DGC Magazine Digital Gold Currency

DGC Magazine 

“Paper is poverty....it is only the ghost of money, and not money itself.” - Thomas Jefferson 1788 

October 2008, Digital Edition 

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Digital 

Gold 

Currency 

El E c t r o n i c 

Pay m E n t s 

Ba c k E d B y 

Go l d 

No Chargebacks 

Merchant Interfaces 

Mobile Integration 

Immediate Settlement 

Denominated by Weight 

Global Payments 

No Currency Risk 

Low Fees

The Golden Road To The Last Village 

by Paul Roseberg 

Page 5 

e-gold Engages KPMG to Assist 

in Development of AML Program 

Improvement 

Page 6 

The Future of Private money 

by Sidd, Co-Founder of Pecunix 

Page 8 

WebMoney Passes 6,000,000 

Registered Accounts 

Page 12 

Fiat currency 

by Patri Friedman 

Page 15 

Time for a gold rouble? 

Page 15 

A Modern Gold Standard? 

Page 18 

Notice: e-gold Bar Count Change 

Page 20 

India’s first spot bullion platform at 

Coimbatore 

Page 20 

On Golden Island 

by Claire Wolfe 

Page 22 

What Will The ‘New’ E-gold Look 

Like? 

Page 27 

All E-gold Accounts Now Require Tax 

ID Information 

Page 30 

Cover is a 1 Kilo gold bar from Emirates Gold 

http://emiratesgold.ae 

Banks Crumble, Wait for Physical 

Bullion Gets Longer 

by Patrick A. Heller 

Page 30 

BullionVault.com Becomes London 

Bullion Market Association Member 

Page 32 

’Top Shelf’ Digital Gold 

by Mark Herpel 

Page 33 

Cryptohippie Gets A Big DGC 

Magazine Endorsement 

Page 38 

Pay Zakat in Gold 

by Omar Javaid CRITIC Magazine 

Page 41 

Justice, Policing, and E-Gold 

by Michael S. Rozeff 

Page 46 

The Inevitable End of the Central 

Banking and Political Money Regime 

by Thomas H. Greco, Jr. 

Page 52 

Print Issue Now Available. 

How to get a print copy? 

Go to http://www.magcloud.com and search 

for ‘DGCmagazine’ order up one. To buy an 

issue with gold or get a free copy contact 

the editor. 

Editor, Mark Herpel 

editor@dgcmagazine.com 

Skype IM ‘digitalcurrency’ 

What’s Inside 

DGC Magazine is published online 12 times a 

year. Subscriptions are currently free. 

© 2008 DGC Magazine All Rights Reserved 

DGC Magazine October Issue § 3

4 § DGC Magazine October Issue

th E Go l d E n ro a d to 

th E la s t Vi l l a G E 

by Paul Roseberg 

The US economy and the global financial system 

are tipping at the brink. You probably watch the 

financial channels every day to see if and when 

the markets will turn a corner and pull themselves 

back together. But it’s not just you – people in 

thousands of small towns all over the world are 

also watching, and that probably isn’t helping your 

business. 

As you get further away from the first-world cities 

where you live and work, it gets harder and harder 

to convince people to step into an all-electronic 

money regime. (These folks don’t trust their 

own local officials, much less money-masters in 

Washington or Brussels!) 

There is, however, one asset class that people in 

even the smallest village understand and respect, 

and that is gold. Gold requires no explanation, and 

it is always of value. Princes come and princes go, 

empires come and empires go, but gold remains 

unchanged. People in the smallest villages have 

understood this for a hundred generations. Instead 

of fighting against this long-held belief, why not 

turn it to your advantage? Use it! 

DIGITAL GOLD 

Digital gold is nothing new; it has been actively 

used for a decade or more by millions of people 

and at transaction rates in the billions of dollars 

per year. The gold remains in audited warehouses 

and ownership is exchanged electronically. 

Micro-payments? No problem. Send a thousandth 

of a gram if you like. 

Currency-to-currency conversions? Not even an 

issue. It never converts at all – it’s gold! 

There have certainly been regulatory issues with 

digital gold (the burden of being new), but there is 

a stunning lack of complaint from the actual users 

– they love it. 


I won’t waste time in this article, explaining the fine 

points of digital gold systems. First of all, you can 

probably guess most of the details – the systems 

operate pretty much the way you’d expect them 

to operate. Secondly, you can poke around 

DGC Magazine’s web site and find most of the 

information you need. 

THE HUGE ADVANTAGE OF GOLD 

How hard would it be for you to make arrangements 

with a gold dealer in a regional city to accept your 

payments in return for gold and silver coins? You 

could probably get it done in a few days. At worst, 

you’d have to leave an escrow at the local bank. 

The dealer would make a few percent on each sale 

and you would actually generate a bit of revenue 

on each transaction. 

BUT… think about what that means to the doubting 

old man in the last little village of your territory. 

This man will not be impressed by your technology 

and he certainly doesn’t want to hear about your 

network. But you’ll get his immediate attention if he 

understands that when he uses your system, he’s 

using nothing but actual gold! Heck, you could give 

your first customer in the village a free bus ticket to 

the city to exchange some digital currency for gold 

or silver bullion. Can you think of a more visceral 

marketing technique than this person stepping off 

the bus and showing their friends and neighbors 

the shiny new coin they got with your system? 

THE ISSUE OF TRUST 

Hawala and similar value transfer systems have 

endured because of trust. The Hawaladar is a 

trusted man in the community, tribe or clan. For 

him to betray that trust would generate horrible 

consequences for himself and for his family. You 

cannot compete with that. You are an outsider. 

You can, however, make the issue entirely moot. 

Gold does not require trust. It simply is what 

it is. And if your currency is known to represent 

physical gold, the issue of trust becomes almost 

meaningless. I send you a payment and you 

receive it instantly (unlike Hawala). And if you 

have any reservations at all, you can run to the 

next village and turn it into gold bullion. 



Speed and redemption trump the ancient way. 

Sure, some will still prefer the ancient way simply 

because of its age, but that sort of resistance seldom 

lasts in the face of overwhelming advantages. 

WHO NEEDS A BANK? 

Bank accounts are creatures of the West’s industrial 

era. They certainly made sense in their time and 

place, but opening one is an unwieldy, unpleasant 

experience. People would rather not go through 

the process if they don’t have to. 

The traditional banking and currency model is 

also problematic for businesses. Consider your 

own: Instead of creating complex hierarchical 

systems for transferring value (the MMT device, 

the intermediary, the local bank account, currency 

converters, hubs, etc.), why not just use electronic 

gold and flatten out the entire process? How 

much more profitable would you be, minus a few 

layers? 

Digital gold is a better architecture, and - soon 

enough - it will be adopted. 

Moreover, this is the way to “bank the unbanked.” 

Getting these people to rearrange their lives 

your way involves getting them to a bank, getting 

them to fill out forms full of highly personal and 

embarrassing information, and begging them to 

trust this new institution with their earnings. I don’t 

have to tell you that this is not an easy sell in many 

places. But, if you offer them gold, and require only 

a visit to their local store, they will be interested 

and even eager. 

Why spend time and money forcing unwanted 

burdens upon your customers, when it’s easier 

and cheaper to do things their way? 

OBSTACLES & REWARDS 

There will be obstacles to face if you decide to rollout 

a digital gold system. Most of them will revolve 

around the phrase, “We’ve never done it that way.” 

People in the hierarchy of existing systems may 

object. You may find yourself facing-off against an 

old institution. Some people may even say bad 

things about you. 

Make no mistake, digital gold is the best way to 

do business with the last village, and perhaps the 

6 § DGC Magazine October Issue 

only way. But, if the obstacles don’t seem worth 

crossing, you can certainly keep trying as you 

have been. 

Some company is going to do this – the advantage 

to be gained is too large to ignore. That company 

will then use their advantage and become an 

industry leader… possibly the industry leader. 

© Copyright 2008 by Paul A. Rosenberg 

Paul is the author of A Lodging of Wayfaring Men 

and other books. You can find his work at 

http://www.veraverba.com 

E-G o l d ® En G a G E s kPmG to 

as s i s t E-G o l d in i t s dE V E l o P m E n t 

o f aml Pr o G r a m im P r o V E m E n t 

Melbourne, FL (PRWEB) September 30, 2008 

-- e-gold Ltd. announced today that it has 

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e-gold Ltd. announced. 

Dr. Douglas Jackson, e-gold Ltd. Chairman, said, 

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Dr. Jackson said e-gold Ltd.’s goal is to implement 

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Tel: +44-1534-511-977 

Fax: +44-1534-511-988 

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GoldMoney 


The Future of Private Money 

Th e Fu T u r e o F Pr i vaT e m o n e y 

Since the early 1990s forward thinkers have been 

discussing various technologies that could be 

used for private money. With the arrival of strong 

cryptography and the Internet, digital cash in the 

form of “Digital Bearer Certificates” became a real 

possibility. In this article we will look at the history 

behind the idea of bearer certificates and why it is 

more relevant today than ever before. 

th E h i s t o r y o f wa r E h o u s E 

r E c E i P t s a s m E a n s o f E x c h a n G E. 

Since around 330 BC in Ancient Egypt warehouse 

receipts have been used as a form of money. 

Farmers deposited grains in secure warehouses 

and received written receipts for specific quantities 

of grain. The receipts could be returned and 

exchanged for the grain when needed. These 

receipts were much easier to carry, store and 

exchange than bags of grain, so they were used 

as a secure and convenient form of payment. The 

warehouse receipt itself had no inherent value; it 

was only a symbol for something of value. These 

highly successful ancient grain banks eventually 

evolved into the goldsmith banks in seventeenth 

century England. 

These were the early days of the mercantile 

revolution when gold and silver coins were the 

common money. No banks existed in England at the 

time so people stored their wealth with the leading 

goldsmiths of London, who already had stores of 

precious metal in secure private vaults. For each 

deposit of precious metal, the goldsmiths issued 

paper receipts certifying the quantity and purity of 

the metal. Like the grain receipts, the goldsmiths’ 

receipts soon began to circulate as a safe and 

convenient form of money backed by the gold and 

silver in the vaults. These receipts represented a 

promise by the goldsmith to exchange the receipt 

for a certain amount and quality of metal, and 

were “negotiable” in that anyone (the bearer of the 


b y Si d d, Co-Fo u n d e r o F Pe C u n i x 

receipt) could present the receipt to the goldsmith 

and take possession of the metal. 

The system of goldsmith receipts worked 

exceptionally well so the obvious question to ask 

is why, if the warehouse receipt system worked so 

well, did it not continue to be used through to the 

present? 

th E d E c l i nE 

With their warehouse receipts working extremely 

well as money, and earning a decent fee for 

storing the precious metal, the goldsmiths became 

well known and prosperous. It was not long 

before people began asking the goldsmiths to 

lend them money. Merchants needed to expand, 

farmers wanted to buy more land, the borrowed 

money could facilitate wealth and prosperity. The 

goldsmiths soon learned that they didn’t need to 

lend their own gold. They could simply write out 

more receipts to “create money”, even if they 

didn’t have the metal in their vault to back them 

up. Nobody except the goldsmiths knew how much 

gold they had in their vaults, or how many receipts 

they had issued. The receipts were still accepted 

at their full value, even though in reality there was 

not enough gold to back them up. A subtle change 

had happened; the goldsmiths had become 

bankers, and the papers they were issuing were 

no longer warehouse receipts, but had become 

bankers’ notes (bank notes). The paper was no 

longer backed up by real metal in a vault, but by 

the bankers’ promise to pay the bearer the value 

on the note. It is obvious that these new bankers 

were being dishonest, and ultimately their fraud 

was revealed and the system collapsed. 

The problems with the early goldsmith bankers 

were caused primarily by a lack of adequate 

financial governance. What the goldsmiths lacked 

was a system that would keep them honest and



would allow their customers to have reasonable 

certainty that the warehouse receipts they were 

using truly were as valuable as claimed. If those 

early bankers had allowed or encouraged their 

customers to elect a trustworthy member of the 

community to act as an auditor of their affairs, the 

problem would not have arisen. The auditor would 

simply examine and count all the precious metal 

in the vault, then examine the banker’s receipt 

book. It would be instantly obvious if there was a 

difference in the amount of reserve and the value 

of the issued receipts. If the people who used the 

receipts for trade trusted the auditor they could 

always be confident that the receipts had full 

value. 

Unfortunately instead of implementing honest 

auditing and keeping the money supply private, the 

government stepped in and started to regulate the 

banking industry. This was the beginning of the end 

for anything remotely resembling honest money. 

Money has degenerated over the years to the 

point that it is highly dishonest and untrustworthy. 

Bankers and governments do an extremely poor 

job of protecting the wealth of the people who 

trust them and the current runaway inflation and 

financial breakdown is perfect evidence of this. As 

we watch government money steadily decline in 

value, we need to replace it with money of real 

substantive value. 

wa r E h o u s E r E c E i P t s t o d ay 

In the early 1990s, Nick Szabo coined the term 

“Digital Bearer Certificate” and described it as a 

broad term incorporating various technologies. A 

digital bearer certificate may come in various forms 

such as digital cash, digital warehouse receipt, 

digital certificate of deposit, digital credit note, etc. 

Each of these forms may also come in various 

forms: digital cash may be cryptographically 

blinded or not, it may be one-use only, it may have 

cryptographic integrity or not, etc. “Cryptographic 

Warehouse Receipt” describes a specific type 

of digital bearer certificate which uses modern 

technology to implement exactly the same idea 

as the goldsmiths’ receipts of old. Warehouse 

receipts are an established principle still used in 

modern society, most commonly for agricultural 


and industrial trade, and have an established 

legal status. Most warehouse receipts are issued 

in negotiable form so they can easily function as a 

money substitute. 

The technology is available to create a system 

of gold or silver (or any commodity) warehouse 

receipts issued by an efficient and secure 

computerized system under a policy of strong 

governance. Using modern highly secure 

cryptographic techniques and combining this with 

the Internet, we can efficiently facilitate both local 

and international exchanges between traders, 

merchants and their customers. 

If we use a computer to create the receipt, the 

issuing warehouse can cryptographically “sign” 

the document to guarantee its authenticity. It 

isn’t possible for anyone to create counterfeit 

warehouse receipts because they don’t have the 

signing key. The receipts can be digitally stored 

in a database or as text files, and can be passed 

from person to person using Internet facilities such 

as e-mail and instant messaging. As long as there 

is always a strong governance system in place, 

people who use these warehouse receipts can be 

confident that the receipt has real value. 

