With a recent article about gold-backed tokens, I wanted to discuss here about some of the more popular ones out there. It’s probably not a surprise that Kinesis is my favorite, but honestly, I didn’t know a ton about a lot of the competitors and wanted to dig in. For example, I had no idea what Pax Gold was up until recently. For someone like me tied heavily to this type of product, not knowing a competitor like this speaks volumes mostly to my crazy insane PM twitter feed not mentioning it. Twitter helped make me aware of products over the years, and I didn’t even know much about Pax Gold – which is the largest right now.
As a disclaimer, I hold Kinesis KVT and am gradually increasing my KAG (silver) holdings with them as they get the on-off ramps settled once and for all with US banks. A friend of mine was easily able to send a SWIFT transfer to the Indonesia account for Kinesis with Wise for a flat $14 fee, but many of us just want to point and click to a friendly name we know of here in the US.
In this article, I’m going to discuss the major ones I heard of.
- Tether Gold
- Pax Gold
Cache – run and licensed out of Singapore. It doesn’t seem to sell you gold tokens. “CACHE, although permitted to do so by the PSPM act, has elected not to sell tokens directly to or buy tokens directly from the general public and instead only acts as a tokenization and redemption gateway” – so it seems like you could deposit gold in their vaults and get tokens you can use. So this then begs the question, how can I get tokens? When you start clicking around, it becomes a tad confusing. It seems like there’s a total of 65,000g in circulation, but 100,000 in the system? Total market cap looks to be around $5m. I see they are now branching into other things like watches? .25% cost of storage fees. 1% redemption fee and 1% transfer fee. It also uses Ethereum. Provides audits by Bureau Veritas.
Tether Gold – The Tether name is known to crypto folks as a stablecoin. I know of Tether from what I’ve been reading with the “full backing” of USD which turned out to be 3% USD and “commercial paper”. We all know how banks have been doing with mark to market, one can only pontificate that Tether itself would be in trouble, but they don’t allow anyone to see audits. Checking out the site, says “gold bars are redeemable to sent to anywhere in Switzerland”. Seems to be a .25% fee to buy and redeem. When you do redeem, seems like it needs to be a full 400 oz gold bar. “
Important: You can only redeem Tether Gold (XAU₮) in increments of one full gold bar. So you need to have enough Tether Gold (XAU₮) to receive one full gold bar in order to redeem.
- If your tokens are allocated to a whole bar of gold, you can redeem an amount of XAU₮ equal to the number of fine troy ounces of gold contained in your bar of gold.
- We normally advise that you deposit 430 XAU₮ tokens to ensure you have enough to redeem a full bar of gold. Our bars of gold (like all LBMA bars of gold) vary in size and can be as big as 430 fine troy ounces.”
Of most concern is there is no mention of an audit anywhere on this page or in the FAQs. This….is a concern.
Market cap of $490m? No audits? Yeesh…that’s gonna leave a mark. No storage fees.
Pax Gold – from what I can tell, the largest by market cap. No storage fees. “PAXG offers investors a cost-effective way to own investment-grade physical gold with all the benefits of the blockchain. Each Pax Gold (PAXG) token is backed by one fine troy ounce of gold, stored in LBMA vaults in London. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company.” As far as redemption “PAXG is the only gold token you can redeem for LBMA-accredited Good Delivery gold bullion bars. Institutional customers can also redeem for unallocated Loco London Gold. Redeem for USD at current gold market prices at any time.” They say there is an audit every month, but it is actually an “attestation” letter from Withum accounting. Seems to be a really big firm. So it’s not an audit of the actual gold, but an attestation that the Pax Trust holds all the gold that the Ethereum blockchain say it has. $500m or so in market cap if you take the 251,000 oz or so and times it by $2000. Pax seems legit, but has no exposure to silver and redemption is somewhat limited.
