Many people who are in to crypto like the way that the government seems not to be able to be in control of their money. They like the concept of cutting bankers out of the equation and directly paying someone else. Kinesis has this promise, with the upside of being backed by gold and silver. The main drawback of Kinesis is you can’t to a 200x moonshot like some of the Doge coins of the world. Precisely why it is the superior “stable coin” of the future.
Years ago, people might have walked around with silver or gold coin as money. This becomes inefficient for larger transactions and poses security risks. Likewise, no one can take a one ounce gold coin (worth about $1800) and buy a loaf of bread with it.
What Kinesis does is salami slice up gold and silver into millions of sub units, while also having the practicality of…”being money” as defined in our US Constitution.
It replaces this…
…with a digital front end capable of directly paying someone in gold or silver. Essentially, the title of what you own is stored on the exchange, or you can pull it into your wallet on your machine and then it is registered on the blockchain.
Now that we know what it is, I’m going to first address the drawbacks and then go into the positives. I feel there are a lot more positives than negatives, so I wanted to get the not so good out in the open first. Some of this is being addressed by the team.
The not so good…
- Funding. When funding in this country, I had a heck of a time getting my money into my account. There’s a workaround to Swift, by funding your pre-paid physical debit card, but that has limits from my bank of $1,000 a day for 2 days, then $500 a day after that. This is a low cost way of funding the pre-paid card, but with it, you then have to import into Kinesis. If I wanted to mint 200 KAG for about $5,200, I needed to get a lot of money there quickly. My bank refused to do a Swift transfer because they said the account related to another Swift entity. I contacted support, and that will go under bullet 2 here, but eventually they confirmed the right account. I had to then go back to my bank a second time and sign a waiver that the $8,200 I was sending them could wind up going into the ether as they lose control of it when sent. This really scared me. I signed, and hoped. It was there the next business day, which was quick. Cost me about $50 to do this. Ideally, I want ACH so I can fund immediately. Or, perhaps detail a way a noob like me could get it done quicker and cheaper by buying ethereum and sending to Kinesis. If no ACH in the cards, they may want to really focus on how to fund with ETH.
- Support. I have tried contacting support several times. First with questions about the product, twice, over several months, and never got a response. These are the questions my 1700 Twitter followers brought up to me that they haven’t been able to get answers to. I then called the support number which was a UK number, and this should be a 1-800 number. There’s a 5 hour or so difference with UK and my time, so problems after 2PM or so don’t get solved until the next day. As the user community increases, they need to heavily invest in support of the product. This could be a link on the main page for media responses, so some of the product questions can get a channel to answer. A 1-800 number should be set up so people don’t get international billing for calls. Rolling support in different time zones could get you more real time support, even if it’s scaled back, I won’t have to wait 18 hours for a response, I could get one in a few hours.
- Jurisdictions and compliance to regulations. This one was brought up by many in the crypto world. ABX is a bullion company, so they don’t have a ton of regulation when it comes to buying bullion. However, Kinesis is a spin off company that is a separate legal entity and is in many jurisdictions. Where are the headquarters? What do the different offices do? What are the laws in regards to selling cryptos in those jurisdictions? I think there’s concern about someone backing up the truck and buying millions of dollars in KAU and then a country try to seize this or shut down the exchange. THIS NEEDS TO BE ADDRESSED in order for Kinesis to REALLY get massive numbers. Right now, this is my personal biggest concern – where a government could just step right in and shut the doors.
There are more minor issues, but nothing really bigger than the 3 above. If you can solve those BIG three items, this will massively grow participation in the platform and de-risk it to a point that big money can get involved. Right now, if you are a money manager of sorts, you need to do your due diligence with risk and this is too high on the risk scale right now with the compliance. I think the company needs a link right on their front page with compliance and detailing it in tremendous detail.
There’s a lot to pick from below, which is why I’m very much involved and highly recommend this to people. You have to evaluate your own risk appetite, but I’d encourage people to take a small position with them and try it out. I got my friends involved with silver, and this is something where we could pay each other in silver. For instance, a bunch of us do yearly trips to the poconos and split beef/pork for bulk purchases. It’s easy enough to transfer the USD equivalent in KAG.
