(Apes, this is a continuation of Part 3, please find the first half of Part 3 here)

The Money Illusion

In 2008, we were at the end of a major debt supercycle. The frenzied mortgage lending and securitization in the financial sector, along with massive consumer credit borrowing, had set the U.S. up for a major crisis. In relative terms, we were at a 27% HIGHER total debt to GDP ratio than the Great Depression.
These massive debt loads were coming home to roost, manifesting first as a crisis in subprime but then quickly moving to prime mortgages, corporate debt markets, money markets, and even the consumer credit markets. As discussed in Part 2, NY Fed Pres Tim Geitner stated that during the darkest days of 2008 the inter-bank lending market was freezing up, and we were “days away from the ATMs not working”.
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Total US (Public+Private) Debt to GDP
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But, this didn’t happen. Ben Bernanke, the Chairman of the Federal Reserve, was a self avowed student of the Great Depression- and was determined not to let it happen again. He, along with Treasury Secretary Hank Paulson (Former CEO of Goldman Sachs) and Tim Geitner, created new lending facilities and MBS purchase programs in order to swallow the massive amounts of toxic assets the system had created.
Paulson and Bernanke technically had no legal authority to create these programs, but in a crisis, all caution goes out the window. TARP and other programs authorized by the Treasury bought billions of dollars of MBS, funded by T-bond issuances. This chart shows US Govt Debt as a % of GDP through today: (notice the spike in debt during and after 2008)
US Government Debt To GDP
The US borrowed heavily- TARP alone was authorized for $700 billion. The Treasury did not have the funds to support this so it issued billions of dollars of T-Bonds. Banks, hedge funds, other governments, and the Fed all bought these bonds en masse.
Remember, only the Treasury has the ability to SPEND, and only the Fed has the ability to LEND/PRINT. The Fed was created as a private institution to “protect” the government from reckless money-printing. The Primary Dealers (banks approved to trade directly with the Govt) buy Govt bonds from the US Treasury, and turn around and sell these bonds to the Fed or other third parties. If you’re confused about how the system works, I recommend watching this video on how the financial system functions.
In the equity markets, as we started bottoming in the first quarter of 2009, hedge funds, banks, and family offices began loading up on margin debt again. This renewed confidence in the banking system and overall lending capacity began pushing equity markets back up.
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Margin Debt and Stock Market Rally
Further stabilizing the markets was the Federal Reserve with their massive Quantitative Easing program. In 2008, the Federal Reserve’s Balance Sheet ballooned- assets (Treasuries and MBS) grew from $880 Billion pre-crisis, to $2 Trillion immediately after, and eventually over $4T by 2014. Many economists, particularly those with a libertarian bent, such as Peter Schiff, immediately decried this reckless behavior and predicted immediate hyper-inflation as early as 2011.
Federal Reserve Balance Sheet
When the Fed buys assets, it is completely different from any other institution buying. Pension plans or mutual funds use the savings of the investors of the fund. Because that money came either from working, or from other investments, it represents NO net increase in money supply. The money they received HAD to come from someone else, for a good/product/service/asset they created or provided.
However, the Fed has no taxing authority, no savings, no funds to speak of at all- EVERYTHING the Fed buys it purchases through money it PRINTS. Thus, Fed Balance Sheet expansion=money printing. The Fed printed $2T in the two years following 2008.
This rampant money printing rightly worried experts and pundits in the media- but the inflation they feared never came. They were flat out WRONG. Why?
Most of the new money that was printed went directly into the banking system. Lyn Alden describes it brilliantly-
“Leading into the financial crisis, only about 13% of bank reserve assets consisted of cash (3%) and Treasury securities (10%). The rest of their assets were invested in loans and riskier securities. This was also at a time when household debt to GDP reached a record high, as consumers were caught up in the housing bubble.
That over-leveraged bank situation hit a climax into the 2008/2009 crisis, coinciding with record high debt-to-GDP among households, and was the apex of the long-term private (non-federal) debt cycle. When banks are that leveraged with very little cash reserves, even a 3% loss in assets results in insolvency. And that’s what happened; the banking system as a whole hit a peak total loan charge-off rate of over 3%, and it resulted in a widespread banking crisis” (I can't link source, it keeps getting the post taken down- I will post it in comments).
Bank Recapitalization
Thus, the new money went to recapitalize banks and shore up their balance sheets to defend them from bankruptcy- it stayed in untouchable bank reserves, and never entered circulation.
The money that didn’t go to repair bank balance sheets flowed directly into the markets - Let’s walk through it.
There are two different economies- the real economy, and the financial economy. The tidal wave of new money the Fed was creating did not cause inflation (in the traditional sense), because the money did not flow into the real economy- the goods, products and services that everyone consumes on a daily basis. The money instead flowed into the Financial economy- bond markets, stock markets, private equity funds, commodities, Forex markets, etc.
Financial Economy vs Real Economy
When you give a bank $100M, it doesn't go out and buy $100M worth of Big Macs and Kleenex- the bank puts these funds into investments, generally either in the form of loans or in the form of equities or equity derivatives. Thus, the funds that flowed into the banks are stored up almost exclusively in the financial system, or get pushed into loans to consumers.
“Wait a second!”- you say. “The Fed printed money to buy T-Bonds- The Treasury usually spends funds that go into the real economy-- so THAT should have caused inflation, right?”
