Weekly Mailbag: Gold-Backed Cards, Supply of Uranium, and the Yuan-Gold Connection

Welcome to our Friday mailbag edition!

Every week, we receive fantastic questions from your fellow readers. And every Friday, I answer as many as I can.

Up first today, a question from reader Robert on using a gold-backed debit or credit card as a way to preserve your wealth…

While storing gold can offer protection against a failing fiat currency, it can be cumbersome to transform into a convenient medium of exchange.

There are gold-backed debit cards available that are backed by real gold that you own. No one knows that you are actually spending fractional gold when you complete a transaction. It is good anywhere in the world that the major brand card is accepted.

This sounds like an excellent way to protect your purchasing power outside the dollar. Have you ever explored this option?

– Robert D.

Hi Robert, thanks so much for bringing up the topic of gold-backed cards.

Gold-backed debit and credit cards are excellent tools for buying, selling, and using physical gold for transactions in any fraction that you may want. They allow you to make your stored gold or silver liquid. And keep it from your bank.

From a practical standpoint, you would use a gold-backed credit or debit card in the same way that you would use a regular debit or credit card. You present that card in person or for online purchases when you want to pay for something.

The difference is that the gold-backed debit card isn’t backed by cash in your bank account. And the gold-backed credit card isn’t backed by the credit limit on your credit card. Instead, the transaction would be completed by converting gold you own – gold that’s backing your card – to the equivalent amount of cash needed for that transaction.

There are several banks or other financial companies that can provide you with a gold-backed debit or credit card. These act like your bank does in terms of ensuring you have the funds, or in this case, the gold, to complete your purchase.

Some of them have created apps that enable you to fund your existing credit or debit card with gold through your smartphone. And for some platforms, you don’t even have to get a new, separate card. In these cases, you would simply use a card you already have but fund a portion, or all of it, with physical gold.

Some apps allow you to buy gold at regular intervals in whatever increments you want. You would pay for that gold based on current market levels plus a processing fee.

Some apps allow you to transfer your gold to other people without that transaction touching your bank account. These apps act like Venmo or PayPal, but for gold.

Back in 2018, I was in London speaking about my book, Collusion, with the U.K. Parliament at venues like the London School of Economics. During that time, I had lunch with an old friend of mine, John Butler.

Nomi and John having lunch in London

John has been, and continues to be, on the cutting edge of gold and gold-related financial technologies – like gold-backed cards. As we were waiting for our food to arrive, he had something to show me that he thought would interest me given my general skepticism of banks.

He took out his wallet and extracted a gold-backed debit card – made of gold!

“This is the future of gold,” he told me. He wrote about many other such developments in his classic book: The Golden Revolution, Revisited. It’s a must-read!

Here are four steps to buying and using gold through gold-backed cards:

1) You need to set up a gold account. This is to store your gold to back your card.

2) You need to fund it. That means you need to buy some gold. Some banks or companies that provide gold-backed cards require a minimum deposit. Some don’t. Some banks or companies make you buy gold from them. Others don’t. GolVerCard is one card that lets you link your own gold bullion and silver coins from other accounts to fund your card.

3) Make sure your gold is secure no matter where it is. Do this by verifying that the bank or app you use holds your gold in a secure vault, like the Perth Mint.

4) Once your gold is stored, you’ll be issued a debit card linked to your gold storage account. Or you can link an existing card to your gold.

Euro Pacific Bank is one solid institution that offers gold-backed debit cards. It’s also a licensed dealer with the Perth Mint. That’s where it securely stores precious metals. But it does require a minimum $500 to open an account and charges from a 0.5% to 4% transaction fee. Plus, it charges a one-time $150 initial fee.

My favorite way to link my gold to a card is through an app called Glint. It took me three minutes to set this up. Glint’s fees are only 0.5% on all gold and silver transactions.

The other cool thing about Glint is there’s no minimum investment and no start-up fee. Plus, Glint is regulated by the Financial Conduct Authority. So your gold is safe. And it is secured by physical gold held in Brink’s Vault in Switzerland, which is insured by Lloyd’s of London – a bank that has been around for more than a century…

In summary, if you’d like to set up a gold-backed card, here’s what you should do:

• Download Glint.

• Set up your account by following its prompts.

• Attach your Glint account to one of your existing cards (which is what I did) or apply for one of Glint’s cards (if you want to keep your gold transactions completely separate from your existing card).

• Buy some gold.

• Enjoy easy access to, and use of, your gold away from traditional banks!

Next, reader John wants to know about the long-term supply of uranium…

Is there enough uranium to support some 30 billion people into the future? How much of the earth will be torn up mining out this uranium? No expert has ever said anything about the supply of uranium. Experts are promoting the feeling that nuclear power will be free and easy forever!

– John F.

Hi, John. Thanks for writing in!