- Superior business model – to an extent. This product uses a series of yields to provide an incentive to participate. To fund the entire platform, there are transaction fees to get things in and out of the system and paying each other, etc. These fees are about .45% on what I saw. To do a lot of Visa/Mastercard transactions, you are looking at 2-3% merchant fees, if I recall. This might be an incentive for merchants to accept the product – lower fees to them. Of issue here, mostly, is how much transaction fees do they collect, and will this scale out to cover operations down the road. Most want to look at this transaction fee as something not large right now – and they are probably right, but the KVT sale is sort of like an IPO or ICO where sale of 300,000 of these at about $1,000 each can provide the company $300,000,000. Some I saw were now being sold for $1,400. The point is, if going concern is your main issue, don’t sweat it anytime soon. I heard KVTs are half sold, and with this, you are looking potentially at another $150,000,000. With a light support model and transaction dollars coming in now, this is very likely to help support the company for years to come. What I can also see happening is as the product becomes more used and more popular, prices of KVT could increase the less that are left. At issue is if Kinesis doesn’t launch into orbit over the next few years, if the KVT money comes in, the company burns through it, and they are running at a deficit each month – things will have to change.
- Rewards for storing bullion. The parent company is ABX, so all of the infrastructure is there through ABX. Kinesis does not have to buy expensive vaults, they simply lease some space from the parent company at extremely favorable terms to capture market share. Right now, people buy unallocated products from Perth because they want the exposure the real metals, but they don’t want to pay for it. Many reading this understand the issue with unallocated, and the ghost metal there, but this product is something where you can either sending in your metals, mint to bring in metals, or buy existing metals – at no cost to store. In fact, you are looking to make money storing. What I would recommend is that the yields for these remain small, and perhaps get smaller the more you store. If you want to have whales store there, you don’t necessarily need to pay them to store it, you just need to avoid the cost. A portion of the transaction fees goes to holders, and this is split up amongst the metals. So you might get tiny yields when all is said and done, but you avoid paying costs. Right now, this has the absolute promise of marketing to those who have unallocated accounts. You can capture that market share. As a metals investor, I see Kinesis pulling metals off of the market where unallocated is not. So this is also a natural competitor to PSLV. Both can help take 1,000 oz bars off of the market, but with Kinesis, you can easily convert some of this gold and silver to cash and immediately use on your pre-paid debit card. I don’t have access to PSLV funds outside of market hours. And – I can pull as little as 200 oz out of the exchange and send to my house.
- Gold and Silver awakening. With gold and silver promising to have a big next 9 years with debasement of currencies worldwide, and perhaps the end of the USD hegemony as the reserve currency, others do not want to step up to be the reserve currency. Many think the Yuan might be a fit, but there are trade offs with being the reserve currency they may not want. The USD wants to remain the reserve currency, but there appears to be an effort amongst the G20 for all currencies to print to infinity. This form of MMT will not work, as wages will not rise as fast as prices – and this will have a net effect of runaway inflation. This is when gold and silver will catch fire amongst the elite, as has happened for 5,000 years. Having a situation where you may see gold go to $10,000 and silver to $600 by end of this decade, this is a 6x in gold and 20x in silver – these are crypto-like returns. Having owning crypto tokens backed by these metals, you may see performance gains like in the 1970s, where silver went up 29x and gold 24x.
- Divisibility of gold and silver. We all know the paper currency was NOT money, it was the receipt for your gold and silver and was more portable. With this era of the blockchain, you can now salami slice gold and silver up to millions or billions or trillions or quadrillions of times with math. When and if gold get re-priced by central banks, it’s possible we see $50,000 gold and $2,500 silver. This makes the above look silly – but this would assume gold is backing 10% of the currency around. If you want it at 20% or 40% backing, it would be higher. Point is, you can easily make gold and silver real money again, and this software front end is the way to do it. There are competitors to Kinesis which do the same thing with dividing gold and silver. But what Kinesis does differently is the yield engine which rewards spending. This is the marketing piece which needs to be on the front of the website. “Kinesis – get paid to store and use your precious metals”. Done. The line out the door starts.
