In Gold We Trust (continued)

Clearly, says Turk, if the Internet is going to become the engine of global commerce it's cracked up to be, it needs a currency it can call its own - a currency as nonproprietary and international as the Internet itself. "And gold seems to be the logical candidate," he says, "because after all, that's gold's traditional role. It's international money."

But if gold does good things for the Internet, says Jackson, the Internet does even better things for gold. E-gold isn't your great-grandfather's gold standard. It's new and improved, Jackson argues, fortified by the rigor of free-market discipline and the openness of digital networks. And if you think that's no big deal, well, Jackson - a 45-year-old former oncologist and entirely self-taught economist - would like you to know that his invention represents "an epochal change in human destiny" and "probably the greatest benefit to humanity that's ever been thought of."

How so? Invulnerable to government manipulation and subject to the kinds of market forces only a worldwide, 24/7, open-ended network can bring to bear, e-gold promises not simply better money but the best: a money supply kept so straight and narrow that it has room for neither bubbles nor crashes. And "this," as Jackson is fond of claiming, "fixes something that's been screwed up since before the pharaohs." After millennia in which the boom and bust of the business cycle has washed ceaselessly over human affairs - playing havoc with the lives of rich and poor and even now blackening capitalism's good name - e-gold has arrived to still the waters. E-gold is here to bring capitalism to a kind of perfection.

Not that it's a foregone conclusion. Some of Jackson's closest business colleagues, after all, like to think e-gold might actually bring capitalism to its knees.

It's a hot high noon in Dubai, United Arab Emirates. Faint, muggy breezes are blowing in off the Persian Gulf; and in the shopping malls, Mercedes dealerships, and air-conditioned Starbucks of this deliriously prosperous city-state, loudspeakers are discreetly broadcasting the muezzins' call to prayer.

The call can also be heard, if you listen hard enough, inside a 12-foot-square, steel-and-concrete-walled storage vault located in Dubai International Airport's heavily guarded cargo-holding facilities. But if you're inside the vault, your mind is probably on other things. Like, for instance, the $7.5 million worth of precious metal piled up around you: five flat bars of chrome-bright palladium; two large plastic jars full of powdery platinum sponge; 160 fat, tarnished loaves of silver; and - on a single shelf, laid out one next to the other like babies in a maternity ward - 58 slender, radiant bricks of 99.9 percent pure gold, about 400 troy ounces each and altogether worth more than $6.5 million.

These assets represent nearly half of the e-gold system's physical reserves, and there are, arguably, sound business reasons for storing them in this part of the world. Dubai, sometimes called the Switzerland of the Middle East, offers the financial sophistication of a major commercial hub, the low overhead of a mostly immigrant labor pool, and the high security of a politely authoritarian mini-monarchy.

But the truth is, the gold is here because Allah commanded it. Or at any rate, because the passionate believers behind e-dinar - the network's Muslim-friendly frontend - believe He did. When Douglas Jackson and the e-dinar principals began the negotiations that culminated in e-dinar's September 2000 launch, Jackson was told up front that a proper Islamic currency requires a proper Islamic country as its base. Obligingly, he moved some of the company's existing assets from ScotiaBank in Canada to Dubai's Transguard repository (the rest remains with J. P. Morgan Chase in London) and even rewrote his governance contract to give e-dinar a limited veto over bullion transfers out of the vault. In return, e-dinar agreed, in effect, to help market the e-gold system to the world's 1.1 billion Muslims.

The pitch? Late one night in the lobby of one of Dubai's five-star hotels, a 46-year-old Muslim named Abdalhasib Castiñeira lays it out, sipping chamomile tea as he outlines a brief theology of money and calmly prophesies the downfall of the worldwide capitalist imperium.

A gaunt, neatly bearded Spaniard, Castiñeira is marketing director of the Islamic Mint, a private institution dedicated to reviving as international currency the coinage described in the Koran - the gold dinar and silver dirham. He has placed on the table before him two small gold coins inscribed with Arabic scripture. The Islamic Mint makes them and they represent, says Castiñeira, the Islamic virtues of fair trade and honest value. Give someone a piece of gold, the argument goes, and you give him a real asset whose worth has endured throughout millennia. "Whereas this," he says, pulling a crisp US hundred-dollar bill out of his wallet, "is just a promise." Put your faith in it, and you submit to a system ultimately controlled by governments and corporations, a system that when it collapses - "all empires fall sooner or later," he says - will take the dollar down with it.

"But if you hold this," he says, picking up one of the gold coins and weighing it thoughtfully in his palm, "you are free."

The coin in Castiñeira's hand contains 4.25 grams of gold, just as the dinar did in the time of the Prophet. Likewise, and by no coincidence, the e-dinar's primary unit of account is also 4.25 grams of gold. Officially, the Islamic Mint and e-dinar are separate organizations, but they're actually the off- and online divisions of a single project, joined by ideological and personal ties.

E-dinar's British COO, Yahya Cattanach, and his family share a communal condo with Castiñeira in the comfortable Jumeirah district of Dubai. The company's Spanish president, Umar Ibrahim Vadillo, is also the president of the Islamic Mint. And finally, uniting all three men - as well as e-dinar's Swiss CEO, Malaysian CFO, and German CTO - is one crucial biographical datum: All are high-placed members of the Murabitun movement, a modern, Western offshoot of Sufi Islam and possibly the only religious sect in history whose defining article of faith is a financial theory.

<< Page 2       Page 4 >>

Previous Story: Broadband Cowboy

Next Story: The $7 Billion Delusion