After the historical success and failure of warehouse 

receipts, it is reasonable to ask what relevance 

they have today. Right now we are experiencing 

a serious crisis in the fraudulent money system 

currently run by bankers in collusion with corrupt 

governments and we need to create a practical 

and honest alternative. During the last 15 years we 

have seen various experiments in private money 

issuance based on gold, with the most successful 

being e-gold, the Liberty Dollar and various clones 

of e-gold such as GoldMoney and Pecunix. These 

private money systems have served their purpose 

well as experiments, but unfortunately have flaws 

and consequently do not appear to be resilient 

enough to survive. Bankers and governments 

don’t easily accept honest competition and these 

early experiments have recently come under 

attack. Both e-gold and Liberty Dollar have been 

charged by the United States authorities with 

alleged offenses ranging from “money laundering”, 

unlicensed money transmitting and fraud.



As the pioneer in online digital money, e-gold is 

an excellent case study that can help us develop 

private money into the future. Although e-gold 

models themselves as an issuer of digital gold 

currency, their main function is more in the line of 

an account based payment system. This means 

that they are able to control who uses their system 

and how their system is used, and the government 

expects them to do that. If we look at the Federal 

Reserve Bank (that issues US Dollars) we can see 

that they don’t have this problem. Once they have 

printed the money and distributed it into the world, 

they have absolutely no control on who uses the 

money or how it is used. Consequently it would 

be impractical to accuse the Federal Reserve 

Bank of facilitating crime and they can plausibly 

deny knowledge of any alleged crime. In the case 

of e-gold, it is much easier for law-enforcement 

agencies to accuse e-gold of facilitating crime than 

it is for them to find and charge the real criminals, 

as they must do if Federal Reserve notes are used. 

Furthermore, e-gold has no way to plausibly deny 

any knowledge of the alleged crime because they 

have complete records of every e-gold transaction. 

The introduction of cryptographic warehouse 

receipts would put the issuer in the same position 

as the Federal Reserve Bank in terms of plausible 

deniability and could protect the issuer from 

frivolous attacks by lazy law-enforcement agencies. 

Clearly the current political and legislation regime 

in the world does not encourage private currencies 

in the way they have been implemented to date so 

innovators need to come up with new systems to 

challenge the status quo. 

Research indicates that there is a distinct change 

in human consciousness rapidly spreading 

throughout the world. Perhaps it is due to the 

facilitation of massive and instant information 

exchange through the Internet, but no matter 

what facilitates this process of change, people 

are waking up to the realities of life under corrupt, 

violent controlling governments. The world is 

ready for honest money that puts the economic 

power back into the hands of the people who 

produce, and forces governments to work as they 

should. The issue of gold based money in the form 

of warehouse receipts suits this new paradigm 

perfectly. 


Payments between people, merchants and 

customers using well governed cryptographic 

warehouse receipts are secure, private and 

highly resistant to government interference. The 

larger the number of independent private money 

issuers, the more resilient the system will become. 

Today we have the ideal situation to use this type 

of private money for worldwide trade. We have 

extremely efficient computer and Inter-network 

systems and modern highly secure cryptographic 

techniques. It’s time for people to take back the 

control of their wealth and money, and one way to 

ensure this is for them to return to the system that 

stood the test of time (approximately 2500 years). 

Using precious metals, gold and silver as money, 

combined with the efficiency, security and privacy 

offered by cryptographic warehouse receipts is a 

viable solution for honest worldwide commerce in 

the future. 

1 http://en.wikipedia.org/wiki/Social_evolution_of_money 

2 http://en.wikipedia.org/wiki/Banknote 

3 http://szabo.best.vwh.net/bearer_contracts.html 

4 http://anoncvs.aldigital.co.uk/lucre/theory2.pdf 

5 https://ffij33ewbnoeqnup.onion.meshmx.com/doc.php 

6 http://en.wikipedia.org/wiki/Warehouse_receipt 

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rE G i s t E r E d ac c o u n t s 

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In May of this year their Webmoney Keeper Mobile 

product won a National E-Finance Innovations 

Award for 2008. Earlier in April, Webmoney along 

with VISA co-sponsored the annual Digital Money 

Forum-2008 in London.



http://www.seasteading.org/

fi at c u r r E n c y 

by Patri Friedman 

I find it a little baffling that people blame the current 

financial crisis on deregulation and laissez faire 

when it is occurring in a financial system built on top 

of fiat currency - arguably the greatest swindle of 

all time, and one perpetrated by the government. 

This is not to say that the current crisis couldn’t 

have been avoided by additional regulation. It is 

complex enough that proponents of both more and 

less regulation can reasonably imagine alternative 

approaches which fit their model and would have 

made things better. Thus each side can see, in the 

crisis, validation of their own beliefs. But it strikes 

me as insane to characterize any system built on 

top of fiat currency as a free market. 

Rothbard’s “What has the government done with 

our money?” [http://mises.org/money.asp] is a good 

introductory read on the subject of money. While I 

don’t agree with his views on the fraudulent nature 

of fractional reserve banking and he (of course) 

overstates the case against government / for the 

market, money is a topic where I believe there is 

some deep, basic truth to some of the strongest 

allegations of libertarians about the fraudulent and 

coercive nature of government. 

It blows my mind that we live in a world where 

most people don’t know that for a long time, money 

consisted of notes redeemable for gold or silver, 

until suddenly one day, the government (here & 

elsewhere) said “You must continue accepting 

these notes, but you can no longer trade them 

for metal - and we’re keeping all the metal we 

had been using to guarantee the notes.” In many 

cases, this was accompanied by a ban on the 

private ownership of the metal, or on taking it out 

of the country. People accepted the unbacked 

notes because it was illegal to do otherwise. 

It was theft on a colossal, mind-boggling scale, but 

it’s behind us and so we’ve forgotten about it. 

The history of money is a sordid history of legalized 

Fiat Currency 

theft. It will be interesting to see what alternatives 

arise in the coming decades, and whether fiat 

money survives. I would guess that it won’t, 

because of the advantages of digital cash, except 

that the arguments which say digital cash will win 

in the future also say it should already have won, 

which it hasn’t, so perhaps those arguments are 

wrong. http://patrissimo.livejournal.com 

ti mE f o r a G o l d r o u B l E? 

(John Laughland for RIA Novosti) - 24/09/2008 

- There used to be a habit of framing old Tsarist 

bonds and putting them on the wall. Lenin’s 

decision to renege on the Russian imperial debt 

meant that it became mere paper, interesting only 

as a historical relic. 

In the light of the recent financial crisis in the USA, 

could the same thing happen now to the bonds 

issued by the American government, and could the 

country which has dominated the world for the last 

half century now enter history as a bankrupt state? 

And what can Russia do in the circumstances? 

The decision by the US government to inject 

$700 billion into the financial system means that 

the already gigantic annual budget deficit of the 

American state (previously some $450 billion a 

year) will now rise by a factor of three. The total 

state debt of the USA will rise to well over $11 

trillion. It is obvious that such a colossal debt can 

never be repaid. Instead, it will be serviced by more 

debt in the future. The contrast with Russia, which 

has painstakingly sanitised its state finances to 

the point that it now has more money to lend than 

the IMF, could hardly be greater. 

The recent financial crisis itself grew out of this 

American culture of debt. To some extent, all 

countries share it: since 1914, all countries use 

paper currencies, i.e. debt instruments which are 

never redeemed. Whereas before the First World 

War, bank notes were essentially vouchers for 

specific amounts of gold cash, now the “promise 

to pay the bearer” (which remains inscribed on 

British bank notes) is in fact hollow. 

In America, this basic culture of debt is aggravated 



by the fact that other countries use the dollar itself 

as a reserve. This means that the United States 

can export dollars in order to pay for its imports 

without the dollar losing value. Other states also 

need dollars to buy key commodities like oil. The 

USA can therefore export paper currency almost 

indefinitely - the famous “deficit without tears” 

analysed by the great French economist, Jacques 

Rueff. Naturally, if the state itself encourages such 

a culture of debt by issuing unredeemable paper 

currency to pay for imports, and by accumulating 

such mountains of debt, then it is no surprise if the 

American financial markets themselves operate on 

the same basis. But the collapse of those markets 

is only a symptom of a much deeper problem, the 

basic insolvency of the American state itself. 

What can Russia do about this? At first sight, 

Russia’s role in the international financial system 

does not seem very large. However, as a major 

exporter of hydrocarbons, her role in the world 

economy is actually very important. As the age 

of the dollar draws to a close, Russia will have to 

consider selling her oil and gas not in the devalued 

American currency, but instead in the euro used 

by most of her customers. It is surely unnatural 

for two geographical neighbors to do such large 

volumes of business using the currency of a distant 

and now ailing nation. 

Second, the Russian leaders might also consider 

making their own currency, the rouble, convertible 

into gold. The idea of gold convertible currencies 

is extremely unpopular among most economists: 

they dismiss gold as a “barbarous relic” (to use 

the famous phrase of John Maynard Keynes) 

and suggest either the present regime of paper 

currencies or, at best, a link to a basket of 

commodities. 

Both these solutions are highly artificial and based 

on the same level of state control which has now 

just so spectacularly failed. Indeed, which is more 

“barbarous” - the reintroduction of gold as an 

instrument of payment, or the practice of amassing 

huge quantities of the precious metal to keep it 

locked underground in the vaults of central banks? 

The contempt of the Keynesians notwithstanding, 

it is an indisputable fact that gold does remain 

the ultimate store of value, which is precisely why 


states own so much of it. 

Russia has less to fear than other countries from 

the introduction of a currency convertible into 

gold. Governments are typically hostile to gold 

because it reduces their discretionary power over 

the currency and the economy: they say that the 

money supply cannot be made dependent on the 

production of gold mines. In reality, this argument is 

bogus because the amount of mined gold already 

in existence vastly exceeds the yearly production, 

so mining does not in fact have an appreciable 

impact on supply. But, as it happens, Russia is a 

major producer of gold anyway and therefore to 

some extent controls production. 

Secondly, Russia is vulnerable to her status as an 

exporter of primary materials - and as an exporter 

generally - especially in the age of inflation which 

is about to dawn. The more the Russian economy 

exports, the more her national paper currency will 

rise, making those exports more expensive. This is 

bad for an export-oriented economy. By contrast, 

the value of a gold rouble would depend not on 

the trade balance of the Russian economy at all, 

but instead simply on the price of gold itself which 

generally remains stable with relation to other 

commodities. 

Russia has shown surprising success in putting 

an end to the unipolar world of which American 

strategists have dreamed now for over a decade. 

There are no permanent victories in diplomacy, 

however, but a shift in the structure of the world 

financial system would help to entrench recent 

gains. 

John Laughland is a British historian and political 

analyst, and Director of Studies at the Institute of 

Democracy and Cooperation in Paris 

http://en.rian.ru/analysis/20080924/117072937. 

html


A Modern Gold Standard 

a mo d e r n Go l d STa n d a r d? 

“be C a u S e, ‘WiT h o u T i nT e G r iT y, n o T h i nG W o r k S ’, T h e o n ly W a y o u T o F o u r C u r r e n T 

m e S S iS To r e S T o r e i nT e G r iT y To T h e dollar. We m u S T h av e a m o n e Ta r y S y S T e m 

T h aT iS n o T b a S e d u P o n a lie. a ‘m o d e r n G o l d S Ta n d a r d’ W o u l d d o T h e T r iC k.” 

— Louis R. Woodhill, “Time for a Modern Gold Standard,” June 17th, 2008.1 

One of the most-reported stories of the year also happens to be the biggest problem most-ignored by 

politicians: inflation and the weak dollar. Plenty has been written about the problem, but very few have 

written anything in the way of solutions, and even fewer leaders in Washington have responded with 

anything other than band-aids and bromides. 

Fortunately, that may be starting to change. Yesterday, writing for Real Clear Markets, Congressman 

Ted Poe (R-TX) in his piece “Congress Must Stabilize the Dollar”2 outlined his bill, H.R. 6690, the 

“Sound Dollar and Economic Stimulus Act of 2008”. It would set the value of the dollar to one fivehundredth 

of an ounce of gold. In his words: 

“aT $804/o z, T h e C u r r e n T m a r k e T P r iC e o F G o l d r e F l e C T S T h e e x P e C TaT i o n 

(a n d F e a r) o F F u T u r e i n F l aT i o n. i b e l i e v e T h aT FixinG T h e va l u e o F T h e dollar 

n o W in T e r m S o F G o l d aT $500/o z W i l l S T o P T h e C u r r e n T i n F l aT i o n W iT h o u T 

C a u S i nG d e F l aT i o n. ho W e v e r, m y b i l l a l S o P r o v i d e S a P o W e r F u l S u P P ly-S i d e 

S T i m u l uS, in T h e F o r m o F F i rS T-y e a r e x P e n S i n G o F a l l C a P i Ta l i n v e S T m e n T, To 

e n S u r e T h aT e C o n o m iC G r o W T h a C C e l e r aT e S aT T h e S a m e T i m e T h aT i n F l aT i o n iS 

b e i n G S T o P P e d. br i nG i nG T h e dollar P r iC e o F G o l d d o W n To $500 W i l l b r i nG 

T h e P r iC e o F G a S o l i n e d o W n F r o m i T S C u r r e n T $3.50/G a l l o n To l e S S T h a n 

$2.50/G a l l o n. iT W i l l S T r e n G T h e n T h e dollar a G a i n S T F o r e iG n C u r r e n C i eS. 

mo S T i m P o rTa n T, iT W i l l P r e v e n T am e r iC a n S’ i nC o m e S a n d S av i n G S F r o m b e i n G 

S To l e n b y i n F l aT i o n.” 

This mirrors a proposal from Louis Woodhill of June 17th. In response to publisher Steve Forbes’ call for 

a “modern gold standard” in his June 16th piece, “Unilateral Disarmament,”3 Mr. Woodhill outlined his 

plan to stabilize the U.S. dollar with just such a standard amid soaring inflation over the past decade: 

“un d e r a m o d e r n G o l d S Ta n d a r d, T h e Fe d W o u l d u S e i T S oP e n ma r k e T 

o P e r aT i o nS To F o r C e T h e Comex P r iC e o F G o l d d o W n To (S ay ) $500/o z a n d 

k e e P iT T h e r e. aT T h aT P o i nT W e W o u l d h av e a F i aT C u r r e n C y W h o S e va l u e W a S 

d e F i n e d in T e r m S o F T h e m a r k e T va l u e o F G o l d. un l i k e T h e o l d G o l d S Ta n d a r d, 

G o l d W o u l d n o T b e m o n e y, a n d m o n e Ta r y o P e r aT i o nS W o u l d n o T C r e aT e a n y 

a d d iT i o n a l d e m a n d F o r G o l d. Th e m o n e Ta r y b a S e W o u l d a u T o m aT iC a l ly e x Pa n d 

a n d C o n T r a C T in r e S P o n S e To m a r k e T d e m a n d. be C a u S e T h e Fe d h a S T h e P o W e r 

To d e l i v e r o n a C o m m iT m e n T To S Ta b i l i z e T h e va l u e o F T h e dollar a G a i n S T G o l d, 


a m o d e r n G o l d S Ta n d a r d W o u l d h av e i nT e G r iT y. 