- Possibility of reserve currency. Right now, we are in the betamax/VHS wars of cryptos. Many of you are very young, and you have an emotional attachment to your shitcoin meme coin. Over time, these 9000 coins will find the best of the best, but in the end will be “Asset Backed Digital Token” versus “utility token”. Those that simply have a ledger space on the blockchain saying “Nate wuz here” will go the way of the betamax, at they have no intrinsic value. “It’s the network baby!” No. Just no. I’ll take on Saylor any day and show him a nice picture of a blockbuster, that had the best network in the business, but went bye bye because other products had more value. I mention the possibility of Kinesis as a reserve currency because no nation really wants the reserve currency any more, as other currencies constantly try to devalue against them. Those with less value can sell products cheaper and with this, create more jobs and tax revenues. The reserve currency has better purchasing power, but jobs are hard to get because your cost of labor is higher. To me, it seems the east is going back to gold at some point – or even the threat of it. This whole Basel 3 compliance thing by the BIS, I heard in a video, could have been the result of Putin and Xi threatening to back their currencies by gold. Which would have destroyed all paper currencies overnight. While a 100% peg to gold is unlikely, ever again, if nations have massive piles of gold this assures other countries they can pay their debts. Now, imagine if Russia and Iran can buy and sell oil in digital gold? Each country has a central bank with gold. Imagine a Kinesis – or a product like it – has gold vaults worldwide and an Iran moves gold into it. They then change title to Russia with transfer of KAU, and Russia delivers oil and pulls the gold out of the vault. This bypasses the USD and can anger the west, who wants to sanction people with USD. Countries will adapt away from the USD, by attrition, and you will have the SWAP countries perhaps using the USD and Euro, and non-swap countries perhaps using gold and digital gold commercial products. So while there may be a lot of gold and silver cryptos out there now, Kinesis has that unique kicker of yields that others do not. IF you are getting large entities in there moving lots of gold/silver, KVT owners will make a fortune. Now, there could be a few products like Kinesis rise to the top – so 10-20 years from now these may be like Visa/Mastercard of today. Oil may be priced in gold and not USD. This makes these countries who participate early entrants and if they can all move gold efficiently and effectively among 5-10 companies, there is little need for a reserve world currency. Gold translates in all languages, and the word “silver” in many languages means “money”. While many people talk about Bitcoin in this religious light of hard money. Kinesis has the ability to expand the money supply as gold/silver is brought in. The world supply of these increase at perhaps 1.25%, or about the rate of population increase. If we are at 25 billion people on the planet 100 years from now, we want the money supply to increase at the rate of population. With a bitcoin, the only promise is that early adapters and the ultra wealthy will be able to afford a satoshi 40 years from now. The satoshi would become so deflationary that it prices people out of it. And, unfortunately, that’s math. Gold and silver are recognized world wide as money, and every country has exchanges set up to convert gold and silver to their currency. There’s no brainwashing of 8 billion people needed. It’s already recognized. And, it seems that gold/silver digital currencies are a logical step for a reserve currency. No single nation could print themselves up bombers to infinity. Prices of commodities would be relatively fixed in gold – it’s the individual nation’s currencies that would fluctuate to gold/silver. Those who print too much would see their price of gold go up (or rather, needing more currency units to buy them).
Good things coming
When I did my piece about the minting and funding, pretty much the same day a release came out with their road map where a lot of the smaller concerns I was talking about would be addressed upcoming. Specifically, things I was talking about with their yields and tracking yields appeared more or less within 48 hours. Obviously these things had been in the works for months, so glad to see I was seeing some things they did.
A new website is coming, yields are coming online, and more people I follow on Twitter are coming to the same realization I did about how much of a promise this product has.
My overall takeaway here is that there is low to medium risk with tremendous upside potential not only in owning KVTs, but the price of gold and silver can go “crypto-like” with inflation over the next 10 years and those who missed Bitcoin or Doge moves can get in on the ground floor here. The biggest risk I worry about is compliance and nation-states having problems with things like Iran and Venezuela using a product like this to buy and sell goods in gold. Countries want to control their money supplies and ability to tell you what is money or not, and this does have the potential to take out both the USD and Euro.
I try to look at a company I invest in with a deep dive, like I was going to work there. Would I work there? I took on my pretend role of “VP of user experience, marketing, and compliance” to determine if I would work there, and what I’d start working on day one. You bet your ass I’d work there, but 1 – they could not afford me, and 2 – I probably pissed them off with mentioning any negatives, but the truth here is I’m evaluating risk of an investment for readers. The good news is a lot of the items I had discussed in the 3 previous pieces appear to be being worked on, so this is promising. The biggest concern you or I might have in the near term is crypto exchange compliance operating in what jurisdictions. I don’t see going concern any risk anytime soon, as it appears interest is growing, KVTs are being sold and many want to buy them – but in the US we cannot unless you are a special type of investor that has $1m or makes $200,000 per year for the last 2 years. This inhibits their growth, at the moment, but given the lag with the support at the moment, a pause in growth could be more than ok. I think the marketing plan they had to give away 2,000 oz was wildly successful and got a ton of people to start advocating for them.
