Introduction
The purpose of this article is to alert readers to the massive changes that could come about as a result of the rapid growth of gold-backed alternative currencies, and what individuals and businesses could do to take advantage of these changes.

See also:

• Is the Private Sector Really Part of the Public Sector?
• E-Gold and Alternative Currency FAQ.

The Offshore Advantage Newsletter - 2002 - Issue #5
If you've ever seen the aftermath of a tidal wave, you can't help but be moved by its devastating power. Boats smashed to pieces and scattered on the shore, buildings collapsed -- a vast scene of destruction and disarray. And yet, if you have boating experience and are out to sea, you know that a tidal wave can move right beneath your hull and you might never know the difference. That's the way it is with the truly massive changes in the world. They seem to happen with sudden fury, but in reality the big transformations move beneath us so silently we rarely know what is happening.

Prediction
The really big change that is quietly moving beneath us is the shift that is bound to take place with governmental currency. Fiat currencies (governmental paper currency without backing) have been the norm since 1973 when virtually all the major countries in the world followed the example of the U.S. Federal Reserve and abolished gold as the underlying support for their printed currency.

Gold is the historical real money of last resort. Whenever there are fears associated with any form of currency, prudent investors move quickly back to gold in order to hedge their positions. Throughout 5,000 years of recorded history, gold has reigned supreme as the fundamental money for commerce. At this moment in time virtually all the world's central banks view themselves in competition with gold and will do (and have done) just about everything they can to convince the populace that gold is simply a commodity like bricks or lead, and that it's now nothing more than a relic of history. Notwithstanding huge governmental down pressure on the gold spot price, the pieces are in place such that gold is about to regain its preeminence.

In my 1996 book entitled "Barter & The Future of Money," I argued that in the first quarter of the new millennium, as the Internet expanded and allowed for increased international commerce by the average person, no governmental currency would be adequate to service the needs of commerce. Further, because governmental currencies represent political statements, any given country's currency will ultimately be deemed (and correctly so) as the extension of their particular political persuasion. (More on this in the next newsletter.)

The following quotation by Lord Reese-Mogg and James Davidson in their 1997 book entitled the "Sovereign Individual" sums it up:

"While paper currency will no doubt remain in circulation as a residual medium of exchange for the poor and computer-illiterate, currency for high-value transactions will be privatized. Cybermoney will no longer be denominated only in national units like the paper currency of the industrial period. It probably will be defined in terms of grams or ounces of gold, as finely divisible as gold itself..."

Private currency, backed 100% by gold held in secure commercial vaults with third-party physical validation will engender consumer confidence and allow for the expansion of what the trade calls, "digital gold." Digital gold now exists and already allows people to use gold as money over the Internet, via personal data assistants, like the ubiquitous Palm Pilot, and even through cellular phones. It is much easier to use, faster and less expensive than wire transfers, and of course it is gold, not unfunded paper. So... given a monetary crisis one is way better off holding gold on deposit than paper currency. But, perhaps most importantly, it provides for a level of security and confidentiality no longer available through the US-dollar driven banking system.

As of March 2002, there are already seven private digital gold currencies in the world that allow people to use gold to buy, sell, and trade goods and services on an international scale in a matter of seconds. This fledging $2 billion a year industry has been growing at a tremendous rate over the past 18 months and shows no sign of slowing in the near future. [For a list of alternative currencies, see Is the Private Sector Really Part of the Public Sector?]

According to the Matthew Chancey of the Gold Economy, "Investment gurus such as James Davidson, Doug Casey, and Lord Reese-Mogg predict that by the year 2050 digital gold will replace the US Dollar and the Euro as the currency of choice around the world for commerce and savings. As the world seems to have entered a global recession, Digital Gold Currencies are growing faster than ever before. Both E-Gold.com and E-Bullion.com are operating in the black and making significant profits." And, Crowne Gold has just purchased 3Pgold.com with principals who know a great deal about launching and operating an alternative currency and with the resources to ensure success.

Digital gold has the potential to revolutionize the way the world does business. Already bullion traders use digital gold to move large quantities of gold instantaneously with superior cost efficiency. Two gold-mining companies have already started paying their shareholder dividends using digital gold. It is just a matter of time until digital gold catches up to the larger economy. The Luxor Casino in Las Vegas will soon be paying out winnings in digital gold, and Carnival Cruise Lines is running a pilot program to pay its employees via direct deposit using a digital gold currency coupled with an international debit card! Gold can now be held on both debit cards and smart cards. The financial world is changing.

Claiming Autonomy
This sea change is part of the process that may end up causing the death of some national governments or at least force upon them dramatic transformation. This is inevitable if governments can't control the exodus of currency and assets. Feeling this threat, nation states have reacted with ever-harsher means of exacting wealth from the people whom they are pledged to protect. Under cover of anti-money laundering legislation, the threat of terrorism, and the war on drugs, the US has launched a whole new level of citizen control laws. Most of this legislation has to do with the tracking of every dollar deposited, spent, or transferred, thereby stripping citizens of their rights to privacy and exposing anyone transacting business in US dollars to predatory seizure laws. With central planners attempting to manage the US economy, (much like the former Soviet Union), things do not bode well for a long-term recovery.

Curiously, gold remains unregulated regardless of its digital use in place of currency. For government to do otherwise supports the obvious position that all currency ultimately falls back on gold and this could put US dollars under huge downward pressure by currency speculators.

The alert individual is claiming personal sovereignty as nations lose their authority over knowledge, money, communication, and thinking. Slowly, quietly, as if waking from a dream, we take control of our lives and make the decisions that are best for us. Government is not capable of delivering what they promise -- protection, security and value-underwritten currency. It is the task of the autonomous individual to assume more of these responsibilities.

It's been said that there are three kinds of people in the world: those who make things happen, those who watch things happen, and those who wonder what happened. Continuing with the nautical theme we might suppose that those who steer their ships safely to harbor are the ones who "make things happen;" those who never get off the dock are the ones who "watch things happen," and those whose ships get dashed on the rocks for lack of understanding and direction are the ones who simply "wonder what happened."

By understanding the processes that are in play, the self-directed individual who makes things happen has the opportunity to conduct business from more secure locations, in more secure ways, and hedge assets where they may grow more rapidly beyond the grasping hands of predators

Until next time... Offshore IS THE SOLUTION.

Terry L Neal will be speaking at a seminar in Nassau Bahamas May 1-3, 2002 and in Cabo San Lucas, Mexico June 19-21 -- entitled Financial Privacy, Estate Planning, and Advanced Asset Protection.

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