By Staff Writer
Novem Gold is planning torevolutionize the gold industry, buyng, selling and storing through tokenization of gold assets through blockchain. The company is fully registered an licensed Lichtenstein. Blockchain Asset Review speaks to Fouad Soultana for more details and explanation how blockchain technology can be applied to the gold industry.
Q: Please introduce Novem Gold and what is your value proposition?
Our journey regarding regulation started way before the introduction of the Blockchain Act. Back then, our first act was to get a legal opinion whether our products NNN and NVM are to be considered securities or not. Having done that, the outcome was that the NVM is to be seen as a regular utility token and the NNN might be considered a security/ financial instrument. We try to offer investors maximum transparency and security and have therefore initiated the drafting of a security prospectus for the NNN. The document is among others intended to provide information on the issuer, to give an overview regarding the overall business the organizational structure, financial information concerning the issuer`s assets and liabilities, financial position, profits, losses as well as information on the securities themselves. The latter involves general information, legal basis, rights and risks attached to the securities as well as further terms and conditions on the offer. In summary, the prospectus shall clarify among others information on the issuer, products, involved risks and rights on the securities. In a joint effort with two law firms this process took us nearly a year. However, with the new Blockchain act in place there is now a clear distinction between commodities and securities. Gold being a commodity is therefore not to be considered a security. Nevertheless, having done all the work we already satisfy most of the requirements set by the new Blockchain act. We are now happy to say that we are in the final phase towards getting regulated under the newly introduced Blockchain Act.
Q: Given the volatility in the global currency markets, do you think there is going to be more demand for gold as a store of value? And how does Novem tap into the market?
When looking at the global economic development we see more and more countries that are in need of economic support to sustain the value of their currency due to rising debt. Prime examples can be found in South America, South Europe, Turkey and many more countries.
Under current banking conditions, companies in Europe can obtain loans at very favourable terms. They receive loans at almost zero interest rates, which delays the natural selection of economically bankrupt companies. In my opinion, this development has placed Europe in a dilemma. If the interest rate is raised, banks can again earn money from lending. The consequence, however, is that a large number of companies go bust due to the increased costs, unemployment rises and the economic performance of a country decreases due to reduced consumer behavior.
Looking at the real estate market in Germany, for example, one finds an all too familiar situation. In metropolitan cities such as Munich, Berlin, Hamburg, Frankfurt or Cologne you can find more and more overvalued properties that were bought with cheap money at almost zero interest. Should property prices correct themselves in the future, and the interest rate rise, owners of real estate could find it problematic to refinance the house with further credits in case of a correction of the market. The outcome is likewise reflected in a potentially severely depressed economy.
These scenarios are not intended to serve as gloomy opinion making, but rather to illustrate why gold has been such an attractive store of value for thousands of years. In the last 20 years alone, the price of gold has risen by over 550 percent and is at a 7-year high in USD and reached an all-time high in Euro. This kind of economic development can be seen in many countries, which leads me to believe that gold will continue to have a very healthy demand.
Novem Gold’s market entry strategy depends on the respective country and the economic situation. In South America there are highly inflationary currencies. In the most extreme case in Venezuela, which became practically worthless. At the same time gold receives a lot of demand, however, cannot be obtained by most of the general public due to the lack of financial funds and the often high MOQ of approx. $30 (0.5g bar) or more. With the NNN those people can save up gold over time as they can buy 0.000000001 NNN equaling 0.00000000001g of gold. At the same time storage and insurance is free and the gold can be redeemed once an amount of 10g is reached. In essence, we provide access to both either small or large amounts of gold. Depending on the country and need, communication strategy of the product and its advantages may vary.
Q: When you say physical stores, please tell us where are you planning and how would it work in the scheme of all things blockchain?
The first store was opened last year in September in Linz, Austria. The next stores are to be opened in Europe since european market is naturally the market we have the most experience in. At the same time we are working on building global partnerships to further drive expansion outside of Europe. Our goal is to form the first global gold brand.