TWST: Would you start by telling us about GoldMoney?

Mr. Turk: GoldMoney is like online banking, but instead of your account being denominated in dollars and cents, it's denominated in gold grams and mils. What it does is two things. Firstly, it enables you to buy and sell gold very conveniently and economically in an online environment. Secondly, it allows you to use gold as an online payment mechanism.

TWST: What is the advantage to investors of investing online? Is it a safe investment decision?

Mr. Turk: There are some big picture issues that have to be brought into the equation. One is that we're in a cycle that favors tangible assets, and I think this cycle has many years left to go. It's similar to the cycle that lasted from the late 1960s through, let's say, 1982, where people moved out of financial assets and into tangible assets. Back in the early 1970s, when people started to see the need for owning gold as a means for diversifying out of the dollar and protecting themselves from inflation, the logical choice was the Krugerrand, which was a South African gold coin. The Krugerrand was very successful, in terms of what was sold over the next 10 years, in providing a hedge against dollar inflation, but the technology has changed over the last 30-35 years. As a consequence, people want the convenience of today's technology and the better, more economical costs available from today's technology. At GoldMoney, we've created a way for people to transact online through GoldMoney to purchase gold and also silver, which we've just added to the Website.

TWST: Gold recently hit a multi-year high of $550. What has been happening to drive gold prices up to these high levels?

Mr. Turk: Let's look at it first from a big picture point of view. There are four factors driving the market. The question is whether to own financial assets or tangible assets, and it's a question of whether one or the other is overvalued or undervalued when compared to each other. If you look back over recent history, in the 1950s and 1960s, everybody wanted financial assets until the late 1960s, when those financial assets became overvalued relative to tangibles. The stock market peaked in the late 1960s, and we had people moving out of the Dow and putting money into tangibles, gold and other commodities. That cycle then lasted until the early 1980s, when tangibles were at a peak and overvalued, and financial assets were at a bottom and undervalued. You then flip-flopped and saw money coming out of the gold market and other commodities, such as real estate, and into financial assets. Then the Dow started an 18- year climb and peaked in 2000. At that moment in time, financials were overvalued relative to tangibles, and over the past four or five years, you've seen money coming out of the financial assets and into tangible assets. The last cycle lasted 14 years or so. We're only four or five years into the current cycle, so I think we have another eight to 10 years left in this current cycle of people moving out of financials and into tangibles.

TWST: How much is the gold price increasing according to US dollars?

Mr. Turk: The gold price has been up five years in a row. In US dollar terms, those increases were 14% per annum over the last five years on average. But what happened last year is that gold started rising in terms of all the major currencies, and it hasn't done that since the 1970s, confirming again that we're in a repeat of the 1970s, but still in the early years of the cycle. What happened is that a few years ago, after the stock market peaked and when the dollar began looking vulnerable, people moved out of dollars and went into the euro because the euro was seen as a safe haven. It was a quick knee-jerk reaction based more on emotion rather than logic because, if you looked at the euro, you would understand that it had problems of its own. They were different from the problems of the dollar, but it wasn't quite the safe haven that people might have thought. Anyway, the dollar fell out of bed, going from $0.85 to purchase the euro, to $1.35 to purchase the euro over a period of three or four years. Then in May 2005, everyone got a wake-up call. The French and the Dutch rejected the European Constitution, and people started to feel that maybe the euro wasn't the safe haven they thought it was. Subsequently, over the following months last year, there were the riots in France and other news coming out of Europe, all of which made people recognize that the euro wasn't necessarily a safe haven. As a consequence, given the problems the dollar still has, and now with the newly discovered problems with the euro, what do people do with their money? The answer is gold. It's significant that gold rose not only against the dollar last year but also against the euro and the Swiss franc. Then toward the end of last year, the last currencies to give in were the world's two strongest ' the Australian dollar and the Canadian dollar. Both of these are resource-based economies that were doing well on the commodity boom anyway. Gold started rising in the fourth quarter against the Australian dollar, and then finally against the Canadian dollar as well. So gold is now rising against all the world's major currencies. This is significant and hasn't happened since the 1970s.

TWST: How does GoldMoney help preserve your savings?

