Interview With

Free Market Money Guru

Jim Davidson of Vertoro
Intervew by Mark Herpel DigitalMoneyWorld.com

Jim has been an ever present force in the digi-

tal currency world for almost a decade. He shares
with me his ideas on free market money, precious
metals and digital currency. I appreciate Jim taking
time to answer my questions.

(Q)Where does the name Vertoro come from?

Vertoro is a combination of the French word “vert”

meaning green, and the Italian word “oro” mean-
ing gold.

(Q)So the name implies your motto, going from

green American dollars to gold money?
Gold and silver also expand in supply, as more of
Yes, that’s the idea. We think that it is vital for busi- these metals are discovered.
nesses and individuals to make that move from
green to gold. But, they expand at a much more consistent rate
over the long run than paper money.
(Q)What are your reasons for urging people to
do so? Finally, gold and silver are market-chosen money.
The free market principles which I believe are the
The ones we tend to emphasize are going global best economic policy should be practiced not only
with gold, hedging against inflation with gold and at the national level, but more importantly at the
silver, and using free market currency to avoid an- local level. Individuals and businesses should use
ti-market forces. free market money - money with value derived
from its acceptability in the market rather than any
Gold is a world currency and certainly one of the edict or decree.
two oldest currencies. Gold and silver are both
mentioned in the Old Testament, they were used (Q) What is your full name and your position at
in coins thousands of years ago, and they are Vertoro?
widely accepted. In my own travels, I’ve been able
to convert gold and silver coins to local currency People call me Jim. When you go to the Wikipe-
in every country I’ve visited in Europe, Africa, Asia, dia disambiguation page on “Jim Davidson” you
and North America. find me where it says “James Eric Davidson.”
VertoroI’m the chief executive officer at Vertoro.
Inflation is a tax on wealth. If you hold your wealth
as dollars, you get hit with that tax. The guys who (Q) What does Vertoro do?
make dollars, both at the printing press and in the
banks, generate more dollars all the time. Vertoro is a consulting services company. We of-
fer extensive services in communications security,
Since dollars are not in fixed supply, the value of privacy, data security, encryption, hardware and
the dollars changes. Generally, over time, mon- software systems for secure communications, free
etary policy has been inflationary. market money, web development, e-commerce,
and marketing. As a result of our specialties, we (Q) How long have you worked in financial
do a lot of contract programming of one sort or consulting and when did you open your first
another. digital gold account?

(Q) Those specialties sound rather diverse. Is My business school studies were in marketing and
there a common thread? entrepreneurship. I guess my first job in financial
consulting was working as an intern for Space
Yes, sure. In fact, the common thread is informa- Services Incorporated, developing their business
tion. Money is just a special type of information. plans, writing software for their real estate divi-
The very earliest data we have about money sug- sion, and helping them find a market for their pay-
gests that ancient man kept records of wealth rep- load launching business in the university science
resented by flocks of sheep or herds of cattle by community. That would have been in 1986.
notching bones with tally marks. Nowadays, we
keep track of wealth by flipping bits in computer My first digital gold account came in December
systems, so that a bank account shows a certain 1998. I was involved in a Texas constitution reform
balance. project and the guy running it agreed to reimburse
my expenses with e-gold. So, I opened the 1,468th
More significantly, the value of information may e-gold account. Once I got started, though, it be-
be the value of your entire business enterprise. came exciting. In those days, you could redeem
If someone steals your laptop and gains access two tenths of an ounce of e-gold and they would
to all the confidential records of your customers, mail you a gold coin. It was fantastic. Occasion-
you may be out of business tomorrow. If you don’t ally I hear someone recite how large an upward
have a secure backup, you may not be able to do move has taken place in the price of gold over the
business. past two years, and then they tell me it’s too late
to buy. Fools and their money are soon parted, my
If your records are compromised, you may have to friend.
reimburse a lot of customers who expected you to
keep their data secure. The government may shut (Q) How many other people are employed at
you down for having lax data security. And that’s Vertoro and is there anyone I might know?
already happened - lots of laptops have been sto-
len and over 150 million customer records have All our staff, including me, are contractors. We
been compromised as a result. work closely with a team of consultants and con-
tractors who provide all kinds of specialties includ-
So, we create value by deploying effective infor- ing accounting, marketing, programming, web
mation systems which use the latest techniques development, publicity, media relations, and other
for data security. We also create value by providing services. We have a chief technology officer, Kev-
access to markets around the world and in many in Wilkerson. We also have a set of very good re-
specialty niches which simply cannot be reached lationships with financiers, so we place deals with
without good data security, use of digital money, them and help companies raise money. Our po-
and online gold. litical risk consultant is Sandy Sandfort. You may
have read a few things he’s written. Over the years
(Q) What would you consider to be your spe- he’s been published in places like Wired magazine
cialty? and the like. He has forgotten more things about
the law and international company structures than
The one thing I’m any good at is writing. I have I’ve ever learned.
a certain facility at taking ideas from various dif-
ferent technical specialties, thinking about them, One of the guys I work with quite closely is Court-
and then writing about them in a clear, simple way. ney Smith. He used to run a leading hedge fund
Sometimes, people find they understand what I’ve and a top-rated newsletter and a top-rated stock
written. fund. So, he’s something of a finance whiz.
He and I have worked about half a dozen deals in years.
the last year, taking companies public, bringing in
new capital, going overseas to offshore stock mar- (Q) Can I raise equity financing through Ver-
kets to tap other sources of financing. toro?