Yes, this is typically what happens. But, during and after the 2008 financial crisis the majority of Treasury expenditures went to programs that were stabilizing the financial system (TARP+ TAF+ TLGP+ Others). So, the money that would have been spent by govt agencies in the real economy instead just flowed back to banks and financial institutions.
Typically in a recession the Treasury will increase spending to cushion the blow to workers- and in 2009 they did extend a few unemployment benefits. But, by and large, Congress authorized few benefit programs for workers, and the average time on the benefit decreased after a slight bump in 2009.
Average Time on Benefit
Thus, the amount of freshly-printed money that reached the real economy was minimal, and whatever money did reach it largely acted to counteract deflationary forces- it wasn’t enough to actually induce inflation. The government did little to stop foreclosures, or provide aid to small businesses. Unemployment spiked, and due to the Phillips Curve Principle (covered in Pt 1), this put a dampening effect on inflation.
Unemployment Rates
The funds the Federal Reserve had created, therefore, created no inflation in the real economy- instead they flowed to the financial economy and inflated financial assets. This started off the largest and longest bull market run in U.S. Stock market history- easily beating emerging and other developed countries’ equity markets.
Massive US Stock Market Rally
Keynesian economists lauded this as an accomplishment- they believed they were creating what is called a “Wealth Effect” - a theory that stated that as people’s financial wealth increased, they would be induced to do more spending and investment- thus, by propping up the stock market, they would stimulate the real economy. This is awfully convenient for the rich- the top 10% own 85% of the equity markets, and thus have seen their wealth balloon by over 186% while growth for everyone else stagnated.
Ironically this theory has it exactly backwards- real economic growth should drive the stock market, not the other way around. But, convinced of their theories, economic policymakers continued to pump ever increasing sums into the financial system.
When you divide stock market performance by the Fed’s Balance sheet, you see that there has been basically NO real growth since 2008.
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The Rally is an Illusion
The entire “rally” we have experienced for the past 12 years has been nothing but an illusion- it is simply the result of vast money inflows into the financial system. Banks and financial institutions will do everything they can to convince you that the high stock market valuations are justified by fundamental growth.
This is wrong- these valuations are NOT justified. Insane levels of money printing and debt leverage have created extremely dislocated equity markets. For example, Square (SQ) has a forward PE ratio of 499.87- it currently doesn't pay a dividend, but let’s assume it paid a 3% dividend payout ratio (which is rare for tech stocks) - if that were the case, it would take 14,996 YEARS for the dividends to pay pack the price of ONE SHARE. (449.87/0.03).
To summarize, see this image from a post I made a month back- all the warning lights are blinking red. The markets are at the extreme end of the range by almost every valuation metric- and no one seems to care.
Summary of Recent Warnings
The markets are slowly being “walked up” every day. Today, the ultimate price insensitive buyer (the Fed) is now plowing $120B a month into Treasuries and MBS, and the Primary Dealers now have to turn around and put their money somewhere. The bond market is already a trap with 2% yields, and 5% inflation. There’s no more profit potential there, so these institutions are forced to buy equities if they want any returns. The Fed is killing whatever is left of price discovery.
SPX grinding higher daily
Four billion dollars or so a day is being pumped into the system- and going straight to the stock markets.
Further, to stimulate growth in the real economy, policymakers dropped interest rates to near 0% in late 2008 to induce bank lending to get consumers to borrow and spend again. (70% of our economy is consumption due to the factors discussed in Part 1).
This did create massive loan demand- basically every sector of the US economy began borrowing en masse. The Fed was able to “reflate” the bubble and allow the economy to survive on debt financing to “re-invigorate the economy”. Fast-forward to today, and a decade of pinning rates to the zero-bound has us breaking records in terms of debt loads:
Student Loan Debt:
Student Loan Debt
Corporate Debt:
Corporate Debt to GDP
Consumer Credit Card Debt:
Consumer Credit as % of GDP
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Auto Loan Debt.
Auto Loans
I could go on and on, but you get the point. Now, the entire system is overleveraged- the cancer has spread, and it has infected virtually every single sector of the economy.
People keep saying that we “kicked the can” of 2008 down the road. This is WRONG. We kicked the can UP THE STAIRS- meaning, we not only delayed the problem, but made sure it would get WORSE, since we borrowed MORE to paper over the old debts and worthless securities the system had created.
A fascinating aspect of our recent financial history is that the bailouts are exponentially growing- this is due to the simple fact that the entity giving the bailout has to have a balance sheet multiples larger than the firm receiving the bailout, and government guarantees of banks induce reckless speculation. For example, to bailout a bank with $10B in mark-to-market losses, you need a bank with a $20 or $30B capital surplus, to absorb the loss and keep the depositors and creditors satisfied that the bank giving the bailout won’t go under.
In 1998, a hedge fund called LTCM was near collapse- it had leveraged itself over 25-1, using complex algorithms made by Nobel Prize winning economists to predict bond prices. They had made massive derivative bets buying Russian bonds (among other things) - and when the Russian government defaulted in August 1998, their positions began to unravel.
The massive debt and derivative exposure they had created was threatening to pull several large banks down with it. The Fed stepped in during September to organize a $3.5 Billion bailout, funded by 12 large banks. According to James Rickards, General Counsel of the LTCM Bailout- the US equity and bond markets were “close to being completely shut down” during the worst of that crisis. (start at 16:30)
In 2008, the entire US financial system was nearing collapse and desperately needed a bailout. A massive bank run had begun. Congress stepped up and provided- in the end spending over $498 Billion of taxpayer funds. However, the Fed also provided a bailout (though QE), eventually buying over $1.7 Trillion of MBS.