“un d e r a m o d e r n G o l d S Ta n d a r d, T h e W o r l d W o u l d b e C e r Ta i n o F F u T u r e va l u e 

o F T h e dollar. all o F T h e e C o n o m iC C o S T S C u r r e n T ly d e v o T e d To h e d G i nG 

F l u C T u aT i o nS in T h e va l u e o F m o n e y W o u l d b e av o i d e d.” 

This proposal differs from the old gold standard because under that standard, gold was money. 

Governments using the standard would redeem the paper currency for gold at a fixed price upon demand. 

The problem, according to Mr. Woodhill, was that “[f]rom the beginning, there wasn’t enough gold 

in the world to honor this promise. This was a fundamental lie… [that] was implemented via 

‘fractional gold coverage’ laws that allowed central banks to issue (typically) up to 2.5 times as 

much base money as the value of their gold holdings.” 

In contrast, this modern gold standard would simply peg the value of the dollar to the value of one fivehundredth 

an ounce of gold at $500/oz without requiring the nation’s central bank to stockpile bullion to 

match the dollar printed. According the Mr. Poe, instead, the amount of money would be “determined 

by the demand for money, which depends upon the transactions people want to do and how 

much money they want to hold.” 

To justify this course, he writes, “What matters about money is not its quantity but its value…” 

which would be pegged to gold at $500/oz. 

A potential flaw to Mr. Poe’s plan is if the quantity of dollars exceeded the actual demand for dollars. 

Under those circumstances, the value of gold would plummet, as would the value of the dollar. Therefore, 

the way that the demand for dollars is measured would be of critical importance to enacting the Poe 

plan. Would it simply be the amount of money borrowed? Would it include population growth? Economic 

growth? 



Of course, that’s the same problem that exists today: Inflation is up because the supply of dollars 

currently exceeds the actual demand. Dollars are worth less, so prices are marked up. A potential 

upside outlined by Mr. Poe is pegging the value of the dollar to gold is that it would increase the demand 

for dollars: 

“i b e l i e v e T h aT T h e d e m a n d F o r T h e n e W l y -S Ta b l e dollar W i l l b e S o G r e aT 

T h aT T h e Fe d W i l l a C T u a l ly h av e To e x Pa n d T h e m o n e Ta r y b a S e… on C e T h e 

Fe d i m P l e m e n T S i T S n e W d i r eC T i v e F r o m Co n G r e S S, e v e r y dollar in T h e W o r l d 

W i l l h av e T h e S a m e m a r k e T va l u e a S o n e F i v e-h u n d r e d T h o F a n o u n C e o F G o l d. 

Fr o m T h e n o n, T h e m o n e Ta ry b a S e W i l l e x Pa n d a n d C o n T r a C T a u T o m aT iC a l ly in 

r e S P o n S e To m a r k e T d e m a n d.” 

And then the American people’s purchasing power would increase, prices would stabilize, and the 

economy could begin long-term growth based upon the certainty of costs. And two of the biggest 

problems facing the economy would be solved at one and the same time: inflation and the weak 

dollar. 

*http://www.getliberty.org/content.asp?pl=37&contentid=37#A_Modern_Gold_Standard 

1-http://www.realclearmarkets.com/articles/2008/06/time_for_a_modern_gold_standar.html 

2-http://www.realclearmarkets.com/articles/2008/09/congress_must_stabilize_the_do.html 

3-http://www.forbes.com/business/forbes/2008/0616/031.html 

no t i cE: E-G o l d Ba r co u n t ch a n G E 

Craig Spencer has posted and item showing that 

the e-gold bar count has changed by -16 bar(s) 

to 178 bars. [Since there are both kilogram and 

400oz LBMA bars in e-gold's inventory the actual 

total weight (2.22 Mg or 71375 oz) has been accounted 

for in terms of the equivalent number of 

nominal bars of exactly 400oz weight.] 

http://scbbs.net/craigs/fencome.asp 

in d i a’s f i r s t s P o t B u l l i o n 

P l at f o r m at co i mB at o r E 

RiddiSiddhi Bullions (RSBL) Ltd, the biggest bullion 

dealer in the country, has launched India’s first 

electronic over-the-counter spot trading platform 

(RSBL Spot - spot precious metals online Trading) 

at Coimbatore. RSBL Spot is currently trading 

with contracts of 100 gm (.999) and 1 kg (.995) 

gold, and 30 kg silver (.999) with delivery centres 

at Mumbai, Ahmadabad, Hyderabad, Vijayawada 

and Coimbatore. The trading platform does not 

charge for opening an account, commission for 

trading or for the usage of terminals. 

“RSBL Spot is a common solution for all problems 


faced by jewellers. With this platform, we have 

created an integrated systematic, transparent and 

efficient buy-sell mechanism for all wholesalers 

and retailers of jewellery. The prices on Spot are 

comparable to all international or domestic physical 

market prices. It has emerged as the benchmark 

for Indian prices of precious metals,” said Prithviraj 

Kothari, managing director, RSBL. 

The company is the only firm that owns the credit 

to start such a trading platform for bullion in rupees 

for jewellers, wholesalers, jewellery manufacturers, 

hedgers and investors. The e-trading platform 

RSBL Spot also provides trading facilities without 

the involvement of any intermediaries. 

Within 5 months of its launch, the RSBL Spot has 

registered 300-plus clients. RSBL Spot recorded 

a total volume of 6 tonne gold and has already 

recorded a volume of 2.3 tonne for the month of 

August. “We have outperformed the combined 

volume of 3,093.033 kg of all gold ETFs (exchange 

traded funds) in the country,” said Samir Shah, 

vice-president, RSBL Spot. 

http://www.financialexpress.com/news/India-sfirst-spot-bullion-platform-at-Coimbatore/353297



ON GOLDEN ISLAND 

By Claire Wolfe 

I couldn’t help it. The place reminded me of 

Hardyville. 

Yeah, Hardyville -- the grubby little mid-nowhere 

town that adopted me years ago, but eventually 

chewed me up and spit me out. Now here I was 

floating on a man-made mobile island, rocking 

gently on the territorial waters of some fiscally 

friendly sheikdom, palm trees waving, global 

sophisticates slouching elegantly past my outdoor 

cafe table in designer semi-nudity or gliding by in 

flowing robes. 

Nope, definitely not Hardyville. Not a sagebrush or 

a cowboy hat in sight. 

Still, the place is Hardyville right down to its 

monumental steel, concrete, and thermoplastic 

bones. (The island is so massive, they say, that 

you can’t actually feel all that floating and rocking 

in anything less than a hurricane. Yeah. Tell that to 

my inner ears.) 

The island has an official name, but nobody bothers 

with it. Most people, in one language or another, 

call the place something like Isla d’Oro. Or Ile en 

Or. However they might say it in Chinese or Arabic 

or Swahili -- it’s always Golden or Gold Island. 

And that’s what it lives on. Gold is what it does. And 

all that that implies. Freedom. Which of course is 

why it reminds me of my old free-wheeling, freemarketing 

town. 

Gold Island is a floating center for anonymous 

digital gold systems. And for the actual storage 

and shipment of precious metals. 

Not the center, mind you. Just a center. Doesn’t 

do to keep all your eggs in one basket, even if the 

basket floats on some of the 21st century’s best 

construction. A basket can fall. So this is just one 

of five or six. 

And when I say “floating” I mean that in more 

than one sense. Like Nathan Detroit’s Permanent 


Floating Crap Game from the old Damon Runyon 

stories, if the location around it gets unfriendly, 

Gold Island can get under ponderous weigh toward 

a friendlier locale. 

But I have to apologize for going on so long 

describing the place. This article isn’t meant 

as a Utopian tour. (Don’t you hate those old SF 

books and movies that drag you yawning all the 

way through “And this is how Our Utopia came to 

be ... and this is how it benefits the downtrodden 

workers” kind of thing?) Trust me, I’m not going 

to do that to you. I’m here to tell you about my 

first really big, serious business deal using digital 

gold. 

I was on Gold Island to finalize that transaction. 

There was actually no need for either party to be 

there, but I thought it would be cool to see Gold 

Island at last and meet the long-distance associate 

I’d been negotiating with. 

Ah, there he is now, heading for my cafe table. 

After diplomatically hiding his disappointment that 

I’m not a hot babe (I could have warned him about 

that), the Monsieur sits down. 

This being a Mediterraneanish sort of place, we 

don’t get right down to business. You know the 

obligatory European and Mideastern chitchat. My 

impatient American self chafes, but I tell myself to 

learn to love the more leisurely pace. 

So over appetizers and aperitifs, we do what 

passes for chit-chat hereabouts: we talk politics. 

“’Ave you come recently from America?” he queries 

in a gentle accent that makes him sound a little 

less Pepe LePew than I’ve just written him. 

I explain that I haven’t set foot at home in five 

years. 

“Ah yes,” he sighs, nibbling at crudites grown 

right here on the island (but really, I promise I’m 

not going to do that “tour of Utopia” thing on you; 

I won’t drag you off to look at the hydroponic 

gardens or the solar panels). “I used to love to visit 

the United States,” he continues. “The energy. The

Anybody 

Seen Our 

Gold? 

The gold reserves of the United States have not been fully and independently audited for half a century. 

Now there is proof that those gold reserves and those of other Western nations are being used for 

the surreptitious manipulation of the international currency, commodity, equity, and bond markets. 

The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might 

retain its function as the world’s reserve currency. But to suppress the price of gold is to disable the 

barometer of the international financial system so that all markets may be more easily manipulated. 

This manipulation has been a primary cause of the catastrophic excesses in the markets that now 

threaten the whole world. Surreptitious market manipulation by government is leading the world to 

disaster. We want to expose it and stop it. 

Who are we? 

We’re the Gold Anti-Trust Action Committee Inc., a non-profit, federally taxexempt 

civil rights and educational organization formed by people who recognize 

the necessity of free markets in the monetary metals. For information about 

GATA, visit: http://www.GATA.org. 

GOLD ANTI-TRUST ACTION COMMITTEE INC. 

7 Villa Louisa Road, Manchester, Connecticut 06043-7541 USA 

CPowell@GATA.org 

GATA welcomes financial contributions, which are federally tax-exempt 

under Section 501-c-3 of the U.S. Internal Revenue Code. GATA is 

not a registered investment adviser and this should not be considered 

investment advice or an offer to buy or sell securities.


openness. The very rush of it all. But ...” he puts 

down the carrot, sighs, and gestures to the barman 

for another drink. 

Yeah, exactly. When speaking of what the U.S. of 

A. has become, there’s always that sad, sorry “But 

...” Nobody ever has to say more. 

As with every great empire, its peak also defined 

its fall. All that tripping about the globe to convert 

everyone to “democracy” at swordpoint. All that 

inflation. All that militarization of every domestic 

berg and hamlet. All that bureaucracy. All those 

subsidies. All those bailouts. All those barrels 

of pork. The eventual curtailment of travel. The 

outlawing of privacy. The bread. The circuses. The 

long, slow, painful slide. 

Oh, don’t get me wrong, even in decline the United 

States is big and dangerous. Old Grandpa Grizzly 

still has claws. 

But America isn’t the alpha in the pack any more. 

In this post-empire world, the U.S. is no more than 

a beta or a delta. Others now offer bits of what the 

“land of the free” once promised. Some found it 

desirable to offer privacy and hands-off banking 

laws in exchange for incoming profits. The U.S. 

can still bluster and threaten, for sure. But its 

power to hunt and destroy has weakened -- and 

everyone knows it. So here we are. 

Time to order lunch. The waiter glides over and 

bows. I’m really beginning to wonder when 

Monsieur will grant his unspoken permission for 

us to get down to business. After all, pleasantries 

and pheasant breast aside, business is what we 

came here to do and what you came all this way 

to read. 

“May we,” I finally say, reaching for some notes in 

my attache case, “get started discussing the final 

point or two in our contract? I wanted to ask you 

about this provision ...” 

But Monsieur only gazes past me toward another 

table of business people. 

“Isn’t it amazing,” he muses, “that we could, had 

we chosen, have transacted our business entirely 

without ever even knowing each other’s names?” 

Haven’t we always taken that for granted? I 

thought. But he was right. 

In previous eras, one had to meet face to face, 

personally correspond, or send representatives to 

transact business. Then came the Internet with its 

power to change all that. But -- naturally -- almost 

as soon as the Internet made anonymous, longdistance 

transactions feasible, the powers that 

be rushed to make them impossible. Nations and 

giant corporations (driven largely by the dictates 

of the U.S.) developed what you might call “anal 

probe” methods of ensuring trust. For some 

bizarro reason, “they” imagined that trust could be 

enhanced by them knowing the totality of our lives 

while we knew less and less about their doings. 

That version of “trust” predictably didn’t work out. 

I coulda warned them about that, too. A lot of 

others tried, but the anal probers weren’t listening. 

Eventually, when their one-way trust model flopped 

like a dying fish, we got Gold Island. 

But my luncheon companion isn’t merely stating 

the obvious when he observes that anonymity and 

honest dealing can be compatible. He’s taking 

a profound step further. “And,” he continues, 

“ because of our ability to deal privately and 

anonymously through encryption, trust systems, 

and anonymous digital signatures ... we have also 

become more safe to meet face-to-face to conduct 

business as if all were legal and aboveboard. Do you 

see the irony? Because we can be anonymous, we 

therefore have less fear of meeting and talking.” 

“Well, after all, our business is legal and 

aboveboard,” I remind him. “It’s 100 percent legal 

within the territorial waters of our host nation, and 

on Gold Island itself.” 

But I understand his real point. Because Grandpa 

Grizzly’s opinion becomes less relevant every 

day, people can now meet and talk with less risk 

of being surveilled, harassed, and persecuted, as 

long as their business is non-violent and there’s no 

fraud involved. 