(Q) Is Kevin Wilkerson an important part of the We are not a broker nor a dealer in securities. To
Vertoro organization? raise equity financing, we would refer you to our
network of contacts in those industries, which are
I would say so. He’s the chief technology officer. extensive.
We rely on him to evaluate technology, develop
systems, identify programmers, put together the (Q) Or can you arrange financing for a private
project teams that actually implement software company wanting to go public?
and hardware systems, and handle some of the
parts of the market which he knows best. We have contacts in the business of taking com-
panies public, not only in the USA, but also in Eu-
(Q) What kinds of digital gold currency do you rope and Asia.
sell at Vertoro?
(Q) When building a larger and stronger online
Mostly, that is e-gold and Pecunix. We sell a tiny digital gold economy, which comes first the
bit of eCache. As a practical matter, we sell what merchants or the users?
the market wants. Pretty much we sell all kinds.
That is, all the kinds that are actually gold. So, if The merchants come first. But, the users are easy
we cannot verify that there is gold, if the currency to bring. The reason e-gold became the leading
cannot be redeemed into actual gold, we don’t digital gold currency is very simple: they had a
touch it. referral program. Their referral program split the
revenues from the payment receive fee between
(Q) Is Vertoro an exchange provider and can I the person referring the spender and the person
sell gold to the company? referring the recipient. It worked. And the leading
merchants were the ones who did the most to pro-
Vertoro? No. Vertoro is a gold dealer. That means mote e-gold.
that we sell gold coins, silver coins, and digital
warehouse receipts for gold or silver. We do not (Q) As long as I have been online and touting
ever buy from the public. An exchange provider is the benefits of digital gold currency, not too
a sort of money changer and, therefore, as we’ve many people have put away their plastic and
been advised, a type of money service business. replaced it with e-gold or Pecunix.
These days, money service businesses are regu-
lated in most markets. A gold dealer, on the other I wouldn’t expect all forms of plastic to go away.
hand, just sells gold or silver to the public. Since a Fiat money is actually in circulation rather than
gold dealer does not buy from the public, that’s not gold and silver because of Gresham’s law. So, it
a money service business, again, as we’ve been is well to have systems that inter-operate between
advised, under the current legal and regulatory re- gold and fiat. One of the projects I’ve been asked
gime. to consult on is a digital gold card where the bal-
ance is held in gold but the payments are in lo-
(Q) What type of ventures has Vertoro been in- cal currencies. Even with all the CC fraud, high rip
volved with over the past several years? off interest rates people still use their plastic when
shopping online. About 90% of all US online trans-
Most of our work has been in asset protection, actions are paid with plastic.
communications security, and systems integration.
We have been consulting on private placement (Q) What’s it going to take to get people to
and public financial market offerings for about two change?
The same thing it always takes, Mark. It is going (Q) I’ve heard people say, “I’d start using digi-
to take a collapse of the world’s reserve currency. tal gold currency if there were more places to
Fiat money inflation in France lasted seven years spend it.”
or so. The fiat money in Weimar Germany last-
ed four years. The experience in Yugoslavia was I really haven’t. I’ve wanted to hear that, but I don’t.
something like five quadrillion percent inflation in Mind you, it is easy to adopt. Merchants can use
one and a half years. The Republic of China had the gold-cart.com software to accept any number
hyperinflation for sixteen years while they fought of digital gold currencies.
the Japanese and then Mao.
(Q) Then 2 minutes later I hear from a mer-
The United States dollar untied from gold in 1971, chant “I’d accept digital gold if more people
or 36 years ago. There have been amazing things used it.”
in those three dozen years, that have kept the cur-
rency alive. But the end result is always, always, Right. But, that’s the Catch-22. The merchants
always the same. People won’t change while they have to accept currencies if they expect anyone
think they are prosperous. One of the side effects to buy from them, or use those currencies. It is
of monetary inflation is the illusion of prosperity. up to the merchants to choose free market meth-
But, people always go back to gold and silver when ods or not. And the same crisis that is going to
it matters, when the currency collapses. impel everyone to move into gold and silver from
fiat money is going to work its magic on merchants
(Q) But won’t people just switch to some other much sooner. Hyperinflation is always hardest on
currency? the least prepared merchants. Harder than it is on
anyone else.
They might, but it won’t do a bit of good. There is
no paper currency that works. (Q) If you look at the chart of gold price moves,
it really has jumped recently. Do you see higher
(Q) What is the largest ‘thing’ you would like prices in the years to come and if so, why?
to see changed about the United States fiscal
policy? Yes. I believe we’ll see $1000 gold in early 2008,
and $10,000 gold or higher before the dollar col-
Myself, I would like to see the USA adopt a policy lapses. At the same time, the Dow should hit
of voluntary donations rather than coercive, con- 30,000 or so, as all those foreign held dollars seek
fiscatory taxes. some sort of return on investment.

