New Partnership Announced with LBT P2P lending and borrowing

GMONEY1GMONEY1 Posts: 313 Bronze ✭✭✭
ICYMI: P2P borrowing and lending backed by your bullion. Coming soon!
Excited for this.

http://m.marketwired.com/press-release/-2217830.htm

Comments

  • mr1mr1 Posts: 289 Bronze ✭✭✭
    @GMONEY1
    This is very exciting news. Thanks for posting! Peer to Peer lending and borrowing backed by gold is a huge step forward.

    And this enhancement has actually been requested and discussed before in the wishlist section of the forum.
    http://community.goldmoney.com/discussion/3965/p2p-gold-silver-backed-lending-silverbullion-in-singapore-are-now-a-major-threat-to-goldmoney
    Goldmoney surely had this in works before this post was made, but either way, it is good to see wishlist items being implemented. Thanks Goldmoney!
  • GoldmattersGoldmatters Posts: 3,470 Admin
  • ike11ikeike11ike Posts: 142 Bronze ✭✭✭
    Any of you jabronis need a loan? ;)
  • Skookum_JimSkookum_Jim Posts: 117 Bronze ✭✭✭
    I had a look at the faq, the minimum amount to borrow/lend is 25.000 gbp for businesses or more than 60k gbp for individuals. Am i the only one who thinks this might not have been the wisest partnership?
  • TexTex Posts: 136 Bronze ✭✭✭
    I think this is a great idea.
    @Skookum_Jim I'm sure the lending platform will grow and become more accessible to others as time goes on. It's a good step in the right direction.
  • mr1mr1 Posts: 289 Bronze ✭✭✭
    I looked at the LBT site and just realized that I had initially misunderstood this partnership and what LBT does.

    I thought that they allowed users to get a return on their gold, by lending it out, but that is not the case. If I understand correctly, what they do is allow users to use their gold as collateral to borrow fiat currency from other users. So the gold isn't being lent out, the gold is acting as the collateral in the loan similar to how a house is collateral for a mortgage loan.

    I think this platform is useful for people that want to make collateralized loans, outside of the banking system. And for those that want to borrow against their gold holding.

    I don't know if anyone really offers a platform for lending out gold, but some may be trying. Here is one example of a business deal where gold is borrowed, and the payments are made back in gold.

    "FREEDOMFEST LAS VEGAS, Nev., July 15, 2016—At FreedomFest, Monetary Metals announces that it has closed its first gold fixed-income deal, to finance the gold working inventory of Valaurum. The initial amount of gold meets Valaurum’s current needs, with room for expansion driven by its growth. The interest rate is 5 percent of the gold, paid in gold."
    https://monetary-metals.com/fixed-income/
  • GMONEY1GMONEY1 Posts: 313 Bronze ✭✭✭
    edited May 24
    @ike11ike i have not used the service yet.

    @mr1 I agree it does seem mainly to be for PM collateralized loan.

    I want to know if lenders have the choice to just keep the metal if a borrower defaults? It seems like in the case of default, they sell the metal to return as much capital to the lender.

    @Skookum_Jim I agree with @Tex on the roadmap for accessibility and lower amounts. If they want to increase the number of transactions/loans then they will have to lower the minimums. I would not be surprised if by 2018 we are seeing micro loans ($100) with Goldmoney Personal collateral. Or even $1000-5000 loans with Goldmoney business Collateral. It seems like a great next step and partnership overall.
  • paddy10tellyspaddy10tellys Posts: 182 Bronze ✭✭✭
    @mr1 thx for the assessment. I was stuggling to get my head around it.

    I'm still pondering. Any thoughts about potential use cases? Apart from obvious ones like the gold standard...?

    Is it for lending scenarios where banks fear to lend? Or, a punt on Gold-fiat pairs?

    @GMONEY1
    if default:
    your gold <- their gold
    else:
    your gold = fools gold

    So damn right you get to keep the metal - unless it was collateral for umpteen other loanees as well?

  • GMONEY1GMONEY1 Posts: 313 Bronze ✭✭✭
    @paddy10tellys I don't think you are correct. The LBT website says that they sell the collateral gold for fiat dollars to give back to the lender on the case of default. If I lend fiat dollars through the system, I want to know if I as a lender can just take the borrowers GOLD if they default.

    Also a good use case could be:
    Small Business owner wants to do a Renovation on store front; they don't have the cash flow or credit line to do it; but the owner does own gold; owner doesn't like banks and so chooses LBT to leverage his/her gold holdings at goldmoney to secure a loan (without a BS or political application process at the bank); gets the loan at an open market rate through P2P auction; does the reno; attracts more customers; increases cash flows; makes the interest payments back to the lender; pays off the loan at the end of the term... all without going to a bank... and hopefully without having to actually sell any gold (bc that would mean default).
  • GMONEY1GMONEY1 Posts: 313 Bronze ✭✭✭
    Another use case:
    Goldmoney customer has been saving in gold; there is a piece of real estate (land, foreclosure, etc) that requires cash only (either for down payment or whole purchase); customer doesn't have enough cash at the moment but they can leverage their gold through LBT P2P auction to secure the fiat dollars.

    It could also be that the real estate seller favors a "cash deal"; this could be a competitive advantage if you are the buyer... without using a bank.
  • GMONEY1GMONEY1 Posts: 313 Bronze ✭✭✭
    Another could be debt consolidation depending on the marketplace rates:
    Say a Goldmoney customer has credit card debt, medical expenses, back-taxes, student loans, etc with interest of 6% or higher (credit cards is most likely here @ 10+%)...that customer could use a P2P loan offering a rate of less than say 4% to save on interest expenses. And they'd likely boost their credit score in doing it too, because banks would see debt reduction, but really the customer is leveraging his/her gold to pay the same amount of debt off at a lower interest rate.
  • 79Au19779Au197 Posts: 4,047 Gold ✭✭✭✭✭
    Is this available in the US?
  • ike11ikeike11ike Posts: 142 Bronze ✭✭✭
    Collateralized lending and borrowing. Sounds awesome to me. Minimum to loan is 5k and minimum to borrow is 25k....says right on the home page.
  • paddy10tellyspaddy10tellys Posts: 182 Bronze ✭✭✭
    @GMONEY1 Many thx. OK, I'm paying attention now.

    The more I read, the more interesting it becomes. It's James Turk - that's a plus.

    One individual could loan £20000 each year, to various borrowers & pay no tax on the interest after the launch of the LBT innovative finance isa. That's £20000 each year - recurrently! Assuming you are a UK taxpayer that is...

    It avoids dodgy, tyre-kicking due-diligence because the collateral is gold! Seems secure. Cuts out the banks. Backed by gold. Attractive risk/reward ratio. Awesome! JT is a genius.

  • packetmagicpacketmagic Posts: 7 Tin ✭
    So I love this idea. However, I think it should be much like Prosper.com except backed by gold. You should be able to allocate part of the loan along with others to spread out the risk further. It looks like LBT is only going to be for UK citizens. I hope something similar becomes available in the USA soon.
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