Fintech or Physical Bullion

We live on a dangerous planet through some very interesting times.

Frankly, I do not see too much of a difference between the harsh reality of the Dune Universe and our world.

Yet, it is the very nature of life on Terra that made us into the natural born survivors we are today. But to survive in this environment, one needs more than just brain and brawn. One needs money. But cash is no longer valuable. In fact, it stopped being worth anything the very day its last link to the gold standard was severed by Nixon in 1971.

Gold has always been the financial backbone of an economy. Paper money was invented by unscrupulous financiers and promoted by even shadier politicians to steal, garnish, and withhold the labor of workers in wartime.

This is what happened during the Napoleonic Wars, when a hard-pressed England, trying to subvert an entire continent, used bullion as a weapon of war, subsidizing espionage, covert operations, and corrupting the French Empire bureaucrats, to defeat the Corsican Ogre.

But to do so, and since the economy has always been a sum zero game, someone not something had to give. So, the UK government resolved to also let private banks issue paper money that was redeemable against gold. But the catch was that since this was a free market, there was a premium on gold that evolved with the fortunes of war.

So, unless Britain was winning, which was not the case for most of the wars, gold was not to be had at any premium, the City was morose, and paper money lost most of its value. How did this affect the people? Easy, the workers got screwed out of their meager savings, turning to theft, crime, joining the Army or the Navy, in short risking life and limb, to be able to support their families, and keep them out of the poorhouse.

What the City and the Government did not steal from the people via the worthless fiat money, the Tax Man did with the war levies, and various imposts that originated in this era.

War, my friends, is a costly proposition. War is very profitable for a few people. But it is downright unhealthy, ruinous, and a mortal danger to most of us.

But I digress. Thousand apologies, sahib!

So, back to – How do you protect your savings today?

Some people yearn to protect their savings and investments at all costs. They do this by hedging their assets over a variety of savings instruments. They buy property, land, valuables, gold, cars, art, businesses. They watch the markets, and they buy low and sell high. In short, they bend over backwards, hoping to escape the depreciation of their hard-earned cash.

Others invest it online or place it in a brick and mortar banking institution, again hoping, and praying the rate of return will be forever in their favor. But you know what they say, sometimes you pray to God for something, but the answer is No. Unfortunately, the joke is on the people.

Some go boldly into the unknown: bitcoin, virtual currencies, and other arcane financial experiments.

One of these fascinating technological innovations is called financial technology.

Fintech is good if you enjoy making some money for yourself and buying that proverbial Lamborghini for the Revolut boss. But I got ahead of myself. Let’s back up a bit, shall we?

Let’s say you have a Revolut portfolio account: international credit card, bank card, savings card, 24/7/365 online access to the markets, preferential currency exchange rates all over the globe, the whole nine yards.

You can and people do this all the time, you can actually buy XAU or virtual gold futures on the market, using the Revolut app on your smartphone. It takes 30 seconds to 1 minute to place the order to buy, and Bob’s your uncle. It’s that easy and that fast.

But there are a few catches though. Some directly impact your return on investment (ROI). Others only cast a doubt on the propriety of the whole process.

1. When you place the order to buy on REVOLUT, you undertake to pay an upfront commission of around 1% of the value of the transaction. Let’s say that the market price of a troy ounce of virtual gold is $2,610. You will pay $28 more or $2,638 per oz.
2. When you place the order to sell on REVOLUT, you undertake to pay a backend commission of around 3% of the value of the transaction. Let’s say that the market price of a troy ounce of virtual gold has gone up by $100 to $2,710. You will pay $84 more or $2,722 per oz. That is before you get to make any money off your investment. In this case, you won’t profit from your business acumen. In fact, a simple mathematical calculation will show that you need to offset a $112 handicap just to break even. If you are looking for any meaningful ROI of, say 1-4%, you would have to weather some market volatility. And that, ladies, and gents, is not for the faint of heart.
3. Furthermore, a mere exploration of the concept of virtual gold investments, will showcase the ugly truth. When REVOLUT sells you the XAU gold future, it does not give you access to the physical bullion. You are buying a future option into the market price valuation or appreciation of a virtual asset. Who can say that REVOLUT doesn’t also sell your tranche of gold to other online investors? You see how easy it is for an unscrupulous, unregulated agent to create a commercial forum for venture capitalists who are comfortable buying ethereal options that maximize profit for the puppeteer controlling the strings than it does for those risking their money?

In the end, REVOLUT founder and boss, Nikolay Storonsky, built his money-making machine on the back of the only thing that destroys the value of capitalism: Greed. Everything else works for capitalism.

If you are into saving for a rainy day or just making sure the monopoly money you hold today will have a value tomorrow, buy physical gold. Buy low and sell high.

Why do I make this marked difference between these two approaches?

Up until recently, bullion coins have been legal tender in most countries. I mean, which merchant worth a damn, would say NO to HARD money. You’d have to be insane. However, since we obviously live in an insane world, that has shed any trace of pretense or decency, nowadays gold coins are legal tender only where accepted.

Some states even impose restrictions by separating the coins minted domestically from foreign. But in actuality, this makes sense.

Why do I say this?

Say you have a Swiss Vrenelli coin weighing 6.45 gr of 22k solid gold. That represents by weight only 5.91 gr of 24 k or .9999 pure gold.

Those 8.3% worth of zinc, silver, copper or nickel, they do subtract a lot of value, eh!

Whereas a Canadian 1 oz gold coin weighs in 31.1 gr of pure .9999 precious metal. What you see is what you get. And gold, ladies, and gents, is gold. It is portable, so unlike silver it won’t weigh down when you carry it as if you were a goddamn mule.

If I had a car dealership and a dude walked in to buy a car with gold coins, I’d make sure his gold was genuine, and give him the market value for it. Pure and simple.

Gold is the only wealth that maintains its value not just over time, but also across generations, centuries, and millennia.

Gold is valued so much because it retained the attraction it exerted on the first city dwellers who appreciated it just as we do today.

Fun facts

In 2014, according to Financial Times Research, 150 Swiss banks had under management non-residents assets worth $2.04 trillion.

Also, in 2024, the Swiss Confederation has reported stocks totaling 1,040 metric tons of gold, with another 200 metric tons in private hands. I find that estimate totally underreported but that’s just me. In any case, this statistic if we are to take it on faith, makes Switzerland the 7th largest repository of gold in the world.