Digital Gold Is Leaving The Station
Commentary By Fergus Hodgson
Gold Newsletter’s Roving Editor
Dear Fellow Investor,
The seemingly unstoppable rise of bitcoin — up 400 percent in value since last year — signals that the horse has bolted from the stable: Just as alternative media is becoming the new mainstream media, so too will alternative digital currencies dislodge fiat currencies.
Those looking to make a quick buck on bitcoin are a tad late to the party, but opportunities lurk in this space unbeknownst to the vast majority of observers. One of those is set to revolutionize the usability of gold and compete with cryptocurrencies, and you can get in on the ground floor.
The enormous room for private money to address gaps in the market, such as the world’s unbanked population, has proved too great for the bitcoin network. Bitcoin’s uptake has been so fast, the growing pains have opened the door for other competitors to pick up the slack. Ethereum’s value, for example, is up 268 percent in just the past month.
The man behind one forthcoming competitor will be familiar to many Golden Opportunities readers, given his lineage and distinct name. He is Anthem Blanchard, son of the late James Blanchard, who initiated the New Orleans Investment Conference in 1974 and was the founder of Gold Newsletter.
Anthem has both followed in his father’s footsteps and carved out his own space in precious metals, and his latest project is the anthem currency. This is another cryptocurrency, but the kicker is that each anthem is a digital token redeemable for 1 gram of gold.
The gold backing places an upward limit on each anthem’s value, since it can’t rise much more than gold itself. However, the idea is to offer a greater level of security and stability to the alternative currency. The trillions of dollars in gold reserves tower over bitcoin’s and ethereum’s market capitalization of $40 billion and $20 billion, respectively.
Holders of a full kilogram will be able to “cash out” directly from a vault in Texas, whereas smaller amounts of the physical gold will be available from Amagi Metals. In other words, Amagi Metals will be the first retailer to accept anthems for purchases.
When speaking with Gold Newsletter directly, Anthem was particularly optimistic about the integration of modern technology and oversight into the ownership of gold. He describes this as the “real value proposition” of the new currency.
In addition to live video footage of the vault, each kilo bar will have a traceable radio-frequency identification chip (RFID) to tie it to specific anthem tokens. The heightened transparency addresses the age-old problem of dishonest fractional reserves. (We have reported on paper gold or gold certificates before, with input from the Gold Anti-Trust Action Committee.)
There are two avenues where investors and gold bugs can play a role: (1) buy equity in the company, Anthem Gold, and/or (2) buy anthems and use them for trade. Anthem predicts the anthem tokens will be available, with the process fully activated, within six months, although you can already sign up for an online account and digital wallet.
For those eyeing the former and a stake in the new currency, there is plenty of detail to unpack, but early entrants get the pick of the litter: a 20 percent discount on convertible equity notes. Right now, Anthem is recruiting the initial round of investors via the fin-tech crowdsourcing site, BnkToTheFuture. His goal is around half a million U.S. dollars within the next month, and he is just about to crack $100,000, with 33 investors on board and plenty in the pipeline.
You’ll want to assess the functionality yourself, since physical backing for a currency comes with its own complications. Storage costs, for example, kick in three years after the currency’s release, one disadvantage over purely digital bitcoin. Further, Anthem has elected to use the ethereum platform to host the tokens, and he may add other network options for future releases.
This is where cryptocurrencies get technical and intimidate many likely investors. One assurance from bitcoin enthusiasts is that the network is decentralized with no one person or central bank at the helm. In the case of anthems on ethereum, the initial owner network will include a range of developers to dilute the power of any one person.
The final arbiter, however, will be market conditions: Gresham’s law will prevail. If consumers and merchants prefer a gold-backed currency, it will rise to the top and drive out inferior options. That remains to be seen, but you can at least hedge your stake in cryptocurrencies and board the gold train now before it leaves the station.
Fergus Hodgson is an economic consultant and Gold Newsletter’s roving editor.