Staff Insights

Rai Stones: A Pre-Digital Cryptocurrency and Its Monetary Relevance to NatGold™

In the verdant landscapes of Micronesia, on the Yap Islands, a unique form of money circulated from the 17th to the 20th century, defying our traditional notions of currency and value. These were the Rai stones or Yapese stone money, massive circular disks of limestone, some towering at over 12 feet in diameter, with a hole in the center for transport. Despite their immobility and the risk of moving such monoliths, Rai stones represented a sophisticated system of wealth and transactions that challenges contemporary understanding of money’s essence.

Ownership of a Rai stone was a communal agreement, recognized without the need to physically move the stone. These stones, heavy with history rather than gold, carried tales of ownership, transactions, and even mishaps at sea, where they sometimes sank and were lost to the depths. Yet, even submerged and unseen, a Rai’s value remained undisputed among the Yapese, continuing to circulate in the economy as confidently as if it stood proudly in the village square.

The story of Rai stones underscores a profound truth about currency: value is not in the physical possession but in communal trust and agreement on worth. A sunken stone’s worth didn’t diminish because its value wasn’t in its physicality but in the shared belief of its existence and worth.

Drawing a parallel to modern economics, Milton Friedman, the father of the Chicago School of Economics, once highlighted the similarity between Yapese stone money and the gold reserves of the Federal Reserve Bank of New York. Here, gold shifts ownership between nations without ever leaving its vault, a process not unlike the transfer of Rai stones’ ownership without their physical movement. This system, while seeming archaic, reveals a striking resemblance to the principles underlying NatGold.

NatGold, in essence, revives the Rai stones’ wisdom for the digital age, grounding it in the realm of certified gold resources. Like the Rai submerged and unseen yet universally acknowledged in value, certified gold in the ground carries intrinsic value agreed upon by communal consensus without the need for physical displacement. This gold, though buried, forms the backbone of a new digital currency, embodying trust, sustainability, and a departure from the environmentally damaging practices of gold extraction.

Through NatGold, we are reminded that value resides not in physical accumulation but in shared belief and sustainable practices. The Yapese understood this centuries ago with their Rai stones, and today, NatGold proposes a modern incarnation of this wisdom. It champions a future where the value of gold is liberated from the confines of physical possession, promoting an ESG-friendly approach that echoes the Rai stones’ enduring legacy. As we embrace NatGold, we rekindle the age-old understanding that true wealth lies not beneath our feet but in our collective trust and sustainable stewardship of the Earth’s treasures.

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What is Tokenization?2024-04-20T23:35:52+00:00

Tokenization is the process of converting rights to an asset into a digital token on a blockchain. These digital tokens represent ownership or a claim on the asset, enabling it to be traded or managed on digital platforms. This innovative approach offers a secure and efficient means of handling assets, utilizing the transparency, immutability, and distributive nature of blockchain technology.

In the context of the NatGold model, tokenization involves creating digital tokens that represent ownership of a certain amount of gold resources, as certified by NI 43-101 reports. Each NatGold coin is a digital representation of gold resources, making the intrinsic value of gold easily transferable and accessible without the need for physical handling. This process democratizes access to gold as an investment, making it possible for individuals and institutions to invest in gold resources with ease and confidence.

Tokenization transforms traditional asset management and investment by breaking down barriers to entry, reducing costs associated with transactions and storage, and enhancing liquidity in the market. By leveraging blockchain technology, tokenization introduces a new era of asset utilization and investment, opening up opportunities for innovation and value creation.

How is the baseline intrinsic value of NatGold calculated?2024-05-18T12:55:00+00:00

How is the baseline intrinsic value of NatGold calculated?

The baseline intrinsic value of NatGold is calculated using a global per ounce average profit comparative methodology developed by the International NatGold Council. This method assesses the profit potential of NatGold by comparing the global average cost of gold production, as indicated by the All-In Sustaining Cost (AISC), against the current market price of gold. This approach provides a robust framework for establishing the minimum intrinsic value of NatGold coins, emphasizing their potential profitability in the global market.

Calculating Production Costs: The All-In Sustaining Cost (AISC) is used as a key metric in this comparison. AISC is a global weighted average calculated quarterly by the World Gold Council, based on the reported costs of each publicly reporting mining company for that period. This figure reflects the comprehensive cost faced by publicly reporting gold mining companies to mine, refine, and market one Troy ounce of gold.

