Financial Freedom

How is FinTech shaping the Remittance Industry?

In a globalised world, money is rapidly becoming borderless. Heightened migration and commercial expansion on an international level have triggered a stark increase in remittance payments being sent, globally. Reports show that the bulk of remittance payments are being directed at developing countries by migrant workers. These payments ranked higher in their contribution to the recipient country’s economy than foreign aid.  In 2018, The World Bank reported that remittance sent to low and middle-income countries reached a record high of $529 billion. Although the Covid-19 pandemic initially triggered a dip in remittance payments being made, trends show that they are, once again, on the rise. While the reliance on remittance is not the all-purpose built solution for emerging economies, remitted payments have drastically increased the GDP of these countries.  What is a Remittance? When money is sent to another party, this is referred to as a remittance or a remittance payment. Now that currency can be transacted, transferred, or sent via email, the term foreign remittance is more often invoked to describe the process of sending money to someone who resides in another county. When transacting money, we expect that a fraction of that sum will be lost to the central banks or the institutions we are transferring money to. However, the fees incurred from remittance payments are notoriously high, as many will have noticed when trying to take out money from an ATM abroad.  The World Bank reported that in 2021, an average cost of 6.38% was deducted from a sum of money sent as a remittance. Hence, banks and Money Transfer Operators (MTOs) make a significant profit on the exchange rate used to convert one currency to another.  Whether you are a company owner or a migrant worker, fair remittance payments are crucial; not only will that increase the recipient’s fiscal spending power, but it will often serve as an emergency response fund for individuals experiencing a natural disaster or political conflict.  Fair remittance means that money can flow directly from the remitter to the recipient family member or friends, as opposed to foreign aid, which may never reach the parties in need of it.  Types of Remittance When discussing remittance, there are two types to be aware of: Inward Remittance: when funds are sent domestically, from one person to another within the same country. Outward Remittance: when funds are sent to a bank account in another country. Right now, outward remittance is skewed towards exploitative rates. This means that individuals sending money from their host country to the recipient’s face a transaction fee, a loss of value due to the exchange rate, and a fee relative to the speed of the transfer. This can take anywhere from under an hour to more than six days.  Remittance as Industry Competitors in the remittance industry that can offer high-speed transfers and limits, favourable rates and no hidden fees are starting to have an edge over the renowned market-dominant, Western Union. Notably, the impact of blockchain on the remittance industry is also having a major impact.  Digital currencies like Dash, Cardano, and of course, Bitcoin, can be sent abroad for a fraction of the cost and time that traditional outlets offer. In fact, blockchain enables these transactions to happen in a peer-to-peer manner, such that intermediaries are no longer involved nor needed.  The great diaspora remitting payments to their countries of origin are likely fulfilling families or individuals in developing countries who are considered to be underbanked. Moreover, remittance payments can function as an alternative financial solution for often the poorest segments of society.  Underbanked, Underserved In 2017, 1.7 billion people were classifiable as ‘unbanked’ in emerging economies. This means that these individuals lack access to banking infrastructure, a mobile phone or the required government-issued ID to open a bank account.  A lack of financial inclusivity is no good for the underbanked individual nor the country’s economic system as a whole. Those who remain under or unbanked, tend to develop a general distrust of banking systems and further, a lack of participation in the country’s economy.  The Importance of Remittance Remittance payments are, for many developing nations, a significant contributor to the economy. A staple report demonstrated that remittances equate to over 10% of the GDP of developing economies over the course of a year. These payments are highly important, not just for the country’s internal economic growth, but for global economic development as a whole.  In certain cases, remittance payments that flow directly to citizens in developing countries can function as business start-up capital. This enables the injection of funds into business infrastructure that will eventually act as a catalyst for employment opportunities, innovation, and stirred competition.  The result of start-up capital is plain to see, from the tech giants dominating Silicon Valley to the dramatic impact of Alibaba on Hangzhou, the domino effect of enterprise transforms the operation of cities. Remitted payments can therefore provide financial leverage for start-ups, paving the way for financial success.  Looking Ahead Understanding the importance of remittance payments, mega-corporations should take care to manage the extent they are capitalising on an individual’s hard-earned cash. Coincidentally, the recent partnership of Monzo and Wise is indicative of fintech start-ups seeking to benefit from the explosive capital opportunity presented by the remittance industry.  Thankfully, there is a much safer, efficient and transparent alternative to this. System participants are able to send fiat currencies or digital cryptocurrency assets via the Kinesis Monetary system for an extremely low fee, with the transaction executed in seconds. What’s more, the ecosystem offers users the option to purchase physical gold and silver currencies, KAU and KAG, which are backed 1:1 by the respective precious metals. In turbulent times of high-level inflation and economic instability, money parked in precious metals is becoming increasingly more appealing for those in emerging markets. As for the remittance industry as a whole, the diversification of providers can be a positive aspect for individuals. More competition means that companies will have no choice but to do better in regard to their services, rates, and product offerings. It may be this rivalry that leads, eventually, to fair remittance policies for all. 