Mr. Turk: It enables you to own gold, acquire it economically and to hold it in a very safe and low-cost way. What GoldMoney is doing is providing you with the means to acquire gold easily and inexpensively relative to other alternatives. It's gold that's going to help you preserve your savings. Let me give you a couple of examples of this. Because we calculate the price of goods and services in terms of dollars, we can oftentimes be misled as to the true worth or value of things because the dollar is a sliding scale. In other words, the dollar in 1980 had a different purchasing power than a dollar does today. But an ounce of gold is an ounce of gold. It doesn't change. And if you calculate the price of goods and services in terms of ounces of gold, you get a very interesting picture. For example, while the price of crude oil has been rising in dollar terms, an ounce of gold today still purchases the same amount of crude oil as it did 50 years ago. Another example is the Dow Jones and how many ounces of gold it takes to buy the Dow Jones Industrials. There are certain cycles in the markets. In 1929, it took approximately 30 ounces of gold to buy the Dow Jones Industrials. In the 1930s, it took one ounce of gold to buy the Dow Jones Industrials. At the peak of the stock market in the 1960s, it took about 35 ounces of gold to buy the Dow Jones Industrials. In 1980, it came all the way back to a bear market bottom of one ounce of gold buying the Dow Jones Industrials. In 2000, it took 42 ounces of gold to buy the Dow Jones Industrials. Right now, it takes about 20 ounces to buy the Dow and my guess is that before this bear market in the Dow is over and the bull market in commodities is over, it's going to take one ounce of gold to buy the Dow again. The question is, what is that one ounce going to be and what is the Dow going to be? In the 1930s, it was $35. In 1980, it was $800 on the Dow and $800 on gold. What's it going to be in the future? We don't know the answer to that question because we don't know whether the US dollar is going to be inflated or deflated, but it doesn't matter whether the US dollar is inflated or deflated. What you should be doing is getting out of the stock market with your money parked now in cash, but not dollar-cash. It should be in gold-cash because gold's purchasing power is going to appreciate over the next several years. And as it does, wait until we get down to about one ounce of gold to buy the Dow again, then get rid of your gold and buy the Dow Jones Industrials.

TWST: How secure is the gold in GoldMoney?

Mr. Turk: We've created a very strong governance procedure to provide the assurances of integrity that our customers' gold is safe. First of all, GoldMoney is just managing the process of first class service providers, so, for example, the gold is in a vault owned and operated by VIA MAT, which is a big European vault and safe depository company. Increases and decreases in the gold are done by Euro-Dutch Trust Company, which is a commercial trust company, to make sure that the quantity of gold in circulation within GoldMoney is also equal to the weight of gold in the vault. Other protections are that we have a separate database manager. The gold is insured by Lloyd's of London. The gold is audited by Deloitte Touche, so we have a very strong governance procedure to give our customers the knowledge that their gold is safe and secure.

TWST: Who founded Goldmoney and who first realized the usefulness in making digital gold currency payments?

Mr. Turk: I am the Founder of GoldMoney. I'm also the Chairman of the company. The idea for GoldMoney actually goes back to the 1970s, believe it or not. I began my business career in 1969 with The Chase Manhattan Bank (now JPMorgan Chase). I was in the International Department. I spent most of the 1970s living in Asia. There was a banking crisis in the early 1970s that literally brought the international monetary system down to its knees. I basically studied this crisis from my own point of view to learn what had happened and to see if I could come up with a solution on my own. The idea for GoldMoney came to me in 1979 as a result of that study and thinking about the crisis. Back then, the technology didn't exist to make GoldMoney possible, but it seemed likely to me that my idea was the way that currency and international payments were going to be evolving in the years ahead. Throughout the 1980s, I thought about my idea and continued to refine it. In the late 1980s, I realized the technology was moving much more quickly than I had previously thought possible, both in terms of communications and personal computers, so I decided to start carving out some intellectual property and began researching patent law. I realized that the idea I had, as it had developed over years of thinking, was a patentable idea. In 1992, I hired a patent attorney, and we filed a patent application in February 1993, well before the commercial possibilities of the Internet were realized. But it was clear to me that my idea was a new form of currency that would make currencies much more globally efficient than the existing system. The patent was granted in 1997. We formed the company in 1998, and then we were under development for a few years, creating the software and establishing the relationships with our suppliers and vendors. We launched in 2001. We're now storing $78 million worth of gold on behalf of our customers, and they're located in over 100 different countries around the world.

TWST: Is it more advantageous buying gold than to invest in gold mining stocks?