Since the Great Financial Crisis, the banking system debt crisis has now become a government debt crisis, and indeed an economic debt crisis- and this debt has spread worldwide. Equity and bond markets have continued to march up, despite fundamentals. This new financial paradigm was rightly termed “The Everything Bubble”
Total World Debt
Total (Govt+Private) Global Debt now stands at staggering $281 Trillion, or 356% of GDP. We’ve never been here before- we are now navigating uncharted waters. The next bailout will have to be bigger- a LOT bigger.

Avalanches

Avalanche
Imagine a snowfield on an alpine slope, above a small town. A few inches of snow falls. Everything is fine. More snow falls. Still nothing happens. A blizzard moves in. A day later, the snowfield reaches critical mass. Then, a disturbance happens- it could be a deer foraging for food, or a hapless skier exploring the backcountry. The snow starts sliding, pushing the snow below it. Positive feedback loops start to engage. The field begins to slide- now an avalanche has begun. The town is wiped out.
The financial crisis was the beginning of a debt avalanche- it’s likely that over 70% of the major banks, mortgage brokers, and other financial institutions would have gone bankrupt, superseding the Great Depression-era record of 30%. Thousands of private and public companies would have gone bankrupt. Real estate and equity markets would have entered a freefall lasting for years, and unemployment would likely have spiked past 30%, bringing back the soup lines not seen since 1936.
Instead, policymakers kicked the can up the stairs- they issued massive amounts of government debt to paper over the 2008 crisis, and incentivized excessive borrowing in the private sector. The fundamental factors that caused the crisis (unregulated derivatives, bank combinations, excessive leverage, lack of oversight) were never resolved. As u/Criand so elegantly puts it, 2008 never ended. Now, with US Government Debt standing at over $28 Trillion, there are only tough choices ahead. We will soon reach a point where the interest payments alone on the debt supersede all US Tax Revenues- when that happens, we will have traveled beyond the event horizon- there will be no coming back. The debt will be IMPOSSIBLE to pay off. (This is according to the governments own projections!)📷
US Government Debt Projection
The US Government continues to borrow- running a staggering $2.1 Trillion deficits for just the first half of 2021. There is no end in sight. The Biden Administration is pushing for another $1.2 Trillion in infrastructure spending this year ON TOP of the already massive deficits. Some politicians are demanding that it be more.
Day by day, we are adding snow to the mountains above our village. When will end is anyone’s guess, but borrowing more will only make the end worse.

Smoothbrain Overview:

• Through the magic of Fractional Reserve banking, institutions can loan out much more debt than cash that actually exists. This increases systemic risk.
• As a result, over 90% of all capital created is in the form of debt. This supercharges debt cycles and can cause massive bank failures.
• When debt super-cycles crest, and begin the march downwards, massive deleveraging and defaults begin. If the banking system is weak, bank runs begin. (1930s)
• We were hitting another end of the 80 yr debt cycle in 2008 (1929-2008 (79yrs)). We never de-leveraged the system. Instead, we re-leveraged EVERYTHING even MORE.
• The Government and the Fed swept in and bailed out the banks. Now the Federal Government is deeply in debt to the tune of $28 Trillion.
• The trillions printed by the Fed were almost exclusively routed to the financial system- creating a new bubble in every single asset class, larger and even more widespread than the 2008 bubble.
• We never resolved 2008. We only kicked the can up the stairs. The Derivatives monster from Pt 2, along with a massive debt avalanche, will come back with a vengeance.
• Almost every sector of the US economy, and indeed the world economy, is now greatly overleveraged. Global Total Debt to GDP broke past 350% during Covid.
• Options are running out for policymakers. Debt borrowing and money-printing cannot continue forever.

Conclusion:

The debt crisis will return, but this time, it will be the financial system, US government, and indeed the ENTIRE world economy that needs a bailout- and who has a big enough balance sheet to absorb that? The only answer is the ones with an infinite balance sheet- the Central Banks.
The idea that anyone can borrow forever, or print money forever, with no consequences, defies basic financial logic. Impossible Objects cannot exist forever. History shows deadly consequences for the nations that venture down either path. The United States is no exception.
The Fed has already tried to escape this trap in 2018. It failed. Sovereign creditors are losing faith in the US Treasury, and have been since 2015. The walls are closing in, and the ultimate decision must be made. (More on this in Pt 4)
The avalanche is coming either way- and we only have two choices. Either we allow ourselves to be buried under a mountain of hyper-deflation, creating a new Great Depression, frozen credit and equity markets, and massive bank failures- or, we burn our way out, using the inferno of money-printing and hyper-inflation.
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BUY, HODL, BUCKLE UP.

>>>>>TO BE CONTINUED >>>>> PART FOUR (SERIES FINALE) “AT WORLD’S END”

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(Adding this to clear up FUD- My argument is for hyperinflation to begin in a few years- this is a years- long PROCESS, and will take a long time to play out. It won't happen tomorrow, but we are in the same situation as Germany after WW1. Hyperinflation is GOOD FOR GME--- DEBT VALUE COLLAPSES, MONEY CHASES ASSETS (EQUITIES) pushing the price UP, so shorts will have to cover) BUY AND HOLD.
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Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. From reading my Post I cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you, so any opinions or information contained on this Post are just that – an opinion or information. Please consult a financial professional if you seek advice.