Latifa Alkhanjary
Latifa Alkhanjary

04/11/2021

Bitcoin versus Gold: Is Bitcoin the New Gold?

In recent years, this has been a frequent question for investors. Oftentimes, Bitcoin and gold are pinned against each other, as journalists observe the rally in Bitcoin’s market value, speculating on the future of the two assets.  It seems strange to compare gold and Bitcoin when they are in fact two very different financial instruments. As it will be explored further, despite the many similarities that they share, these are far outweighed by their significant differences.  On the whole, when observing the potential face-offs between the two in today’s technological environment, the outcome is favourable for precious metals.  What is Bitcoin (BTC)? In 2009, Bitcoin was created as an electronic currency which, unlike conventional currencies, came on to the financial market as a decentralised option, eradicating the need for a bank or financial institution to act as an intermediary. Instead, transactions are recorded in a public database, which is then distributed on the Bitcoin blockchain network.  The network enables the anonymous, peer-to-peer exchange of virtual coins (or fractions of them), as transactions that cannot be manipulated, duplicated or destroyed. These transactions are broadcast to several computers which act as ‘nodes’ on the global Bitcoin network, to verify the records as accurate.  To date, Bitcoin has never been hacked or compromised, because to do so would be extremely difficult, if not impossible. This can be attributed to vast amounts of energy supply needed to power the Bitcoin network, such that one Bitcoin transaction uses nearly the same amount of electricity as a British household in two months.  For certain institutions like central banks or governments, the possibility of taking full control of cryptocurrency transfers and transactions is well out of reach.  Gold and Bitcoin: What are the differences? Tangibility Gold is a tangible, raw material with even its derivative contracts linked to an underlying value of physical gold that follows the same price valuation trend.  Unlike precious metals, virtual or digital currencies have no intrinsic value, rather, they are mechanisms for exchange. For a large proportion of the globe, the value of digital currencies comes from their ability to act as a utility, that can be transferred, transacted and exchanged peer-to-peer.  History  Gold, as we know it, has been used as a material since antiquity, with its unique properties that have enabled its survival through bloody wars - and even tempestuous market conditions.  The other competitor, Bitcoin (and virtual currencies) has been present in human history for just over a decade, leaving much still to be understood about the full extent of their impact on money as we know it today.  During this time, Bitcoin has experienced everything from major price growth and subsequent declines, to hacking scandals on compromised crypto wallets. With a backdrop of high volatility and triumphant advertisement from crucial figures like Elon Musk, the future of cryptocurrencies continues to divide and spark opinion. Demand On the whole, the global demand for gold has been relatively stable over time, within even significant variations in the range of 5-10%. Underpinning that stability is the fact that demand comes from different sectors, such as industry and jewellery, in addition to central banks and investors.  The relationship between these two sectors is often inversely correlated, such that during an economic crisis, demand from the jewellery and industrial sectors will tend to fall while increasing from the investment sector. In times of economic expansion, the scenario will likely be reversed.  The same cannot be said to apply to the cryptocurrency market, which is still in its infancy. Prone to volatility, the value of Bitcoin, as with other cryptocurrencies, moves in extreme cycles that resemble sharp spikes and dips.  Market capitalisation Despite its multiple rallies, Bitcoin’s market capitalisation has never come close to that of gold. Speaking of which, it has been estimated by the World Gold Council that gold’s market cap sits at around $10-11 trillion. This figure is around 8 times more than the market capitalisation of Bitcoin and around 5 times more than the entire cryptocurrencies sector. Moreover, even if Bitcoin has a key role to play, the total value of cryptocurrencies is divided between more than 10,000 different e-currencies. This offers a fragmented picture of the cryptocurrency world, making it more difficult to make a comprehensive assessment of the sector.  Furthermore, certain cryptocurrencies may cease to exist in the future. It is gold that remains ever-present in the world, even if it is lost, stolen or hard to recover - at the depths of a sunken ship, for example. This too could happen to Bitcoin. At the same time, large quantities of gold are held by individuals as family treasures, with jewels stored privately across the five continents. The World Gold Council has estimated that this gold tucked away amounts to around 90,000 tonnes, effectively reducing its availability on the market by 45%. The similarities between Gold and Bitcoin Finite Supply One possible common feature of gold and Bitcoin though is that supply seems to be finite. The total number of Bitcoins that can be "mined" is equal to 21,000,000 units, which should be mined completely by 2140. About 50% had been mined by 2014, and 75% by 2017. The pace then declined progressively, with energy costs making the activity increasingly uneconomical - regardless of Bitcoin’s market price. Gold’s current global supply is also limited, with known reserves estimated by the World Gold Council at 57,000 tonnes. However, there are two limitations. First, the quantity is finite, secondly, some of that gold is practically impossible to extract, or at least it is not economical to do so at the current market price. For example, consider the gold that is buried under mountains or located underwater in the middle of the oceans. Price Comparison Some similarities have been found analysing the gold rush of 2002-2011 with Bitcoin rallies. From a technical viewpoint, the gold prices jumped from around $250 to a peak of $1,920 in the span of a decade. Bitcoin’s explosion was much quicker and corrections were also much sharper. All this is telling of the crypto market that is just getting started, with significantly higher volatility.  In a few words, the possibility of reaching higher returns could be greater. However, as many investors may have already experienced first-hand, the possibility of facing sharp declines or sometimes collapse can be detrimental to a portfolio.  Needless to say, Bitcoin is not yet gold and will probably never become like the precious metal. Gold is still widely accepted as the preferred safe haven for investors. Carlo Alberto De Casa is Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

