Summary
Carter Dougherty in Frankfurt reported in the June 18 issue of the New York Times that Thomas Geissler has invented a vending machine that dispenses pieces of gold. Customers will be able to buy 1, 5 and 10 gram mini-ingots, Canadian Maple Leaf and South African Kruger-rands. His plan has a strong appeal in Germany where hyperinflation wiped out savings twice in the 20th Century. The concept of gold dispensers came to Mr. Geissler as he considered how to advertise his online market place for precious metals. Within three month, his TG-Gold-Super-Markt plans to have machines running in Germany, Austria and Switzerland. Eventually he plans to install 500 machines around the world. His company, is showing off a prototype in Frankfurt. They will be armored and he plans to test them with explosives before placing them in Russia and other dangerous nations. The market in Germany is 150 tons/year. A greater demand for gold followed the beginning of the credit crisis last year.
Analysis
History tells us that they will. Germany is one of the more salient examples but during the American Civil War, when Confederate money lost value, not only gold but various foreign currencies were used. Similarly during the American Revolution and for some years after it ended, gold, silver and foreign money circulated. Sterling was popular and readily available in Canada. Spanish money was used in southern states. We have entered an era beginning last year where central bankers in many places are either presently tinkering with the money or thinking about it. The biggest worry is about U.S. currency but the Russian ruble has had its troubles and many people in the European Union are concerned that a less conservative central banker could replace Jean Claude Trichet. Several political leaders including Nicolas Sarkozy are unhappy about the existing constraints on the euro. In Africa, of course, reliable currency is a rarity. So far Asian currencies seem to be holding up but Indians are famous for wearing their fortunes on their fingers and arms. Even the Chinese do not regard gold as a hostile form of exchange. Reactions of the BRIC group of nations could quickly cause a run on the dollar and this would accelerate gold sales internationally. With 500 worldwide machines dispensing small quantities of gold, consumers could quickly establish prices for all types of goods based on gold. Prices would reflect the new gold-based levels. Any paper money that could not be immediately exchanged for gold would quickly become worthless. This would have an impact on government bonds. If governments would not insert a gold clause in the sales contract for such debt instruments, no one would buy them. Individuals, institutions and governments could easily unload worthless foreign paper notes for whatever they would bring in gold. Would governments dare to react against this revolutionary private system of exchange. Only at the risk of dire peril for their functionaries. Mr.Geissler may be onto something big.