*If you would like to learn more, check out my recommended reading list here. This is a dummy google account, so feel free to share with friends- none of my personal information is attached. You can also check out a Google docs version of my Endgame Series here. (ALL THESE LINKS ARE GOOGLE DRIVE LINKS, FROM A DUMMY ACCT!)
(Side note: I’ve been accused of being a shill/FUD spreader for the first two posts- please know this is NOT my intention! I cleared this series with Mods, (PROOF) (THIS IS A GOOGLE DRIVE LINK, I WASNT SURE HOW ELSE TO SHARE IT) but if you think this is FUD/SHILLY then downvote/comment and I can discuss further.)

Kinesis Monetary System is positioning itself to be one of the most revolutionary monetary systems in the history of the world. This company blossomed out of the Allocated Bullion Exchange, an Australia based gold and silver physical bullion storage company founded in 2011. Kinesis combines the power of blockchain with physical gold and silver bullion, creating a potential alternative to long held fiat currencies such as the dollar, euro, pound and yen. If Kinesis is successful, early purchase of Kinesis Velocity Tokens could be comparable to buying Google or Facebook stock in their first few years.
The premise is this: An investor can exchange cash or crypto currency for physical gold or silver and have it stored in Kinesis’ privately allocated vaults in New York, London, Sydney, Hong Kong, Singapore, Dubai, Lichtenstein or Zurich. The investor then has the ability to store, spend or transfer gold or silver to other Kinesis investors (members). Each transaction is recorded using the blockchain as a public ledger, thus keeping track of who actually owns the physical gold and silver in the vaults. The Kinesis vaults are audited on a semi annually basis by an independent auditing service that has been in business for over 100 years. The Kinesis exchange therefore provides a digital currency, backed by precious metals, that investors and consumers will find is very liquid, secure, and in units that work in everyday transactions.
Investors in Kinesis also have the ability to withdraw their physical gold and silver and have it shipped directly to their home. The minimum withdrawal is 200 oz silver or 100 grams of gold. This is at very competitive prices (for example, one user redeemed 200 oz silver for about 8% over the spot price including shipping, withdrawal fees, insurance, delivered to his door.) Those following the silver market these past few months will realize that premiums have recently been as high as 30% on physical silver. Online bullion dealers are currently selling 100 oz silver bars for a 15-20% premium over the spot price. This ability to acquire physical silver or gold at a discount will likely catch on with people who want to accumulate the precious metals.
An exciting thing about this system is that it rewards users for keeping, using, and transferring gold and silver within the system. The fee on each transfer is 0.45%, about half of which will be redistributed to all the users of the platform. So instead of paying a vault company to store your gold or silver Kinesis will pay the user. The other half of the fee is split between large partners and overheads (storage, insurance, company costs, etc.). The Partner yield is particularly important in motivating partners to encourage usage among their user bases.
Kinesis currently has a public private partnership with the post office of Indonesia. The Post office plans to start paying their employees in Kinesis gold (KAU) and to use the Kinesis system as their primary bank. At this time, it is estimated that two thirds of Indonesians don't have a bank account or are under banked). Kinesis investors believe a system like this can provide value to individuals and economies which have limited access to traditional banking institutions.
People who live in advanced economies should be concerned that their governments are printing trillions of dollars in aid and stimulus (again and again!). Developing economies often have unstable local currencies and their citizens may not want to store or save money in their local currency due to potential for rapid devaluation. Venezuela, Turkey, and Lebanon have all been in the news recently due to loss of faith in their currency.
Want to have the ability to spend your gold, silver or cryptocurrencies? Kinesis has rolled out a physical debit card with a limit of $20,000 in the US. Later this year the card should also be available in the UK and Europe. They also have a virtual Visa debit card for worldwide use with a modest limit of $500 dollars.
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Potential major markets I predict they could break into, disrupt, and take a major dominant market share over the next decade:
1. Physical gold and silver bullion storage. Currently it costs about 0.5 to 2% annually to store your bullion in a vault. This is the primary disadvantage to owning physical gold and silver, it pays no yield and costs money to store large quantities. With Kinesis you can earn a small yield on your gold and silver which will be competitive in a world of near zero to negatively yielding bonds. There is no fractional/derivative aspect like the COMEX or unallocated bullion dealers.
Each gram of gold or ounce of silver is legally titled and held by a single person on the blockchain. A token is not created in the system until they buy and store the metal in the Kinesis vaults. The tokens are easily divisible into smaller fractions similar to bitcoin. This plus the tight trading spreads on the gold and silver in the Kinesis system make them viable to be used as alternative currencies.
2. International money transferemittances. Kinesis Money charges a flat 0.45% fee to transfer your digital gold and silver to anyone in another country with an account. This would be an ideal system for international workers from less affluent countries looking to send money back home to their families. No forex fees. The transfer happens immediately. They report their system can handle ~3000 transactions per second so there is a significant ability to scale.
Typical Western Union or Paypal international transfer fees are about 5% plus up to 6% forex conversion and another 2-3% if you paid via credit card.
The yearly remittance transfers across the globe are quite substantial.
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https://preview.redd.it/7fkij4e2wzr61.png?width=960&format=png&auto=webp&s=64b90848e930d2da9b8a9afcc1f3f85e7488a6ab
3. Credit card processors. Visa, Mastercard, AmEx and Discovery. The way their business model works is that they charge the business 1.4-3.5% of your total every time you use a credit card machine. Businesses eat this cost so it is not passed directly on to the consumer, but consumers pay this via higher prices.