27/10/2021

Tether vs. KAU: The Difference Between Fiat Stablecoins and Gold Stablecoins

Find out what Tether's recent audit investigation means for its future and how Tether fares against Kinesis native gold-backed currency: KAU.  What is Tether? Tether (USDT) made its stance on the crypto scene when its trading started in 2015. It quickly established itself as a fiat-backed alternative to standard cryptocurrencies like Bitcoin or Litecoin, which experience extreme market volatility.  As the name suggests, Tether is a cryptocurrency that is 1:1 allocated - or tethered - to the equivalent amount in traditional fiat currency, specifically the US dollar (USD). Today, it ranks 5th among the leading world cryptocurrencies, according to its coin market capitalization, certainly making it one to watch.  How does Tether stay at $1 dollar? Since one Tether coin is pegged 1:1 to the US dollar, it is not surprising that its valuation should rest comfortably at a pricing of $1 for a coin.  This single fact can be attributed to Tether’s success, as a cryptocurrency with a proposition to ensure the collateralized, fully allocated value of each coin.  Since fiat currency has traditionally operated with fractional reserve banking and is managed by central banking institutions, Tether exists as an alternative that claims to have a pegged, stable value to every single coin. This provides the basis for a more stable option to holding fiat currency in a traditional bank account, where only a proportion of fiat is held in its physical form (cash reserves).  A Dip in the Market  Despite Tether’s reputation as a stablecoin, its price has dipped below the value of $1 a number of times in recent years.  Tether sparked controversy in 2019, causing an alarming debate about the integrity of the cryptocurrency when an investigation into Tether’s trading platform revealed that it was not fully backed by the dollar. In fact, the landmark investigation by New York Attorney General, Letitia James, found that Tether was in fact only 74% backed by the dollar at the time.  A few months before in November 2018, Tether Ltd. published an audit report of their cash reserve at Deltec Bank & Trust Ltd. but at least $700 million was removed from Tether’s account the following day. Without user awareness, it was revealed that this sum was moved from Tether’s account to Bitifinex’s - one of their affiliated companies.   Trust in Stablecoin Since the scandalous revelations about Tether unfolded, users continued to trade the cryptocurrency, as evidenced by its trade volume which has almost doubled since late 2018.  However, when scandals like this one are publicised, general trust for crypto, especially a currency that claimed to be a stablecoin, can be severely dented.  After Tether published the report on their dubiously audited cash reserves, Tether denied further commentary on the investigation but conceded to pay an $18 million fine as settlement, promising to provide quarterly audits of their reserves for the next two years.  To avoid future penalisation, Tether clarified their claim of being 100% backed, making the following addition on their website: “Every Tether token is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).” Tether’s reserves, revealed as being diversified across unnamed third parties and affiliates, was a public response from the company that left participants questioning the security of it as a digital asset.  One damning report even suggests that Tether’s cash reserves only back the USDT tokens by 2.9% as opposed to the 100% backing initially promised by the company.  Clearly, this presents a problem for customers who want to exchange their USDT tokens for physical US dollars, as the company does not provide any guarantee of physical redemption.  In contrast, when Kinesis users redeem the value of the Kinesis gold-backed KAU, they receive its equivalent value, since KAU is always backed 1:1 with physical gold bullion.  With biannual audits published twice a year, Kinesis seeks to provide a fair and transparent monetary system for all users on the platform. Find our most recent audit here. A Question of Value  With fiat, crypto or alternative forms of currencies, it is clear that money cannot just be a medium of exchange but must also function as a store of value. Hence, the instability of Tether as a supposedly stablecoin will continue as long as the dollar is not linked to a stable asset or commodity backing its value, such as precious metals. Market analysts have shown that gold and the dollar oftentimes have an inverse relationship, so while the dollar has depreciated, gold has appreciated in value over time. The dollar has historically depreciated in value, in line with inflation, since its value was separated from gold after the fall of the Bretton Woods Agreement in 1971. However, gold has appreciated in value almost 50 times over since this date, making it the asset of enduring value.  By modelling a system on the steady and stable value of gold, Kinesis offers a true alternative to the ills of the byzantine banking system. In comparison to Tether, Kinesis KAU and KAG currencies enable users to generate a recurring passive monthly yield simply for holding the gold and silver in their Kinesis accounts or wallets.  In today’s low or even negative-yielding environment, the need for gold-backed stablecoins is clear, in addition to a currency that ensures protection against inflation, which fiat currencies do not. Find out more about the Kinesis Money yield system here.

