The South African Gold Coin Exchange & The Scoin Shop invited Jaco Visser, Editor of FinWeek to sit down with Co-Founders of Troygold, Bastiat Viljoen and Dane Viljoen, to discuss the rise of goldtech. Here is the conversation from that Zoom call and this feature also appeared in print, FinWeek Friday 5th November.
Golden Innovation - Insuretech, spacetech, agritech, lawtech . . . and now goldtech. The application of technology to different industrial sectors or asset classes marches on.
What makes the application of technology to an eons-old asset class such as gold exciting, is the massive value unlock it brings about. Or, as Dane Viljoen, co-founder of Troygold with his brother Bastiat, a Stellenbosch-based technological company, puts it: “Goldtech brings the value of stored gold back into the light.” Billions of dollars worth of gold is kept in personal and bank safes around the planet. Monetising this asset class can be a tedious and unsafe affair, with the owner having to find a counterparty or exchange to sell his/her bullion to. The proceeds of this eventual sale are susceptible to opaque pricing and high transaction costs. At last, the gold seller has his/her cash in hand, which they can then use elsewhere.
But what if a technological application, even downloadable on a gold owner’s mobile phone, can give the holder of bullion immediate access to their gold’s currency value? That is what Troygold aims for and it sits neatly within Viljoen’s narrative of bringing the value of gold into the light – or more practically, providing instant access to and liquidity on gold. “Gold is the best store of value, but it’s also actually a money,” says Viljoen. “Yet, it sits idly in many safes, without the owner being able to access products that one can with its fiat money counterpart.”
Money has been the bedrock of the industrialisation of nations across the planet, says Viljoen, and to have a store of value sitting idly, is also inhibitive for economic growth. The latter relies on the provision of credit and lending by consumers and businesses, he continues.
“For centuries, the main function of gold was to back the value of fiat (touchable or tangible) currency,” he says. “That changed when the US dropped the gold standard in the 1970s and fiat currency was left to the whims of the markets and central bank printing presses. Consequently, inflation has been hard on fiat currencies ever since, gnawing away at the purchasing power thereof year after year.”
However, to overcome the problems with gold being a store of value and hedging against the impact of inflation, many bullion investors found that they don’t have access to this valuable asset class. And that is where Troygold saw and grabbed the opportunity. The company was set up in 2018, after which it built its own proprietary gold digitisation technology – growing to more than 5 000 users ever since, says Viljoen.
“Our platform is aimed at gold owners whose physical gold is held outside the banking system. Many of these investors’ gold are held at home or in safe-holding places, such as SafeGold. Investors can therefore safely store, but not readily monetise the value of these gold holdings,” Viljoen says.
The process of monetising gold with the Troygold technology platform is fairly straightforward. In South Africa, Troygold allows gold owners to deposit their bullion (such as gold Krugerrands) at any of The Scoin Shop’s nationwide outlets. The gold will be bagged and tagged and the depositor will receive a digital certificate of ownership before it is stored at SafeGold’s world-class safe-storage facilities. The deposited gold will then be assigned to the depositor’s Troygold account (which is accessible on the Troygold app). A bank account and Mastercard linked to the gold held in the vault is then issued to the depositor –
providing access to a loan facility backed by the gold held as collateral.
“This is an extremely safe and neat process which also allows gold owners to access currency liquidity, without the need to sell their gold holdings,” says Viljoen.
An important part of goldtech is the trust that gold owners need to have in the application to make use of it. “Trust is the holy grail for gold outside the banking system,” says Viljoen. “Therefore, our gold holdings are fully reserved, segregated and allocated. We can’t sell anything that doesn’t exist in the vaults. Thus, if anything happens to Troygold, the client still has ownership of their gold.” What makes gold tech, and Troygold’s, application more trustworthy, is that gold owners can redeem their gold through the application and have it delivered to their premises should the need arise. Through this gold tech application and in cooperation with The Scoin Shop’s network of bullion experts and outlets, Troygold has truly succeeded in “bringing gold’s glimmer into the light” for owners of this asset class.