The way the Kinesis Visa card currently works is that you sell some KAU/KAG and "top up" your card with money. Doing this on the Kinesis exchange will cost you 0.22%. Visa is likely still charging something as well, but paid by the merchant.
The goal is to get merchants to start transacting directly via KAU/KAG transfers. In that case, instead of paying 1.4-3.5% to the credit card companies, it's 0.45% which could be huge savings to merchants doing a high volume of credit card transactions. This means that merchants can save money relative to Visa, Paypal and other credit and online money transfer services. Kinesis offers businesses the ability to partner with them and earn a return on all of the transactions done through their system.
4. Banking. Indonesia has about 270 million people. Indonesia has a young population and it is estimated that two thirds do not have a bank account or have very limited banking access. Now if you have a smartphone you can use Kinesis as your banking system. Kinesis is currently launching a public private partnership with the government of Indonesia to use as the main payment system for the entire postal service in Indonesia. They are building a gold and silver vault in Jakarta to service the country's needs. Kinesis is reportedly currently in talks with other countries as well. I estimate that there are at least a billion people worldwide that don't have a formal bank account but do have a smartphone.
5. Bring cryptocurrency users into the gold and silver markets. Easily convert some of your crypto profits into a more stable, less volatile asset for diversification. It is quick and seamless to send your cryptocurrency to your Kinesis wallet. You can also buy, sell, send, receive, and store Bitcoin, Ethereum, and USD tether. Kinesis management reports they are working to bring more cryptocurrencies to the Kinesis exchange.
6. Increasing investment demand for precious metals. Most people have no allocation to gold or silver in their personal investments. The average US investor only has about 0.5% of their total investments in gold and silver. If this increases to a modest 5% that would be a 10x increase in demand for the metals.
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https://preview.redd.it/ns6up9h5wzr61.png?width=850&format=png&auto=webp&s=cd17affa4e6f67bcc9f5e804f15fb8dcd5095784
7. Partnerships with large institutions or investment funds. Kinesis states that they can tailor solutions for multinationals, investment banks, brokers, pension funds, asset managers, trading firms, and precious metals refiners and traders. They are partnered with Deutsche Börse, a European asset trading and clearing platform. This ability to partner with large groups opens the potential for exponential growth in precious metal trading on the platform. The targeted institutional partners for Kinesis are listed below:
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https://preview.redd.it/gzw0ezm9wzr61.png?width=620&format=png&auto=webp&s=20e2c91e7eacbdd8c4637b17fba8d6cd68aabe0b
https://preview.redd.it/m9tqplc7wzr61.png?width=620&format=png&auto=webp&s=54b1246b778984315aee6bddbd94a788b8de0c51
8. Direct competition with modern central banks. Are you concerned about the massive money printing the Fed and our government is currently doing? Are you concerned about inflation and the erosion of purchasing power of the dollar?
US M1 and M2 money supply:
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https://preview.redd.it/i1hkiazbwzr61.png?width=1463&format=png&auto=webp&s=87c320469f8b06d8129161454949278f01626dd0
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https://preview.redd.it/qo7v3ubewzr61.png?width=1751&format=png&auto=webp&s=5770e6e25d1e7e5e9e0955870853dba8de96e23c
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https://preview.redd.it/3xgnielgwzr61.png?width=1820&format=png&auto=webp&s=554c4cb1c37482bf530ac6fbf0f7e64fbce36bcf
Stimulus money printed in the past year: (not including the new $3-4 Trillion dollar infrastructure bill that's getting drafted now or the 2nd stimulus bill of 2021 that’s being proposed by the current US administration). It's really easy to make a few trillion dollars with the touch of a mouse these days. Free money for everyone!
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https://preview.redd.it/anjvulpjwzr61.png?width=1039&format=png&auto=webp&s=62ccc5e8defb0a002c4afa98e8b1ff2a008e9771
Gold is mined at a stable 1.5-2% per year for centuries. Exceptions were in the California and Alaskan gold rushes when large amounts were found in a short period of time. I follow the mining markets very closely and there are no major discoveries in the pipeline. It usually takes a decade or more to bring a large mine into production so even if the largest discovery ever was found next week it wouldn't have any immediate impact. Gold has been valued across every nation equally and has been for the past 5000+ years. When inflation hits from all this money printing many people will naturally move into gold or silver.
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Potential problems and hurdles that Kinesis needs to overcome:
Being shut down or blocked in a certain country by some sort of regulatory agency such as the SEC, FINRA or other international counterparts. The company says they are being very careful and trying to comply and partner with all the regulations in this area. They are based in the Cayman Islands and Lichtenstein for the very strong protection that these countries offer in terms of banking and personal property laws. The development teams are located in Australia, Europe, Latin and South America.
There have been efforts at the state and federal levels over the years to make gold and silver true currencies again (i.e. remove any taxation of gold or silver in the US.) Citizens for Sound Money is a nonprofit group that is working to help advance and advocate for using sound money like gold and silver again. They will be working at a national political level in the US to help protect and advance this cause which will in turn help support Kinesis.
Another potential vulnerability for Kinesis is competition from another similar platform, although I think this is not likely to affect them in the near term. They are currently the leader in this new industry and I think that they have a serious competitive advantage over anyone else because they already control a global precious metals bullion storage business with vaults in multiple countries and continents. There have been multiple gold linked cryptocurrencies but they don’t have the full suite of options that Kinesis offers. They look very rudimentary compared to the system Kinesis is using.