Lode – I first heard of any kind of tokenized metals about this a few years ago. At the time of me looking at them I believe they had about a $7m mkt cap, which told me they were kind of small. I just went to their website and it has a lot to be desired. Seems you need to sign up first to get a lot of details, which, unfortunately, I don’t like. Couldn’t find anything about audits on their page, but there was a “security” audit that looked like it was an audit of the code of the site, not of the metals. I don’t know what else you get access to once you sign up that might be behind this. I did read they had a debit card, but that ran into some issues. Good people associated with the project so do not want to talk bad about it – I wish them a lot of luck with growth in the future!
Kinesis – my referral code here. I’ve written a ton about them over the years, so you all know I like them. The biggest feature for the stacker is that it pays you yield to vault with them. For the saver, you can spend your gold/silver with a debit card in a lot of countries and save in metals and spend in fiat at Point of Sale (PoS). They have real redemption at much lower sizes than others. The company also has other types of yields, and has a Kinesis Velocity Token which rewards owners of these based on the usage of the system. This system is designed for people to spend their precious metals – as well as store vaulted for long term. With about a $150m PM market cap (plus perhaps another $300-600m plus in KVT), it’s smaller than Tether and Pax Gold, but has FAR more usability. At that size, it also dwarfs Lode and Cache. The KVT side of things could heat up in the coming years and make the total system the first to hit a $1b market cap. Edit – I was just informed that Citizen’s Bank is now an on-ramp for Kinesis in the US, so many of us may be loading up with them ASAP. My Phillies play at Citizen’s Bank Park, so this is a well known bank to me.
Glint – to be fair, I didn’t know much about them other than they are used in the same sentences as the above. When doing the table I created below, I’m looking on all of these sites for their blockchain and it dawned on me that Glint doesn’t do blockchain, it’s a database. My first thought of them was that no one on my feed talks about them so they must be tiny. Nowhere on the page can you find how much gold they have. What I found was that Glint has their act together. Backed by Sprott. Run in the US and can use ACH to fund accounts. However, this is not an Asset Backed Digital Currency with tokens. You spend this via Mastercard Debit. The real hangups with them are they don’t talk about auditing and the redemption appears to be a mini-nightmare. In a sense, this reminds me a bit of another Sprott sprott product I like, OneGold. One gold allows you to buy gold and silver that is tied to metals in the Royal Canadian Mint, but you cannot redeem this – you have to sell it and then you go to a front end with Apmex. This looks very similar – as in it seems to rhyme – with the one main exception of you have a Mastercard front end. There’s also a small vaulting fee of .02% per month. So if you vaulted $100,000 with this, it’s like $240 per year to hold that. Ideally, if you had $100k in metals you would hope it would go up more than .25% per year to cover your vaulting costs. I think this is a solid product, but I don’t like the redemption.
The above might be hard to read, so I uploaded the Excel here.
I tried looking up some more of these, and many were hard to get information on. So I also asked my Twitter audience about what their favorite crypto metals were, and didn’t get anything above what I mentioned I’d cover. So I have 6 covered here, and want to start at the 50,000 ft view and then drill down.
The first thing that caught my eye during this analysis was that Glint had nothing to do with a blockchain. IF you are worried about the survivability of ALL blockchain in a CBDC environment, this product may be something to add to your layers of metals holdings. However, a $10,000 deposit into metals that don’t move have a negative carry cost of about $25 per year. Not going to kill you, but in the above I talked about $100,000 and $250 per year. So the cost you are paying here can essentially be said that you are paying for vaulting. And, given there is immediate access to spend what is in the vault, it then begs the question why you would ever do “traditional” vaulting again. Think about it – if you are paying .25% to Glint or .25% to any vault owner out there, Glint gives you the ability to easily spend or sell your metals. The big drawbacks with Glint though at that – as seen – it’s not on the blockchain so it’s all murky with transparency, it’s hard to “redeem”, and since it isn’t in the crypto space, at all – access to it is restricted through the company’s software. Sprott is an investor here, and with this, I get a flavor of OneGold that has an added benefit of easily being able to pay for things with a debit card. Additionally, like OneGold, it has ACH and you can easily fund your account with your US bank account. This is attractive to many of the competitors on this list, where on and off ramps are constantly tampered with by governments trying to stamp out all cryptos. In this sense, you could invest $10,000 in Glint, see the price of gold go up 40%, and thus your $10,000 would be $14,000 and you can easily play the price of gold or spent that gain.