These are all important questions to consider…

That said, uranium is a common element in Earth’s crust and is more abundant than gold or silver. It’s not exactly rare, to put it mildly.

For example, a square mile of earth one foot deep will typically contain over a ton of uranium. In fact, the natural decay of uranium in Earth’s core and mantle is a major source of heat that drives geological and tectonic processes, such as continental drift.

So, uranium mining basically boils down to economics…

Incidentally, economics (or lack thereof) was also the reason why we largely stopped mining uranium here in the United States.

Until the early 1980s, there were active uranium mines in Arizona, Colorado, New Mexico, Oregon, South Dakota, Texas, Utah, Washington, and Wyoming.

But then the price of uranium declined sharply in the late 1970s and early 1980s. Many uranium deposits in the U.S. became uneconomic because of their lower grade. This forced the closure of numerous mines.

It also didn’t help that the U.S. government imposed strict rules about private companies handling any ores that contained uranium or other radioactive elements. With worries about global nuclear proliferation, the government feared uranium falling into the hands of rogue states.

Now, back to the crux of your question: do we have enough uranium?

The most widely accepted estimate is that there are roughly 4.6 billion metric tons of uranium in Earth’s crust at present.

Of this total amount, around 40 million metric tons of uranium are economically recoverable using current mining technology and at current market prices. When the technology improves (which it definitely will) and/or prices go up, we will be able to unlock more of these resources.

Assuming we can unlock one-third of the 4.6 billion metric tons I mentioned earlier, this amount could last us for around 28,600 years at the current rate of global consumption.

And it’s a good bet that there are also resources beyond what we know. For instance, there’s a huge amount of uranium in seawater. But it’s diluted enough that recovering it isn’t commercially viable. For now.

Scientists estimate that the extraction of uranium from seawater would unlock about 4.5 billion metric tons of uranium. That’s another 84,000-year supply at present consumption rates.

Yes, these are very theoretical calculations… But they should give you some idea of just how abundant uranium really is.

And as long as we’re talking about uranium, I’d be remiss not to mention some potential alternatives to uranium as a nuclear fuel. You might have heard about thorium, for instance.

Thorium is a naturally occurring radioactive element that was first discovered on a remote island in Norway over 100 years ago. Advocates claim that thorium reactors have numerous advantages over uranium reactors, the main ones being:

• It is cheaper to extract and more abundant than uranium.

• According to estimates, the extractable reserves in the U.S. alone can power the entire country for the next 10,000 years.

• It is not useful in making nuclear weapons.

• The reactors are more stable and can’t melt down. Plus, they produce less radioactive waste.

Naturally, with such benefits, thorium research is being actively funded – with India and China leading the way. So what is currently stopping thorium?

Well, thorium can’t in itself power a reactor. That’s because it does not contain enough fissile material to initiate a nuclear chain reaction… unlike natural uranium. “Fissile” just means ready for a fission reaction. As such, it must first be bombarded with neutrons to produce the highly radioactive isotope uranium-233.

But while thorium is much cheaper than uranium, fuel costs are the least of the worries.

The problem is that unlike the naturally occurring uranium-235, extracting uranium-233 requires a breeder reactor. Thorium needs to go through a series of nuclear reactions before its energy value is unlocked. This is complex and prohibitively expensive.

This is exactly why we haven’t adopted it as a power source in the U.S.

Keep in mind that we already have 92 nuclear reactors powering tens of millions of homes across the U.S. And that nearly 20% of all electricity in the U.S. is generated by nuclear energy. So there isn’t much enthusiasm to develop something that could take decades to harness economically and safely.

It would require huge amounts of R&D investment. It would also require building an entire infrastructure. That’s risky, and even potentially impossible without government backing.

Now, I don’t foresee thorium being a worthwhile alternative (and thus investment) soon. But I’m sure it will become that at some point… it just needs to make sense economically.

In the meantime, you can position yourself to benefit from the growing need for uranium worldwide. Consider investing in the Global X Uranium ETF (URA).

The exchange-traded fund (ETF) holds a basket of producers, physical holdings, and property developers. So, it gives you broad exposure to the sector.

And as an ETF, it carries less company-specific risk than investing in individual companies.

I also put together a video presentation on how you can position yourself to profit from the growth of nuclear energy. It involves a technology called SMR and a company you can get into with as little as $2 a share. To watch it, go here.

Finally, our last question this week is from reader Alan on the possibility of China issuing a gold-backed yuan…

I’m so glad you answered Catharine’s question about gold. And I am grateful for you going into the details of consequences of a CBDC as others have left this rather vague.

I have another question about possible gold confiscation. Since banks and central banks are buying lots of gold, and since some like China might issue gold-backed yuan as a threat that could help overtake the dollar… wouldn’t that possibly or likely bring private ownership into some serious consideration of confiscation in order to compete with/critically support our CB currency?

– Alan G.

Hi, Alan. Thanks for your question!

