Startup Pushes Gold-Secured Consumer Credit Card

Capitalizing on the gold-investing craze, a U.S. startup this week said it is seeking banks interested in issuing a consumer credit card backed by gold bullion. Boca Raton, Fla.-based Gold Solutions Marketing Inc. says its new Gold Bullion Credit Card would be secured by credit lines tied to cardholders’ gold. Prospective customers with gold may ship their coins or bullion, ensuring it is registered and insured with United Parcel Service, to Gold Solutions Marketing, which would store it as collateral in a secure vault. The company then would provide customers with a line of credit equal to the value of their gold in the vault. The card “could unlock millions of dollars in capital” as credit card issuers tighten credit lines for traditional credit cards, says Jeffrey Silver, Gold Solutions Marketing vice president of marketing and card development. “Gold trading and investing has always been popular, but during the last 24 months it has been a big trend. Our product would enable people to continue investing in gold while using that value as a source of revolving credit,” Silver says. Gold Solutions Marketing has contracted with CardWorks Inc., a credit card services company, to issue Visa or MasterCard credit cards through participating banks. Gold Solutions has not yet announced any banks or an official launch date for the card, but it is gathering the names of interested customers through a Web site. One analyst says a gold bullion-secured credit card sounds more like a marketing gimmick than a new lending strategy. One has to wonder “why a prospective borrower would care if the credit card loan assets are backed by gold or plain old U.S. greenbacks,” says Scott Strumello, an associate at Auriemma Consulting Group. “In the end you can still borrow against (these assets), and the result is the same.”