Disclaimer – this is NOT a paid piece. However, I will link my referral code below in case I have interested you in Kinesis and want to sign up.
Referral codes will help me support the page and YouTube channel (rather than a Patreon) and you can also refer friends and get rewards from the system. I have one KAG and 2 KVTs. The overwhelming majority of my portfolio is in PM miners and real estate. I am looking to begin my journey with Kinesis and bring you along for the ride.
As part of this series of articles, I plan on taking you on a journey of understanding why this is something I’m interested in, what barriers I’m seeing, and what’s coming down the road. I want to take you on this trip as a 45 year old with no crypto user experience so you can learn with me and learn to adapt this new technology.
Bottom Line, Up Front – Kinesis is essentially if gold and silver had a baby with crypto currencies. When you buy Kinesis KAG or KAU, you are buying digital representations of silver and gold that are redeemable for physical silver and gold. This is NOT buying unbacked crypto currency that relies on other people to buy your crypto to make it have value. I am an advocate for sound money and want to use gold and silver as money. Here, I tell you the case for why.
Like many reading this, I got into gold and silver over the last 19 months due to uncertain times ahead. I primarily invest in PM miners and real estate, and at 45 years old, I didn’t take too much to the cryptos. I think many of you can relate to this last part as it is pretty intimidating stuff. I only heard about Kinesis from watching Andrew Maguire videos and I was intrigued, but it still just seemed like everything else. It’s not. Not even close.
In my “real job” I manage a massively large IT contract and deal with extremely complex systems on a daily basis. I’ve had 10 years of college and had a hard time wrapping my brain around some of this crypto stuff. This does not qualify me to operate on a child, sell insurance, build your roof, or advise you on crypto or gold and silver. What I WANT to do is boil down highly complex things so that perhaps a few hundred million people who are not involved with PMs or cryptos might take notice of a newer technology and follow me on this journey to learn with me.
I’m a “sound money” guy. I remember at 12 years old reading a book on government waste and remember the $10,000 hammer stories in the book. It angered me to no end. I knew very early on I wanted my government to not outspend its means. It was interesting for me to learn that gold and silver are listed in our US constitution as the only form of money. Over the years, we have somehow gotten away from this due to various laws and executive orders – yet this is still in the Constitution – so I have no clue how this is ignored because my civics classes told me you would need an amendment to remove this. C’est la vie.
I stumbled on to Mike Maloney’s series titled “The Hidden Secrets of Money” which is a 10 part series on YouTube that had the production value of a documentary to be on PBS. It is AMAZING and I think you should all start there. Send this to all of your friends and family members not yet involved in PMs or cryptos.
This starts to get the wheels turning on “why gold and silver”.
Most of you reading this are already in the precious metals sector, but many of you might be crypto currency people here for the same reason. Sound money.
What is Kinesis? Is it a crypto?
In short, it’s not a “crypto currency” as you would think of bitcoin or Ethereum. It is MONEY.
This is bitcoin: “a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
This is Ethereum: “Ethereum is open access to digital money and data-friendly services for everyone – no matter your background or location. It’s a community-built technology behind the cryptocurrency ether (ETH) and thousands of applications you can use today.”
So what is Kinesis? It is an “online record of the physical bullion you own”, which you can see here. When you are sending Kinesis KAG or KAU to people, you are essentially sending them ownership of your portion of that physical bullion held in vaults around the world, which is recorded on digital ledgers called the blockchain.
This is how I have compared Kinesis to crypto currencies previously. On the left hand side, you would have a Kinesis KAG or KAU which you could redeem for silver and gold, respectively. On the right hand side, you have crypto currency which you could potentially redeem for dollar bills.
Quick history for the non-PM persons reading this. On the graphic you see a $20 bill there. This $20 bill 100 years ago would get you an ounce of gold at the bank. Walk in, put the $20 bill down, get an ounce of gold in return. This is what it looked like close up.
On this was that gold certificate you can just make out. This USED to be a receipt for gold and silver. This is what Kinesis is, today. It is a digitalized version of this. It exchanges 1:1 for gold/silver.
