How technology can democratize gold investment 

Gold bars are seen at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, March 18, 2016.   REUTERS/Leonhard Foeger/File Photo   - D1BEULVPYLAA

Tangible assets: gold is an attractive - but historically inaccessible - investment Image: REUTERS/Leonhard Foeger/File

Herman Widjaja
Vice-President, Engineering, Tokopedia
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Gold investment has been well known to provide a balance of security and attractive returns. In the past 18 years, the price of gold has grown steadily at 400%, with 22% year on year growth. Unlike cash where value continues to deplete over time, the value of gold continues to increase if adjusted by trend.

Traditional gold investment has a high cost of entry. A certified 1gr gold bar (the lowest common denomination) is traded at around US$ 45. Let us consider the GPD per capita in some Southeast Asian countries: Indonesia at US$ 3,570 (US$ 295/mo), Thailand at US$ 5,900 (US$ 490/mo), Philippines at US$ 2900 (US$ 241/mo), Myanmar at US$ 1,275 (US$ 105/mo). Given the implied average income per month, most people in Indonesia need to save 15% of their monthly income to save 1 gr of gold compared to 9% in Thailand, 18% in Philippines and 42% in Myanmar.

In other words, gold investment is a luxury that very few people can afford.

Imagine a day where everyone (yes, everyone) can just start saving gold without the barrier of having to save a significant portion of their income. A day where everyone can buy gold in any denomination values. We now no longer have to image since new technology has the ability to solve this problem and revolutionise how we are administering gold investment as a society.

With e-gold, everyone can start a gold investment with USD 3 cents only. This price point removes the barrier of entry and allows a much broader part of our society to participate in gold investing.

There needs to be a shift of perspective from “buying gold” into “start saving in gold”. Rather than saving cash to buy gold as a final destination, they can just start saving in gold.

The digital marketplace plays a vital role towards this revolutionary mindshift. There are two ways that digital marketplaces such as my own can incentivize a behavior shift. First, by providing a short-term financial incentive, such as rounding up gold savings. For customers who want to purchase US$ 15.20, we can offer the customers additional $0.80 of e-gold. Second, we can also allow physical gold redemption for people to commemorate their milestones.

Imagine someone in Myanmar saving US$ 0.35 per day or US$ 10.5 per month; which translates to 0.008 gr per day or 0.2 gr per month. Building a habit of daily savings or monthly savings, they can reach 1 gr of gold investment in 5 months. As a reward of their great investment behavior, every 5 months, they can redeem 1 gr of physical gold.

By making gold more accessible and shifting society to a “save in gold” mentality, we are enabling a broader society to enjoy the benefits of gold investment.

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