KAU and KAG do not currently trade outside the Kinesis exchange, but will be integrated into other crypto exchanges eventually. I suspect that people who want to own bitcoin, and other cryptocurrencies in addition to gold and silver would be very at home on the Kinesis platform. I’ve sent bitcoin over from my Coinbase app a few times and it arrived in 20-30 min. You can then immediately convert that to silver (KAG) or gold (KAU). I found this to be the easiest and fastest way to fund my account. (Note: Coinbase made me wait 6 days before transferring new crypto deposits out of their system.)
The ability to internationally wire money into the Kinesis system is currently slow and clunky and will need to be optimized by the platform (compared to sending a domestic wire transfer). I think that this needs to be optimized if they want to increase user participation and rapid onboarding. The ACH transfer system is another option. The rollout of integrated banking should make depositing simpler as it happens on a regional basis. Expect a $10 wire fee plus anything that your bank will also charge to send a wire in.
They will need to have a strong sales and promotions team to help drive the adoption of the platform going forward since this is such a radical idea for many people. The educational videos they have produced are high quality and help make this concept more understandable, but the concept is still very niche. I think helping people to understand and trust the platform and what’s going on behind the scenes will represent one of their greatest challenges for broad world world adoption. Hopefully this research helps you to do that personally.
Overall the app and website need a bit more polishing but work pretty well. They are still releasing new features and continue to improve the app and desktop experience. The Kinesis support team is responsive and generally helpful with any issues that arise.
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Kinesis allows you to store gold and silver with no cost in their allocated, insured vaults. How does the company make money?
With every transaction in the system there is the 0.45% fee that is charged by Kinesis. For Exchange trades, the fee is 0.22%. These fees go into what they call the “master fee pool”. Kinesis will take 17.5% of this fee to keep the business running, vault storage, blockchain technology, tech support, etc.
Kinesis Commercial Center will be an online aggregator of commercial goods and service providers who use Kinesis currency suite as their payment method (thus bypassing the Visa, Mastercard, PayPal and other payment processors charges.) Kinesis will take a 20% fee of the KCC commissions, KVT holders will continue to also get a 20% return.
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What makes this system so exciting for people who already want to buy, hold or trade precious metals is that the other 52.5% is distributed back to the users and holders in the system. They use a unique yield system that will pay you to use Kinesis.
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How do you make money while using Kinesis?
Minters Yield: 5% of master fee pool
This is for people who bring money into the Kinesis ecosystem, a process called minting.
Depositors yield: 5% of master fee pool
Want to get paid forever on the initial amount of money or crypto you deposited and turned into silver or gold in the Kinesis system? You have 2 weeks to lock in your depositors yield which will be paid in perpetuity.
Referrer’s yield: 7.5% of the fee's generated by those you directly refer
Have a group of friends and family who you think would like to use real money to transact with? Kinesis has a great referral system where you will receive a percentage of the fees that your referrals generate. This is not a multilevel marketing system as it only applies to the people you directly referred into the system. This makes it much more of a flat referral model.
Holders Yield: 15% of master fee pool
Those who hold their gold or silver in the Kinesis vaults will receive 15% of the money from the master fee pool. Your personal share of this is calculated by taking your percentage of how much gold and silver divided by the total amount that is stored. This way your gold and silver earns a dividend instead of you having to pay the typical storage fee.
KVT yield: 20% of master fee pool
So how does one best profit from this should Kinesis become a major success? From my research the best way is to acquire KVT (Kinesis Velocity Tokens). The KVTs allow you to participate in the company’s success by receiving a dividend of gold or silver. They essentially function similarly to a non voting share of stock that will pay a perpetual monthly dividend based on the amount of silver and gold that gets traded across the platform. Kinesis started the company by selling KVTs for $1000 each raising an initial $200 million in start-up capital.
There are only 300,000 KVT tokens that were ever created making them fixed like bitcoin. You will will receive your # of KVTs/300,000 x .20 of the master fee pool. If Kinesis is able to capture 1% of the total gold investment market over the next few years a single KVT could payout thousands of dollars in dividend yields each year.
A current issue is that Kinesis themselves can't currently directly sell KVTs to US investors. Kinesis doesn't want to get into trouble with the SEC as KVTs are similar to an initial stock offering. When Kinesis starts paying the dividend yield on KVTs (estimated to be late Q2 to Q3 2021) they will become freely tradable and available to directly purchase by US investors.
Kinesis is currently incentivizing trading on the platform by offering a free KVT when you mint $50K worth of gold or silver (i.e. buy $50K once or trade $5K 10 times). They started with 10,000 KVTs last July and have 3300 left in the system as of mid March 2021. The offer will end when all the KVTs have been claimed by the minting process.
**Update** As of April 9, there were 942 remaining. Kinesis announced they would also continue the minting offer once these were up but would raise the minting costs to $75K. They new expect the KVT yields to being in Q2.
**Update #2** As of April 15th the first PMO has fully sold out. Kinesis is doing a 2nd PMO with the raised cost of $75K per KVT. There are 5,000 KVT available in the 2nd PMO
In order to get KVTs into the hands of smaller investors who don’t have the ability to trade $75K, there is a current offer by the non profit group called Citizens For Sound Money (C4SM). They will sell you one KVT for $1050 with additional KVTs available for $1300. This is a grassroots effort to bring new members into the system. The effort is partly a fundraiser ($1300 KVTs), and partly designed to bring new users in at break even cost (~ $1050 per KVT minted). I bought some through the group and can personally vouch for them. You can also mint your own KVTs while they last during the PMO offer, however this requires effort, skill, capital, and if in the US, also requires you to be accredited investor. C4SM is not requiring accreditation and it has been confirmed by Kinesis that accreditation is not required to hold KVT.