(Q) How about the Canadian dollar?
They sold all their metal reserves in 2005, as I re-
call. So, the Canada dollar is backed by their re-
serves of USA dollars.
(Q) And the EU euro?
First, let’s just look at the historical prices. In Janu-
ary 1980, the price of gold hit $895 per ounce dur-
ing intra-day trading in the April 1980 futures con-
tract. In today’s dollars, that would be over $2700
per ounce. So, as long as gold is below $2700, it
is not even matching the historical high.

Second, let’s look at the dollar. What is holding

My friend Doug Casey likes to point out that if the it up? Some confidence in the American govern-
USA dollar is “an I owe you nothing,” then the euro ment? Some set of policies that may be believed?
is a “who owes you nothing?” At least with the “full Some history of fiscal or monetary restraint? No.
faith and credit of the United States” you can pin None of these. All the trade policies are protection-
someone down. With the EU euro, which of the ist and inflationary. All the foreign policies are ag-
member states is responsible for your money? gressive and inflationary. All the fiscal policies are
Any and none. deficit-laden and profligate, so, inflationary.
The only thing that is going to bring nominal prices
for gold down is the huge investment in gold min-
ing that has been going on since 2002. Yes, that
is going to realize some serious discoveries, and
those discoveries already found are going into
production next year and through 2011. But, the
dollar is going to collapse before that new produc-
tion is in hand, so the prices won’t be dollar de-
nominated. Plus, of course, there is a little known
rebellion cycle in American history which peaks
right about now. The actual peak should be in the
five years around 2010. So, the period from now
to June 2012 or so. And rebellion is very, very in-
flationary.
to meet the people involved in the industry - Doug
Jackson, Bernard von NotHaus, Jim Turk, Anthem
Blanchard, Sidd Davis, Paul Vahur, and others.
But, your question suggests some quality I have
that might be regarded as unique. I would demur.
What I have is a certain facility for knowledge and
a considerable ability to communicate, which are
easily replicated. It is possible that I lend insights
and witticisms to speed things along, or make them
more enjoyable, but I’m just this one guy.
(Q) What are you currently doing to help move
that change along?

