Although it is always good to have some metal in hand for an emergency, (i recommend it highly, actually) a gold-backed crypto where the metal mined immediately goes straight to tokenization AND is able to be bought at spot price (I wouldn't mind if AABB even added at small percentage premium on top) is, in my mind, revolutionary... This is an operation and concept that has never existed, however is very attainable. The middle man is completely cut out of the Miner to End-Consumer process. The customer, without the hassle of paying high physical premiums and storing their own physical gold, can access real physical gold through a secure crypto token.
The company has the pieces in play:
1. the actual ERC-20 token on Ethereum.
2. Existing access through relationships in Asia (Asia big, bro — China, India — that’s like over 2B people).
3. Cash on hand.
4. Stake in existing mine(s) and access to real gold production.
Again, the token will be backed by the actual precious metal. Something the Comex, LBMA, the GLD ETF and the many other Gold-based derivatives which highly likely are not. They’re very close to being criminal operations, honestly.
SOBERING REALITY ALERT: The world paper gold market is said to be about a 300-500 to 1 paper ounce to physical ounce ratio.. Some even go as far as saying it’s over 1000-1 paper to physical. I’m not here for that debate, as there is good due diligence one can do themselves. I’ve been following precious metals for over ten years and, personally, I land on the more that 500-1..
***AABBG token will be backed by physical gold at 1:1... ONE TO ONE!!!
Think about how the Fed Reserve prints money out of thin air.. Think about fractional reserve banking (the process of lending where a bank only has to have a fraction of the paper money that gets lent out, which originally is printed out of thin air anyway, in their bank reserves).. Bitcoin, which I’m not against, is backed up simply by the idea of supply and demand, and its scarcity. And an idea 10+ years in the making. That’s it.
The company just recently put the AABBG website out.. I'm waiting to hear from them directly how this is all going to work. If they've been in the business so actually as to have sold a gold mine, I'm not too worried how the gold that will back up the token will be sourced. Ideally, it would already be in their possession. If they're basing it off of current bullion holdings as well as gold they have in the ground, I'm good with that. If they have substantial drill reports on the land they own and have under control... great.
The value, to me at least, is twofold.
1. Increase in the price per AABB share.
2. Increase in the paper spot market price of gold.
Having paid attention to precious metals for the past 10+ years (long enough to have a grip on the industry), the past 6 - 12 months has gradually seen a decoupling of the paper Comex/ LBMA spot price versus the price of physical gold in hand (local coin dealer/ online bullion shop)…
… If the majority of the gold tied to the AABBG token is still in the ground, then they are not paying the roughly $1,700 per oz to mine it. Mining costs average in Mexico (I did the homework) average between $325/ oz to $700/ oz.. Let’s use the average, round number of these two and just say $500/ oz mining cost.. At a $1,700/ oz paper spot price, you would subtract the $500/ mining cost which would give the gold miner a $1,200/ oz profit on each ounce of gold they would mine. Gold is measured by troy ounces, which is about 31 grams per troy ounce..
Other “Gold-backed” crypts:
1 - PGMT is traded on only two exchanges. I've never hear of either of them. They're also not a miner, they are only a refiner. It doesn't look like they're available for purchase in the US. Only 916 PGMT tokens have ever been minted.
2 - DGX is also not available in the US and are only available on seven exchanges, six which I've never heard of. They only have 76,644 DGX tokens.
3 - PAX Gold is tied to the LBMA, another criminal enterprise along with the Comex. LBMA is part of the 500-1 paper to real physical gold ounce problem and, most likely, the gold that backs up the PAX doesn't exist.
4 - Tether Gold - Tether is the Federal Reserve of stable coins. Not backed up by anything and their tether "printing" has played a huge part in the recent crypto bull run. Tether says they're backed up by USD, but they highly likely only have a fraction on the cash on hand versus the amount of tether they're injected into the market.
5 - Meld Gold - I cannot find any info on this token, besides being more of a concept being built on the algorand blockchain. Token is not available for purchase.
"With a wonderful business, you can figure out what will happen: you can't figure out when it will happen. You don't want to focus on when, you want to focus on what. If you're right about what, you don't have to worry about when" ~~~ Warren Buffet