Mr. Turk: They're different things. When you look at a portfolio, you have stocks, bonds, and cash. Mining stocks go into the stock component because you're making an investment. You're taking risks with those stocks, and you hope to earn a return or earn some kind of a dividend from those risks that you're taking. But gold is different. Gold is cash. It's liquidity. It goes into the cash component of your portfolio, and it has an advantage, particularly during periods of monetary crisis, in that it's the only money that is no one else's liability. So it is liquidity without any kind of contingency. When you're looking at mining stocks, you consider them to be an investment. When you're looking at gold, you can consider it to be money.

TWST: How does gold maintain its value over the long term? What happens if it suddenly slumps?

Mr. Turk: That's a really good question because gold is perhaps the world's most misunderstood asset. A lot of it's because we've lost sight of gold over the last 20 years or so, while gold really hasn't done much except move sideways. But the answer to that question is that gold is truly unique. Every commodity that we produce ' indeed, every good or service that we produce ' is consumed. Oil is consumed. Soy beans are consumed. Everything is consumed. It disappears after it's consumed. Gold, on the other hand, is produced for accumulation. The gold that was mined by the Romans still exists today in above-ground form. It doesn't disappear. Gold is not consumed, so we have this huge above-ground stock of gold. It's the only thing that we humans accumulate in this way. Even copper is consumed in the sense that it's dispersed in millions of applications around the globe, but gold is accumulated. It's hoarded. And it's hoarded because it's very useful as money. It's useful for calculating the price of goods and services, as I was explaining earlier about calculating the price of oil or the price of the Dow Jones Industrials in terms of ounces. So analyzing gold is different from analyzing other commodities, where the annual supply is important. In gold, what's important is the demand. You have this existing, above- ground stock, which is basically all the gold that's ever been mined throughout history. Is the demand for that gold rising or falling? During periods of monetary crisis or monetary uncertainty or inflation, the demand for that above-ground stock of gold rises and the demand for national currencies falls. That means that the price of gold rises in terms of national currencies. And the reason that gold maintains its purchasing power over long periods of time is that the above-ground stock of gold grows by about 1.75% per annum on average, which is approximately the same as world population growth and new wealth creation. So gold, over long periods of time, has this consistency in its purchasing power.

TWST: Would you explain further the role of gold as currency in the information age and the advantages of online trading?

Mr. Turk: That's another interesting question. People think of gold as some sort of archaic thing from the past. But the reality is that gold is as important today as it has been at any moment in time because it provides a useful way to calculate the prices of goods and services 'as I explained earlier in terms of looking at things like crude oil and the Dow Jones Industrials. The point is that gold is money because we can use it to calculate prices. Yet for 100 years, it hasn't circulated as currency. Gold coins went out of circulation long ago. But what technology enables gold to do is circulate in a way that's extremely efficient and at a much lower cost than paper currencies or any national currencies because of one fundamental difference: when you're circulating gold as currency, you're circulating an asset; when you're circulating national currencies, you're circulating a liability of a financial institution. Liabilities of financial institutions need clearing and settlement systems, which are very expensive to run and operate, and therefore have a very high cost associated with them. But when you're circulating an asset as currency, it's very easy and quick. For example, if I went and paid for something with a gold coin, there would be no further follow-up by the owner of the shop ' he has that gold coin, and he delivered a service ' whereas if I had paid for it with a Visa card or a check, he would have had to take that Visa card and go through the processing required and eventually get it to his bank account, etc., and that's a very expensive thing to do. We use today's technology in an online environment to enable gold to circulate very easily and inexpensively. We also use today's online technology to enable individuals around the world to buy gold very easily and inexpensively compared to other alternatives.

TWST: You mentioned earlier about currencies not doing well against gold and gold rising above that. But how do you analyze the value of gold relative to major currencies? What happens if the reverse happens?

Mr. Turk: We live in a world today where everything is floating. When we were under a gold standard, there was a discipline imposed on the monetary authorities by the amount of gold that was in existence. As a consequence, though you did have some booms and busts because of too much lending, and then a collapse when the credits and the loans couldn't be repaid, those booms and busts were relatively mild compared to the huge structural imbalances that we have today. The point is that currencies are moving up and down all of the time. So how do you actually calculate what those currencies are worth? You have to look at tangible assets and use them as the basis ' specifically gold. That's why, when you look at the Dow, you should look at its price not only in terms of dollars, but also in terms of gold. That way, you get a much better picture from a long-term point of view as to what its true economic value is. It's the same thing with crude oil. You should look at crude oil in terms of how many grams of gold it costs to buy a barrel of crude oil, and you can see that the crude oil price has not gone up in gold terms; it's only risen in dollar terms. The dollar is constantly being inflated, which is the key. Its value is changing. And even if we were to go into deflation in the future ' which, I think, is highly unlikely ' the dollar's value would continue floating up and down, whereas gold's value would really maintain its long-term purchasing power. We don't see that result though, because we calculate prices only in dollars. We don't calculate prices in terms of gold, but we should.

