Get Your Gold from a Vending Machine

In Germany, the art of the vending machine is at the forefront of its game. See this one in Wolfsburg, where you can choose your Volkswagen:

Elsewhere, a fellow named Thomas Geissler has started a company that is installing 500 vending machines in various spots, and what do you suppose he sells?

Gold.

That's right, buyers have a choice among a 1 gram wafer for 30 euros, a 10 gram bar for 245 euros, or various gold coins.

There is a slight hitch: He has added a 30 percent mark-up to the cheapest products. Most dealers will ask only around 5 to 7 percent for bullion coins. And of course, prices are monitored and changed every few minutes.

See an article on this by Murray Wardrop at the UK Telegraph. And here's another at Reuters, and a third at Geissler's website.

Economist Edward C. Harwood introduced the notion of selling gold by the gram and potentially using it as an exchange medium back in the 1960s, and he even got his face on a one-ounce gold coin, in honor of his efforts. I don't know if he was the first; but his story is a fascinating one that I may be able to tell at some point relatively soon. I'm now working on his biography.

Meantime, I've often maintained that the gold standard can come back through various doors:

1. Official re-adoption by the politicians (but as my friend the former Columbia economics professor says, don't hold your breath);

2. Partial re-introduction, i.e. official acceptance of gold as legal tender so the public could use it as an alternative to the dollar in contracts and for repayment of debts public and private (I wouldn't hold my breath for this one either, because the politicians know how much this would limit the scope of their financial activities);

3. Demand by the public.

Now, this third avenue may just arrive in spite of a lot of skepticism. US gold coins are in short supply due to the huge demand in the US. Other countries are more aware even than we are of the importance of gold in the historical money markets. This experiment in Germany may tell us just how likely it is. If the public is willing to pay a 30 percent premium to own gold from a vending machine, then the urge to own something of value instead of fiat paper currency must be deeply ingrained indeed.

Mr. Geissler has surely thought this thing through, and has invested in some pretty heavy equipment (500 very solid machines, plus something to make the 1-ounce wafers) and security systems to see that his operation has a chance to succeed. I will be watching this one closely.

Remember my mantra: You can take gold out of the standard, but you can't take the standard out of gold.

Disclosure: No position

Comments

[speculari:]

Interesting article Katy, we've missed you! The shot of the VW vending machine is equally interesting - thanks.

Jun 18 09:21 AM

[Donald Ingram:]

The re-monetization of gold continues. The only TRUE money. Okay. Silver too! The common man gets paid in silver, the soldier gets paid in salt, (latin - sel, hence salary) the general or the senator gets paid in gold.

Jun 18 11:55 AM

[Larry House:]

Thanks, Katy. This makes me concerned about gold. Usually it is the kiss of death for an asset to get this much attention/exposure. Interesting, Donald. Thanks for including silver as money. I have called silver the poor man's gold. Some day we may be buying groceries with silver and cars with gold.

Jun 18 12:18 PM

[MadScientist:]

I agree with Larry on this - the amount of press and exposure currently being given to precious metals is incredible, and may be the first sign of a near term correction.

I still believe that gold and silver will break through their current resistance levels by the end of this year, and may be on track for $1200 gold and $25 silver next year. Silver seems to be the one with more potential upside for now.

Not sure that I want to be holding the physical materials though - I'll keep my vending machine purchases limited to Diet Cokes for now.

Jun 18 02:44 PM

[Donald Ingram:]

Also - A poorly performing Roman soldier is said to be "not worth his salt". Silver is the poor mans gold, that's why I own it! Cheers.


On Jun 18 12:18 PM Larry House wrote:

> Thanks, Katy. This makes me concerned about gold. Usually it is the
> kiss of death for an asset to get this much attention/exposure. Interesting,
> Donald. Thanks for including silver as money. I have called silver
> the poor man's gold. Some day we may be buying groceries with silver
> and cars with gold.

Jun 18 03:05 PM

[TinyTim:]

The basic tenets of Harwood's theory are so clear as to be obvious. The problem is that they need fiscal and monetary conservative laws to enforce them during these times when even the concept of a balanced budget is seen as absurd.

Jun 18 03:10 PM

[Nathaniel C:]

I love gold but I would never pay a 30% premium for it. I would really like to have a gold standard though.

Jun 19 12:41 AM