Latifa Alkhanjary
Latifa Alkhanjary

22/09/2021

The Ultimate Guide to Gold-Backed Cryptocurrency

What is gold-backed crypto? In its simplest form, a cryptocurrency backed by gold or silver is the modern evolution of the gold standard: that is, a monetary system where a currency is directly linked to physical precious metal. Coins or tokens issued that follow this system provide token holders with digital assets that have a value directly correlated to the physical assets they represent; gold or silver. To go into more depth, gold or silver-backed crypto regulates its worth by having a direct, stable link with a trusted asset - gold - thus avoiding what many risk-averse experts see as one of crypto’s shortcomings - its lack of intrinsic value, which results in high price volatility. Stablecoins (cryptocurrencies whose value is tied to outside assets) that use these physical assets can therefore enjoy more tangibility and more predictable price swings, compared to their fully digital counterparts. As a result, their price will never drop below the price of a precious metal that backs them, though the value of the token can increase in tandem with the underlying physical asset, providing both stability and the potential for profit. The history of money backed by gold To fully understand the benefits of gold-backed currency, it’s important to understand the idea behind linking currencies to precious metals and how it played out historically. First introduced by the United Kingdom in 1861, fixed-rate gold-backed currency came about to help stabilise an economy that was gradually becoming more and more global. Gold has always been an important resource for central banks and governments to hold, so tying a nation’s currency to its gold reserves was a way of ensuring that trade was always at a surplus.  The United States followed suit in 1879, and until 1933 the US dollar was backed by gold. Why did this change? In part, following the First World War and the Great Depression in the 1930s, people began to hoard gold supplies. Governments also realised that it was difficult to aggregate resources based only on their reserves, so the system was changed to the current trust-based system that we see globally today. As a result, currencies were decoupled from gold and silver, and the value began to fluctuate more wildly as it was based on intangible promises, not unlike today’s modern cryptocurrency.  Throughout this, gold remained as valuable in the eyes of traders as it always had been. Investors kept investing in gold, and as a more stable option than many global currencies, it’s now a sought-after asset for the astute.  Translating the gold standard into the modern day Though the US dropped the gold standard fully in 1971, the idea behind linking money to something that’s truly valuable remains a solid financial strategy. With blockchain technology connecting commerce like never before, it was only a matter of time before cryptocurrency enthusiasts linked this new fintech revolution with a stable, trusted asset.  By digitising the timeless value of gold into a spendable currency, Kinesis worked on our blueprint to integrate the stability of precious metals with the convenience of modern finance.  This gives holders all the reliable store of value offered by gold, and all the ease of use you expect from a more modern, fluid asset.  What is the benefit of currency backed by gold?  The benefits of gold-backed crypto are numerous and are largely linked to its stability compared to other options like Bitcoin or the Ethereum blockchain. We’ve listed a few of the most commonly cited benefits below: It’s a stable option As mentioned, a legitimate gold-backed cryptocurrency enjoys a higher level of market stability than its more volatile counterparts. This is because it’s intrinsically linked to the current gold price, which is largely one of the most stable markets around. Historically, everyone wants precious metals, and so a coin linked to those metals is bound to retain its value as long as it’s associated with these materials. It’s easier to understand the market Tied to this stability, the price fluctuations of gold-backed crypto as a whole, are easier to understand. Many of the market variations of Bitcoin and other crypto tokens can seem random, even arbitrary. However, with these stablecoins, you can look at the daily gold market and see trends, changes and predictions that will help to make informed investment decisions. Cryptocurrency is easy to store Unless you have a Swiss vault (or several) to