1 KAG = 1 Kinesis silver ounce (AG is silver)
1 KAU = 1 Kinesis gold gram (AU is gold)
I have heard questions posed to me – “Nate, why aren’t KAG/KAU on exchanges?”. They just started trading on BHEX and according to the CEO in an interview a few months ago, are looking at trading on 7 or 8. I invite you to take a look at his discussion with Tom on Palisades. Anyway, the VALUE of BTC and ETH are derived from buy/sell orders on these exchanges from other individuals. Its value is determined by the free market, so to speak. Its value is ONLY what people feel they should pay you for it. However, KAG and KAU are based on the underlying metals. There are slight variances but you aren’t bidding this up in the free market – you are buying metals in a vault and this is your digital receipt. Therefore, the value of these “tokens” are pinned to the underlying metals, not the exchanges, per se.
So the takeaway from this section here is this….
Kinesis is traded for gold/silver. Cryptos are addresses on a blockchain where you are squatting, waiting for someone to give you more money than you paid for the real estate. When you sell your crypto currency for cash, you are relinquishing your address on the blockchain to them for ownership. In a sense, you are buying and selling strips of land, digitally, for cash (or other crypto currency). Don’t yell at me about this. Michael Saylor himself calls BTC “property” and not money. This is how people speculate with crypto. Kinesis is not “crypto” – it is gold and silver. If you are speculating, you are speculating on the 5,000 year track record of gold and silver. Not an unbacked crypto currency.
OK – I’m sold, now what?
Go to Kinesis.money and look around. I made the mistake here of trying to read up on everything from YouTube. Too much stuff out there. I then signed up, got an account, and once signed in – I had a terrible time finding things. I was like, ok, I now have an account, now what?
On the main page, take a look at some of the videos under Support –> Video lessons. These are short videos, maybe 2-3 mins each and tells you about what it is and what benefits you can get from it. It just took me about 30 mins to run through all lessons. It gives you a high level understanding of the system. I personally love the KVT portion of this. It almost seems like buying shares in a company, to an extent.
From here, feel free to sign up for an account (again, feel free to use my referrer’s code, as this can help me a ton and not cost you a dime). This is KYC, or “know your customer”, so with this, you may be requested to submit pictures of you and the like. This is common banking practice. Note, many crypto exchanges do NOT do this, which makes them the subject of law enforcement as being “shady” or laundering money. When banks use KYC, there is a person on the other end of the account that is verified. To me, this greatly de-risks the platform.
One barrier for me in the United States is that I have to do a SWIFT transfer of funds to fund my account. Apparently, I have to go to the bank in person and do this. To me, this is a PITA and I think the Kinesis folks are working on changing this – but they operate in a LOT of countries and have a LOT of laws they must comply to – so I may have to wait on them for this. You can, however, link your bank to get funds sent to you. I’d LOVE for this to be setup so I can just add funds directly from my bank to them. Note to anyone from Kinesis reading this – you have many, many, many people in my country who would link to their bank account tomorrow and use the hell out of this, but telling them to do a SWIFT transfer by visiting their bank in person is a massive barrier – believe it or not.
Edit: A user sent me Jim Forsythe’s hack on how to fund your account via the Kinesis debit card here: How to get $s into Kinesis : Wallstreetsilver (reddit.com)
Why would I use this?
I want you to look at the big picture of the world today. Many people have seen the value of the dollar lose 99% of its value over the last 100 years. This is what it has looked like since 1971.
What this means is when you hold your wealth in dollars, it is an evaporating asset of purchasing power. The below example I’ve used 200 times, but this can show you essentially what we are getting at:
In 1964, you could take 2 silver dimes and buy a gallon of gas. If you took those same two 1964 silver dimes today to a coin shop and cashed them in for dollars, you could then buy a gallon of gas with those two silver dimes. Meaning, the silver HOLDS THE PURCHASING POWER. In 1965, the silver was removed from the dimes and it was worthless metal. Today, you would need 30 of those dimes to buy a gallon of gas.
