The Small Business Goldmine FAQ
The two focal questions raised by this site are:
If there is a good reason, exactly how do I do that?
- Why should I earn gold in addition to dollars (or any other currency)? and
These two questions inevitably raise other questions. All of them are answered here. If you have additional questions that are not answered, please email them to us.
You benefit by effortlessly accumulating a stable asset-foundation for your business. What's the point of earning more dollars if every new dollar earned buys you less and less?
It's easy to do, takes very little time, involves only a small addition of new code to your website, and will go a long way towards solidifying your income and asset base in the face of the dollar's slipping buying power.
Diversification is generally recognized as a plus in the investment world. The same thing holds true when it comes to earnings. Diversifying your earnings base - and therefore the composition of your operating cash, benefits merchants and service providers in the following ways:
- What you earn grows in terms of buying power between the time you earn it and the time you spend it;
- That growth enables you to offer discounts you could otherwise ill afford to entice your customers to use gold to pay you;
- Because of gold’s increasing buying power it is advantageous to use gold to pay off your debts, resulting in a net-gain;
- Saving up a base amount of gold over time enables your business to weather any future dollar-related currency crises or economic downturns.
No. What you earn in terms of gold will maintain its purchasing power over time, while that of the dollar is declining. There is literally no downside to accepting online payments in gold.
- It is easy to do,
- it takes only minutes of your time, and
- once done, the worst thing that can happen to you is - nothing (i.e., nobody wants to pay for your products in gold).
You still make the same profits as before, and you incur no liability to anyone by setting up a gold account for merchants.
Why is the gold price rising?
Essentially, because there is a supply shortage, because world wide mine production has decreased over the past decade, and most importantly, because the US dollar the currency for which most gold is traded around the world, is losing its foreign exchange value.
Is gold also gaining in terms of other currencies?
Why is the dollar losing its forex value?
In 1945, the dollar was declared to be the world’s reserve currency with the express understanding that it would be backed internationally by the then-existing US gold stock. In 1971, president Nixon ‘closed the international gold window’ making the dollar a pure fiat currency. A deal was struck with the Saudis that ensured they would only accept dollars in payment for oil, world wide in return for US military protection, thus ensuring continuous dollar demand world wide. That arrangement has now come into question. Iran, Kuwait, Syria, Russia, are already accepting euros for oil. The Saudis have recently stopped pegging their currency to the dollar - a move widely acknowledged to lead to eventual dumping of the dollar in favor of the euro.
How far can the dollar fall - and how do I know it will really get that bad?
When measured against a so-called ‘basket’ of other major currencies (displayed by what is known as the “Dollar Index”) the dollar’s value is currently at an all-time low. In terms of technical analysis, there is no fall-back option. There is no “support” below. That means that the dollar could theoretically fall to only a fraction of its current value.
The world’s monetary authorities will do their best to slow this fall or to stem it entirely, but their efforts can only be successful if nothing else goes wrong. Unfortunately, the current credit crisis is just such a case of “something else” going wrong. That crisis has not totally played itself out, yet. Further, if (or when) the Bush administration attacks Iran, there is no telling what can happen when world oil flows are seriously disrupted. When Saudi Arabia actually begins to officially accept euros for its oil, however, the dollar’s decline can quickly turn into a complete rout. Similarly, if China sells a significant portion of its holdings in US treasuries (currently 800 billion worth), the dollar can very quickly collapse. There are many more potential ‘triggers’ for such a collapse, and all of them are well within the realm of not only the ‘possible’ - but even the likely.
How do I accept online gold currencies?
You can apply for ‘merchant status’ with the top online gold currency issuers, and then offer to accept online gold currency in exchange for your products or services. Upon clearing, the payment will result in a commensurate amount of physical gold being transferred from the buyer's account to your account with the issuer.
Which Digital Gold Currency should I choose?
Gold Money and Pecunix are the most reliable online gold currency issuers because they use outside, independent auditors to verify the accuracy (and actual existence) of their gold holdings.
How safe are online gold currencies? What are the risks?
The two we recommend are very safe. They have the most impeccable reputation in the digital gold currency industry. There are others, of course, but as already mentioned, their verification procedures leave things to be desired, in our opinion.
How do I find customers who shop with online gold?
You have three options:
- Sit and wait until a customer who already uses GoldMoney or Pecunix comes to your website and decides to use his online gold currency to buy the products you decide to sell for gold, or
- Educate your existing customers about the benefits of owning gold, the convenience of purchasing gold online, and whatever discounts you may decide to offer them for using their digital gold to pay for your products or services, or
- Using both options 1 and 2 above.
You can educate your customers buy referring them to our web site or by using content we will provide on your site (only after express permission, which will be freely given upon request).
How do I price my products in gold?