hand, it’s not easy to store large volumes of gold on an individual level. Digitalised gold and silver allows investors to take advantage of its value for trading, investing and spending without worrying about its physical location at all times. This can translate to lower fees for using it as a trading asset, leading to greater convenience and profit. You can access blockchain trading apps By tokenising gold and silver into digital assets, holders can access blockchain trading platforms and all of their associated benefits with a tangible asset value behind them. These platforms offer easy trading, strict security credentials and the transparency of the blockchain as well as their safety regulations. It avoids central bankers and, thus, banks Through the blockchain trading methods mentioned above, investors can transfer value without having to go to a bank. This is beneficial in various ways: it’s faster, it’s more accessible, and it allows you to avoid the fluctuations that can happen when you trade money globally. In short, it’s a good way to beat a bad exchange rate. All that glitters is not gold...  The drawbacks of gold-backed crypto There are, however, aspects of some gold-backed crypto that still show room for improvement. Although digitalised precious metals are, by default, superior when compared to fiat or traditional physical bullion assets, in most cases they do not offer anything beyond a combination of what crypto or precious metals are offering already. Lack of yield Traditionally, the lack of yield and therefore limited earning opportunities on the vast majority of gold-backed crypto, result in other assets, like stocks paying dividends, bonds or rental properties, appearing as a more attractive prospect for investors.  Nowadays, we can see an increase in the public awareness of the inflationary risks associated with long-term capital holding, which means that investors will look even more consciously for the assets with the highest earnings potential. As negative interest rates have become normalised, people are scouring for a solution that will not require them to – counterintuitively – spend extra money in order to keep their money stored with a bank. Gresham’s Law Another stumbling block is what’s known as Gresham’s law – bad money drives out good money. In practice, this means that people hold onto their gold and silver (good money) and spend paper fiat (bad money), despite their remarkably increased liquidity (and thus, spendability) obtained in the process of digitalisation. Kinesis Yield on digitalised gold and silver Kinesis solves both these problems. By presenting a passive Holder’s yield on digitalised gold and silver, Kinesis allows its users to earn money, simply by holding their assets. The Kinesis Yield system not only takes gold-backed crypto a leap further, but simultaneously stimulates the organic growth of a monetary system in which its users are rewarded for their participation, not penalised.  Moreover, a yield on gold and silver, which can be earned by holding, sending or trading, incentivises spending and defeats Gresham’s Law as a consequence.  Back to the Gold Standard In the wake of the 50th anniversary of the Bretton Woods Agreement collapse (which ended the role of gold as a unified fixed exchange rate dollar-stabilising mechanism), the necessity of re-visiting the policy of a store of value as a currency price determinant appears more self-evident than ever. This necessity, coupled with global digitalisation, is already enabling us to bring back gold and silver as money, once again. Putting gold on the blockchain, a kind of 21st-century alchemy, transmutes it into a spendable asset, with the potential of broadening its reach across the globe. Society seems to be craving the financial stability that gold-backed currency can unquestionably deliver. As The New Case for Gold book author, Jim Rickards explains, while sharing his insight on what a new Bretton Woods System would look like, the solution is already here.  A gold-backed currency, with underlying gold securely stored in a vault and available to spend at the tap of a button, is already available through the Kinesis Monetary System. If you’re convinced by the many benefits of this stablecoin and want to start trading in gold-backed crypto, you should know that it offers more than just a reliable asset. With a rising market cap and surging demand since the beginning of 2020, it’s increasingly looking like the go-to option to combine convenience and stability in the blockchain world. 

