Technically there are of course only five established, main gold-backed currencies,
Backing is irrelevant. What matters is redemption. A currency such as the Federal Reserve Notes issued by an evil cabal of the Federal Reserve System and the USA Federal Government in unconstitutional combination is "backed" one part in every 32,000 or so by gold stored by the USA Treasury on behalf of those from whom it was stolen. However, there is no provision whatsoever to redeem a Federal Reserve Note for gold, silver, or anything else of value. It is a currency for exchanges only.
A currency which can be redeemed for gold, even if the redemption function is highly constrained (as with GoldMoney, you can only redeem one London Bullion Marketing Association good delivery bar at a time, or about 400 ounces at a throw) is as good as gold. A currency which pretends to have gold "backing" such as the Federal Reserve Note, is just another worthless fiat money.
As for "five established main" et's go through the list. Chronological order for grins.
1. e-gold, established 1996 provides four currency services. These are e-gold, e-silver, e-platinum, e-palladium. Redemption of metal is somewhat more difficult now than in previous years, limited to 400 ounce LBMA bars of gold, or 1000 ounce bars of silver, exemplia gratia. Metal is stored in London, Zurich, and Dubai.
2. LibertyDollar, established as NORFED 1998, offers a gold certificate which is a warehouse receipt for gold. They have a gold Liberty piece, a silver Liberty piece, paper warehouse receipts for gold and for silver, and a digital warehouse receipt for silver. Gold and silver are stored in Idaho. Redemption is by the ounce of gold or silver.
3. GoldMoney.com, conceived in the mid-1970s, operational in late 2000 or so. Offers a gold "holding" service which effectively provides for offshore storage of gold in any amount, along with a service for transferring gold from one holding to another, as money. Gold is stored in London. Redemption is only by LBMA bar, or 400 ounces at a time.
4. e-Bullion.com, established early 2001. Offers gold or silver online. Redemption is facilitated by vast array of coins and bullion available from this company established by old hands in the coin and bullion business. Metal is stored in Australia, Los Angeles, Delaware, Zurich, etc. Company holds the trademark for "e-currency."
5. Crowne Gold, established as 3PGold in early 2001. Offers gold online. Gold was stored in Idaho, it may have been moved.
6. 1MDC, established in 2001. Offers gold online. Gold is stored by e-gold. Redemption is in e-gold.
7. Pecunix, established in 2002. Offers gold online. Gold is stored as LBMA good delivery bars (400 oz) wherever it is that Anglo Far East stores their gold (with Brinks). Redemption is discussed in the user agreement.
(8.) INTGold, established 2003. Offers gold online. Gold is stored at an unknown location, possibly in Greenville, Texas (near Dallas). Redemption is not discussed in the user agreement, and the term 'backed' is used throughout, so I suspect that INTGold is not a redeemable currency.
However, how would you classify a currency that is backed by a gold-backed currency?
I think this question further points up the irrelevance of the matter of backing. If e-gold is redeemable, then 1MDC, which is redeemable for e-gold, is also redeemable.
It gets even more complicated by partially backed currencies who hold reserves of other currencies which claim in turn to be based on backed currencies.
I don't consider evocash or other dollar-equivalent exchange services to be gold currencies. They are simply transfer services or exchange services or "money transmitters." PayPal, the Internet dollar, and evocash all come to mind in this context.
I used the term DGC a bit more loosely, as it seems to be becoming a common practice, even for currencies that have no known backing and dubious backers.
Which, again, emphasizes that backing is irrelevant.
OSGold claimed to be backed 150% by gold. The operational difficulties of such a claim are so thoroughgoing as to seem utterly absurd to even the most inebriated person. Nevertheless, what benefit could it possibly offer to someone seeking to redeem his OSGold for the gold which is "backing" it? Nobody would imagine that $1.50 of gold would be provided for each $1.00 of OSGold redeemed, right? That's why the idea that OSGold was somehow a legitimate currency, or that anyone who ever exchanged OSGold was thinking clearly, is utterly absurd.
It isn't an issue of unexpected events. Saying that "Reed scarpered with the funds" or ran off with the money is an obvious claim that nobody would have expected such an event, therefore exchanging OSGold was justified until such time as it became clear that there weren't funds in the system to negotiate the currency. I don't agree with this line of reasoning. The deficits in OSGold were widely known, widely reported, and everyone in this community should have understood that it was a risky and poorly organized proposition destined for failure. (I think the use of "Gold" in the name "OSGold" was a violation of the trades descriptions act, for example.)
I should like to point out, as Craig Spencer has done, that GoldNow to my recollection went to one-sided exchanges in late May or early June 2002 - selling OSGold they had in inventory but not agreeing to buy any from anyone. That went on for a period, during which time messages from Graham Kelly appear to have been "touting" the currency as something valid and useful. I submit that without redemption there is no reason to trust any currency, not even Federal Reserve Notes. (That doesn't mean that there is no reason to use it, only that caveat emptor and caveat vendor apply.)
Similar problems arose with Standard Reserve, which proved to be insurmountable, I think.
Where's the gold? I think that's a key question.
Who owns the gold? Another vital issue.
How is redemption handled? Perhaps the most vital.
Regards,
Jim http://www.ezez.com/
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