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GoldMoney is a digital gold currency founded in 2001 by James Turk. The main office and servers are located in Jersey, one of the Channel Islands of the British Isles. It allows the instant transfer of gold, silver and platinum between user holdings.
As of 30 June 2006, over US$135.0 million of value with 176,600 troy ounces (5,490 kg) of gold in storage, which was worth $108.0 million; and 2,666,445 troy ounces (82,935.7 kg) of silver, worth $28.5 million at the time.
By 31 December 2008, over US$476.0 million of value with 357,900 troy ounces (11,130 kg) of gold in storage, which was worth $309.6 million; and 13,223,311 troy ounces (411,290.9 kg) of silver, worth $142.7 million.
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All gold, silver and platinum is stored in a vault in Shepperton, England or Zürich, Switzerland. The vaults are owned and operated by VIA MAT International Ltd. The metal is insured by Lloyd's of London. The Euro-Dutch Trust Companyverifies and approves all increases and decreases of precious metals in the database. Deloitte and Touche LLP, the external auditors, complete periodic system reviews using stringent standards, such as SAS 70 Type II, and an annual audit report available to customers.
The quantity of gold, silver and platinum in the database, which functions as currency, is always equal to the amount of bullion stored in the vaults. All gold, silver and platinum is owned by the holding owner. Payments are instantaneous and non-refundable. This payment process is ensured through a system of internal controls and governance which include four patents with one pending. Because bullion is titled in the Holding owner's name and because payments are instantaneous and non-refundable therefore the use as a currency removes Herstatt Risk, which is endemic in the current fractional reserve banking structure, from the transaction and completely eliminates settlement, counter-party risk and credit risk.
Peter Schiff wrote, "There are also several places to buy gold on the Internet, and even several that offer storage programs. In general, I would be very reluctant to trust most storage programs, but one exception is GoldMoney.com, founded by James Turk, a longtime gold advocate and widely respected figure. Investors and shareholders of GoldMoney include two publicly traded gold mining companies"
GoldMoney derives revenue from two main types of fees: Holding and Exchange. Holding fees are for gold storage (0.15-0.18% per annum charged monthly with 100 mils or about $2.98 minimum), silver storage (0.87-0.99% per annum charged monthly with 0.2oz minimum), platinum storage (0.59% per annum charged monthly with 100 mils or about $4.02 minimum), payments (10-100 mils), and the service and management of customer segregated funds (0.25% per annum paid monthly and deducted from interest earned). Exchange fees are for of gold purchases (0.98%-3.74%), silver purchases (1.99%-5.24%), platinum purchases (1.93%-3.51%), gold sales (currently no fee), silver sales (currently no fee), platinum sales (currently no fee), metal-to-metal exchanges (0.78%-3.99%), and currency-to-currency exchanges (0.49%).
Gold, silver or platinum may be purchased or sold at the current spot price. Settlement of large orders may be delayed until the next London fix. The various currencies include FRN$, C$, GBP or Euro and may be exchanged for each other. Funds must be wired directly from a bank or credit union account to Customer Segregated Funds Account and then purchases of gold, silver and platinum can be completed.
On January 4, 2006, Turk announced that the purchase of silver is now available through the system and made a similar announcement on July 10, 2009 regarding platinum. Metal-to-Metal exchanges are possible.
GoldMoney is regulated as a money service business by the Jersey Financial Services Commission (JFSC) and operates a Customer Acceptance Policy (CAP) in accordance with JFSC requirements. All customers must provide proof of identity, address and declare their source of funds for know your customer (KYC) and anti-money laundering (AML) requirements. Thus opening a Holding is similar to opening a bank account and the policy also requires that all customer identification documents are certified. "GoldMoney is built upon a solid foundation of rules and ethics. Therefore, GoldMoney has a zero-tolerance policy for fraudulent activity."
Using the facility involves a few considerations that may be new to some investors. Full discussion of these matters is beyond the scope of this article but brief remarks will help to alert new users.
Jersey is a respected and major financial and tax haven with strict bank secrecy laws. For example, under 13.075 Part 4 Section 42(3) of the Banking Business Law 1991 "Any person who discloses information in contravention of this Article shall be guilty of an offence and liable to imprisonment for a term not exceeding 2 years or a fine, or both."
Holding owners may have reporting duties. The IRS asserts that 'each United States person who has a financial interest in or signature or other authority over any foreign financial accounts ... exceeds $10,000 at any time during the calendar year, must report that relationship'. A box may need to be checked on Schedule B of Form 1040 of the U.S. Invidual Income Tax Return. Some exceptions do apply.
GoldMoney asserts (1) they are not authorized to give tax advice, (2) with customers in 102 different countries it would be impractical to try, and (3) the user is responsible for complying with the laws of the territory from which they access the site.
There are claims by high-tax jurisdictions that Jersey and other low-tax jursdictions are havens for tax evasion or legal tax avoidance. The United States Supreme Court has held, "The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted." See Gregory v. Helvering. Claims about possible inappropriate actions by low-tax jurisdictions are strongly contested and labeled as Orwellian by P. Crook of the Guernsey Financial Services Commission.