Doug Turner
Doug Turner

07/09/2021

Marking 50 Years: the Fall of the Bretton Woods Agreement

50 Years Without a Gold Standard: fiat currency post-Bretton Woods Agreement, as discussed in Rickards’ book: “The New Case for Gold” Yesterday, Sunday, August 15th, marked a significant time stamp in the history books, as 50 years since the fall of the Bretton Woods Agreement and gold-backed US currency.  The Agreement of 1944 was the beginning of a foreign exchange system that promoted economic growth on an international scale, forged as a safe-guard against the devaluation of the dollar (USD). Perhaps more importantly, the resulting social cohesion among independent states after WWII was vital for stabilising market volatility on a wider scale.  However, this came with the caveat that all participating countries would peg the respective value of their currencies to the dollar.  Considering the importance of the Agreement retrospectively, the global reliance and exchange of the dollar have largely contributed to its existence as a major currency, currently involved in over 80% of all foreign exchange transactions.  With an end to the Bretton Woods Agreement in 1971 during Nixon’s presidential campaign, foreign currencies became free-floating on the foreign exchange market, as was the case for larger economies like Great Britain, Japan and the US.  Without the ability for the American citizens to claim gold as before, investors looked for private intermediaries to house their gold or to participate in high-risk strategies like Exchange-traded funds (ETFs).  The New Case for Gold  Despite the eradication of the gold standard in 1971, it is clear that the enduring value of this precious metal persists today.  Bestselling author on matters of finance and precious metals James Rickards explores this momentous event in “The New Case for Gold” as well as debunking age-old myths that surround it.  According to him, the process of separating gold from the dollar confirmed rather than undermined gold as a lucrative asset for preserving value. Whether that value is intrinsic or subjective, humanity’s usage of gold as a currency throughout time can be pinned to its pre-requisite properties of “scarcity, malleability, inertness, durability, and uniformity.” His title recognises the renewed importance of monetary systems based on gold, saying: “In the absence of an official gold standard, individuals should go on a personal gold standard by buying gold to preserve their wealth” While the rationale behind a personal gold standard is varied, this pursuit entails low-risk investment in a stable asset that can provide a safe-guard against inflationary threats. In times of global crises, investors look to gold as a “safe haven”, since it is an asset increasing in value rather than depreciating.  The Future of Gold Post Bretton Woods Agreement, it is certain that the future of money is digital. Clearly, the move towards decentralized digital asset management is becoming a widespread reality for those seeking to diversify their portfolio.   As central banks follow suit with digital currencies set to represent fiat, the direction towards digital rather than paper money is already well underway.  As Rickards mentions in an interview about his new release, the answer of a digital gold-backed currency with an accompanying debit card to spend owned gold would bring back a new kind of gold standard.  Making gold a spendable asset, rather than a hoarded one, enables its circulation in the wider economy. This means that gold can be defined as money in terms of a store of value but also a medium of exchange and unit of account.  A New Bretton Woods Agreement  Going forward, the future of gold and gold-backed currency is already in progress. However, whether the gold standard will be introduced to currency on a global scale is another matter.  One of the reasons the Agreement fell was the great undervaluing of the price of gold, which meant that gold production would not be sufficient to provide the resources to finance the growth of global trade.  However, as Rickards highlights, when gold is priced on an analytical, not political basis, this enables its sustainable endurance as a form of money.  The Kinesis Solution At the time of speaking, he notes that gold was historically a non-yield producing asset, sitting stagnant in vaulted infrastructure for long periods of time. This made it impractical for daily use and inaccessible as an exchangeable asset.  However, the Kinesis system participants can not only store their gold with zero fees but can also generate a yield, whether it is spent or simply held in a user’s wallet.  Rather than a Monetary System built on principles of risk or debt, yields are acquired from mutual transaction fees drawn from the entire Kinesis ecosystem.  Whether the future monetary policy will mimic the principles of the Bretton Woods Agreement is uncertain, but a global want for fair and ethical monetary systems is without question. 