My companion is saying that because privacy is


sacred, surrendering a bit of privacy has become 

safer. 

As the U.S. fell, it became natural, even necessary, 

that a place like Gold Island would rise. Truly 

private exchanges, of course, need a medium 

of exchange and a store of wealth that can be 

counted on despite the vagaries of human beings. 

As paper currencies became ever-more laughable, 

global traders of all sorts looked to a medium of 

value that didn’t rely on the (ha ha) “full faith and 

credit” of a bankrupt issuer. Thus ... gold, digi-gold, 

and Gold Island. The guy in Botswana who might 

never lay eyes on the national currency of the guy 

from Indonesia knows he gets something solid in 

return. 

But I’m sorry, there I go again, going on and on 

about how this particular not-quite-Utopia works. I 

promised you I wouldn’t do that. I said I’d tell you 

about my transaction. 

So ... over coffee and pastries, Monsieur and I 

finally do it. We spend 10 minutes hashing out the 

final details of our deal. He types the agreed-upon 

changes into his copy of the contract, e-signs it 

and emails it at me. I e-sign right back at him. 

Then one of us smoothly transfers gold to the 

account of the other. We shake hands. Then he, 

bless him, picks up the e-check. 

Voila! I told you I’d tell you about our business 

transaction, and there you have it. 

What? You say you want to know exactly what 

we were arranging to trade and who paid what 

to whom? You say you want to know whether our 

business was strictly “legal” under the oppressive 

laws you happen to live under? You say I’ve 

cheated you by going on (and on) about Gold 

Island while saying next to nothing about the 

business at hand? 

But really, I told you the very, very, very most 

important things about our business: That it was 

conducted in sound currency and that it’s private. 

Everything else is mere detail. 

I learned a big lesson on Gold Island. I learned 

that I was wrong -- and had been for a long time. 

When digi-gold bugs used to talk to me about 

how digital gold could supplant or even exist sideby-side 

with paper currencies, I’d always argue 

Gresham’s Law: “Bad money drives out good.” As 

long as people would accept paper, I’d repeat, why 

spend gold or silver? Gresham always seemed 

like the immovable object. 

I just forgot that human beings, making free 

choices, are the irresistible force. 

As you smarter-than-I people know, Gresham’s 

law (and Wikipedia) actually says, “Gresham’s law 

applies specifically when there are two forms of 

commodity money in circulation which are forced, 

by the application of legal-tender laws, to be 

respected as having face values in a fixed-ratio for 

marketplace transactions.” 

Legal tender laws? Not around here, my friend. 

“Legal tender” commodity money became mere 

paper. “Full faith and credit” is revealed as snake 

oil. Those who do serious business on a global 

scale demand payment they can count on. 

So gold is golden. 

And privacy is sacred. Otherwise the whole system 

falls apart. What’s private remains private unless 

someone presents strong evidence of aggressive 

violence or fraud. 

So you see, I did tell you the most important thing, 

even if (I admit) I did leave out a few details. 

The rule of gold and privacy isn’t merely a 

rule for sound, free business or banking. It’s a 

fundamental rule for living among other human 

beings in a civilized society. Without respect for 

privacy, verifiable trust, and exchanges of solid 

value, civilization isn’t worthy of the name. Gold 

Island and its fellow enclaves have snatched true 

civilization, true human decency, back from the 

barbarity of all-controlling empire. 

(c) Claire Wolfe 2008

wh at wi l l th E 'nE w' E-G o l d lo o k li kE? 

“Th e n e x T G e n e r aT i o n o F T h e e-Go l d ® a P P l i C aT i o n W i l l u n d e r Ta k e To e n F o r C e 

a ‘o n e-h u m a n b e i n G/o n e e-Go l d u S e r' r u l e,” Ja C k S o n W r o T e . “Th e a d va n Ta G e 

F r o m T h e C y b e r C r i m e-T h Wa r T i nG S Ta n d P o i nT W i l l b e a n e v e r-S T r o n G e r a b i l iT y 

To b l a C k l i S T a P e r S o n W h o h a S a b u S e d T h e e-Go l d S y S T e m.” 

Dr. Do u g l a s Ja c k s o n 'a ne w Be g i n n i n g' 

What will the new e-gold® look like? 

This is a question is on the minds of all e-gold® 

fans. Becoming a “GoldPal” type operation and 

complying with all the US regulations, as PayPal 

does, could be a headache for the e-gold structure 

and business model. However, based on previous 

upgrades we believe that the talented team of 

programmers over at e-gold Ltd., who have always 

set the bar very high, will rise to the occasion and 

create a terrific new online product. 

Here is the end result of recent legal actions 

undertaken by the US Government and a brief 

The New e-gold 

outline of things to come...how e-gold® will be 

changing. 

“In a move to conform with U.S. laws, E-Gold 

has filed an application with the Financial 

Crimes Enforcement Network (FinCEN), an 

agency within the U.S. Department of Treasury 

charged with deterring money laundering, 

Jackson said. E-Gold is seeking to be licensed 

as a money services bureau in those states 

that require it. In addition, E-Gold plans to add 

a number of provisions to its user agreement 

in hopes of stopping criminals from using the 

system to transfer illicit funds. Users will be 


The New e-gold 

required to confirm that they will not use e-gold to violate any laws to which they are liable. Also, their 

accounts may be frozen and they could be subject to prosecution if E-Gold investigators determine 

they are laundering funds. The company also plans to release a new application that will prohibit one 

user from running multiple accounts under the control of multiple people. According to a Department 

of Justice news release, E-Gold’s operators also agreed to implement a “comprehensive money 

laundering detection program that will require verified customer identification, suspicious activity 

reporting and regular supervision by the Internal Revenue Service’s Bank Secrecy Act Division.” 

Ahead of all these changes, additions and upgrades most users are now asking what ‘old school’ 

features will be retained and what new options, features or restrictions might emerge with ‘The New 

e-gold®’? 

1. Will an active marketplace of third party independent exchange agents still operate? Or 

will the new e-gold v2.0 be required to manage all exchange services ‘in house’? 

2. PayPal restricts the exchange of their units with any other digital money. Whether 

automated or not, will the new e-gold TOS still allow open market exchanges with other 

e-currency such as Pecunix, V-money or Webmoney? 

3. Will all transactions still be final and the slogan ‘get paid and stay paid’ remain true with 

no chargebacks? 

4. As PayPal and GoldMoney now require, will e-gold users always be sending funds 

directly to e-gold and never using an independent agent? 

5. Will e-gold be available now be easily purchased with a credit card or ACH transfer as 

PayPal allows? 

6. Will all future e-gold accounts still operate as both a merchant & customer account with 

no distinction or additional requirements? 

7. Might e-gold require a monthly fee to operate an account? 

8. Will e-gold prepaid cards finally be popular? 

9. Will OmniPay ever move to or operate from the Dark Continent? 

10. In order to establish if a financial profit was generated by rising gold prices in a funded 

account, will an IRS form be required each time digital gold is sold? (As Crowne Gold 

required) 

11. Will e-gold offer an in house debit card for withdrawals? 

12. Will e-gold accounts still be offered to almost every country around the world or will 

e-gold be forced into a country by country selection as PayPal does? 

13. Now that the bulk of legal issues appear to be sorted out, should the current e-gold Ltd. 

company just pack up and move outside the US? 

The e-gold® Team has a busy future ahead and most of us feel a very positive cycle of enormous growth. 

Let’s hope that the new version of the company will be able to retain their convenient, inexpensive and 

attractive features. Best wishes to Dr. Jackson and team for a successful future. Count on the 100% 

support from DGCmagazine. 

Section 359 of the USA PATRIOT Act expanded the definition of “financial institution” to include not only a licensed sender 

of money but any other person who engages as a business in the transmission of funds, including any person who engages 

as a business in an informal money transfer system or any network of people who engage as a business in facilitating 

the transfer of money domestically or internationally outside the conventional financial institution system. Any individual 

or group of people engaged in conducting, controlling, directing or owning an informal value transfer system in the United 

States is operating as a financial institution. Therefore, IVTS operators must comply with all Bank Secrecy Act (BSA) 

requirements, which include establishment of an anti-money laundering (AML) program4, registration with the Financial 

Crimes Enforcement Network (FinCEN) as a money services business5, and compliance with the record keeping and 

reporting requirements, which include filing suspicious activity reports (SARs). 

e-gold, e-silver, e-platinum, e-palladium, e-metal, Better Money, AUG, AGG, PTG, PDG are trademarks of e-gold Ltd. 


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e-gold Accounts Now Require Tax Info 

al l E-G o l d ac c o u n t s 

no w rE q u i rE ta x id 

in f o r m at i o n 

Here is a follow up to the previous story, the 

changes are already starting. 

US and non US users will now be required 

to provide personal tax information on their 

e-gold account. 

It was July 21 of this year when Dr. Jackson spelled 

out his plan for updating e-gold accounts. His goal 

is to quickly and properly make the e-gold system 

into a US financial business. From that post back 

in July, Dr. Jackson, acknowledges “... that e-gold 

is indeed a Financial Institution or Agency as 

defined in US law and should be regulated as a 

Financial Institution. E-gold Ltd. ...will be exerting 

every effort to bring e-gold into compliance with 

US law and regulation as quickly as possible.” 

Today, again announced from the e-gold blog, they 

are announcing a major move toward US financial 

compliance and customer identification. Effective 

immediately, all e-gold users will be required to 

provide a Personal Tax Identification Number for 

the point of contact on the account. Non US users 

will have to provide their local tax information for 

their jurisdiction. 

“e-gold Ltd. remains highly committed 

to continuing to offer a cost effective 

Internet payment system making 

instantaneous settlement, free of 

chargeback risk, available to customers 

around the world. We continue to be 

confident that a regulated e-gold rebuilt 

to a more systematic specification will 

be less hospitable to criminals, and more 

attractive to mainstream business use 

without being less accessible to those 

disregarded by legacy payment systems.” 

Congratulations to Dr. Jackson and the e-gold 

team on their move forward. 


Ba n k s cr u m B l E, 

wa i t f o r Ph y s i c a l Bu l l i o n 

GE t s lo n G E r 

This article is from Numismaster.com by Patrick A. 

Heller, Market Update, September 16, 2008 

What has happened to the U.S. dollar, stocks 

and precious metals markets in the past week 

has followed almost exactly the script I wrote 

seven days ago. There has been so much media 

coverage that I won’t repeat all the details here. 

However, there are two significant negative effects 

of the U.S. Treasury’s takeover of Fannie Mae 

and Freddie Mac. First, the takeover constituted 

an act of default on the trillions of dollars of 

outstanding derivative contracts with Fannie Mae 

and Freddie Mac, which now need to be promptly 

unwound without regard to losses. Second, the 

wiping out the equity of Fannie Mae and Freddie 

Mac shareholders affected shares held by many 

investment and hedge funds, which put several 

of them into horrible financial straits. The effect of 

these two factors have added to the other financial 

pressures that have been reported elsewhere. 

On Sept. 15, Lehman Brothers Holdings, Inc. 

announced that it was filing for Chapter 11 

bankruptcy. Bank of America announced that 

it was purchasing Merrill Lynch for a 60 percent 

premium above that company’s Sept. 12 closing 

stock price. Insurer AIG revealed that it is was 

seeking an emergency $40 billion loan from the 

federal government. 

In addition, 10 large banks and brokerages 

announced that they would each contribute 

$7 billion to create a $70 billion fund to provide 

emergency liquidity to the U.S. financial industry. 

Although this is being reported as a source of private 

funds, don’t be fooled. This money is ultimately 

going to come out of the taxpayers’ pockets. 

The sponsors - Bank of America, Barclays Bank, 

Citibank, Credit Suisse, Deutsche Bank, Goldman 

Sachs, JP Morgan Chase, Merrill Lynch, Morgan 

Stanley, and UBS - are all facing billions of dollars 

of losses (or worse) in the coming months.

With all this bad news developing over the 

weekend, the price of gold soared $25 in Asian 

markets early Monday, Sept. 15. As soon as the 

U.S. government’s trader showed up on the London 

exchange, almost all of this price gain disappeared. 

It would take until late in the U.S. markets to return 

to about $25 over Friday’s close. 

For the day, the U.S. dollar index fell about 0.4 

percent, the Dow Jones Industrial Average dropped 

4.4 percent and the prices of gold and silver were 

up 3 percent each. 

You might be curious about trading activity in 

physical gold and silver. On Monday, Sept. 15, 

my firm enjoyed its highest single-day sales since 

March. Virtually everyone was a buyer. The buyers 

were in an urgent mood, eager to write a check to 

get whatever they could acquire. I wouldn’t say they 

were panicked, but it was leaning in that direction. 

For the past two months, demand for physical gold 

and silver has been so strong that many coin and 

bullion dealers and wholesalers have had difficulty 

having any merchandise in stock for live delivery. 

Premiums are up sharply. Today, you can expect 

to have to pay $5-$20 per ounce above the gold 

spot price for coins compared to their premiums 

in early July. For silver, premiums have climbed 

$1-$3 per ounce relative to spot compared to early 

July premium levels. 

If you want to purchase physical gold or silver, 

do not expect to find any in stock for immediate 

delivery, though you might be lucky enough to be 

in the right spot at the right time. As best as I can 

determine as of late Monday, Sept. 15, here is what 

delivery times customers are facing for obtaining 

physical gold or silver: 

Gold coins that can be purchased for delivery within 

two weeks: Mexico 50 pesos, U.S. Buffaloes, all 

four sizes of U.S. American Eagles, and limited 

quantities of U.S. American Arts gold medallions. 

Gold coins and bars that can be purchased for 

delivery in two to eight weeks: Austria 100 coronas, 

Australia Kangaroos, Austria Philharmonics, 

1-ounce gold ingots, and China Pandas. 

Gold coins that are virtually unobtainable: most 

dealers and wholesalers will not accept new orders 

Bullion Buying Is Massive 

(but you might get lucky once in a while) are British 

sovereigns and South Africa Krugerrands. 

Silver coins available for delivery within two weeks: 

U.S. 90 percent and 40 percent silver coins. 

Silver coins available within a few weeks if you find 

the right dealer: Canada silver Maple Leaves and 

U.S. silver Eagles. 

Silver bars available within two months: 100ounce 

and rectangular 1- ounce ingots other than 

Engelhard and Johnson Matthey brands. 