However, Glint is not a crypto, and in a sense, should be put on a broader list of “digital metals” that has OneGold on it. A big drawback for me with Glint is no access to silver, and their redemption policies almost beg you not to even try it. To me, that smells a little wrong. Additionally, I didn’t see anything about audits on their page. It doesn’t mean they are crooked, at all, it just means the bar is now higher today for all of these companies to publish audits.
The next thing that jumped off the page at me when analyzing the 5 remaining CRYPTO METALS is that Tether gold scares the ever-loving shit out of me. It has nearly a half a billion market cap. Nowhere on their page do they talk about audits. They also mention no regulatory body – but to be fair, I didn’t do a 3 hour deep dive on every piece of documentation they had. When you invest your money into this platform, it seems that you have a vaulting fee of .25% yearly. Additionally, you can. in theory, redeem a full 400 oz bar. My thinking here is that Tether Gold is tied to the Tether parent (that has a market cap of $80b). Tether is the leading “stablecoin” by market cap, and with this – the Tether parent problems pop up. Tether was billed as “backed by 100% USD” but came to be that it was something like 3% USD (don’t quote me on the exact percent) and the rest was “commercial paper”. Now, if they spent many billions putting this into low rate bonds/treasuries which have now all gone massively higher in rates – their values have plummeted. When banks had a run and their “paper” was marked to market, they had to absorb the billions in losses, which led to a lot of them failing. Now, let’s look at Tether, who I THOUGHT was based in Hong Kong, and may have a lot of “commercial paper” in the form of failed Chinese real estate projects, junk bonds, commercial real estate, and even lots of Treasuries. Perhaps the idea was “hey, if you put the cash into low-risk paper, you make a yield on the dollars. IF too many people want to redeem, we just kick the ability to redeem down the road, freeze people out, so we can mark to market SOME of our paper to cash them out. We can prevent bank runs by simply stopping the ability to redeem”.
I bring this up because a few of you out there in Twitter go to war with Tether, and feel it is a 100% sham. They don’t permit audits of their books. So, the $80b market cap that supposedly has $80b behind it, in reality, could have $30b behind it in paper. IF rates start to go back down, they may be able to kick the can down the road long enough to see the day where their commerical paper and govt paper gets them back to even. Until then, to me, this is a Silicon Valley Bank that could take down all of crypto.
Meaning, any of the other 4 remaining products could be thought to be guilty of “schemes” if Tether Gold’s $500m go down in flames. It doesn’t mean SOME of the bars aren’t there, but in reality, the redemption is at a bar SO HIGH at 400 oz, that only a small number of crypto players could ever even demand this to redeem. Meaning – it would be extremely easy to play a fractional reserve game here, and if enough people want to redeem – they can take some cash to buy then to satisfy them, or simply freeze you out from redemption “while the market cools”.
With Pax Gold, the big picture for me is it seems like it’s a crypto gold ETF. It doesn’t really do anything, but it may have some upside with the ETH smart contracts down the road. Like Tether Gold, the only redemption appears to be 400 oz bars, which then also casts the same problem as Tether – HOWEVER – their trust is regulated by NY (USA). While they do not provide audits, they provide something call an “attestation” letter. To me, this is not really sufficient in today’s day and age. However, Pax Gold seems legit. It just smells to me like a crypto version of GLD. Meaning, with GLD, only REALLY big players can redeem. The benefit here is Pax gold could be a better “stablecoin” than Tether – in a sense, and it trades 24×7 on all kinds of exchanges. There’s also no storage fee with this, so you don’t get the carrying costs. Right now, this is the biggest and safest of the crypto-metals, but also has virtual no usability or redemption ability.