Latifa Alkhanjary
Latifa Alkhanjary

16/08/2021

The Ease of Redemption with Kinesis

How Kinesis stands out on a physical silver market and why there is no better place for redeeming your precious metals. How much could physical silver be worth if its price was not artificially suppressed for years? Is the recent Reddit uproar an indication that a cannot-be-missed moment to invest in precious metals is happening right now? Is it attainable for a small trader to participate in silver’s miraculous multiplication without the excessive redemption fees proving to be unconquerable? The short answer is - Yes Silver has long been considered the ‘people’s money,’ having a price 70 times lower than gold and therefore being far more affordable for an independent day trader. But is that enough to make it widely accessible for a small investor? It turns out that’s not always been the case. Most providers fail to recognize the importance of making physical silver easily accessible for an enthusiastic individual. Owning silver is still associated with exorbitant redemption fees and inaccessible withdrawal minimums, typically established at 1000 ounces and higher. The Kinesis Solution Kinesis understands the necessity of accommodating easy access and redeemability for an individual investor. Motivated by providing security and reassurance to the trader, the Kinesis Monetary System offers a redeemable amount five times lower than the market standard, starting at just 200 ounces for silver and 100 grams for gold. Moreover, this approach enables maintaining one of the best silver prices across the market globally and dramatically tight spreads, currently as low as $0.21 per ounce for silver and $0.10 per gram for gold. *All information is correct at the time of publishing but may be subject to change. The Drawbacks of Owning Physical Assets Owning precious metals is typically combined with a wide range of inconvenient liabilities. From risks corresponding to storing the metals in-house, to the substantial expenses associated with depositing them into a vault. Let alone the enormous redeemability fees, additionally immobilizing already solidified assets. Moreover, in the case of investors deciding to obtain paper gold or silver in a bank, there is a 95% chance it will not be allocated. The physical metals market seems to be regularly dealing with yet another scandal, as it fails to meet surging buyers’ demand, interminably postponing deliveries of gold & silver bullion that may or may not be in their possession, like Schrödinger’s cat. Although it is a particularly appealing time to invest in physical metals, the buyers’ confidence is fragile, as the market has been offering limited protection. It is not surprising that investors are starting to pay much closer attention to the safety measures of the processes in which their assets are stored. Fully allocating precious metals is undoubtedly the safest direction to protect one’s savings, but it does not always encourage liquidity. Most importantly, exchanging and moving gold and silver is a considerably expensive procedure, with the leading companies offering high-priced redeemability fees and even higher withdrawal amounts. What is Physical Redemption? Redemption is the act of repayment or withdrawal of fixed-income security stored with a bank or a company. In the case of Kinesis, physical redemption describes redeeming the underlying bullion attached to the Kinesis currencies; digitalised physical silver (KAG), gold (KAU), and in the near future, digitalised physical emerald (KEM). As investors’ eyes turned towards physical silver, looking for the most reliable way to obtain and store their assets, it soon became apparent that most providers do not offer an affordable solution. The majority of businesses, such as PSLV, require 10 000 silver ounces, equating to ten 1000 ounce bars as their minimal