Silver coins and bars that are virtually unobtainable 

so most dealers and wholesalers will not accept new 

orders: all Engelhard and Johnson Matthey silver 

ingots, 1-ounce silver rounds (most fabricators 

are quoting 4-6 months for delivery), 10-ounce 

silver ingots, and any coins and ingots fabricated 

by the Perth Mint (currently quoting 6-8 months 

for delivery). I saw multiple reports Monday that 

even the 1,000-ounce silver ingots that could be 

delivered against COMEX contracts are virtually 

unobtainable. 

A quantity buyer of gold or silver might have 

the idea of simply buying a COMEX commodity 

contract and asking for delivery. In theory, you can 

purchase a spot month contract and get delivery 

within a few weeks. However, one Dubai bullion 

dealer stated emphatically this past weekend that it 

is now taking months to obtain delivery of physical 

metal on a COMEX gold or silver contract. 

This may sound strange, but I do not recommend 

purchasing gold or silver as an investment. Don’t 

buy either with the thought that you will buy it low 

and sell it high. Instead, buy precious metals as a 

form of insurance that you will hold until you die and 

pass it along to your heirs. Then, if circumstances 

develop where you need to sell your gold and silver, 

think of it as collecting on your insurance policy. For 

insurance purposes, buy only physical gold and 

silver and take personal delivery. There are several 

vendors of gold and silver certificate programs that 

look mighty shaky right now. You won’t be able to 

trade a silver certificate for gasoline or bread, if 

things get really bad. http://www.numismaster.com/ta/ 

numis/Article.jsp?ad=article&ArticleId=5313 


BullionVault New LBMA Member 

Bu l l i o nVa u lt.c o m 

BE c o m E s lo n d o n Bu l l i o n 

ma r k E t as s o c i at i o n 

mE m B E r (lbma) 

Congratulations to BullionVault.com new member 

of the LBMA. 

BullionVault.com offers an online trading platform 

to buy, own, and sell gold using the Internet. Gold 

trading - from one gram up. 

Incorporated in 1987 in close consultation 

with the Bank of England, The London Bullion 

Market Association is the trade association that 

represents the wholesale gold and silver bullion 

market in London. This bustling city is the focus of 

the international Over-the-Counter (OTC) market 

for gold and silver. That client base includes the 

majority of the central banks that hold gold, plus 

producers, refiners, fabricators and other traders 

throughout the world. 

The LBMA Good Delivery List is now widely 

recognized as representing the de facto standard 

for the quality of gold and silver bars, in large 

part thanks to the stringent criteria for assaying 

standards and bar quality that an applicant must 

satisfy in order to be listed. 

BullionVault is owned by Galmarley Limited 

which is company number 4943684 registered in 

Great Britain. Galmarley is involved exclusively in 

gold and gold related information technology. It 

owns both web sites www.BullionVault.com and 

also www.galmarley.com To learn more about 

BullionVault please visit their informative web site 

or read our interview with CEO Paul Tustain in the 

March issue of DGCmagazine. 

What does the professional bullion market 

have to offer? 

• 

The most competitive gold prices 

in the world are enjoyed by the 

participants in the professional bullion 


• 

• 

• 

• 

• 

• 

market: large gold dealers, refineries, 

government agencies and bullion banks. 

This professional market only deals 

in what are known as Good Delivery 

bars. If you’re not trading these bars 

you are excluded from their market 

- and their very competitive prices. 

Good Delivery bars are cast by a small 

group of metals refiners accredited by the 

professional bullion dealing communities 

in London, New York and Zurich. They are 

accurately assayed and guaranteed always 

99.5% pure gold or better. The market 

trades their pure gold content, known as 

finegold,soyoudon’tpayfortheimpurities. 

From the day they’re first manufactured, 

Good Delivery bars are kept in bullion 

vaults recognized and monitored by the 

local gold dealing community. Every 

time bars are moved a careful record 

is maintained, showing continuous 

storage through trusted hands. This 

guarantees gold bar integrity in a way that 

keeping gold at home, or even in safety 

deposit boxes, simply cannot match. 

The result is that professional buyers 

accept deliveries of these bars direct 

from the seller’s vault without rechecking 

their purity - and that greatly 

reduces bullion dealing costs. This is 

why they’re called Good Delivery bars. 

Good Delivery bars are large - usually 400 

troy ounces each (12.4kg). The professional 

market doesn’t allow you to own part of a bar. 

But having enough money to buy a whole 

bar or two would only solve half the 

problem. You still need that relationship 

with a formally recognized vault to 

look after the gold while you own it. 

The starting balance for an accredited 

storage account is 15 to 20 of these 400ounce 

bars, and the agreements take 

a lot of time, cost and effort to set up. 

For more information, please see their ad on 

page two and visit their web sites: 

http://www.bullionvault.com 

http://www.galmarley.com

‘To P Sh e l F’ diGiTal Go l d 

by Mark Herpel 

Have you ever Googled, “how to buy gold” ? 

That keyword query will serve up over 15 million 

results. After you have waded through those 

results you may find yourself still unsure about 

“How to buy Digital Gold”. Digital Gold has only 

been around since the birth of the Internet. Digital 

Gold Currencies have very specific features and 

benefits. DGCs are a different kind of gold product 

and offers distinct advantages over coins, ETFs, 

mining stocks or mint certificates. 

Digital Gold is one of the easiest ways for anyone 

to buy and own allocated gold bullion (physical 

gold bullion held in storage). Digital Gold can be 

bought or sold anytime from the comfort of your 

home PC. If you can find the ‘Enter’ key and send 

an email, you can buy or sell Digital Gold. 

Using the Internet and not walk in locations allows 

buying and selling of Digital Gold 365 days a year. 

Similar to PayPal, DGCs offer instant liquidity 

into your choice of national currencies. When 

customers make a DGC purchase they own actual 

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gold bullion in allocated form. DGC gold bullion 

has no counterparty risk as you might find with 

gold stocks, ETF’s or gold certificates. Unlike gold 

coins or a heavy gold Rolex watch, local storage 

and safekeeping of digital gold is not required. 

To P Sh e l F diGiTal Go l d 

Digital Gold is allocated gold stored in a secure 

insured professionally managed vault (no shipping, 

storage or insurance hassles) Setting up a new 

account over the Internet is very convenient. 

Accounts can be used for investing, savings, 

trading, local or global fund transfers. Because of 

low fees most DGCs offer excellent options for 

stored value. Because of instant online buying and 

selling at competitive market prices, digital gold 

becomes a very efficient investment model for 

the average citizen. Almost all of these accounts 

can be opened with less than $100. There are no 

account opening costs and no extra processing 

fees. By sending and receiving gold transfers, 

your online business will reduce merchant costs, 

fees from currency conversion and losses due to 

fraud or chargebacks. Since gold is recognized 

and accepted in every country around the globe 

DGC accounts are denominated by weight. 



GoldMoney, BullionVault, Pecunix, 

Anglo Far-East Bullion, e-Dinar, 

Webmoney Gold (WMG) 

When you are ready to make a digital gold 

purchase, any of the above companies may be 

suitable for your needs, however, each business 

model offers specific advantages. It is important to 

understand their features and select the company 

which meets your requirements. 

GoldMoney, BullionVault, e-Dinar, Pecunix and 

Webmoney WMG allow easy account set up 

and low minimum entry points. Anglo Far-East 

Bullion is also an excellent way to privately buy 

and own digital gold, however they have minimum 

value requirements for all new account holders. 

Each of these companies provides a good level 

of transparency, strong governance and audited 

numbers. The digital gold balance which shows in 

these accounts, is backed by actual gold bars at 

a vaulting company. Most of these companies will 

also display the list of bars which are owned and 

insured through the vaulting location. 

GoldMoney.com is an outstanding company and 

an account through GoldMoney includes some 

excellent additional banking options. Accounts 

offers both digital gold bullion and digital silver 

bullion products. All new accounts require extensive 

customer identification and verification, however, 

after a new account has been verified, the process of 

sending or receiving funds to and from GoldMoney 

is quick, inexpensive and painless. This system is 

paired with multiple banking relationships which aid 

customers when buying or selling precious metals. 

Goldmoney clients are not required to have funds 

wired directly back into their local bank accounts. 

GoldMoney has a mutual arrangement through 

their local Jersey banks. Between market swings 

(buying and selling) customers can park their funds 

with GoldMoney and even earn interest. 

In Jersey, GoldMoney’s primary banking 

relationships are with Barclays Bank and Royal 

Bank of Scotland International. When not invested 

in precious metal, customer funds are held in 

segregated accounts with those banks, which pay 


interest on those funds. GoldMoney then passes 

that interest on to its customers and deducts a 

small management fee for the service. 

*http://support.goldmoney.com/ 

GoldMoney is actual digital gold currency which 

means you can transfer any amount of digital 

gold to any other GoldMoney account holder at 

anytime. GoldMoney accepts business accounts 

and encourages all users to transact their daily 

commerce using digital gold payments. If you 

need to pay for a global product or service there 

is no need to use a credit card or wire transfer. 

GoldMoney customers can pay with digital gold. 

Did you know that GoldMoney digital gold is an 

available investment option for an IRA, 401k or 

SIPP account? GoldMoney has arranged through 

licensed professionals the option of holding digital 

gold in your pension or retirement accounts. 

Have you watched the news lately? “Millions of 

Americans are losing their life savings because of 

plummeting stock values in their 401k”...well here 

is an easy gold solution. 

Since GoldMoney accounts are denominated 

by weight and transaction fees are very low, it 

is possible and inexpensive to send or receive 

frequent micro payments. Their web site also offer 

easy integration for developers. 

GoldMoney is an excellent option as an 

International gold savings account. 

Bullionvault.com is a precious metal trader’s 

dream come true! From any computer in the world 

account holders may log in and buy or sell allocated 

gold bullion in just about any size ‘lot’. Bullionvault 

will even give you a free gram of gold for simply 

opening an account and trying their tools. All metal 

on account at BullionVault is held as LBMA good 

delivery bars in secure vaulting locations. In fact, 

Bullionvault is now a member of the London Bullion 

Market Association ( http://www.lbma.org.uk/ ) 

These bars never leave the vault and ownership is 

‘allocated’ with those bars being separated within 

the vault. Unlike GoldMoney, the account holders 

at BV cannot make any online transfers to anyone 

else’s account. A BullionVault account is strictly a 

buy and sell gold metal account. This company

offers an extremely effective package of online 

tools for buying and selling. 

The trading features of a Bullionvault account offer 

distinct advantages over any other digital gold 

product. BV allows customers to place their own 

bids and offers directly from other customers. Easy 

bank integration allows customer funding in national 

currency from the US, UK or Europe. Once funded, 

anyone may place a bid to purchase amounts of 

gold from other sellers. 

To assist traders with online transactions, BullionVault 

offers free graphs, charting and analysis of the 

markets The company has vaults in London, Zurich 

and the US. Bids and offers shown on their web site 

are always viewed in real time. When first logging 

into the BullionVault web site you will easily find the 

‘best bids’ to buy and the ‘best offers’ to sell gold 

bullion. You begin any transaction by simply clicking 

the corresponding onscreen button. BullionVault 

offers online digital gold transactions like no other 

company can deliver. Their fees are very low and 

the bid/offer set up provides everyone with an 

economical and convenient online experience. 

The Anglo Far-East Bullion Company provides 

a range of private bullion custodial and banking 

services. This is safe, secure and fully insured 

bullion storage and it is available from one easy-toestablish 

account. 

It’s called Bullion Banking, and offers an 

extraordinary level of privacy, governance and 

convenience. Another great advantage with AFE is 

they also offer silver bullion and any account holder 

may spread their wealth between the two popular 

metals. Owning gold or silver at AFE means you own 

the actual metal. Customer holdings are allocated in 

a secure vault location in Switzerland. 

AFE provides independent and private bullion vault 

services governed, protected and insured under 

AFE’s strict corporate and custodial governance. 

An AFE bullion account (sometimes referred to as 

a “Metal Account”) operates just like normal online 

banking. The only big difference is that all AFE 

account balances represent ounces of gold and/or 

silver not Dollars, Yen or Euro. All DGC accounts 

mentioned in this article are denominated by weight 

in Troy ounces or grams. E-dinar offers accounts 

denominated by weight in gold dinar and silver 

dirham. 


AFE accounts offer several key privacy features. 

While opening an account requires strict identification 

of any new client, all accounts are administered by 

number and not by customer name or any other 

identifying information. For example, Bullion Account 

Statements and Account Transaction Statements 

never quote the name or address of the account 

holder. The owner is identified by “Number” only. 

All gold and silver bullion holdings, are held in trust, 

free from physical, political or legal risk. 

Working with AFE, customers have available to them: 

Bullion Accounts, Bullion Certificates, Institutional 

Banking along with Financial & Trust services. 

Pecunix and Webmoney (WMG) are digital currencies 

which are 100% backed by allocated gold bullion. 

The Webmoney system has multiple ewallets, called 

purses and one of these is the WMG purse backed by 

gold. Both Pecunix and WMG offer Internet payment 

systems with features that rival any standard credit 

card merchant. Accounts are available to anyone 

around the globe without the intrusive restrictions of 

a credit check or account set up processing fee. All 

transactions are final, so there are no chargebacks. 

Just like GoldMoney, Bullionvault and AFE, the 

accounts balances are denominated by weight. The 

value of a Pecunix or WMG account will rise or fall 

depending on price fluctuation in the spot gold price. 

(sorry no silver here) 

If you own an ounce of gold in a WMG purse, 

and the price of gold rises or falls $100 per ounce 

your new balance will reflect that change in value. 

Consequently, these accounts provide an easy way 

to buy and store digital gold. These company web 

sites provide the ecommerce added benefit of API 

and shopping cart integration, easy programming 

for developers and very low transaction fees. 

Both of these DGCs make an excellent choice for 

e-commerce while providing a level of safety and 

protection that only gold bullion can offer. 

If you have a Pecunix or Webmoney account you 

are free to make transfers from those accounts to 

any other account holder. Sending and receiving 

payment in Pecunix is safe, inexpensive and 

simple. 

Another distinct advantage of these companies is 



the governance. All bullion is held in secure vault 

locations (in fact Pecunix gold bars are stored by 

AFE) and there is a strict chain of governance which 

controls when any new digital units are issued against 

the vaulted bullion. There can never be more digital 

units out, than have 100% gold backing in the vault. 

Ownership of these digital units is actual ownership 

of the allocated gold. If you have a Pecunix balance 

in your account, you own that gold. 