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Why you should start using Kinesis today:
Using Kinesis money will allow you to personally use a currency not controlled by central banks or governments. You will be able to keep your personal wealth safe from major political turmoil, natural/manmade disasters, or any other unpredictable economic volatility that may occur in your home country. Holding KAU or KAG will give you the ability to be able to travel to another country and have wealth stored there and waiting.
Getting in now allows you to become an early adopter of the fusion of the future of value transfer (blockchain) and the most trusted money supply across borders and continents for the past 5000+ years. The Kinesis platform removes the traditional problems of using gold and silver as money, including: poor divisibility of physical metals, transport, and storage concerns. You even get the bonus of getting paid a small yield, allowing you to increase your wealth over time instead of having inflation slowly strip away your buying power.
Every fiat currency in history generally fails after it is decoupled from a gold or silver standard. This is because politicians find it easier and more politically convenient to create new money than raise taxes. As you can see below fiat currencies have periods of stability and periods of rapid devaluation. Once people lose faith in the ability of a currency to hold it’s value they often try to rapidly get rid of the currency because they know it’s value will fall quickly. If this gets out of control it can lead to hyperinflation.
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Hyperinflation. While I don't suspect that the US will go through a Venezuelan style hyperinflation, one must remember that we had high inflation a few decades ago. In the late 1970s into the early 1980s inflation ran up into the double digits. Paul Volcker, the Federal Reserve Chairman at that time “broke the back of inflation” by aggressively raising the interest rates. The prime lending rate hit a high of 21.5% in 1980. With $30 trillion dollars of debt the US doesn’t have the ability to aggressively raise interest rates to deal with inflation this time. The interest payments on $30 trillion dollars of US debt at 12.5% would equal $3.75 trillion, which is slightly more than the total amount of taxes the US government collected in 2020. For those living in countries with developing economies the threat of hyperinflation is a very real and ongoing threat, and could be a major selling point for Kinesis’ adoption there.
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There is a growing populist movement across the globe where people are turning to sound money again to store their wealth. Many people around the world are concerned that the massive printing of new money by governments in response to the pandemic will diminish their future purchasing power through inflation.
Gold and silver have been a traditional store of value over the past 5000+ years. However, over the past several decades, they have been commoditized and traded like iron, copper, wheat, and soybeans. In 2020 JP Morgan was fined $920 million for acting as a "criminal enterprise" due to illegally shorting and manipulating silver contracts. Eventually gold and silver will escape the control of the commodity trading departments of banks and speculative traders who have been able to control the price for the past few decades. The time to take a core position is before this break happens.
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“If you don’t hold it, you don’t own it”
This is the argument of the true hardcore gold and silver bugs. They do not want to have to trust anyone else or have any third party risk. I have not seen a cheaper way to accumulate physical gold and silver than through Kinesis. The caveat is that you just need to save up until you can afford to take delivery on 200 oz of silver or 100 grams of gold. Using Kinesis you can buy every week or month to lock in the best spot prices while you accumulate the required number of oz or grams to take delivery.
Kinesis is the most efficient way to acquire physical silver for non institutional investors.
Here is the math on buying physical silver:
When you read this the spot prices will probably be slightly higher or lower but the concepts remain the same. As of the first weekend of April 2021 the silver spot price was ~ $25/oz. The cheapest bars online at JMBullion or APMEX are going for about $30/oz. If you spend $1000 at one of these merchants you would end up with about 33.3 oz of silver delivered to you personally. However, at the spot price that 33.3 oz of silver is only worth $865.
If you are living in the UK (or many other countries) you had to pay a 20% value added tax (VAT) on top of the premium. In that case your $1000 only buys you 27.7 oz of silver, worth just $692 at the spot prices.
If this community wants to most efficiently squeeze the silver supply, COMEX and bullion banks we need to get the most bang for our buck. To borrow from TheHappyHawaiian’s example, buying gold and silver in small retail lots is like buying hamburgers to squeeze the cattle market: expensive and inefficient.
Buying silver on Kinesis your $1000 dollars buys $995.50 silver or 39.8 oz silver. Should you want to take delivery and remove any counterparty risk you would pay ~ 8% on a delivery, shipping and insurance for 200 oz.
Using the $1000 example and an 8% Kinesis premium over spot for physical silver delivery your thousand dollars could buy $922 oz of physical silver or 36.9 oz. Buying your silver from Kinesis lets you undercut the bullion dealers and buy directly from the pool of used commoditized institutional large format silver bars. The bars may not be brand new or shiny but it’s hard to beat this price on a per oz basis.
What about the PSLV? There is another way to purchase large amounts of silver without being undercut by hefty fees: the Sprott Physical Silver Trust (PSLV) ETF. However most people (myself included) reading this will never be able to take the minimum delivery of 10,000 oz of silver from PSLV. This would cost over $250,000 right now. Most readers of this document will understand the inferior synthetic/papederivative contract nature of the SLV ETF and I won’t dive into this topic further. The blockchain system Kinesis uses will ensure that every bar of silver and gold in the vaults are directly linked in a 1:1 ratio to the owner of that asset.
