The benefits of investing using Kinesis
So you are a PM (Precious Metals) guy or girl. You believe in gold and silver as a store of value, a hedge against inflation, and asset to hold as an investment. You own physical gold and silver that you store and insure yourself, or pay someone else to do the same and it sits there not earning you anything. These costs are unavoidable right? WRONG!
Kinesis offers many advantages over the traditional methods of holding gold and silver including:
- free vaulting
- free insurance
- earn a yield on your holdings (refer Holder’s Yield)
- efficient and cost effective redemption of physical
- change your holdings effortlessly by depositing, buying, minting or selling on the Kinesis exchange
At present Kinesis has in excess of $135 million in Gold or Silver in circulation with some 100,000+ accounts enjoying free insured and secure vaulting.
If you are an active gold or silver investor, or precious metals or crypto trader and are considering using Kinesis Money for these then signing up for a free Kinesis Money account could reward you with a FREE 1/2 OZ SILVER (1/2 KAG) once you trade $3000 in assets.
The yield on gold (KAU) was a whopping 6.99% for the year to 6th October 2021. You can check out the current fee pools by opening a free Kinesis Money account using this link.
Vaulting & insurance
Kinesis offers secure storage of your precious metals within the vaults used by it’s parent company Allocated Bullion Exchange (ABX). ABX, a leading institutional exchange based in Australia now has 13 vaults spanning 9 countries. It’s vaulting partners include Loomis Zurich (Nasdaq OMX: LOOM); OZL Liechtenstein (Nasdaq OTCMKTS: OZMLF), Brinks (Nasdaq NYSE: BCO) and Atlas Vaults.
With Kinesis, KAU and KAG are directly allocated 1:1 with the equivalent physical gold and silver held in the vaults. The holder of the currencies has legal title to the physical metals in the vaults they represent. Neither Kinesis nor ABX has any claim to the physical metals and therefore the success or otherwise of these businesses has no bearing on how safe your holdings are.
Ownership is recorded through the blockchain digital ledger creating an immutable and irrefutable record of who owns what. Every KAU and KAG transaction in the Kinesis system can be searched and viewed in the Kinesis explorer in real time here. Kinesis holds no title to the metal stored in it’s vaults. It is and always will be your metal and never Kinesis’ (well until you spend or redeem it)!
Full allocation is in contrast to how many PM investors knowingly or unknowingly own gold. In many instances gold or silver is credited to an investor, but legal title remains with the bank or dealer holding the metal. This creates 2 issues. It allows the same gold and silver to be credited to multiple parties in essence creating gold out of thin air where none exists. Additionally, as legal owner, the bank or dealer has the ability to sell the metals if they so choose.
The vaults are audited bi-annually by an independent third part auditor, Inspectorate International a member of the Bureau Veritas group of companies. At a set time and date, auditors enter the various vaulting facilities around the globe to tally the quantity of gold and silver held and compare this to the quantities reported by ABX on a prior date. This validates the physical gold and silver holdings to what is reported as being in circulation on the blockchain.
In addition to verifying the quantity of holdings, the quality and weight of random bars are selected for assessment as well as assessment of the quality of the storage facility. Audit reports are available for viewing here. Note, due to Covid-19 lockdowns, an audit in 2021 was not possible.
Vaulting and insurance are provided free to Kinesis users.This is achieved through the unique fee yield system, where part of the yield retained by Kinesis covers the cost of vaulting services and insurance. There is only a fee (2.5% p.a.) where a user wants to store their specific bars and coins with Kinesis as these are segregated from all other users holdings.
Redeeming your holdings
Redeeming your KAU and KAG is easily achieved in the Kinesis exchange. Simply head to Settings > Redemption, complete the form including what is to be redeemed, how much, from where and where to and Kinesis customer service will contact to you finalise.
Redemption is subject to minimum amounts of 100g gold and 200oz silver. These minimums compare favorably with other businesses such as Sprott Physical Trusts (400oz gold and 10,000oz silver).
Additionally, withdrawal fees are a comparatively low 0.45% + $100 + delivery fee. Again this compares favourably with other businesses. For instance redemption costs for Sprott Physical Gold Trust is up to 1% (at the mints discretion), plus $250 admin fee and delivery costs.
You can check out one Kinesis user and Reddit members detailed account of redemption here.
Buying and selling holdings
Buying and selling of gold and silver holdings via KAU and KAG is easily done on the Kinesis Exchange, or even even on the mobile app. You can use the quick buy and sell function on the exchange Dashboard to spend fiat currencies to buy KAU, KAG, KVT or cryptocurrencies at market price. Alternatively head to the Exchange section that allows trading of fiat, metals and cryptocurrencies with market or limit orders.
Depositing your own gold and silver
Physical gold and silver bullion that you store at home, or elsewhere, you can be brought into the Kinesis system and ABX vaults via the Exchange Physical for Digital program. This essentially tokenises your holdings allowing for free storage, insurance and the ability to sell or spend it.
The bullion must meet certain specifications in order to uphold the integrity of ABX’s Quality Integrity Framework and the 1:1 physical backing of KAU and KAG.
- source of production (i.e. an approved refiner)
- form of bullion (size and fineness)
- chain of integrity (documentation on production, purchase, storage and transport).
Bringing bullion into the system will cost you 0.10% for gold and 0.20% for silver. A small amount to pay for free storage, insurance, liquidity and the benefit of a perpetual yield.
Bars and coins
In addition to bringing approved bullion into the system, you are able to bring in your very own bars and coins which are stored and audited separately from other bullion. This allows users to store their very own collections within the system.
As bars and coins may vary in size and fineness, they must be first examined by an assayer of Kinesis’ choosing to determine weight and fineness. Kinesis then use this information to determine the amount of KAU or KAG to issue in order to preserve 1:1 full allocation.
Depositing bars and coins incurs higher fees at 1% on deposit, and a 2.5% p.a. management fee which covers the separate storage and auditing.
As with bullion, depositing your own bars comes with storage, insurance and a yield. You can even spend the KAU or KAG created on real world purchases and still retain your very own bars and coins simply by maintaining 2/3 of your balance. So if you deposited 15 KAU of coins, you could spend up to 5 KAU and still maintain those same coins.
Minting new gold and silver
Minting is the process of creating new KAU and KAG. Rather than buy KAU or KAG on the exchange and already in circulation within the system, Minters buy large quantities of gold and silver from outside the system. The process of bringing more metals into Kinesis means KAU and KAG is created to digitally represent these additional holdings. Minting is preformed in lots where 1 lot is 100g gold or 200oz silver.
Minters are rewarded by Kinesis for creating the new holdings via the Minter’s Yield which is paid monthly forever. This is irrespective of whether you mint once, 10 times or every month.
The first step to investing with Kinesis Money is opening a free account which you can do using this link. It’s also where to get started if you are interested in minting new gold and silver into the Kinesis system.