Let’s look at a deposit of $40,000 in your Kinesis account and buy KAG. At this moment, BTC is about $40,000. The DXY index is 90. So what I’m going to do is play a scenario out over the next 5 years to illustrate why you would use this.
1 KAG at this moment is $28.32. So that $40,000 today can buy 1,412 KAG (ounces of silver).
I am going under 3 assumptions. You may disagree with my assumptions, but they are there to illustrate my point. You can change the assumptions to fit your narrative. This is just for a math example and how I may see the next 5 years playing out.
- Silver moves up to $100
- DXY falls to 75
- BTC reverts to support at $18,000
If silver moves up to $100, this means the fiat dollars you put into the KAG at $40,000 are now worth $141,242. This gives a current spending power of $117,230. It also then assumes that the dollar has 17% less spending power. Your BTC could fall down to $18,000 due to end of market cycle. This also then assumes your bitcoin lost 55% of its value. And, since it is measured in fiat, this remaining $18,000 has the current spending power of $14,940.
Meaning – depending on how you think the next 5 years turn out – your $40,000 could turn into $117k with KAG or $14.9k with BTC. Anyone who is a BTC investor right now is raging, insisting this is going to a million. That’s fine. I’m telling you that given my assumptions, I’m trying to convey how this reacts in future spending power IF silver goes to $100 and BTC goes to $18k. Change assumptions if you want.
In the scenario I mentioned, if silver is $100, my guess is that it is tracking with inflation and a lot of things are costing a LOT more money.
However, had you bought KAG, and 1 KAG right now could buy you 9 gallons of gas – in 5 years, it’s probably going to buy you about 9 gallons of gas. The dollars and the cryptos VALUED in dollars will have that massive loss of spending power. So the KAG will absorb that inflation. BTC (or any cryptos valued in fiat), would have significant depreciation in spending power.
Who else is using this?
Right now, Kinesis is by far the largest digital gold/silver token out there. I did some rough math, and it appears there are about $100m in precious metals in the system. Take a look on their transactions page to see what I’m seeing.
The KAU main net has 779,260 of KAU (grams of gold). That is $61 per gram for $47,534,860 in gold
The KAG main net has 1,857,887 of KAG (ounces of silver). That is $28 per ounce for $52,020,836 in silver.
Total is about $99,5m in PMs. Last I checked the second most popular was $7m. So these guys are the leader in the space, by a LONG shot, and therefore they may have a massive advantage by taking up market share for the “standard” in this space – and all other competitors in this space may roll into them.
Recently, they launched a partnership with Indonesia (225m people, not a small country) regarding using Kinesis. Apparently this is to be working with their 45,000 or so postal service employees. This also makes sense a lot as a cross border payment system in that you can send money to digital wallets in a second, and 3m of Indonesia’s workers are migrant workers in Malaysia.
Last I heard there were over 50,000 users on the system. I want to ask on where we might be able to get a user count. My belief is that this adoption curve will go parabolic as gold/silver rise and 9500 cryptos start to consolidate and die out – many who LOVE the idea of crypto may flock to a solution like this.
Additionally, I feel this is a natural fit for the PM community when you see premiums on the physical at 50%. You can buy here at virtually no premium – and it’s ALLOCATED – so it’s essentially the same effect of buying PSLV because what you are buying is minted and metal is moving into their vaults. Unlike PSLV, you can take delivery of much smaller quantities – as little as 200 oz.
The best money?
One thing I mentioned that I liked bitcoin over gold for was that if I had to flee a country, it’s kind of hard to carry several hundred thousand in gold or silver with me on a plane (customs would take it), but if I had the wealth stored digitally, I could then get to my destination country and be able to access my wealth.
I felt that the Guistra versus Saylor debate was gold versus bitcoin – but the problem is, both have serious flaws themselves. I wrote a piece bashing gold itself and another on bitcoin itself. Kinesis is essentially a combination of the two – with the benefit of being able to salami slice an ounce of gold billions of times with the portability of the block chain.