To protect account holders from default risk, the 

buying and selling of both Pecunix and Webmoney 

are transacted through a global network of third 

party agents. When buying or selling it is the third 

party agent that assumes any financial risk from 

a transaction, thus the gold bullion in the vault is 

always safe. There are thousands of third party 

exchange agents in dozens of countries around 

the globe. This means when you want to fund your 

Pecunix or Webmoney account you DO NOT send 

funds to these companies. You will need to find 

a third party agent that exchanges these digital 

currencies and buy from that agent. The third party 

agent will charge you a small fee for any exchange 

with national currency but it is these companies that 

maintain a liquid market. 

E-dinar digital units are denominated in gold dinars 

and silver dirham. A e-dinar account allows payments 

in highly divisible parts of a metal unit. Using e-dinar, 

it is eash to send or receive tiny payments such as 

1/100 of a gold dinar or .5 silver dirham. 

Each e-dinar electronic unit corresponds to an exact, 

fixed weight of 4.25 grams of pure 24k gold. Each 

e-dirham corresponds to an exact, fixed weight of 3 

grams of .999 silver. Account holders always have 

the option to exchange their e-dinars an e-dirhams 

into any major national currency or redeem them and 

take physical possession of an equivalent amount of 

gold dinar and silver dirham. 

If you have been avoiding gold bullion because 

you did not know how to buy gold online, please 

visit these top shelf Digital Gold companies. Find 

how how easy and inexpensive it is for anyone to 

buy, sell or own Digital Gold bullion without the 

hassles of shipping and local storage. Digital Gold 

Currency is convenient, inexpensive and offers 24/7 

liquid protection against the evils of today’s highly 

leveraged risky world. 


El E c t r o n i c Di n a r 

http://www.e-dinar.com

Peace Of Mind – Second To Nothing 

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wh at to P r o t E c t a G a i n s t 

COMPETITORS SURVEILLING YOUR 

COMMUNICATION 

Today, competitive and industrial espionage are 

daily business. Part of this business is employing 

technical and human means to find out what 

other market participants are doing, what they are 

interested in, and with whom they communicate. 

This information is freely available or easy to procure 

via illegal means. Since all unprotected traffic on 

the Internet can be associated with its origin - even 

surfing to websites - searching through Google, 

sending email and using instant messaging or 

VoIP can - and will - give away critical information 

about the motives your communications. 

INSECURE MOBILE COMMUNICATION 

ENVIRONMENTS

Mobile Internet access via public Hotspots, hotel 

networks or LANs of partners or customers is one 

of the most dangerous, but necessary, practices 

of mobile workers. These methods make the user 

vulnerable to low-cost attacks, to get access to 

communication details as well as leaking valuable 

information on critical security details of enterprise 

networks. 

MANDATORY DATA RETENTION BY 

TELECOM PROVIDERS 

All over the European Union and in many other 

countries, mandatory data retention laws are in 

effect. Massive databases of connection details - of 

everyone using modern means of communication 

- reach back several months or even years. 

These are now available to law enforcement and 

intelligence agencies, often even crossing borders 

due to multi-lateral assistance agreements. 

Since economic espionage is now in the primary 

repertoire of intelligence services, and since 

misdirected investigations are not uncommon, 

these masses of data constitute an enormous 

risk for any globally-active economic organization. 

Adding the problem of corruption and illegal data 

leakage due to hacking and theft greatly increases 

the probability that this data is used in unintended, 

destructive ways. 

UNWARRANTED ACCESS TO 

TELECOM OPERATIONS 

All over the world information about unwarranted 

access to critical telecom back-end systems 

and operations by law enforcement, intelligence 

agencies, private data collectors and hackers 

enters the news and industry publications. Massive 

“vacuum cleaner” data gathering operations, both 

by public and private entities, are a serious risk 

to confidential communication, especially with 

today’s low cost data mining technology. 

ILLEGAL BEHAVIOR BY EMPLOYEES 

Surfing illegal porn sites, illegal file sharing and 

committing fraud employing company resources 

and networks can easily cause investigations of the 

employer. This leads to bad press and often raids 

or seizures. These events can result in tremendous 

cost and even endanger critical operation. 

Cryptohippie 

MISDIRECTED INVESTIGATIONS 

Digital evidence is easy to forge and hard to 

refute. Attempts to direct investigations by law 

enforcement against personal and economic 

enemies are a common practice - in most cases 

leading to enormous damages to the target. 

BLACKMAIL AND CORRUPTION 

Internet Service Providers and other telecom 

companies have total access to all communication 

content and details. They are the central nexus 

of today’s digital society - a central point with 

increasingly valuable data. Using blackmail and 

corruption, organized crime and scrupulous 

competitors get access to key administrators and 

critical customer data, or even to mandatory data 

retention databases. 

LOST AND STOLEN DATA 

Lost and stolen data make the news almost weekly 

although only the tip of the iceberg reaches public 

attention. This data includes not only customer 

databases but often correspondence, critical 

system access credentials and transaction 

records. 

ho w cry P to h i P P i E P r o t E c t s y o u 

ANONYMOUS INTERNET ACCESS 

When connecting via our service, your original IP 

address will not be visible to third parties - it is 

replaced with a new one from our system. This IP 

address is not assigned to you, nor does it remain 

the same. This makes it extremely hard for an 

outsider to gather any information on who you are 

or where you surf. Furthermore, the packets sent 

through our network get mixed with many others, 

making traces very hard. 

PROTECTED CLOSED-GROUP 

NETWORKS 

Closed-group networks are private and encrypted 

networks only accessible to authorized members. 

This technology makes it possible to invite only 

members of a team into ones own “private internet”. 

Cryptohippie includes this functionality into all its 

products. 


Cryptohippie 

NO NEED TO TRUST A SINGLE PARTY 

Accessing the Internet via your ISP or through most 

anonymization services forces the user to entrust 

a single entity with his or her privacy. Cryptohippie 

splits trust over multiple certified entities. None of 

those entities has access to enough data to break 

your privacy or gather information that could be 

used against you or a client. 

JURISDICTION AWARE ROUTING 

To further protect against unfounded surveillance, 

all communication on our networks travel through 

at least two jurisdictions. Furthermore, connections 

leave our system in a jurisdiction different from the 

jurisdiction of the destination/receiver. This serves 

as barrier against over-reaching investigations. 

MILITARY GRADE ENCRYPTION 

All traffic to and within our networks is protected 

by state of the art encryption. This keeps third 

parties from gathering information about your 

communication contents and context. Even 

stolen client keys will not compromise previous 

data transfers. Data is encrypted with AES-192/ 

AES-256, key exchange is conducted using RSA- 

2048/DH-2048, HMACs are created with SHA1/ 

SHA256. 

DYNAMIC IP ASSIGNMENT 

Internet destinations often create and share logfiles 

with other parties. This can easily create 

profiles on users. Cryptohippie employs dynamic 

IP assignment methods that assign IPs based on 

both source and destination of a connection only. 

Doing this ensures that a client IP will constantly 

change (without breaking connections) and thus 

makes profiling much harder. 

ADAPTIVE FIREWALLS 

All traffic within our network runs through client 

specific firewalls. This assures that no unauthorized 

connections to your systems can travel through 

our network. Firewall rules can be updated 

during active sessions and thus may be adapted 

dynamically to current requirements. 

Protect your Internet business and data. Visit the 

Cryptohippe web site today and get signed up. 

http://www.cryptohippie.com 


Gold Dinar and Silver Dirham photos courtesy of 

e-dinar. They deliver around the globe. Please 

visit their web site for more infomation. 

http://www.e-dinar.com

Pay za k at in Go l d 

By Omar Javaid, Sr.Editor, CRITIC Magazine 

(www.criticmagazine.pk) 

We are living in a world controlled by an economic 

system that is anything but Islamic. It’s based on 

Interest / debt based banking systems designed to 

enslave and dominate the masses and countries 

so that their natural capacities and wealth can be 

exploited for the benefit of the few on the top1. 

Being a Muslim it’s our ultimate responsibility to 

launch a response that can transform this system 

toward the Islamic Ideals. 

The most pivotal building block and strongest tool 

of exploitation of the interest / debt based economic 

system is paper currency backed by nothing. 

Paper currency (and now digital) is the center of 

gravity off the prevailing economic system and 

Alhamdolillah, SubhanAllah Islam has provided 

us a very strong weapon called Zakat that we can 

use to hit its lifeline if we use it properly i.e.“Pay 

Zakat in Gold”. 

To understand this we have to get hold of the 

economics of paper currency first. Paper currency 

is not backed by Gold or silver these days. Its 

value is determined through floating exchange 

rates resulting in deadly repercussions in following 

ways: 

“i b e l i e v e T h aT b a n k i n G i nS T iT u T i o nS 

a r e m o r e d a n G e r o u S To o u r 

l i b e rT i e S T h a n S Ta n d i nG a r m i e S. 

al r e a d y T h e y h av e r a i S e d u P a 

m o n e y a r iS T o C r a C y T h aT h a S S e T 

T h e G o v e r n m e n T aT d e F i a nC e. Th e 

iS S u i nG P o W e r S h o u l d b e Ta k e n 

F r o m T h e b a n k S, a n d r e S To r e d To 

T h e P e o P l e To W h o m iT P r o P e r ly 

b e l o n G S.” 

-Th o m a S Je F F e r S o n, 3r d uS 

Pr e S i d e nT 

wh E n sh a r i nG BE c o m E s EV i l 

The most central practice in today’s economic 

model is Fractional Reserve banking (FFRB) 

which is about lending a percentage of deposits 

to customers. Paper Currency that is printed in the 

quantity, desired by Central Bank (CB) is multiplied 

as it passes through Fractional Reserve Systems 

of Conventional banks resulting in inflation. The 

CB imposes a Cash Reserve Requirement i.e. 

CRR is 7 ~ 10% on commercial banks (even 

Islamic banks) which determines the amount to 

be loaned out. A CRR of 10% means that a bank 

can lend 90 rupees if it has a deposit of Rs. 100. 

The bank in fact transfer this amount to the clients 

bank account, i.e. the same bank (or any other 

bank) receives it back, again making it a part of 

its deposits ready to be loaned again. The cycle 

continues and the money generated by central 

bank is multiplied many times in the form of loans 

and expects commercial banks expects it back 

with interest. Britain the Central bank regulates 

only 3% of the total money generated where as 

the remaining 97% is regulated in form of loans by 

commercial banks. In other words only 3 pounds 

of money exists arise from the practice of fractional 

reserve banking. When ever a bank gives out a to 

pay back 97 pounds to debt in Britain!!! 

This phenomenon seems very profitable if seen 

in context of banking practices, but from macro 

economics stand point this is most contagious and 

is the biggest root cause of Monetary Inflation (of 

course there are others reasons as well) as by 

practicing FRB, banks gains the capacity to produce 

and control the money supply in the economy.2 Its 

exploitative nature is evident from Mayer Amschel 

Rothschild, statement which he made in 1828 

“Allow me to issue and control the money of the 

nation, I care not who writes the law”. Fractional 

Reserve banking is only possible if economy is 

backed by paper currency backed by nothing and 

its value is determined by floating exchange rates. 

If it’s backed strictly by gold then it is not possible 

to do FRB simply because a physical gold coin 

cannot be passed on to many in form of loan, 

enabling them to use it simultaneously! 

fr o m Pa P E r to Bi t s 




In reality, Paper currency is a hoax (pay orders, 

bonds, cheques and other receipts included) and 

digital currency (debt / credit cards) are even bigger 

hoax, as it was supposed to be backed by gold but 

it’s not. The reason paper currency superseded 

gold and silver was that it could be produced 

effortlessly and multiplied many times over in form 

of debt by passing it through the FRB system. The 

digital currency in form of credit and debit cards has 

even eliminated minor repercussions which paper 

currency had, like printing and distribution, as now 

it’s even more easier to generate and multiply it 

in digital form, thanks to the latest information 

technology. 

The result is constant depreciation of currency’s 

value as it multiplies with time, in the form of debt, 

when passes through the FRB system of banking 

(the sugar coated term for this phenomenon in 

economics is the Money Multiplier Effect). Today 

3% of Britain money supply is controlled by 

government whereas 97% is controlled by banks 

inform of debt3, even worst is the case in USA. 

The result is staggering inflation and devaluation 

/ debasement of paper currency and the hardest 

hit are the poor as their savings disintegrate 

with the rate of inflation cased by excess money 

supply, henceforth they have to put additional 

backbreaking effort just to maintain it. From Islamic 

standpoint, Ahadith and Quranic verses, describing 

the economic ruling, are based on Dirham and 

Dinnars, which has always been in form of gold 

and silver. By the way 1400 years ago a chicken 

price tag was 1 dinnar and today it’s still 1 Dirham 

i.e. 3 grams of silver means zero inflation in terms 

of silver currency4. 

Paper currency is a pivotal element of Debt / 

Interest based economic environment which 

enables world powers to accomplish their agenda 

of Economic domination and slavery (for details 

of this agenda read the book by Confession of an 

Economic Hitman by John Perkins who worked at 

IMF), as it allows the banks to control, issue and 

devalue the money supply. 

Devaluation of currency is practiced to keep 

countries under their economic rule. You must 

have noticed the devaluation of Rupee in the past 


“Th e dollar iS ame r iC a'S G r e aT e S T 

S u C C e S S S T o r y, b e C a u S e e a C h o n e 

C o S T S l e S S T h a n a P e n n y To P r o d u C e 

a n d y e T, iS S o l d T h r o u G h o u T T h e 

W o r l d F o r $1 a P i e C e. Wh aT am e r iC a n 

e x P o r T C a n m aT C h T h aT ?” 

-Jim Gr a n T, Gr a n T'S in T e r e S T raT e 

ob S e r v e r, nyC Co n F e r e n C e 

and more significantly in recent times. The World 

Bank occasionally pushes Pakistani government 

to devalue the currency (source Dawn newspaper) 

simply because it increases the amount of debt 

in dollars and the interest on that debt (previously 

to pay back 1 dollar, we had to earn Rs. 60, now 

we have to earn Rs. 70) as a result Pakistan has 

to pay more out of its savings for an even longer 

period of time. 

th E Go l d sta n d a r d o f 2.5% 

We all know that the currency used 1400 years 

back was Dirham and Dinnar, which were in 

fact gold and silver coins. Henceforth Zakat was 

implied on individuals whose savings were more 

than a specific amount i.e. 85 grams of gold, 595 

grams silver or 653 kilograms of certain grains. 

