On 19 Aug 2001, at 14:29, Craig Spencer wrote:
> Both are transferable *derivatives* of gold. That is, they are
> contractual obligations whose value derives from that of gold. The
> principal contractual commitment is the obligation to redeem e-
>gold in gold on demand (under certain circumstances).
Craig, I know you are tired of this discussion, but there is one
major element that characterizes "derivatives", and it is leverage. If
you use the pure definition of a "derivative", which is "a bi-lateral
contract whose value derives from the value of an underlying asset,
refernce rate or index", then everything but the gold coin or gold bar
you hold under your mattress, is a gold derivative.
But the truth is that derivatives in the financial world must have
some leverage, usually high leverage. In the case of GoldGrams
and grams of e-gold, the leverage is almost inexistent.
No matter what happen to the operator of these sytems, the
owners of a goldgram will always own an undivided interest in an
allocated pool of unencumbered gold.
I must say that I feel must safer to own 1000 GoldGrams or grams
of e-gold than to have a Hallmark Kilobar of gold under my
mattress. -:)
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