Lode and Cache to me seem to have really good people with the projects, they just never got hot and got a massive traction. With Cache, it appears like they are trying to branch out into other things as they may have not kept up with market share with Kinesis, and with Lode, I found it hard to get info because all of the info is after you sign up. I also heard their CEO left recently but I found it hard to confirm that. I think Lode suffered from some technical issues but does also have the ability to buy silver. Lode also talks about audits, but from the main page I couldn’t find links. Cache has links to their BV audits and seem to be the “gold standard” of the audits in all of the crypto-metals space. Lode’s redemption policies are also veiled in some secrecy as you have to sign up to even find out how to redeem? While they did have a debit card, I heard there were some issues with it.
I saved Kinesis for last because it is my clear favorite amongst the crypto-metals. The comparison sheet above gives you a lot of solid green from them – I like how I can buy silver as well as gold, it pays YOU a yield to store (albeit small), they have a KVT token that easily allows for people to benefit off of the company’s successful business model down the road (Lode has something similar, best I could tell). Their redemption policies also are for much, much smaller bars of 100g/1kg gold or 100oz 1kg silver. So clearly this is much easier to redeem than Pax/Tether for the noob. I can’t pretend Kinesis has not had their struggles with on-ramps, but this is affecting a lot of the crypto industry as a whole and rumors are US-based stuff is coming again soon. However, a friend of mine showed me how you can send a wire to Kinesis in Indonesia for a flat fee of $14 using Wise Pay. With that – you see the overall risk in the crypto space from a regulatory standpoint which is why Glint gets some props for a daily spender with a debit card. However, Kinesis has a debit card as well that is active in like 60 countries and one is coming to the USA (again) as some of the regulatory stuff is sorted out. Kinesis has a LOT of big picture ideas, but has had significant issues over time delivering consistently on timelines. The company is growing at a massive rate and transitioning from a “startup” to an “established company in the space” and with this, has recently launched a communication campaign to be more “corporate” and slow down with the “big picture to sell you on the concept” and focus more on “deliverables in the near term to execute flawlessly”. With a $150m market cap of metals, it is a distant 3rd to Pax and Tether, but with their KVT element factored in of perhaps $600m (300,000 KVT x $2,000 per KVT), you can see the Kinesis Monetary System is built to have a lot more usage and features of Pax/Tether, and a lot of the investment in them is based on the future usability and profitability of the system as a whole. You can debate the fair market value of a KVT, TODAY, but very much like P/E ratios with startup companies – you can view a high P/E ratio of these startups as “overvalued to today’s revenues” OR you can see that “the market is expecting the earnings to be MUCH higher and with this, the P/E ratio has already factored in higher earnings to come”.
The trick here is KVTs are not freely traded, yet. It’s been a long journey from launch until now, and when they do trade freely, some may wish to sell and get out of that trade. OK. Well, you have people like me cashed up here waiting for that moment. And, there’s thousands of rabid fans like me who will provide that floor for that market. Even if it freely trades at $600, that is then potentially taking the total market cap of Kinesis from $150m in metals to $150m in metals + ($600 x 300,000 = $180m) for a value of the system at $330m. So, Kinesis is now a formidable competitor in the space, and its features have the die hard loyal users of the system wanting more.
For me, the big deal for me is NOT getting into crypto here. I am a KVT owner, so USAGE of the system will provide me a good side hustle, paid in gold. I want to vault silver, in mass quantities, because I feel silver may have a 5x in it over the next 5-10 years, if not a 10x. While gold may hit $2500 or $3000, that’s a 25-33% move, and with silver, I can see multiples coming. So if I vault massive silver with Kinesis, I avoid vaulting fees, AND I can spend this with a debit card (here, soon), use Apple Pay, KPay, or transfer KAG/KAU to someone. So unlike a Pax Gold – I have the same benefits of Pax, but with a LOT more feature functionality AND easier ability to redeem.
I feel the landscape is this….