Minimum limit of Zakat was 2.5% of the saving in 

Dirham/dinar or other trading goods and 5 ~ 10% 

on grains in stock exceeding the minimum limit. 

This extracted amount of savings goes to poor and 

deserving people of the society. Today we calculate 

and pay in terms of paper currency. If the poor guy 

spends it immediately then he has nothing to lose. 

However, if he kept it for saving, paper currency 

disintegrates with the rate of inflation. 

Please note that Zakat cannot be paid on debt! 

It’s paid on the Real Wealth if it exceeds then 

limits defined above. Considering an economy 

such as of UK as example, where 97% of all the 

money supply is in the form of debt created by 

fractional reserve systems of commercial banking, 

assuming the masses are all Muslim and wants 

to pay Zakat on their monetary reserves then 

they will be only able to pay 2.5% of the 3% of

eal money circulating in the economy. Similar 

would be the case in United States or any other 

developed country with similar economic scenario. 

This simply means that a Muslim economy if gets 

more and more dependent on the interest/debt 

based fractional reserve banking system then the 

masses will become increasingly handicapped 

to pay Zakat. Furthermore, whenever a person 

asks for some debt from the bank, the bank in 

return asks him to pledge what ever real wealth 

he has so that bank can secure its investment in 

case the creditor gets bankrupt. Thus pledging 

further disables the creditor to extract a portion of 

his savings to help the poor of the society. Little 

surprise when we say“Richs are getting richer and 

poor are getting poorer” in today’s debt reddened 

so called developed countries... 

"ba n k i nG W a S C o n C e i v e d in iniquiTy 

a n d W a S b o r n in S i n. Th e ba n k e r S o W n 

T h e ea r T h. Ta k e iT a W a y F r o m T h e m, 

b u T l e av e T h e m T h e P o W e r To C r e aT e 

d e P o S i T S, a n d W iT h T h e F l iC k o F T h e 

P e n T h e y W i l l C r e aT e e n o u G h d e P o S i T S 

To b u y iT b a C k a G a i n. ho W e v e r, Ta k e 

iT a W a y F r o m T h e m, a n d a l l T h e G r e aT 

F o r T u n e S l i k e m i n e W i l l d i S a P P e a r, a n d 

T h e y o u G h T To d i S a P P e a r, F o r T h iS iS 

W o u l d b e a h a P P i e r a n d b e T T e r W o r l d 

To l i v e in. bu T iF y o u W iS h To r e m a i n 

T h e S l av e S o F ba n k e r S a n d Pay T h e 

C o S T o F y o u r o W n S l av e ry, l e T T h e m 

C o n T i n u e To C r e aT e d e P o S i T S." 

--Sir Jo S i a h STa m P, 

Pr e S i d e nT o F T h e ba n k o F en G l a n d 

in T h e 1920'S 

th E alt E r n at E 

Keep in view the above stated points its becomes 

blatantly clear that if we want to raise the standards 


of living of the half of the world’s population living 

below the poverty line then we really need to get rid 

of interest / debt based economic system operating 

through FRB. The first and most convenient step 

would be to get rid of paper and digital currency 

and replace it with Gold and silver, simply because 

it’s not possible to issue, control and devalue it as 

done with existing forms of currency. 

As it is clear that the poor in the society are getting 

poorer with a rate currency is being devalued 

which is in fact the rate of inflation, thus as Muslims 

our first priority should be to save the poor class 

from the claws of prevailing evils of the economic 

engine. 

The Zakat paid by Pakistan is is 60 ~ 70 billions of 

rupees. If this is paid in form of Gold and silver, will 

bring following advantages 

1. Poor class will be able to develop their 

monetary reserves in form of Gold and Silver, 

which they are unable to develop due to their 

negligible income. As we know that the price of 

Gold and Silver has been increasing with time, 

thus this will profit poor class in monetary terms. 

2. If this much gold and silver is injected at the 

bottom of the society, it will encourage the use 

of gold and silver as a unit of exchange. Hence, 

the circulation of gold and silver will begin in the 

society, which is a pivotal element of Islamic 

Economic system. As you might know that in 

some cities of upper Punjab dollar and pounds 

are used simply because a member of each 

family is abroad and send back his savings 

in form of dollars thus making it a medium of 

exchange for the whole city. In Malaysia use 

of Gold as a medium of exchange has already 

started, so it really happens if people initiate it. 

3. This will be a move in the direction to make 

Gold and Silver supersede paper currency, 

this will be the strongest blow to the interest/ 

debt based economic system, as it will disable 

them to dominate and exploit countries that 

they do through fractional reserve/interest/ 

debt based banking. Fractional reserve will 

not be possible in presence of gold currency 

thus their agenda of economic domination 

will be deterred effectively as they will not 



be able to control and manipulate the money 

supply as they do with paper currency. 

Translated from the “Al-Fath Al-’Ali Al-Maliki” 

page.164-165 “This Fatwa considers paper-money 

to be fulus (lower category of currency with limited 

used), because it only represents money and does 

not have value as merchandise. It follows that since 

Zakat cannot be paid in fulus, which has no value 

as merchandise, it cannot be paid in paper-money, 

which value as weight of paper is null. On this 

basis, it becomes clear the urgent need to restore 

the use of the Dinar and the Dirham as payment 

of Zakat. If the millions of Muslims who now make 

their payment of Zakat in paper money would do 

it in newly minted Dinars and Dirham’s, they will 

put in circulation millions of gold and silver coins in 

to the mainstream of daily commercial activities of 

our communities. That single act will became the 

most important political act of the century, opening 

the path towards the establishment our own halal 

free currency breaking away from the usurious 

financial system. The return to the payment of 

Zakat in gold and silver is an essential part of the 

reestablishment of Islam.” 

Reference 

1 Confession of an Economic Hitman by John 

Perkins 

2 For details please see 

http://www.en.wikipedia.org/wiki/Fractionalreserve_banking 

http://www.lewrockwell.com/rothbard/frb.html 

3 UK Money Supply Has Tripled Since 1997: 

http://www.dailyreckoning.com.au/uk-moneysupply/2007/10/09/ 

also see 

http://www.prosperityuk.com/prosperity/ 

prosperity.html 

4 http://www.goldprice.org/buying-gold/2006/02/ 

islamic-gold-coins.html 

5 http://en.wikipedia.org/wiki/Zakat 

6 25 million die of hunger a year: UN. Source: 

http://www.cbc.ca/news/story/2003/11/25/ 

hunger031125.html 


"i a m h o W e v e r S Ta r T i n G To T h i n k T h aT 

T h e P l a n F o r T h e Gol d din a r a n d 

S u P P o r T F r o m o T h e r iS l a m i C n aT i o nS 

iS a P l a n n e d o F F e n S i v e a G a i n S T T h e 

u S e o F T h e dollar a S a S e T T l e m e n T 

C u r r e n C y F o r o i l. iT iS P e r C e i v e d, a n d 

C o r r e C T ly S o, T h aT T h e iS l a m i C W o r l d 

iS C o n T r o l l e d v i a T h e u S e o F T h e 

uS dollar a S T h e m a i n S e T T l e m e n T 

C u r r e n C y. Wh e n i S ay "C o n T r o l l e d" i 

m e a n W h aT e v e r h a P P e n S e C o n o m iC a l ly 

in T h e uSa iS e x P o r T e d T h e r e v i a T h e 

dollar ...Wh aT W e a r e h e a r i nG n o W iS 

T h aT T h e Go l d di n a r W i l l b e u S e d a S a 

"m e a S u r e" S e T T l e d q u a r T e r ly in G o l d 

o n a n iS l a m i C i nT r a-n aT i o n b a S i S, b u T 

T h aT C o u l d C h a n G e q u iC k ly. a r e v i e W 

o F T h e T r a d e b a l a n C e S o F ma l ay S i a 

a n d i T S i nT r a-iS l a m i C T r a d e Pa r T n e r S 

i n d iC aT e S T h aT iF T h e Go l d di n a r iS 

e m P l o y e d a S n o W S u G G e S T e d, iT W o u l d 

T i e u P a P P r o x i m aT e ly 200 T o n n e S o F 

G o l d P r o d u C T i o n e q u a l To 10% o F 

n e W m i n e S u P P ly. iF ma l ay S i a W e n T a l l 

T h e W a y a n d W e n T To C o n v e r T i b i l iT y 

W iT h a 15% G o l d C o v e r, T h e y W o u l d 

u T i l i z e m o r e T h a n 300 T o n n e S o F n e W 

P r o d u C T i o n. eiT h e r W a y , T h iS iS T h e 

Wi l d e S T o F Wild Ca r d S F o r Go l d." 

The Gold dinar: a nuClear 

Wild Card 

-Jim Si nC l a i r, Ta n r a n G e

aP P E n d i x 

Source: http://en.wikipedia.org/wiki/Money_ 

supply 

M0: Physical currency. A measure of the money 

supply which combines any liquid or cash assets 

held within a central bank and the amount of 

physical currency circulating in the economy. M0 

is the most liquid measure of the money supply. It 

only includes cash or assets that could quickly be 

converted into currency. 

M1: M0 + demand deposits, which are checking 

accounts. This is used as a measurement for 

economists trying to quantify the amount of money 

in circulation. The M1 is a very liquid measure of 

the money supply, as it contains cash and assets 

that can quickly be converted to currency. 

M2: M1 + time deposits, savings deposits, and noninstitutional 

money-market funds. M2 is a broader 

classification of money than M1. Economists 

use M2 when looking to quantify the amount of 

money in circulation and trying to explain different 

economic monetary conditions. M2 is a key 

economic indicator used to forecast inflation. 

M3: M2 + large time deposits, institutional moneymarket 

funds, short-term repurchase agreements, 

along with other larger liquid assets. This is the 

broadest measure of money and is used by 

economists to estimate the entire supply of money 

within an economy. 

The different forms of money in government money 

supply statistics arise from the practice of fractionalreserve 

banking. Whenever a bank gives out a 

loan in a fractional-reserve banking system, a new 

type of money is created. This new type of money 

is what makes up the non-M0 components in the 

M1-M3 statistics. In short, there are two types of 

money in a fractional-reserve banking system. 

• 

• 

central bank money (physical currency) 

commercial bank money (money created 

through loans) -sometimes referred to as 

checkbook money 

In the money supply statistics, central bank money 

is M0 while the commercial bank money is divided 

up into the M1-M3 components. Generally, the 


types of commercial bank money that tend to be 

valued at lower amounts are classified in the narrow 

category of M1 while the types of commercial 

bank money that tend to exist in larger amounts 

are categorized in M2 and M3, with M3 having the 

largest. 

fu r t h E r rE a d i nG s: 

• Bank for International Settlements-The 

Role of Central Bank Money in Payment 

Systems. See page 9, titled, “The 

coexistence of central and commercial bank 

monies: multiple issuers, one currency”: 

http://www.bis.org/publ/cpss55.pdf A quick 

quote in reference to the 2 different types 

of money is listed on page 3. It is the first 

sentence of the document: “Contemporary 

monetary systems are based on the 

mutually reinforcing roles of central bank 

money and commercial bank monies.” 

• European Central Bank-Domestic 

• 

payments in Euroland: commercial and 

central bank money: http://www.ecb.int/ 

press/key/date/2000/html/sp001109_2. 

en.html One quote from the article 

referencing the two types of money: “At the 

beginning of the 20th almost the totality of 

retail payments were made in central bank 

money. Over time, this monopoly came to 

be shared with commercial banks, when 

deposits and their transfer via checks and 

giros became widely accepted. Banknotes 

and commercial bank money became 

fully interchangeable payment media that 

customers could use according to their 

needs. While transaction costs in commercial 

bank money were shrinking, cashless 

payment instruments became increasingly 

used, at the expense of banknotes” 

^ Chicago Fed-Our Central Bank: http://www. 

chicagofed.org/consumer_information/the_ 

fed_our_central_bank.cfm. The reference 

is found in the “Money Manager” section: 

“the Fed works to control money at its 

source by affecting the ability of financial 

institutions to “create” checkbook money 

through loans or investments. The control 

lever that the Fed uses in this process is the 

“reserves” that banks and thrifts must hold.” 


Justice, Policing, and E-gold 

This article compliments the article on digital 

bearer certificates on page 8, entitled “The Future 

of Private money” by Sidd, Co-Founder of Pecunix. 

After you read this article below, go back and look 

closer at Sidd article, tell me if DBC then make 

perfect sense. 

Ju s t i cE, Po l i c i nG, 

a n d E-Go l d 

by Michael S. Rozeff 

This is an article by Mr. Michael S. Rozeff and was 

originally posted on Lewrockwell.com 

http://www.lewrockwell.com/rozeff/rozeff215.html 

The criminal case of E-Gold, an internet company 

that allows users to make exchanges using gold 

as currency, highlights basic questions about both 

justice and the proper scope of policing. 

America is very far from being a free country. 

Indeed, America is moving in the opposite direction. 

At some point – and I, for one, would say that point 

is now – the U.S. becomes a police state or, at the 

very least, a “soft” police state. 

The E-Gold case dramatically illustrates the lack 

of monetary freedom in the U.S. and many other 

countries with similar laws. A person with monetary 

freedom can transact in any currency of his 

choice with anyone else willing to transact in that 

currency. He can transmit any amount of money 

in any form he wants to use to any place in the 

world where another party stands ready to accept 

it. A free person can use any available method of 

transmission to transmit the medium of exchange 

of his choice. 

With monetary freedom, legal tender does not 

exist. People choose the media of exchange that 

they prefer to use, and no authorities force them 

to use the dollar, the euro, the won, the yen, the 

rupee, the renmimbi, the ruble, or any other money. 

They can use cowrie shells if they wish (used 

widely in Africa until the 20th century). Dr. Roger 

McCain writes that “The colonies were required 

to use European money, and they did – but when 


the European monetary systems collapsed in 

hyperinflation, the West African people went back 

to using their cowrie-money to get past the crisis. 

It was the cowrie-money that proved most reliable 

for many years of the twentieth century.” 

Monetary freedom also entails freedom for those 

in business who deal in money. They are free to 

provide the service of privacy to their clients who 

want it. Monetary freedom means that businesses 

are not compelled to spy on their clients. It means 

that they are not forced to report transactions to 

the authorities, and that they are not compelled 

to become part of a network looking for activities 

that the authorities have deemed to be suspicious. 

Monetary freedom means that if a business service 

permits it, a person can withdraw or deposit any 

amounts in any form he wants to without being 

subject to the prying and spying eyes of the 

authorities who have forced the business into 

being part of their police apparatus. 

