Blockchain Is Systematically Dismantling Barriers To Precious Metal Ownership

Owning gold and silver is now easier than ever before.

MetalStream
Oct 4 · 4 min read

Central banks are currently creating fiat currency in unprecedented volumes, making gold and silver ownership increasingly important. People are beginning to remember that to secure our economic futures we need to own precious metals. It has often been observed that all fiat currencies eventually return to their intrinsic value: zero. When that happens we need to rely on other stores of value to survive.

For most people gold and silver ownership for investment purposes has been restricted by barriers to market entry. Through the implementation of blockchain technology, we are finally beginning to witness the dismantling of these barriers. We could soon see ownership of precious metals become democratized on a global scale.

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The world’s central banks have enormous leverage over our governments. The ability to create money brings opportunities for unlimited corruption and it has been suggested that bank owners are the real power behind our governments. Some of the largest banks have been accused of manipulating precious metal markets bringing them profits while the market loses. The admission by JP Morgan that they were involved in spoofing precious metals markets is only the most recent example of a bank engaging in theft. An excellent commentary on the incident can be found here at Sprott Money.

Access to precious metals for most people takes the form of jewellery which can be both valuable and aesthetically pleasing. Many cultures have ancient traditions of storing and transmitting wealth through precious metal jewellery. Gold brokers can be found at traditional markets in even the most economically challenged countries.

Compared to fiat currencies precious metals hold value indefinitely. Given the limited volumes of precious metals available, it is in the interest of the world’s bankers to restrict access to them. This restriction has been created through barriers to entry which keep the majority of the population out of the market.

One barrier to entry for investors is the premiums charged by brokers. These premiums known as rent-seeking are created through restricted access to supply. As brokers are often the only vendors available to purchase bullion from, they are able to charge prices significantly higher than the market’s spot price.

Many brokers also set investment thresholds for bullion which are a further barrier to entry for small investors. For example, some brokers for gold bullion may set the purchase threshold at 1 ounce. These thresholds combined with the premiums charged for precious metal bullion effectively lock small investors out of the market.

Not only do small investors lack the minimum investment amount to buy bullion, but they are also aware that the premiums charged can erode or destroy their profits should they need to liquidate their investments. These practices are profitable for brokers but have a broader impact of restricting investment in precious metals to the wealthier segments of society.

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Rent-seeking in precious metal markets is being eliminated by blockchain technology. Two inherent qualities of blockchain tokens are the speed at which they can be transferred and the negligible costs of transfer when compared to traditional financial systems. Investors in tokens backed by precious metals can easily compare vendors to determine how much above the spot price they are being charged and choose accordingly.

Improving the liquidity of precious metal ownership while reducing the price will bring increased numbers of investors into the market. This process will be amplified by the fractional nature of blockchain tokens. In the future, investors will not only be able to purchase precious metals in individual grams, they will be able to purchase fractions of a gram. We could soon see true democratization of the precious metal markets bringing ownership opportunities to all sectors of society.

It is important to note that not all precious metal-backed tokens are created equal. Unlike MetalStream’s MSGLD some tokens do not allow owners physical access to their precious metals. This is an important point of distinction because access to physical ownership helps to ensure accurate auditing and reduces the opportunity for fraud. Owning precious metals traditionally carries the costs of storing and insuring those precious metals. MSGLD absorbs these fees for investors removing yet another barrier to entry.

An increasingly democratic market for precious metals will offer greater numbers of people the chance to actively secure their financial future against the ravages of fiat currencies. With strong auditing structures, the blockchain should also help to reduce fraud in the precious metal markets. The combination of precious metals and blockchain could be about to herald a brighter economic future.

MetalStream is the issuer of the innovative gold-backed MSGLD token. Please visit our website for more information, and contact support@metalstream.io for enquiries related to the purchase of tokens.

MetalStream

Written by

MetalStream Gold (MSGLD) tokens are gold-backed, ERC-1400 compliant security tokens employing a metal stream financing model.

MetalStream

Issuer of the innovative MSGLD security token, backed by and redeemable for bullion. Get the liquidity of a token, plus the safety of gold, at a 30% discount.

MetalStream

Written by

MetalStream Gold (MSGLD) tokens are gold-backed, ERC-1400 compliant security tokens employing a metal stream financing model.

MetalStream

Issuer of the innovative MSGLD security token, backed by and redeemable for bullion. Get the liquidity of a token, plus the safety of gold, at a 30% discount.

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