Pax gold will continue to grow as many crypto traditional people get out of shit coins and into gold. The easiest way they know how to do this is with Pax Gold. Tether Gold is also an easily understandable concept to anyone who owns Tether. However, you have Tether Gold as a potential thermonuclear bomb for the sector if one day a good Tether rugging happens. I believe this may push a lot of people out of Tether gold, and perhaps into cash or other safer products like Kinesis and Pax Gold. Overall, the cryptometals race, to me, is between Pax Gold and Kinesis. With Kinesis having ridiculous more usability and yields, a function of time here will show that Kinesis Monetary System as a whole will get more market share than Pax Gold. Unfortunately, at the moment, Cache and Lode appear to be trailing in the race at a great, great distance behind Kinesis. I don’t see this trend changing anytime soon. Kinesis is also working with Indonesia to have their government use this monetary system to pay remote workers that are working as ex pats outside of the country. The ability to redeem Kinesis in a lot of different currencies then also make it ideal to preserve your wealth across borders or to use with a debit card when traveling.
I believe Glint is a way to play this move with the debit card for this skittish in the crypto space. I recently helped my mom’s 70 year old best friend buy a monster box from SilverBack Precious Metals. However, I struggled to give a 2 sentence elevator pitch to her about Kinesis because at 70, she is simply looking for ways to vault and protect wealth with virtually zero risk. It is FAR easier to teach them how to use a Glint and just have them pay the .25% per year in vaulting than walk her through wallet addresses and crypto exchanges. So she could then use a Glint by funding her account with ACH, getting her fiat out of the banking system, and having the ability to immediately spend her GOLD as prices rise. Glint could crack a bit of the Kinesis market if they offered silver as well, but described above – Glint’s major drawback to Kinesis is the easy redemption of much smaller bars of metals.
I see the entire market cap of the space going up 10x in the next few years, if not more. With banking troubles in the US, many want to get out of fiat now, and want to know where to put it with a recession looming and high inflation. Even projects like Cache and Lode, IF they fix some of their usability/redemption issues, could get a second wind here and thrive. I feel that perhaps 5-10 years from now, there will be a handful of these companies like the above that are the next Visa/Mastercard/Discover/AMEX.
The ISSUE I feel, above all, is the crypto landscape today along with a lot of the bad that has yet to be driven out. Recently, I fought with people online to defend Kinesis, and will do so all day and all night, but I would never convince these people. What they really should do is look at the low hanging fruit of Tether Gold and start asking some hard questions there. I feel Tether gold collapsing could shock the entire ecosystem, but it will reveal how much stronger these other products are over Tether Gold.
I am not paid by Kinesis for this. Someday, I’d love to work for them. That day is not today, and I get no sponsorship, advertising, or anything. What you will find is a horde of us that are fanatical about the product because the amount of graduate degrees all of us have that have done ridiculous DD on this product is insane. There’s a relatively large contingent of us that spend dozens if not hundreds of hours looking at Kinesis and we are wildly bullish BECAUSE we did the DD. The attacks I have seen come from anonymous sources that try to draw conclusions that are leaps and not there. They have limited access to information so they draw the wrong conclusions. Attacks on the fringe. Things that are easily explained, but framed in such a way that they committed the JFK assassination. I feel the space has its issues, but if all attention for these “investigators” is not put on something like Tether Gold, you have one and only one conclusion to draw. They are not out for finding the rot in the system, they are paid by some entity to smear a company.
I’m clearly pointing you to the rot in the system, as best I can see in Tether Gold. IF you are the White Hats you say you are, that’s a great place to start looking. Tether Gold doesn’t even claim to audit or have any form of regulation. Yet they have a $492m market cap? For the love of God….this is the low hanging fruit you should have started with.
April 20, 2023 at 4:22 am
I know quite a bit about Glint. My interest would be as a spending vehicle whereby you spend in fiat currency and they pay in gold grams by redeeming those grams from you deposit with them. They have a Mastercard for use In Britain and the the US but not in Canada, where I am.
The caution with Glint as a company is that have had cash flow and operating issues so if they go bankrupt I suspect you would lose your gold ounces on deposit and become another creditor. So my thought would be to keep a few ounces with them and replenish as needed, depending upon my fiat currency spending. My main gold stash would be elsewhere, bullion bank, Gold is Money, or any of the options you suggested.
The advantage is I can still own gold grams and hope it rises in value over time to increase my purchasing power.
Good article and I learned lots about an area that I know little about….BTW I have no idea what your name is lol….