All of this can be re-stated in terms of rights. A 

free person has the right to choose the medium 

of exchange (money or currency) that he prefers. 

He has the right to choose any form of currency 

or money he prefers. His rights are being invaded 

when the State compels him to use a national 

currency, like the dollar, or not to use a currency 

like gold. His rights are being invaded when he 

is forced to accept a particular kind of money in 

transactions. A free person has the right to send 

any amount of money in any form whatever to 

wherever he wants to. He has the right to send it 

in secrecy and privacy if he can find an obliging 

carrier or transmitter. Conversely, his rights and 

those of financial institutions are being invaded if 

those businesses are forced by the authorities or 

anyone else into inspecting and reporting upon his 

financial dealings. Businesses that cannot operate 

or get licenses unless they agree to become spies 

for the authorities are having their rights invaded. 

They are being subject to extortion by the State. 

This is by no means a complete catalogue of 

what monetary freedom entails. It serves as an 

introduction to the case of E-Gold. 

THE E-GOLD CASE 

On July 21, 2008, the U.S. Department of Justice



released a document with the headline: “DIGITAL 

CURRENCY BUSINESS E-GOLD PLEADS 

GUILTY TO MONEY LAUNDERING AND ILLEGAL 

MONEY TRANSMITTING CHARGES.” 

Paragraph one noted “E-Gold, Ltd., (E-Gold) an 

Internet-based digital currency business, and its 

three principal directors and owners, pleaded guilty 

to criminal charges relating to money laundering 

and the operation of an illegal money transmitting 

business...” 

The principal person involved is the company’s 

founder, Dr. Douglas Jackson, 51, of Melbourne, 

Florida. He “pleaded guilty to conspiracy to engage 

in money laundering and operating an unlicensed 

money transmitting business.” 

Sentencing is due on November 20, 2008. “Douglas 

Jackson faces a maximum prison sentence of 20 

years and a fine of $500,000 on the conspiracy 

to engage in money laundering charge, and a 

sentence of five years and a fine of $250,000 on 

the operation of an unlicensed money transmitting 

business charge.” Additionally, as part of the plea, 

E-Gold and Gold & Silver Reserve have “agreed 

to forfeiture in the amount of $1.75 million in the 

form of a money judgment for which they are joint 

and severally liable.” On top of that, at sentencing, 

the companies also face a maximum fine of $3.7 

million. 

QUESTIONS 

The case raises such questions as these. Did 

E-Gold violate the rights of others? Or have the 

monetary rights of E-Gold been violated? 

Suppose that a department store has a restaurant, 

and suppose that several criminals transact 

business at a table while having lunch there. 

Is the store guilty of a crime? Suppose that 

criminals communicate using newspaper ads. 

Is the newspaper company guilty of a crime? 

Did it violate the rights of the criminals’ victims? 

Suppose that criminals communicate secretly 

using some advanced telephone or internet 

communications device. Are the manufacturers of 

that device responsible for the crimes that these 

criminals commit? Are internet providers guilty of 

conspiracy? 


Suppose that a bank receives deposits from 

criminals. Is the bank responsible for the crimes 

these criminals have committed? Is it responsible 

for knowing its customers and for detecting those 

who are criminals? Is it responsible for reporting 

monetary transactions to the authorities? 

Should racetracks, gambling houses, and internet 

gaming companies be required to report large 

money bets and large winnings? Should stores, 

auto dealers, and real estate agents be required 

to report large purchases for cash? 

Should every company be made to detect and 

report possible criminal activities on its premises 

or among persons using its products or services? 

Should every company be made to monitor 

everyone with whom it deals in order to detect 

possible criminal activities? 

ANSWERS 

A free person is certainly not free if he is forced into 

becoming a police spy. A person is not free if he is 

forced to monitor all the people and their activities 

that he encounters. The same statements hold for a 

business. If there is a law against dealing in drugs, 

that becomes a matter for the police, not a bank 

or a stock broker or a mutual fund, all of whom are 

being forced into reporting to the authorities. 

Everyone has a right to his life, liberty, and property. 

To be forced into using one’s time, money, and 

property in order to detect possible criminal 

behavior is clearly an invasion of one’s basic rights. 

It is one thing to ask people to be on the lookout 

for a suspected criminal. It is one thing to ask 

people if they will post wanted posters, or to ask a 

business to donate some space to alert people to 

a suspected criminal. The voluntary cooperation 

of common people in finding and apprehending 

criminals is one thing, but compelling them to 

police one another is entirely a different matter. 

This is the difference between a free country and 

police state. The U.S. has crossed the line, and so 

have many other countries. 

Another answer to all of these questions is 

panarchy. You choose your society, and I will 

choose mine. And they can co-exist side by side 

on the same territory. Societies that are without



territorial control, living side by side, intermingling, 

are what panarchy is about. You practice your 

religion or none, and I practice mine or none. We 

live in the same town and there is no problem. 

If you want to live in a society in which no one 

has privacy and everyone spies on everyone 

else, then do so. Your members can report on 

each other all they like. But you have no right to 

impose your restraints and dictates on those who 

think otherwise and choose a society in which 

their banks do not have to report large cash 

transactions to the police. You may want to reduce 

drug-taking and attempt to do so by imposing all 

sorts of police-state methods. You may launch 

billion-dollar wars on drugs and build a prison in 

each locality to house, feed, and clothe drug users, 

or you may execute them. But you have no right 

to impose your methods (or taxes or regulations) 

on anyone else who chooses a different society, 

although they may live on the east side and you 

on the west side of town, or even if they live on the 

west side too. 

Tolerance is what panarchy is about, that is, 

tolerance by people of those who live across the 

social divides that they wish to make for themselves. 

Social divides need not be territorial divides. There 

is plenty of room for everyone and plenty of ways 

to accommodate the different ways of others 

without compelling everyone to live under one set 

of laws in this vast region we call the United States 

of America. You may be as intolerant of drug-users 

as you like to all those within your society who have 

agreed to that intolerance, but you may not extend 

your intolerance to my drug use within my society 

and my ability to buy drugs without a doctor’s 

prescription or to my having them administered by 

an alternative healer of illness. 

IS DR. JACKSON GUILTY OF A CRIME? 

The fact that Dr. Jackson pleaded guilty does not 

answer the question of whether he is guilty of a 

crime. He was forced into a corner. He is seeking 

to continue the company he began 12 years ago. 

He is revamping it to comply with the State’s 

edicts. A guilty plea was his least-cost choice, in his 

estimation. Dr. Jackson’s statement can be found 

here. It is a complete cave-in to all the demands 

of the State. 


E-Gold was not a fly-by-night business. Its 

customers did not bring about the criminal 

indictment. It was not customer complaints about 

missing gold, embezzlement, theft, or poor service 

that brought on the indictments. E-Gold did not 

steal anything from anyone. If it has, why hasn’t 

the DOJ trumpeted that? However, the criminal 

complaint did have a large negative effect on 

E-Gold customers who encountered illiquidity in 

their accounts. 

The Department of Justice [sic] news release goes 

on at great length about the supposed crimes that 

Dr. Jackson committed. In fact, the document 

suggests to me that the company committed 

no crimes at all! If it did commit crimes, did the 

victims appear in court? Did they document their 

damages? 

If Dr. Jackson actually committed a crime, what 

was it? The fact is that he pleaded guilty to the 

nebulous crime of conspiracy to engage in money 

laundering. This only means that other people used 

E-Gold to transmit funds possibly obtained via 

illegal activities and that E-Gold was not equipped 

to detect who they were and report them. What kind 

of cockamamie crime is it when one fails to kowtow 

to the State’s edicts compelling one to work with the 

authorities to detect money laundering? For that is 

what is involved in the other conspiracy charge. I 

quote the DOJ: “E-Gold...will move to fully comply 

with all applicable federal and state laws relating 

to operating as a licensed money transmitting 

business and the prevention of money laundering 

which includes registering as money service 

businesses. Also as part of the plea agreement, 

the businesses will create a comprehensive 

money laundering detection program that will 

require verified customer identification, suspicious 

activity reporting and regular supervision by the 

Internal Revenue Services’ (IRS) Bank Secrecy 

Act Division...” 

Dr. Jackson has pleaded guilty to the crime of 

not verifying who his customers were, not making 

sure that they were not criminals, not creating 

a comprehensive program to detect money 

laundering, not detecting and reporting suspicious 

activity, and not operating under the supervision 

of the Bank Secrecy Act Division of the IRS. In

http://www.perfectmoney.com 



other words, he didn’t become part of the State’s 

spying apparatus, and that makes him and his 

operation a criminal conspiracy. The crime here is 

not the commission of a crime. Instead the State 

is demanding that you do what it tells you, and if 

you don’t, then that is a crime. If you stand up for 

your rights and do not obey the State’s demands, 

you are a criminal! 

CONCLUSION 

In Wikipedia, we read: “The Bank Secrecy Act 

of 1970 (or BSA, or otherwise known as the 

Currency and Foreign Transactions Reporting 

Act) requires U.S.A. financial institutions to assist 

U.S. government agencies to detect and prevent 

money laundering. Specifically, the act requires 

financial institutions to keep records of cash 

purchases of negotiable instruments, file reports 

of cash transactions exceeding $5,000 (daily 

aggregate amount), and to report suspicious 

activity that might signify money laundering, tax 

evasion, or other criminal activities. It was passed 

by the Congress of the United States in 1970. The 

BSA is sometimes referred to as an “anti-money 

laundering” law (“AML”) or jointly as “BSA/AML”. 

Several anti-money laundering acts, including 

provisions in title III of the USA PATRIOT Act, have 

been enacted up to the present to amend the BSA. 

(See 31 USC 5311-5330 and 31 CFR 103.)” 

The rest of the article introduces the reader to the 

reporting requirements under these laws. 

These laws infringe the monetary rights of all 

persons who either are made to obey them or who 

are forced to transact under the watchful eyes of 

financial institutions that are applying these laws 

to their persons and property. 

These laws are one of the very many instances of 

the abysmal and wretched failure of Americans to 

have monetary freedom. Many other countries are 

in no better shape. 

We have major laws that openly violate the rights 

of people. I protest! If I disobey one of these laws, 

then I am a criminal under these laws. If I am caught, 

then I will pay a price for my disobedience, that is, 

for exercising my rights. That is what happened to 

E-Gold. It’s a topsy-turvy world. 


August 30, 2008 

Michael S. Rozeff is a retired Professor of 

Finance living in East Amherst, New York. 

th E in E V i taB l E En d o f 

t h E cE n t r a l Ba n k i nG 

a n d Po l i t i c a l mo n E y 

rE G i mE 

by Thomas H. Greco, Jr. 

The present disorder in the financial markets and 

the cascading failures of financial institutions 

come as no surprise. Those who recognize the 

impossibility of perpetual exponential growth 

and who understand how compound interest is 

built into the global system of money and banking 

expect the continuation of periodic “bubbles” 

and “busts,” each of increasing amplitude until 

the systems shakes itself apart. 

Engineers call this phenomenon, “positive 

feedback.” Such a system cannot find 

equilibrium. Imagine a heating system in which 

the thermostat, sensing a rise in temperature, 

calls for more heat instead of less. Such is 

the nature of the debt-money system. The 

imposition of interest on the debt by which 

money is created, demands that more debt 

be created. Such is the debt imperative which 

gives rise to a growth imperative. Among other 

things, it prevents the emergence of a steady 

state economy. 

Is this the final round? Who can say? Can the 

system be saved yet one more time? Maybe. 

Under the central banking regime which has 

become all but universal in countries around 

the world, money has been politicized. The 

collusion between politicians and international 

bankers enables governments to extract wealth 

from the economy by deficit spending and 

banks to extract wealth by charging interest 

on money as they create it by making loans.

These two parasitic elements take wealth away 

from productive members of society and lavish 

it on military adventures, international intrigues, 

wasteful boondoggles, and financial finaglers. 

When the system spins out of control what 

will come out of the chaos? It is impossible to 

predict but here are two strong possibilities. 

When the dollar collapses the financial and 

political elite class will certainly try to orchestrate 

a new global monetary regime based on the 

same old mechanisms for centralizing power 

and concentrating wealth in their own hands, 

seeking to complete the New (feudal) World 

Order which has been building for the past 

three hundred years. Another possibility is 

the emergence of the kind of decentralized, 

democratic, and sustainable system we have 

been advocating for a long time. 

We had better get ready to seize the opportunity 

that accompanies this impending crisis. 

How? By organizing ourselves in our local 

communities and affinity groups to reclaim the 

credit commons, to create interest-free, nondollar, 

non-bank exchange mechanisms and 

payment media. This is not as hard as it seems 

We already know how to do it. All it takes is 

organization and will. 

Back to the current crisis, we should consider 

the possible actions of America’s creditors. 

According to Paul Joseph Watson & Yihan Dai, in 

and article in Prison Planet (http://prisonplanet. 

com/) dated Friday, September 19, 2008, 

“China Finance, China News and Chaobao 

Financial News, all state owned media outlets, 

slammed the Fed for taking action that will only 

make long term economic conditions worse 

and devalue the dollar by “creating money that 

does not exist which leads to the inflation of 

liquidity,” a policy contrary to China’s position 

as a holder of vast reserves of US dollars.” 

Central banks have one true function, that is 

to manage the effects of the parasitic drain, 

to decide who will pay the price, who will feel 

the pain. They can either (1) restrict credit, 

The End of The Central Banking Regime 

thus causing recessions, bankruptcies and 

unemployment; or (2) they can expand credit 

and inflate the money supply by monetizing 

debts (either public or private) that are 

uncollectible. 

Given China’s position as one of the United 

States’ biggest creditors, it is in a powerful 

position to determine the outcome of the current 

and future financial crises. If they don’t like the 

restructuring plan that the financial elite wants 

to put in place, they can kick over the table by 

dumping their dollar holdings and causing the 

value of the dollar to crash through the floor. 

Organized others acting in cooperation might 

do the same. 

“The king is dead, long live the king.” 

th o m a s h. Gr E c o, Jr. 

thg@mindspring.com 

Website: http://www.Reinventingmoney.com 

Blogs: Beyond Money: 

http://beyondmoney.wordpress.com 

Tom’s News and Views: 

http://tomazgreco.wordpress.com 

Photo gallery: 

http://picasaweb.google.com/tomazhg 

Tom has a new book coming soon. “The 

End of Money,” is due to be published 

early next year by Chelsea Green and 

will further elaborate on the points in the 

article.

DGC Magazine Digital Gold Currency

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