A call into BullionVault support put me on the phone with Paul Tustain, the founder. That was lucky, but then again he’s a founder with a hands-on approach.

I got to ask him everything I was still wondering about, most of which falls into the realm of the non-essential, since his writing and support material does an excellent job of explaining how thoroughly the business approach is thought through and constructed. Some of that is referenced in an earlier piece on this site, so please check it out if you have time.

Here are the main points we covered in the conversation: how Viamat is restricted in terms of moving the gold of clients, the gold-denominated insurance in place for him in particular as more than 50% owner of the business, and how BV differs from GoldIsMoney (a form of gold-backed e-money founded in London by James Turk).

The first point is covered in material on the web. Basically, withdrawals of gold have to be published by user ID on the front page or ViaMat won’t do it. In addition, while there is a limit of (I think) 5% of the total amount that can be moved at any one time, there is permission to move all of it between Viamat vaults, which covers the geopolitical emergency scenario.

Paul personally gave an irredeemable loan of 6 gold bars when he started the company, amounting to roughly $2 million. This amount is reserved for the board to handle administration of the company should there be a management problem. This simple construction ensures that Paul’s motivation is aligned with the company’s. Nice and direct.

By the way, BV has 5 million GBP in free cash and a burn rate of 800,000 GBP so they can survive for more than 5 years without any revenue. At present they have more than half a billion in deposits and 15 tons of gold, and are profitable, so there is very little operational risk in this company.

Regarding GoldIsMoney, Paul had some reasonable thoughts. The main point is that philosophically BV and GIM are very different. GIM aims to use gold as e-money, whereas BV aims to use gold as a store of value. Paul quoted Gresham’s Law, which states that bad money always pushes good money out of the system. His point is that while gold is an excellent store of value, historically it has not always functioned as money for the simple reason that there has been lots of bad money (can you say printing press?).

He also pointed out that with e-money the worst consequence of a break-in is someone can spend your money. With BV, the worst that can happen is someone can sell your gold and send you the money.

But he thought GIM is very well run and as an e-money system it would be his first choice.

So there you have it.