(Q) I know you have had an interest in the Lib- Very little. I think the only meaningful thing to do
erty Dollar and the Phoenix Dollar, both are in that regard is to combine encryption technology
private barter style silver bullion products. I’m with digital bearer instruments and some sort of
also a big fan of 100% silver backed currency. gold and silver redemption system to offer com-
pletely private exchange of value. But, I don’t have
Yes. My first silver coin was a 90% silver dime my the math to contribute to crypto. I don’t have much
great Aunt Dori gave me in 1967. The coin was background with digital bearer instruments. And
minted in the year I was born, before Lyndon John- the auditing of the gold and silver is a puzzle that I
son said that silver was “too expensive to use as think George Hara might have worked out, but I’m
money.” still puzzled by.

It was, of course, the debasement of the silver (Q) I read from the Vertoro ‘About Page’ that
coinage that told the French to begin converting your goal or mission is, “…to help individu-
their dollars to gold. That was what started the als and businesses educate and protect them-
London Gold Pool of 1965-1971. selves from the collapse of the dollar.”

(Q) Do you consider yourself a force for If we do nothing else, that should prove to be very
change? valuable to a great many people, yes.

Me? I’m just this guy, y’know? I’m aware of change, (Q) Where do you see the US dollar falling to
and I do what I can to stay even with some of it. over the next two or three years?
But a force for change would be nanotechnology.
You want to see how fast that is changing things, I believe that within the next three years, the USA
talk to Darrell Brookstein. dollar could cease to circulate. Just as the mandat
replaced the assignat in Revolutionary France, I
(Q) Or a factor in how the world of tomorrow is expect the North American Union to include a
being shaped today? monetary union, and something hyperinflationary
like the amero to be the new currency.
Well, sure. We all are factors in that shaping.
Look, the economy is just choice taking behavior. There is no historical parallel outside of the col-
All it is, all it has ever been, is buyers and sell- lapse of the denarius when Rome fell or the failure
ers taking choices. I happen to be an innovator in of the solidus when Constantinople was sacked
this industry, in the digital gold industry. Or a very by the Turks or the failure of the dinar when Bagh-
early adopter. I’m someone people talk to about dad and Damascus were sacked by the Mongols.
this stuff because I’ve gone to a lot of trouble Perhaps something like what happened when the
mulberry bark paper of the Khans of Imperial Chi-
na went hyperinflationary in 1300 or so. Basically,
everyone with any dollars is going to be desper-
ate to unload them on anyone selling anything of
value.

In other words, I don’t see a bottom.

(Q) What does financial freedom mean to

you?

Financial freedom means being able to control the

destiny of my wealth.