Why use bitcoin/ETH over kinesis?
People are all wired differently. Some things are important to others, and not important to some other people. One of my friends said she prefers bitcoin because there’s no third party risk. Meaning, she buys bitcoin from the exchange and there’s no company that could go out of business for her crypto to be worthless. That makes sense with reducing a counter-party risk. One counter to that is that there’s apparently 1/4 of all bitcoin ever created that are locked out. So you have no tech support number. Imagine someone who bought 1,000 bitcoin in 2010 at $1 each and you are locked out? Can you imagine how sick to your stomach you’d be today?
One concern was – well, what if Kinesis ever went out of business? I think it’s a very fair point. On their “trust” page they discuss more about how the bullion is allocated and not in their name – they just safeguard the metals on our behalf. One of my questions in to them had to do with if Kinesis went under, how would someone redeem their KAG/KAU for metals/cash? There’s a TON of information on their web pages, but it’s a giant sea and they may already have this process mapped out.
Where most of you stackers who might be reading this are clinging to every ounce of silver with your last breath, there’s many people out there who are practical who might diversify HOW they hold their silver. I don’t know about you, but if I had to flee my house in a hurry, I’m not lugging hundreds of pounds of silver with me. Maybe I have a small portion here in Constitutional silver (junk silver), maybe I have some OneGold silver. Maybe I have some PSLV. Maybe I call up Bob Coleman and he gets me a few 1,000 oz bars.
The truth is, none of the above of what I said are practical for every day usage of gold and silver. With Kinesis, I now have a debit card. Currently, I have to convert the KAG to dollars to load on to my debit card. I can use this debit card at the store for groceries, gas, etc. When I use this, rewards go into the system with transaction fees. This is how the whole damn thing is funded. The company, the rewards, everything.
There are minters rewards, where you “mint” KAG or KAU, which my assumptions means that it allows the company to go out and buy it to bring it into the system. You have holder rewards, referral rewards, depositors yield, KVT yields, and I thought rewards for spending. Don’t quote me on the last one.
But why would I spend my silver or gold?
Gresham’s law says bad money drives out good. In this sense, you are swapping your horrible dollars for gold/silver. But why spend it? Because you are holding a potentially APPRECIATING currency with KAG/KAU. And – with Kinesis rewards systems, you get benefits to spend your gold/silver in the system.
Let’s assume you have 100 oz of constitutional at home and 2 100 ounce bars. You can send the 100 oz bars to Kinesis. Maybe you just hold there? Maybe you can sell some of it instantly, rather than lugging it to a coin shop?
Maybe you are sitting on 200 KAG in your account, and silver goes up to $50 from $28 now. You can take some of that, load it on the debit card, and go buy groceries. Meaning – you paid in $28 per KAG and got back $50 per KAG. If you think gold and silver are going up over the next 5 years, it means people like me will be taking my fiat, sending it there, and using that on a debit card to get the benefit of rising metals prices to get cheaper goods.
Assume you spend $150 on groceries per week. You have 6 KAG in your account, worth about $168 today. Maybe silver shoots up to $50 in a few weeks. Where before those groceries would cost you about 5.5 KAG, they now cost you 3 KAG. Starting to get it now?
IF you think metals prices are rising over the next few years, it might make sense to send fiat dollars in to something like this, buy KAG/KAU, then spend. Maybe you buy in 500 KAG and spend up to 250 KAG and reload, leaving 250 KAG never touched, but benefit from rising metals prices as you shop? When I got started in this, silver was $17. Had I bought KAG at $17, I’d have 1.5x the spending power now since the price has gone up 50% in that time.
I feel there’s a TON of PM people out there who I could reach with this to get them interested in Kinesis. Likewise – I have friends I’ve recently got involved in silver and gold and I’d like to also get them up to speed on what Kinesis is. Lastly – there’s the general investor out there who just might be hearing about Kinesis for the first time and not really understanding all of this crypto thing – perhaps I’m able to simplify this for them.
