Why use e-Bullion? An investor explains

Ian Lamont — Thu, 14 Aug 2008 10:02:11 -0700

The e-currency service e-Bullion has been inaccessible since August 5. While the reasons for the outage are unclear, scores of account holders have vented their anger, frustration, and worry on Industry Standard comment threads. One reader from South Carolina, Bryan Nevins, agreed to be interviewed by The Industry Standard, to discuss how he feels about the situation, and why he invested in e-Bullion in the first place.

The Industry Standard: When did you start using e-Bullion?

Bryan Nevins: I started using E-bullion in the fall of 2005.

TIS: Why use such a service, and why pick e-Bullion?

Nevins: I wanted to own silver, but I had no good place to keep silver bullion. There was no silver ETF. E-gold’s customer support had a poor reputation, and Gold Money did not have silver holdings then.

E-bullion had a U.S. address, and phone numbers that were answered by people who sounded like Americans. You could wire money directly to them, without using an exchanger. So they had relationships with mainstream banks. They had been in business for several years, and had a fairly good reputation. I liked the "crypto card" security system.

TIS: Can you describe how much your initial deposit was?

Nevins: Over 1,000 ounces of silver.

TIS: As the value of silver has risen, how much have your e-Bullion holdings increased on a percentage basis?

Nevins: It has more than doubled, if I take the silver high of a few months ago.

TIS: When you established your account, were you aware that e-Bullion was not a regulated financial institution, like a bank or commodities exchange?

Nevins: I was aware that regulations on e-bullion were minimal, and that worried me.

But if you look at banks, their leverage is very high. The FDIC will likely not be able to cover potential losses if some large banks go belly up. So the "security" of mainstream institutions is less than people think -- I can remember the S&L crisis of the 80’s. Besides that, inflation is very high, so you are sure to lose purchasing power in a bank savings account.

I did some checking around. E-bullion had been in business for years, and I could find no accounts of money "disappearing." The fact that the business had a physical presence in California gave it some legitimacy

I have seen many "scam" sites on the Internet, and they are usually very obvious. They offer very high returns. There are no names or real addresses given, and no reasonable description of a business plan.

Even now, none of the public documents suggests that e-bullion was a fraud. They are investigated for "money laundering". If e-bullion was a fraud, it was an unusually elaborate one.

Family members are fighting for ownership of the business, which is not rational if it is a pyramid scheme.

TIS: When did you discover that you were unable to access your e-Bullion account?

Nevins: It was about August 6. I had checked my account just a few weeks earlier and everything was fine.

TIS: What's your take on the current site outage, and the DOJ investigation of the service?

Nevins: If I was e-Bullion, I would put the site out of service as the "safest course of action".

Alternately, they could allow people to log in and see balances, but not allow transactions. But that might take special programming, which they could not do on short notice.

I suspect the "money laundering" is related to [High Yield Investment Products]. These are really gambling schemes, but some people might be tricked. Both e-gold and E-bullion allowed anonymous accounts (false names) and that encouraged their use by HYIPs. I think the DOJ should show that people were really harmed, and give a compelling reason for disrupting business. Also, the DOJ should guaranty that silver savers (like myself) will not have their bullion impounded by the government.

Readers, feel free to share your story below. Did you use e-Bullion to invest in silver or gold, or for some other purpose, such as conducting overseas business transactions or investing in HYIPs? Why did you use e-Bullion, as opposed to another digital gold currency service? Were you aware that it was not regulated like a bank or brokerage?

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