Last night CoinSpot, Australia’s most popular crypto exchange, listed our gold and silver backed tokens, Gold Standard and Silver Standard. This is a ground breaking development for investors in precious metals and crypto traders alike.
Australian precious metals investors now have the ability to trade gold and silver 24 hours a day, 7 days a week from anywhere in the world. These trades can be of any size, require no picking up, receiving or storing of bullion, and are at low margins compared to directly buying bars or coins.
Gold and Silver standard don’t only provide a safe, secure and cost effective platform for investors but also act as a stablecoin for crypto traders to park profits between trades without going to Aussie dollars or a Fiat currency tether. Simply swap, say, your Bitcoin (BTC) for Gold Standard (AUS) on Coinspot at 1am Saturday night whilst on holidays in Bali. This means you can completely avoid Fiat currency and bank risk even if that is a proxy like USD Tether (USDT) where the USD funds are purportedly held in a bank.
Regular readers will know about Gold Standard (AUS) and Silver Standard (AGS) but here’s a quick snapshot of what they are. Each token is backed 100% by real physical gold and silver bullion already vaulted in Reserve Vault, insured by the world’s largest insurer, and verified by BDO. This is all done in the high regulatory, geopolitically safe environment of Australia. Each AUS (Gold Standard) and AGS (Silver Standard) token equals 1gram of each metal with their price pegged to the spot price of each metal. The tokens are ERC20 tokens meaning they are hosted on the ultra-secure, cost and time efficient Ethereum blockchain. The goldsilverstandard.com
website provides anyone, anywhere, the ability to see how many tokens are created (via the publicly accessible and immutable blockchain ledger) and how many grams of bullion bars are held, including the serial number for each bar. BDO then verify that independently each quarter.
Some of the commentary on social channels last night after the launch was around the spreads on silver. This is not new to regular bullion traders but it is worth addressing again so everyone understands.
Silver does indeed have a larger spread than gold and a larger spread than ordinarily seen on most cryptocurrencies. Most of the spread in trading precious metals is in refining, bullion production and handling costs before any margin on sale. With the gold to silver ratio at a near all time high of 88, you can imagine that the cost of production as a percentage of the value of the metal varies greatly between gold and silver when the cost of actually producing the bars is relatively similar.
In other words the cost of producing say a kilo bar is not hugely different but when applied as a percentage against one being say $860 and the other $72,000, we see much bigger variances in percentage terms. On top of that, silver is more expensive to refine, more expensive to transport and more expensive to store.
The spread below spot for buybacks allows for refining and repouring odd bars or on-selling and freight to refiners (who also pay less than spot) on a wholesale basis.
Whilst these tokens enjoy lower spreads than you would ordinarily pay for bars or coins from a bullion dealer, they are backed by real bullion that must be bought and sold and hence subject to the same market dynamic described above.
Whilst higher than gold, that same historically high Gold Silver Ratio
(GSR) compared to a 100 year average of around 45, and the maths of ‘reversion of the mean’, has some investors unconcerned by the relatively small extra spread.
Of course you can still buy and sell over-the-counter (OTC) through Ainslie Wealth
for a person to person experience or high value trades (up to $10m) together with our sought after, completely ‘cold’ Ainslie Crypto Wallet giving you the highest level of security for your tokens.