A DISRUPTIVE fintech firm, Troygold, may score big as investors pile into gold amid market volatility after Russia invaded Ukraine.
Troygold is a digital platform that allows users to safely store, buy and sell physical gold bullion. It provides the ability to instantly access cash without selling your gold by providing a gold-backed loan facility at low borrowing rates. Rands are made available on a Mastercard debit card through sponsor bank, Access Bank.
Troygold has started to gain traction as it currently aims to have R1 billion of gold uploads onto its platform.
Troygold was co-founded by brothers Bastiat and Dane Viljoen.
In an interview with Dane Viljoen, he said Troygold's platform aimed to be the natural place for South Africans, who own gold Kruger rands, to deposit and hold their physical gold wealth.
This was akin to people depositing their money in the bank.
Troygold is registered as a Krugerrand dealer with the South African Financial Intelligence Centre of the South African Reserve Bank. It is also a registered credit provider with the National Credit Regulator and an appointed juristic representative for financial services provider, Prime Advisory Services.
“We say this because gold sitting at home or in safety deposit boxes is an idle value that serves only the purpose of insurance against country risk. When opening a Troygold account and uploading this gold, you retain the benefits of owning gold, but gain the benefits of digital and financial products linked to the gold, ” Viljoen said.
South Africans have an estimated R300 billion in Kruger rands hidden in drawers and safes and are unaware that they could be using the value of their gold to fund day-to-day financial transactions.
Gold and Kruger rand ownership is currently a niche market because it is historically not digital and does not scale well.
Viljoen explained that some years ago, one could buy gold Kruger rands from most South African banks or take them to their bank branch for storage and sometimes access to financial liquidity. With the trend of local banks going digital, he said they had gradually moved away from this offering.
“Troygold, a digital gold non-bank, is stepping back into that gap,” Viljoen said.
“So Kruger rand owners will need to know how to get their gold to Troygold (by downloading the Troygold app and depositing Kruger rands at their nearest upload point, for instance) where the physical gold is kept in a vault free of charge and fully insured.
“Each Krugerrand gets an ID number, it is then added to our database, it is digitised and fractionalised, which allows you to use the digital value. The owner is issued a digital ownership certificate confirming full legal title. You can also purchase gold in the Troygold app if you don’t already own gold,” he said.
Viljoen explained that the physical gold was then denominated in Rands, which was loaded onto a Troygold Mastercard linked to a physical cheque account at Access Bank, the sponsoring bank.
“If one does not want to sell their gold, they enjoy a gold loan facility to allow them to utilise the value of their gold holdings. The funds can be spent anywhere where Mastercard is accepted, or the value can be transferred to another bank account,” he said.
There are no monthly account fees with a Troygold account, but there are standard transactional fees associated with the Troygold Mastercard. The gold-backed loan facility has monthly interest rates from 1.25 percent.
The fintech said it was currently focused on finding Krugerrand holders in South Africa and persuading them not to just sit on their gold or sell it but to upload it instead.
Viljoen said since one could also buy gold frictionlessly on their platform, their next market would be the financially savvy South Africans looking to hedge their wealth from Rand devaluation and looking for a sound money alternative to traditional banks.
The greatest challenge for them was attracting gold owners or those that wanted to own gold. Hence, they needed to significantly raise awareness of what Troygold offered and the benefits he said.
According to Viljoen, the investment consensus in South Africa was also that gold was an asset class, but it was actually money as the Krugerrand was also legal tender. Owners had not generally been able to lend against their gold or transact with its value as in the past they would have to sell what they owned. Troygold said it changed this as one could now still own their gold but transact with its value.
Troygold said that gold was globally regarded as the pre-eminent store of value and protector of wealth, hedging one’s savings against economic and geopolitical risk or volatility.
The fintech said that for South Africans, another important consideration was that the Rand had steadily lost significant value, whereas gold has returned 14 percent a year since 1967.
“As our currency continues to lose value, we think that more South Africans will prefer to ‘live in gold’ to safeguard their everyday wealth, which Troygold facilitates,” Viljoen said.
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