As I highlighted in my response to Catharine’s question, there’s no direct connection anymore between gold and the printing of our currency (physical or digital) today. So it’s unlikely that the government or president can connect a national emergency and gold confiscations to fund it like they did during the Great Depression.

Remember, when President Franklin Delano Roosevelt issued the executive order demanding Americans to turn in their gold, it was the year 1933. We still had the gold standard.

The idea behind this was that the “hoarding” of gold during the Great Depression was stalling economic growth.

You just can’t make that argument today.

With the absence of the gold standard, our currency is backed only by the “full faith and credit” of the U.S. government.

The whole point of getting off the gold standard in 1971 was that it enabled the Fed to print more money in times of emergency.

Suddenly, the need to hold gold to the dollar was no more. The Fed could just print away the government’s problems… whatever they were. And that’s exactly where we are right now.

Now, you make an interesting observation about the Chinese yuan and gold… specifically that “China might issue gold-backed yuan.”

The key word here is “might…” and even that is stretching it a little.

Generally, there’s a bit of confusion about the Chinese yuan being backed by gold. So let me clarify something here.

No, China has not issued a gold-backed yuan… And I don’t believe it will in the near future (though that’s a conversation for a different time).

Now, it’s true that in China you can convert yuan into physical gold if you trade crude oil futures.

The backstory is that China originally launched its crude futures contract on the Shanghai International Energy Exchange back in March 2018.

This enabled any oil producer in the world to sell its oil for the Chinese currency, giving birth to the petroyuan. But most producers didn’t want to accumulate a large yuan reserve. China knew this.

That’s why it explicitly linked the crude futures contract with the ability to convert yuan into physical gold. That’s without touching China’s official reserves, mind you… but through gold exchanges in Shanghai (the world’s largest physical gold market) and Hong Kong.

But that doesn’t mean the yuan is backed by gold.

Leaving the idea of gold-backed digital currency aside, what are the potential ways that CBDCs could compete among each other in the global markets?

One is through their features and functionality. CBDCs could differ in terms of their transaction speeds, security features, and other features. Depending on those characteristics, consumers and businesses may prefer to use one CBDC over another.

Another way that CBDCs could compete is through their exchange rates. If CBDCs are freely convertible to other currencies, their exchange rates could be influenced by market forces such as supply and demand. Depending on the exchange rate, consumers and businesses may prefer to hold and use one CBDC over another.

This disqualifies (or at the very least, downgrades) the digital yuan right off the bat.

Because, as you probably know, no matter how many yuans you have, you can’t easily use or invest them anywhere outside China.

That’s because, unlike the U.S. dollar, the yuan is not a freely convertible currency.

Meaning, its value is not determined by the market forces of demand and supply. Instead, its exchange rate against other currencies, including the U.S. dollar, continues to be managed by China’s central bank.

Finally, countries that have more favorable policies and regulations may see greater adoption and usage of their CBDC. But, as long as the Chinese Communist Party is in power, I believe that China will continue to be at a deep disadvantage relative to the U.S. in this regard.

So here’s the bottom line.

I don’t believe that the government can attempt to confiscate your gold again to prop up its CBDC. And while it’s too early to know for sure, I also think it’s unlikely that the digital yuan will overtake the dollar any time soon.

What we do know, however, is that the digital dollar will enable the Fed to inflate our money supply even more than it is now.

And that’s exactly why you want to own gold… to preserve your wealth.

Remember, this precious metal is the ultimate form of wealth insurance. It has helped people keep their wealth through every kind of crisis imaginable.

The easiest way to get exposure to gold is through a gold exchange-traded fund (ETF) that is backed by physical gold. Gold ETFs offer the advantage of holding gold without the hassle of storing, securing, or transporting it. (I covered this in more detail in a recent mailbag issue.)

And that’s all for this week’s mailbag. Thanks to everyone who wrote in!

If I didn’t get to your question this week, look out for my response in a future Friday mailbag edition.

I do my best to respond to as many of your questions and comments as I can. Just remember, I can’t give personal investment advice.

And if there are any other topics you’d like me to write about, I’d love to hear from you. You can write me at [email protected].

Happy investing… and have a fantastic weekend!

Regards,

Nomi Prins
Editor, Inside Wall Street with Nomi Prins

P.S. In 1971, President Nixon took the U.S. dollar off the gold standard.

And now, the Federal Reserve, the White House, and the financial elites are gearing up to enact the biggest change to our money since then.

This isn’t the first time they’ve overhauled our financial system. They’ve done it three other times in modern history. And now, they’re preparing to replace cash with the digital dollar, or CBDCs.

Luckily, I found one asset that will help you position yourself on the right side of this monetary shift and become your own banker.

I put the details in this new video presentation I just released. I’ll also show you my No. 1 gold pick for 2023 and beyond… and three “unprintable” plays to take advantage of the Fed’s next major distortion of the financial system. Watch it here.