TWST: Using GoldMoney clearly gives you a great deal more flexibility with your investment in gold. Is that the primary advantage of digital gold currency payments?

Mr. Turk: The advantage of digital gold currency payments, first of all, is that they're very inexpensive and very efficient. You can pay anyone anywhere in the world, 24/7, at a very low cost, and they're instantaneous. In fact, I could be talking right now on the phone to someone in China and saying, 'Look, I'm going to 'click' you some gold to pay for the goods I want to purchase from you,' and he can see the gold appear on his computer screen in his account at GoldMoney while we're talking on the phone ' the instant after I've paid it from my account, which I see on my computer screen. You can't do that with national currencies because of the clearing and settlement systems that they involve. So that's the first advantage to it ' it's very efficient and instantaneous. But those efficiencies mean lower costs, and the technology that we're bringing to the table lowers the payment costs to the advantage of all of the participants.

TWST: Your company is really like online commerce, in a way. It's a payment solution for online commerce.

Mr. Turk: Yes, exactly, it's a payment solution for online commerce. It's also an online store where people can buy and sell gold inexpensively so that they can easily move back and forth between national currencies and gold. So it's really both of those things ' a way to make payments and an online store.

TWST: James, are there other companies that are doing this or is this a unique way of dealing with gold currency?

Mr. Turk: We have three US patents on this. There are a couple of other GoldMoney wannabes. But, first of all, we're the largest. And none of the others have the governance or the controls to provide the assurances of integrity necessary for customers to know their gold is safe. So we're not only the leader, we really are the dominant player in this new field.

TWST: To sum up, what would you say is the investment case for gold now? Tell our readers why it's advantageous to use this patented process of yours for digital gold currency payments.

Mr. Turk: First of all, I think it's advantageous now for people to be looking at gold as a means of diversifying, getting some gold into the cash component of their portfolios in order to protect themselves because of growing currency volatility and inflationary pressures. There is a lot of dollar inflation in the pipeline based on commodity prices; they've already risen. We're starting up just like we did in the early 1970s, and I think we have several more years of this cycle left to go. So people should be diversifying into gold. How much is up to every individual to decide, but the rule of thumb is 5%-10% of your assets in gold. I actually recommend that people think about investing a little bit more than that, say, up to 18% or so, if they are older, want to take less risk with their money, and tend to be conservative in terms of their outlook. The second part of the question is, 'Why GoldMoney?' I think the answer is that with GoldMoney, you get more gold for your money. In other words, we can deliver something to you not only conveniently, but also economically. Plus, you get our strong governance controls so that you know your gold is insured and safe, including the advantage of having your gold stored for you in London, England. So you get some international diversification, which I think is also important.

TWST: Is there any problem with taxation or issues of that nature?

Mr. Turk: We have customers in over 100 countries, so I can't really advise individuals in any one country what the tax consequences are. Our policy is ' and this is part of our User Agreement ' the individual has to be certain that he's complying with all the laws and rules and regulations in the country from which he's accessing and using GoldMoney. We're based in the British Channel Islands, in Jersey, and we're in Jersey purposefully because we've created the world's only non- national currency. There are a lot of national currencies to choose from, but no non-national currencies except GoldMoney. We chose Jersey because it's one of the world's major financial centers. It complies with all of the OECD and FATF anti-money laundering legislation. Also, Jersey is politically neutral around the world. What that enables us to do is provide a service globally through a privately held company without being affected by political considerations. The key point, really though, is that we're in a cycle where people should be looking to protect themselves from problems with the dollar, and gold is the easiest, most logical way to do that for the average investor.

TWST: Thank you. (PS)

Note: Opinions and recommendations are as of 1/10/06.

JAMES TURK GoldMoney ASL House 12-14 David Place St Helier, Jersey JE2 4TD British Channel Islands UK

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