stability of gold.

“Virtual currencies have entered the scene as a means to respond to the Financial Crisis and the underlying structural deficiencies. But most of these coins have not offered stability against a drop in value. GBC tackles exactly this problem.” - Wolfgang Weinmann,

For a general overview of why gold and silver backed IOUs are important historically, please refer to this recent article.

There are a few things that I really like about GBC.  First of all, it has a price guarantee that is backed by gold.  No matter what, each IOU can be redeemed for 1/10 oz of gold.  Therefore, this creates a price floor that is highly stable and takes advantage of a very liquid market that already exists.  Second of all, being issued in small amounts of 1/10 oz makes investing in it very simple and straight forward.  For example, the U.S. Treasury issues 1/10 oz Gold Eagle coins with a face value of $5.  However, the amount of gold makes them worth upwards of $130 on the market.   The last thing I like, is that the gold is stored in Switzerland, which has historically been a very safe and secure place for storing valuables as one of the few neutral countries that has a strong military, a good economy and political stability.

At the moment,I am not sure how they will provide transparency to exactly how much gold is stored in the vault.  Other issues that might arise are if customers are allowed to take delivery of their gold.  For example: If you wanted to redeem 1 GBC would the company ship you one 1/10 oz coin or bar? Or if you want to redeem 10 GBC could they ship you 1 OZ of gold bullion in coin or bar form?  Traditionally bullion banks have allowed people to store gold in their vaults for a monthly fee.  That is how they make their profits.  I also wonder how GBC plans to make profit.  These are questions that I have and that I will be finding out very soon.

I will be travelling to Austria next month and plan to stop by and meet the GBC team in Vienna to get some questions answered, take some pictures, and put a human face on this very interesting project.

The initial book building  for GBC has started on April 9 and will last until April 22.  If you want to be an early investor and get some GBC at the lowest possible prices, take advantage of this unique opportunity. I cannot give any opinion on the legitimacy of GBC but I hope to offer my personal experiences with their team very soon!

You can check out a recent interview by CryptoCoinsNews here.

 

Are you interested in cryptocurrencies backed by gold?  Please leave comments or questions below.