Take the dollar price of your product or service and divide it by the day's dollar-gold price per metric gram of gold (or "gold gramm", abbreviated "gg" in GoldMoney's system). The resulting amount or fraction corresponds to the multiple (or fraction) of a gram your product will cost your customer.
Leave this amount constant, but periodically check (every few months or so) by how much the dollar price of gold has increased. This will give you a good idea of how much the dollar’s purchasing power is declining over time - and how much you have gained in terms of dollars by accepting gold as payment.
How can I educate my customers about the benefits of owning and paying with gold?
Refer them to this web site. Show them the gold and US dollar charts published on our main page. Inform them that, by exchanging a part for their wealth into gold, they protect their wealth and increase their buying power over time. You can also offer them discounts if they pay you in gold.
How do I know that the gold price won’t drop again, like it did in 1980-81?
In 1981, Americans had lots of savings. Because of that, the US economy was able to withstand then Fed chairman Paul Volcker’s emergency interest rate hikes to an unprecedented 18 - 19%. That increased the cost of holding gold over dollar-based assets and people began selling their gold holdings to take advantage of this tremendous interest rate bonanza.
In today’s economic climate, with Americans deeply in debt and owning near-zero savings, such a policy would be impossible to institute. The US economy would disintegrate immediately. Sharply rising interest rates would cause all consumption to cease (it is currently mainly financed by cheap consumer loans and home refinancing), and would bring business activity to a sudden halt.
How can I protect myself against short-term swings in the gold price?
Earning and holding gold is a long-term strategy. If you were to sell gold on every short-term price correction, you would constantly be behind the curve and lose all benefit of holding gold. Gold is an insurance against dollar-depreciation. As an experiment, simply price one of your major products in both gold and dollars and give your customers a choice. Then, calculate your gains or losses one year from now. You will see the benefit immediately.
Won’t I jeopardize my business when I lock up liquid cash in relatively illiquid gold?
Digital gold or silver currency is as liquid as credit card 'money' (i.e., debt). Also, you do not need to “lock” anything up, at all. Just give your customers a choice. You will still be able to earn dollars just like before - except that by also accepting gold, you will have a basis for a comparison as to which form of payment is more profitable and more secure over time.
Will the government confiscate the gold I earn?
It theoretically has the power regardless of what laws are currently in force. However, far too few people and businesses own any appreciable amount of gold, so the cost of confiscation compared to the benefit that can be derived would be prohibitive to the government. In 1933, when FDR confiscated Americans’ gold, almost every American owned some gold, so there was much more for the government to gain by its action.
How do I keep track of gold price movements?
You can find daily, real-time gold price charts on this page of this website and tens of others on the Web.
Won’t it complicate my accounting when I sell products for both gold and dollars?
Not really. Simply list the accumulated gold holdings as an asset on your balance sheet at the then-current gold price. If you find a vendor who will accept gold in payment from you, you simply draw down your holdings by the amount of your payment. The only difference is that gold payments are best accounted for in terms of gold grams or fractional ounces, rather than their dollar-price. For dollar-accounting purposes, simply add up all remaining holdings and then calculate the present value in dollars at the going rate.
What about taxes
The IRS currently regards a gold transaction as a barter exchange. Statutorily and under its regulatory powers, it has the power to demand payment of capital gains taxes on the amount of appreciation of any amount of gold between the time of receipt and the time of sale. In reality, this is rarely if ever enforced. However, it is important to understand that you owe such taxes only on actual gains. No gain, no tax. Also, any losses can be written off just like other business losses.
What are the realistic chances of an actual dollar-crash?
They are surprisingly high. Without the guaranteed worldwide demand for dollars resulting from middle east oil pricing in dollars, the US government and Fed’s extreme levels of over-issuance over the past several decades will cause the dollar’s forex value to decrease dramatically, even catastrophically. Euro-pricing for middle eastern oil is no longer a theoretical possibility. It is a reality - and it is spreading.
How will banks or other lenders perceive my acceptance of gold as payment for products?
They will perceive you as a prudent business man or woman who had the foresight of taking precautions against the dollar’s decline.
Can earning gold help me repay my outstanding business loans?
Yes. Because the dollar-price of gold is rising, you will be able to use an appreciating asset - gold - to exchange favorably for ever-depreciating dollars, resulting in a net dollar-benefit to you in your repayment efforts.
Can it help me secure future capital?
See the answer to “How will banks or other lenders perceive my acceptance of gold as payment for products?” above.
Can I earn gold in the 'brick and mortar' world?
Theoretically yes, but here the convenience-factor goes against you. Physical gold does not yet circulate as a currency, while electronic gold transfers are becoming more and more common.
Of course, you can always pick a few products and price them in terms of gold grams, etc., even in the offline world. The "worst" thing that can happen is that it piques your customers' curiosity. You can then hand them a pamphlet introducing the subject and direct them to your web site where they can buy with online gold.