At 45 years old, this whole “crypto” thing came out of nowhere, and I don’t get it. 10 years of college, working in IT for 25 years, many don’t understand the underlying IT of all of this and just seem to follow smart people who write “white papers” and talk about “value prop”. Let me be crystal clear. The value of my KAG doesn’t change whether you sign up or not. I do NOT need to recruit you to make the value of my crypto increase. I feel this is a way to play the rising gold and silver price using digital tokens (KAG and KAU) to get more value out of my worthless paper currency. I feel that a super vast majority of the 9500 unbacked cryptos out there are about to collapse, and many of them who invested in an unbacked worthless crypto currency will not go to another worthless unbacked currency – but seek out sound money that is gold and silver – and use Kinesis as the front end digital means of spending it.
As I mentioned, I have recently gotten my friends to buy in on some silver. One of them lives on a farm and is selling me and another friend half a pig. I can send him money through Venmo or Paypal. Or, perhaps I can send him KAG directly to his digital wallet.
So right now the BIG thing from stopping me from using this pretty much on a daily basis is the need to use a SWIFT transaction to get funds into my account. I’m hoping this is something solved pretty soon as this takes the tremendous spending power of the US offline unless they go to their bank every week or two to do SWIFT transactions. I don’t know how much they cost, and have no idea if this is next day or two weeks until it clears.
I have posted a few articles mentioning Kinesis and have had some people really give it to me. Immediately, you sense that this product may be a competitor to their investment. If you put your money into this investment rather than their investment, they go broke. So there’s a lot of fear with the competition this creates.
What I can tell you is that this is a natural competitor to all crypto currencies. Therefore – anyone in unbacked cryptos are going to hate on me. OK. I’d suggest looking at this solution as a backup plan if you start to see your favorite crypto hit the gutter. On Kinesis, you can convert some cryptos right to KAG/KAU right there to immediately hit the panic button if you need to.
This is also a competitor to physical bullion – so you will have the usual people talking about holding it. Many like to say, “if you don’t hold it, you don’t own it”. Again, that makes sense if you are talking about 25-100 oz of silver, perhaps, but this product is something you can store large quantities of gold/silver in AND use them in spending for daily activities. Higher net wealth people cannot hold hundreds of pounds at home due to the risk of being robbed. I’d say most people that LOVE PMs are also security conscious and may want to have a small amount with them in their homes, but also park some in vaults that are segregated, allocated, or perhaps a solution like Kinesis. What I’d say to the PHYSICAL aspect is that this is a practical way of converting fiat into digital gold/silver and then spend it. Meaning, perhaps you have a small amount at home, a whopper of an amount at a segregated or allocated vault, and maybe 100-200 oz on a Kinesis for daily/weekly spending to get the benefits of rising metals prices. Ultimately, I think this will be a way to get the casual investor into gold or silver without going to a coin shop and worrying about 50% premiums. And – if they want to, they can get the metals sent to them.
In the next part, I’d like to share some of my experiences with Kinesis, some of the resistance some of you have posed to me, and some of Kinesis’ replies to those questions. I was speaking with a person from Kinesis for about an hour today and if all goes well, you might see some of these experiences in a video down the road. We’ll see. They also mentioned they have a new CTO (chief technology officer), a web page re-work in progress, and a ton of things coming.
So – my email address is firstname.lastname@example.org. Please send me questions you have. Some of the questions sent to me already have been answered, but I’d like to really dive deeper into concerns that some of you had.
Next I’d like to dive a LOT deeper into concerns, hesitations, things that might be barriers for YOU to enter. I want to be a translator for YOU and understand why you might not want to do this. If you hold crypto OR gold/silver, this solution provides the best of both worlds. I also feel I might have a lifeline to the back end of kinesis to hopefully get some answers for you and get some concerns to them they may not have thought about.
To leave off, I plan on doing a SWIFT transfer pretty soon and then start funding my account and buying KAGs. I plan to try and take some physical on to the exchange as well down the road and learn how to mint 200 KAG. I have KVT and am looking forward to see how these fees start feeding down to those with KVTs.