I think overall most that got into crypto because they understand debasement of currency will have a reckoning at some point where 9,000 cryptos shake out to maybe 10-20 on the planet are used, including the “asset backed digital currencies”. I think there’s a lot of FUD around Kinesis, but you have to ask yourself if it’s an unbiased review or someone hating on them because it threatens their investment.
In my Kinesis adventures, I found that Kinesis has a possibility of directly competing with the below, and because of this, those heavily invested in the below may want to try and create FUD to destroy them.
- Unallocated. Unallocated promises no storage fees, but this is ghost bullion. Kinesis will allow you to buy real metal, cheap, and store it for free. Down the road you can take it out. Because of risk with Kinesis, I’d store in 100 oz increments, with a minimum of 200 oz. If things ever got a little sketch 1-2 years down the road, you can get your physical shipped to you. Most of this camp want to talk about audits and want to create some mythical standard of audit that doesn’t exist to try and trap you into believing that a 3rd party audit doesn’t count.
- Bullion vaults. What I have seen with this is basically saying that since you aren’t paying for storage, it’s a scam. They overlook the transaction fees that pay for such things, the parent company ABX with the vaults all over the world, and the business model that can put them out of business. I see proxies fighting this on my comments, some that are close with some of these entities trying to knock them down. In fairness, in 5 years from now, we will see how much the transaction fees can pay for this. My concern is massive piles are bought to make the footprint huge – like massive adoption and costs to store might get high. So there is legit criticism here, and I’d like to see what their cost to store/lease/insure versus what transaction fees can pay for.
- Bitcoin/shitcoins – anyone with laser eyes sees gold and silver as a competitor. I know some I follow endorse both, but if you are a Saylor follower, he recruits by trying to get anyone out of PMs and in to bitcoin. The problem Saylor hasn’t seen is Bitcoin is like a risk on NUGT. Gold and silver are a risk off hedge against inflation and financial ruin. Anything bitcoin does, Kinesis does better – EXCEPT limiting the amount. I mention above it’s not really a great idea over 100 years to have a completely deflationary asset, as no one but the 1% and early adopters will be able to possess or buy.
I don’t see Kinesis as a competitor to an ETH in a sense, as these are looking to be “smart contracts” and “utility” coins – perhaps like a Theta.
This will be MONEY. And, it’s well designed to do so.
This is a strong speculative buy for me, but you have to understand there are risks involved, especially with the exchanges and nation states. Kinesis should have a Q&A page where it unloads 40 pages of all of the FUD about them and their responses to it. Anyone like myself who wants to fully advocate for Kinesis is limited because I don’t have the corporate answer to many concerns that have been addressed to me that I’ve tried to have answered multiple times through several outlets.
I love the product. I expect good growth, and if/when gold and silver start going hockey stick, you may see physical silver and gold at stupid premiums – but PSLV and Kinesis will be there to catch demand at very, very low premiums. I believe in years’ past, the hockey stick moves of the metals then see massive high premiums which curtails physical buying. When the physical metal become prohibitively expensive to buy, look to products like PSLV, Kinesis, and Lode (and others) to catch fire.
Overall, those 9,000 cryptos in all forms will come down to 20 or so in 10 years. Kinesis will be one of the 20 left standing, and it will be either the Visa, Mastercard, Discover, or AMEX of the asset backed digital token space. They are talking about rolling out Emeralds at some point, and I feel they even have a chance to be an exchange that either replaces or complements the COMEX. Price discovery could be found with physical metals on the KMS exchange, rather than the paper futures markets.
Because of the drain of physical, this will overtake the CME’s iron grip on “price discovery” and a day of reckoning is coming where Kinesis, or a peer, sets the price for silver miners, and not paper pushers. You will need to have the physical metal to sell it, and the money to buy it. No derivative price discovery.
And THAT is the big promise here.
Look into Kinesis. Dip your toes in. Buy some KAG. Look at KVT. As they grow and improve, and address user concerns, then it becomes further de-risked and you will see me and many others opening our vaults to add to theirs. The promise of large scale payments in gold/silver over the blockchain seems to be very interesting, and these guys could be the leader of it all.
This will be like buying Amazon at $5 in its early days. Not without risk, but also with tremendous rewards. I feel the CEO, Tom Coughlin, is a visionary – but the company is not perfect (nor are any) and is going through some growing pains.
Where do I get bumper stickers and T shirts. That needs to be a thing. WallStreetSilver – giveaway of 50,000 bumper stickers and 10,000 T Shirts. Let’s do it.