By: Lisa Wright Business Reporter, Published on Fri Mar 04 2016
Gold is on a tear lately, and that’s been nice for a new Toronto company that has figured out a way for people to store bullion bars in their savings, or even spend it to make purchases. BitGold (not to be confused with digital currency bitcoin) offers international savings and payment services that allow customers and businesses to make payments and hold savings with the precious metal, which was used as currency as far back as 5,000 years ago. At the moment, the upstart Adelaide St. firm offers the only gold-backed, prepaid Mastercard in the world when you open an account, which is free. Payments are converted into local funds when they are made. Co-founder Josh Crumb, former senior metals strategist at Goldman Sachs in London, created the business based on the premise that gold behaves more like a currency than it does other investments. After all, gold bullion is the world’s oldest asset class and this century’s best performing currency. And as Crumb points out, gold has maintained its purchasing power better than any other savings option throughout history. “If you want to buy actual gold, how do you do it? Coins and Exchange-Traded Funds (ETFs) have fees,” explains Crumb, the company’s chief strategy officer. “If you want gold cubes or bars, where do you store them? In a shoe box or under the bed maybe, because banks charge for safety deposit boxes,” notes Crumb, who will make a presentation at the Delta Hotel Tuesday during the Prospectors and Developers Association Convention, which hits Toronto starting this weekend. He also points out that there’s no central clearing house in which physical gold can be quickly bought and sold, for instance in the same day or hour like stocks and bonds. “There’s no easy way to do it. What we’ve done is develop technology that democratizes access to gold, so you can buy and sell it quickly and use it as a form of payment,” said chief executive Darrell MacMullin, former head of PayPal Canada. So far this year, while markets have been see-sawing, gold has outperformed every major asset class as an investment. The rally in the gold price is getting people excited again about bullion, which bodes well for BitGold. The name makes it sound like bitcoin, but the concept is more like a savings account. Customers can purchase gold using a credit card or debit card or via wire transfer at a fee of one per cent over the spot gold price. Crumb says the service marries the strength of savings in gold with the convenience of a globally accepted payment card. The company does not charge fees or require minimums. The card is prepaid with a customer’s vaulted gold funds, which means you do not pay any interest on purchases. The amount is converted And its popularity is growing. Since BitGold launched last summer, a new user signs up every minute. The platform now has more than 739,000 customers located in more than 150 countries, and more than 700,000 grams (worth $38 million Canadian) of gold in safekeeping. Free storage is provided at private vaults secured by Brinks in Dubai, Hong Kong, London, Singapore, Toronto, and Zurich, among others. “It’s different,” said veteran gold analyst John Ing of Maison Placements in Toronto. He agrees with the concept that gold is money, but says the old-school gold bugs probably still prefer to clutch their gold bars and coins as a safe haven amid global financial and geopolitical turmoil, as has been done for centuries. BitGold customers have the choice of saving it in the vault and not seeing it, and can even request bars and 10 gram cubes depending on their holdings, Crumb says.
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