How gold banks could work with local dealers in a monetary system based on gold

GoldNRollGoldNRoll Posts: 116 Bronze ✭✭✭
I made a slide about the monetary system based on gold. It's designed for my friends and everyone who asks me, to make it easier for me to explain:



The black arrows are operations with fiat and other kind of currencies. The focus in on gold.

The main players are the depositories (gold banks), like Goldmoney. Because people open accounts with the banks.

Local gold dealers that partner with banks have to meet a few requirements. Have to be trustful, to have a significant quantity of gold cash (coins and small bars) and have to hold in their depository account a significant quantity of gold.

When the Goldmoney client (a person) redeems say an 1 ounce coin from a local dealer, what happens is that:
- the physical gold coin changes hands from the dealer to the client
- one ounce of gold is transferred from the client's Goldmoney account to the dealer's Goldmoney account
- fees are retired from the client's account and split between the dealer and Goldmoney

When a Goldmoney client deposit say an 1 ounce coin through a local dealer:
- the physical gold coin changes hands from the client to the dealer
- one once of gold is transferred from the dealer's Goldmoney account to the client's Goldmoney account
- fees are retired from the client's account and split between the dealer and Goldmoney

If deposits and redemptions are balanced, nothing to add.

If redemptions significantly increase comparing with deposits, local dealers will see their Goldmoney deposits increasing in vaults but they'll need coins and bars in hand. So Goldmoney will send 12.4 Good Delivery bars to refiners to cast in the coins and small bars required by the clients.

If deposits increase comparing with redemptions, local dealers will have a lot of cash in hands but not enough allocated in their Goldmoney accounts to transfer to clients. So they'll send coins and bars to the refiners to cast into 12.4 Good Delievery bars and deposit in Goldmoney vaults.
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