redeemable amount - an insurmountable barrier for an average investor, rendering silver another unachievable luxury. Kinesis recognizes this market standard’s unattainability, offering a far more viable 200oz Silver and 100g Gold minimum, making precious metals easily accessible for everyone who wishes to secure their savings smartly. Moreover, Kinesis withdrawal fees also stand in stark contrast with the market norms, remaining as low as 0.45% plus $100 delivery cost, as presented in the table below. Withdrawal Fees In order to illustrate these numbers better, let us assume for a moment that the KAU market price is currently $60 per gram and 1 oz of KAG costs $30. The table below depicts calculations based on the minimum withdrawal amount for digitalised silver and gold. Withdrawal Costs Breakdown As an example, Wall Street Silver member, Jim Forsythe, recently redeemed 200 oz physical silver (200 KAG) from the Kinesis vault in New York. The total cost for redemption, including delivery, worked out as 8.17% above the spot price. View his meticulously documented due diligence post here. The Benefits of Bringing your Bullion to Kinesis Kinesis Redemption terms are certainly impressive when compared to the majority of popular providers, but depositing existing bullion in Kinesis vaults is an equally attractive opportunity. Transferring precious holdings into Kinesis’s vaults is not only free of charge but also an excellent guarantee of security. Kinesis vaulting partners; Loomis, Brinks and Malca-Amit, provide the most advanced vaulting technology and facilitate the logistical infrastructure to ensure your bullion is safe. Exchanging Physical for Digital (EPD) Gold and silver bullion can easily be brought into Kinesis, enabling higher liquidity and the benefit of a recurring yield. Exchanging physical precious metals for digital gold (KAU) involves a 0.10% fee and 0.20% fee in the and digital silver (KAG) case. *All EPD fees are waived until the end of the PMO (Public Minting Offer) period. Depositing Fees This is why Kinesis stands out on the Physical Metals Market. Security and Trust: KAU and KAG are backed by 1:1 allocated investment-grade gold and silver bullion, securely vaulted and comprehensively audited bi-annually by world-renowned independent auditors; Inspectorate International, a Bureau Veritas company, making it an ideal solution to mend trader’s tarnished confidence.Simplicity: Kinesis brings technologically-driven liquidity, efficiently combining physical gold and silver with blockchain technology, with every ounce virtually assigned to its owner.Depositing bullion with Kinesis ensures excellent protection in world-renowned vaulting facilities, with no storage fees. Additionally, digitalising precious metals allow it to benefit from the unique Kinesis Yields reward system.Redeemability: Last but not least, Kinesis understands the absolute necessity of making physical metals easily redeemable, positioning itself as a prime spot physical exchange to own physical silver, as well as gold. Conclusion There is no other exchange in the world that offers redeemability as low as 200 ounces. Excellent redemption terms not only offer vital reassurance but also facilitate the exceptionally tight spreads within the Kinesis Monetary system. As silver indeed holds the potential to outperform gold over the course of the next few years, there has probably never been a better moment to join the silver market uprising. What is even more inviting, it has never been this easy to own precious metals, in the history of investing. Kinesis removes all the obstacles that have been, until now, discouraging investors from enriching their portfolios with silver and gold. Digitalised, liquified, and with exceptionally low redemption fees, Kinesis KAG and KAU offer an unconquerable alternative to the traditional assets.

Natalie Laz
Natalie Laz

01/04/2021