Above Ground Market Price Reference: The market price used in this calculation is derived from the latest daily average price for a Troy ounce of gold, as reported by authoritative sources like the London Bullion Market Association and the NYMEX spot gold price.

Intrinsic Price Value Baseline: For example, employing a 90-day AISC of US$1,342 for Q4, 2023, and a hypothetical market price of US$2,200 per ounce, the intrinsic profitability is calculated by subtracting the most recent quarterly global weighted average AISC from the market price. In this instance, the average global profit would be $858 per ounce. This serves as the baseline intrinsic value of gold before the expenditure of US$1,342 to physically extract the gold via traditional mining methods.

NatGold’s approach diverges from traditional practices by focusing exclusively on digital mining certified gold resources in an ESG-friendly way. Essentially, the intrinsic baseline value of an ounce of NatGold is theoretically equal to the average per ounce profit realized by global gold producers, which is calculated by subtracting the average global cost of extraction from the prevailing market price of gold.

This positions NatGold as a sustainable crypto-commodity, capable of attracting a significant ESG premium, potentially even surpassing traditional gold’s market value as global sustainability awareness increases. This valuation transcends conventional production cost-profit analyses, advocating for NatGold’s price to be independently determined by its own merits as a sustainable and innovative financial asset.

What are the gold resource exchange ratios employed in the NatGold tokenization model?2024-04-20T23:36:12+00:00

The gold resource exchange ratios in the NatGold tokenization model reflect the NatGold Council’s approach to categorizing gold resources based on their certification level: Measured, Indicated, and Inferred. These ratios determine the number of NatGold coins created for each ounce of gold resource, adhering to industry-standard certifications to maintain the integrity and reliability of NatGold as a digital asset:

Measured Resources: With the highest degree of certainty and detail in gold existence estimates, Measured resources are exchanged at a 20% tokenization discount. Thus, one ounce of Measured resources is equivalent to 0.80 of a NatGold coin.

Indicated Resources: Positioned between Measured and Inferred in terms of accuracy, Indicated resources undergo a 60% tokenization discount. This translates each ounce of Indicated resources to 0.40 of a NatGold coin.

Inferred Resources: As the category with the lowest precision, Inferred resources are allocated an 80% discount in tokenization, valuing every ounce at 0.20 of a NatGold coin.

This structured approach ensures that the NatGold tokenization model is grounded in established mining and financial practices, offering a trustworthy and stable digital asset based on gold’s intrinsic value.

With respect to NatGold, why is tokenization often referred to as “digital gold mining”?2024-04-20T23:36:49+00:00

Tokenization, in the context of NatGold, is aptly termed “digital gold mining” because it transforms the concept of mining by moving the process from the physical world to the digital sphere. This innovative approach represents certified gold resources as digital tokens, known as NatGold coins, on a blockchain. Unlike traditional gold, these digital tokens can be traded, sold, or held as investments, mirroring the functionality of physical gold but eliminating the environmental degradation associated with gold mining.

By enabling the virtual exchange and holding of gold resources, this method pioneers a sustainable, efficient, and ESG-friendly avenue for harnessing the monetary benefits of gold. It sidesteps the need for physical extraction, offering a contemporary solution that aligns with global sustainability goals. The term “digital gold mining” thus encapsulates this modern process, highlighting a shift towards a more responsible and innovative way to value and interact with gold in the digital economy.

What are the three types of certified gold resources and how do they differ?2024-04-20T23:35:22+00:00

The classification of certified gold resources into Measured, Indicated, and Inferred categories provides a structured approach to understanding the probability of quantifiable gold existence. This system allows for:

Measured Resources: These represent the highest certainty regarding the quantity and quality of gold, based on detailed and reliable exploration data.

Indicated Resources: These offer a moderate level of certainty, with enough exploration to assume the continuity of mineralization but less detail than measured resources.

Inferred Resources: These have the lowest level of certainty, based on limited data, suggesting the presence of gold with the least precision.

This distinction emphasizes the progression from speculative estimates to highly reliable quantifications as exploration advances, aligning with NatGold’s tokenization model that values the quantification of gold resources without necessitating physical extraction.