Vi, while acknowledging you asked for "experience with" and haven't received any takers, may I then be permitted to respond re: concept and execution problems with the e-gold and e-silver products/promotions.
First of all, allow me to direct your attention to the URL with a few observations/comments after the URL:
biz.yahoo.com
1) The Bond market has 3 times the TRADING VOLUME size as does the entire USA equities markets, which include NYSE, OTC-BB, NASDAQ AND AMEX.
2) DUE to cost of system maintenance a/w/a transaction costs per members, THIS lucrative 4 or 5th attempt was both well funded and sponsored acc'd to the list at the bottom of the URL. It didn't make enough to "pay the freight" as it were, neither of the predecessor systems did either.
3) This was a system based upon the UNLIMITED IN THEORY ability to create underlying instruments, i.e., "paper bonds in the non-federal gov't issued sector"--admittedly less than est. 40% market share vs fed. bonds--
4) In this unlimited supply potential, it was STILL unprofitable to maintain or amortize start-up costs, plus ongoing system maintenance and systemic transaction costs and was unceremoniously CLOSED.
Now, let's examine my basic problem with ALLLLLL conceptualized e*gold and e*silver vehicles currently operational to date and for the forseeable future using the above 4 observations about the REPEATED FAILED e*bond trading modelled above.
In e-gold/e-silver virtual gold/silver "schemes" as I like to characterize them:
1) The trading volume in gold=miniscule compared to the e*bond trading efforts that so miserable failed repeatedly.
2) To the best I've been able to observe, NONE of the e*gold/e*silver virtual schemes currently on the landscape are anywhere close to being "well-funded NOR well sponsored" in my opinion, at least not on the level of the luminary institutions that backed this latest e*bond trading scheme
.
3) The e*gold/e*silver schemes are based upon a FINITE amount of gold or silver available to satisfy ability to deliver in said hard commodity if push came to shove, and participants wanted to "cash out." Therefore, these systems are susceptible to fractional "gold" banking mutations as suree as night follows day. The temptation is too great due to the limited availabilty of the physical gold/silver to literally back said systems.
Remember...CBanks hold most of the world's gold, so only if and until CB's are the promoters and funders of e*gold/e*silver schemes such as currently are naiscently evolving, will there ever be the liquidity needed for the perpetuation of this latest financial scheme in my opinion.
4) If something of unlimited supply, i.e., paper-non-govt bonds-- couldn't cover start-up costs, system maintenance costs, transaction costs, then how in the hell could something of LIMITED supply expect to survive either?
In closing:
The systemic danger is TWO-fold in participating in e*gold/e*silver schemes currently available:
one is addressed above: irresistable design to move to fractionalization of LIMITED gold available to gold encumbered by "users" scheme mentioned above. (BTW, this gold in e*gold systems is ALWAYS 24K. Perhaps, the system will mutate to 10K before it is allowed to collapse? YUCK!) This e*anything model doesn't work with physical commodities in my opinion like it does with unlimited paper "commodities" such as non-govt bonds.
The second systemic danger is this:
e*gold and e*silver contain within their framework the unexploded bomb of illiquidity due to the POTENTIAL for demand to outstrip physical supply to satisfy delivery of physical against the e*committments/encumberances.
This is especially alarming to me considering the FACT that world CB's control the supply and not the "free marketers/capitalists" that have dreamed up this virtual e*gold/e*silver scheme.
The reason I use unexploded bomb of illiquidity due to potential for demand to outstrip supply is also TWO-FOLD:
1) It is one thing to ask folks to convert fiat to e*gold or e*silver for ability to "HOLD" physical gold in an electronic form, as kind of a fail-safe, physical savings account mechanism as it were. There isn't enough gold most especially to deliver against any kind of exponential expansion in this model. That has already been addressed.
2) IT IS QUITE ANOTHER THING to ask folks to convert fiat to e*gold or e*silver for the purpose of SPENDING those "secured by physical" credits. Can you imagine the potential scenario where spending goes amuck and the current e*gold and e*silver systems can't keep up with participating consumer spending habits?
We live in a plastic card/ borrow borrow borrow world, especially here in the West. We are voracious consumers of every good and service and commodity imaginable. If e*gold/e*silver were to really catch on, not only would underfunded schemes go belly up first, taking your "exchanged fiat" with it, BUT COSTS for upgraded hardware requirements and systemic maintenance of existing including increased personnel and security/firewall/regulation etc., would skyrocket, taking transaction costs with it.
Or, to put it another way...how long has it been since you were able to mail a letter for 2c postage?
So, in summary, since I won't offer you experience as an e*gold/e*silver participant since I only believe in physical gold and physical silver participation, my gut says: stay away...FAR FAR AWAY.
Please, let me know if this helps you any.
Selah
gold_tutor |
