Monday, 11 April 2022: Russian citizens lost 80% of the value of their rubles against the dollar in the two weeks following Russia’s invasion of Ukraine. In addition, Russians with bank cards couldn’t transact online as accounts were frozen. Amid growing fears of banks limiting access to depositors’ funds, there were queues outside ATMs for days as citizens tried to get their hands on cash.
At the same time this was playing out in Russia, gold holders gained almost 7% on the USD value of their savings. The price of gold reached an all-time high and the ruble price per ounce doubled. Those holding physical gold or bullion outside the banking system had zero risk of asset freeze or ownership loss. The wealth of citizens who owned gold was protected from the effects of war and sanctions, though they found it difficult to use this wealth in the financial system for purchases and payments. Russia’s central bank experienced a similar problem.
The situation has not only highlighted the importance of owning safe-haven assets, according to SA digital gold startup Troygold, but also how crucial it is to be able to access the value of these assets for your day-to-day finances.
Dane Viljoen, Troygold Chief Strategy Officer and co-founder, says, “Gold is again proving its age-old role as a wealth hedge in a time of crisis – it’s not wise for savers to hold all their cash in the banking system in this environment due to the risk of currency wars, of highly indebted nations devaluing their currencies to stay solvent, and historically overvalued stock markets. Gold has maintained and even increased its value during this geopolitical crisis – so holding physical gold outside of the banking system is proving to be a smart allocation of savings.”
Fintech Troygold terms itself a digital gold non-bank that allows South Africans to store their wealth in physical gold bullion and access banking services on this gold value, without having to sell it – a concept they term ‘living in gold’. Individuals can open a Troygold gold account within minutes, schedule a deposit of existing gold held at home such as Kruggerands, or buy gold all within the Troygold mobile app, and then access instant liquidity for day-to-day transactions – they can buy, sell, spend and borrow against their gold.
Customers who own gold on the platform receive a gold ownership certificate detailing which specifically numbered Krugerrands in the vault they own or co-own, and the gold insurance and vaulting costs are free of charge. Similar to a traditional bank experience, users access these services using a mobile app, a Troygold bank account and Mastercard (powered by Access Bank SA), which are issued to the gold owner upon opening an account.
“Troygold serves as an alternative to banking services using your national currency. We are offering a digital bridge for physical gold assets to be used alongside your normal bank account. We believe this plays a significant role in safeguarding people’s savings and is a sound money alternative – something needed in these times,” says Viljoen.
The platform digitises your gold, which allows you to trade any amount of gold 24/7 and even pay in physical gold. It also offers instant liquidity by way of a loan facility to the value of 75% of your gold holdings, available immediately. The funds in the loan facility can be spent anywhere Mastercard is accepted, or the value can be transferred out to an external bank account.
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