(Q) Do you invest your own money in gold or

silver bullion?
think selling gold and silver coins to the masses is
Well, I’m basically a pauper. There are some as- going to be very easy in the next few years.
sets that I have been asked to manage. Whatever
ready money I have access to is stored in gold (Q) I am not a fan of credit cards. I recognize
or silver, except for extremely current cash to pay that last year was the first time since the great
actual bills now due. depression that the US population had a nega-
tive rate of savings, people actually had to dip
(Q) Why? into their savings just to get by, yet credit card
debt continues to rise per US household. Open
Simply put, I don’t trust the governments that put your wallet or briefcase and tell us, do you have
their full faith and credit behind paper money. I be- a wallet full of plastic credit cards?
lieve the history of governments is such that only
a fool would ever trust them. I’ve been reducing. I managed to get one card
company from a credit union to let me pay off the
(Q) If I gave you one full page ad, in the New balances on two others. I plan to reduce further.
York Times, Wall Street Journal and the Wash- But, yes, I have debit and credit cards. They are
ington Post….for one full weekend (Fri, Sat, very handy for day to day transactions.
Sun editions), what would you say to those
millions of readers? (Q) Can you give us three good reasons to be
holding gold today and not US national currency?
If there were only one idea to convey, it would be
the tremendous difficulty faced by people who 1. The USA dollar is at parity with the Canada dol-
have poor crypto. Look at Japan and Germany in lar, which is only part of the dollar index story. It is
World War Two. They had the very best mechani- not going to get prettier from here. The USA is the
cal cryptography systems, and they were utterly world’s leading debtor nation. With oil no longer
defeated by the USA and Britain, which had the trading exclusively in dollars, a whole lot of dollars
very best digital crypto. Now, it happens that I’m are going to want a better home.
working with a company in Houston, LightSpeed
Systems, which offers encrypted root desktops 2. Gold is better money. As Aristotle pointed out,
and Rayservers brand encrypted root laptops. I it is consistent, unlike land. Gold is divisible, un-
think that secure data systems are very, very im- like works of art. Gold is convenient, unlike bars of
portant. If you visit golightspeed.com you would lead. It is durable unlike bushels of wheat. It also
get a glimpse of what we are doing. So, in terms happens to be ductile, malleable, conductive, and
of consumer products, that’s where I am. I really pretty. Taken together, these features have always
made gold attractive. So, it is universally accept- and how can I learn more about it?
able in exchange for whatever people are using
for money locally in time and space. There is no The next big thing is GoLightSpeed.com which is
better store of wealth. going public this Autumn. If we get it all done up
3. The best calculations I’ve seen for the M3 mon- in a package, we are told we can get $5 million for
ey supply since the St. Louis Fed stopped publish- twenty percent of the company in a Reg A IPO.
ing that figure in February 2006 or so suggest that That means the whole thing is worth $25 million. A
the money supply is expanding by about 12% to significant share is held for the various holders of
14% lately. Gold’s supply has expanded by about stock in EZEZ, Reliable Laptop Distributors, and
2% per year for the last thousand years or so. And, so forth. Within two years, I think we’ll raise a total
the supply of gold is naturally scarce. The supply of about $300 million to take that puppy global. At
of money is up to the whims and psychoses of a the same time, I have ambition to get out of the
few very dim-witted politicians. industry completely. I’ve put together a group to
go after the Google Prize. We’re also talking very
(Q) I know over the past year or more the US seriously about putting people on the Moon and
dollar has been sliding down against all major Mars.
currencies. Do you see this downward trend
continuing? When you think about it, we’ve always lived in the
Solar System. If you put a box around Earth, there
Yes, I do. My friend Clyde Harrison said it best. would be no life inside after a few weeks. All life
Fiat currencies don’t float, he said, in August 2005. here depends on the Sun for light and on other
They sink at different rates. space resources that come down as meteorites. In
fact, most of the gold and platinum group metals
(Q) By the end of 2007, the price of gold will are here as a result of asteroid impacts, according
have topped what number? to the best current science. Well, most of the uni-
verse is not down here. It is out there. As a practi-
I’m going to say the ounce of gold at $950 and the cal matter, that means that most of the wealth is
gram of gold at $30.54. out there, too. It is raining soup out there, and I’m
going for a bucket.
(Q) Do you have a PayPal account? Why or
why not? (Q) How many gold or silver bullion coins do
you have in your pocket right now?
Me, personally? Yes, I think so. I’ve had two or
three over the years, and I have recently con- Ain’t tellin’!
firmed one for a very obscure e-mail address that
I’ve been keeping. (Q) Why?

But, I don’t have any money in it. I don’t recom- Well, for one thing, I’m sitting here in my pajamas.
mend PayPal for our digital gold clients. There <smile>
have been a lot of problems with merchants who
have PayPal accounts having their accounts fro- Photos by Louis James of Casey Research at
zen and funds seized or, at least, withheld for Doug Casey’s Eris Society conference in 2005,
many months. There are accounts from company Aspen Colorado
insiders which suggest that the pattern of frozen
merchant accounts was part of a deliberate pol-
icy. While I’m not able to say for certain what to
think of those stories, I think it best to avoid trouble
whenever possible.

(Q) What is on the horizon for Jim Davidson