I think that many individual investors will be able to accumulate and buy silver on Kinesis, then they can take physical delivery once they reach 200 oz of silver. Kinesis offers an advanced way to stack more ounces at the lowest “commoditized” silver prices. This allows Wallstreetsilver members to be most effective with their purchases while continuing to drain the physical silver from the COMEX, LBMA, and the bullion banks.
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A few thoughts on crypto:
Kinesis will appeal and help form a bridge from the physical precious metals to the cryptocurrency community. Cryptocurrencies have seen an explosive rise in popularity over the past decade. Would you like to have a crypto exchange where you can easily convert crypto into a much less volatile money like gold and silver? Bitcoin has been notorious for huge run ups in price followed by face melting crashes. The Kinesis platform allows you to easily move between bitcoin, ethereum, gold, and silver. This can help hedge your crypto portfolio during the next major crash and provide you buying power when the prices stabilize and cryptos are undervalued. As a unified group, the crypto and precious metals communities could join forces and be extremely powerful over the next decade. Both groups have similar goals.
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Concluding thoughts
Let's get some discussion going on this! What are your reactions and thoughts?
Let's hear the good and bad. Please attack my thesis on why this could be a good investment.
If you have never used any sort of block chain application before this will seem like a very strange world at first. This took me a few days to fully wrap my brain around what they are trying to do here. I would love to hear your personal experiences of using Kinesis.
-Dave “TheGoldenSpeculator”
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Good videos and articles to learn from:
Watch the Kinesis intro videos first:
https://www.youtube.com/watch?v=hFxfHQS_aJU
Review:
https://www.youtube.com/watch?v=AIJTr_Gwba8
2nd Review:
https://www.youtube.com/watch?v=KKpPf79ZoTk
CEO and other execs talk about roadmap for 2021:
https://www.youtube.com/watch?v=yRBhkftfOW4
Kinesis CEO chats with Wallstreetsilver crew:
https://www.youtube.com/watch?v=QZhTt2pfSVU
For more information on Kinesis yields:
https://kinesis.money/yields/
How to mint KVT guide:
https://www.reddit.com/Wallstreetsilvecomments/llb8fy/mint_cycling_for_dummies_and_nondummies_ie/
Process of converting Kinesis silver to physical silver delivered to your home:
https://www.reddit.com/Wallstreetsilvecomments/m0ofk7/the_cheapest_source_of_physical_silver_available/
Kinesis blueprint/white paper:
https://kinesis.money/resources/kinesis-blueprint-en.pdf
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If you like what you learn after doing further research and want to sign up for Kinesis, please consider using my referral code:
https://kms.kinesis.money/signup?referrer=KM13495120
KVT offer (while the public minting offer is still available.) Use referral code “theGoldenSpeculator” if you’re buying KVTs and want to help me out by compiling and writing this research document.
https://forms.gle/FCZL3MiuCzJ1vz6G7
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Disclaimer: I don’t work for Kinesis or have any special ties to them. I found out about them a little over 3 weeks ago and started spending a significant amount of time doing research. I have already bought some KVTs from Citizens for Sound Money. I’m not a licensed financial broker or advisor and don’t want any of this DD or research to be construed as financial advice. Please do your own research and due diligence. I have no formal economic or financial education, I’m just an ER doctor who has been buying physical silver, gold and precious metals mining stocks since 2016.
I personally think that we are in the 2nd or 3rd inning of a major bull market in gold and silver. I think that this bull market in silver could be significantly amplified by a loss of faith in fiat currencies due to unrestrained money printing. I’m an entrepreneur at heart and wanted to share this with the rest of the community so that you have the ability to become an early adopter of Kinesis as well.
A special thank you to Jim Forsythe (u/Forsytjr2), Uchiki (on Telegram Kinesis discussion), Jim B (u/oblongflight), Jesse B, Steven H (u/PreciousMetalFriend), and Garrett M (u/garrettthemac) for helping with the many edits on this document. Thanks to Jim and Rhyno for minting me some KVTs through Citizens for Sound Money.

Kinesis Monetary System is positioning itself to be one of the most revolutionary monetary systems in the history of the world. This company blossomed out of the Allocated Bullion Exchange, an Australia based gold and silver physical bullion storage company founded in 2011. Kinesis combines the power of blockchain with physical gold and silver bullion, creating a potential alternative to long held fiat currencies such as the dollar, euro, pound and yen. If Kinesis is successful, early purchase of Kinesis Velocity Tokens could be comparable to buying Google or Facebook stock in their first few years.
The premise is this: An investor can exchange cash or crypto currency for physical gold or silver and have it stored in Kinesis’ privately allocated vaults in New York, London, Sydney, Hong Kong, Singapore, Dubai, Lichtenstein or Zurich. The investor then has the ability to store, spend or transfer gold or silver to other Kinesis investors (members). Each transaction is recorded using the blockchain as a public ledger, thus keeping track of who actually owns the physical gold and silver in the vaults. The Kinesis vaults are audited on a semi annually basis by an independent auditing service that has been in business for over 100 years. The Kinesis exchange therefore provides a digital currency, backed by precious metals, that investors and consumers will find is very liquid, secure, and in units that work in everyday transactions.
Investors in Kinesis also have the ability to withdraw their physical gold and silver and have it shipped directly to their home. The minimum withdrawal is 200 oz silver or 100 grams of gold. This is at very competitive prices (for example, one user redeemed 200 oz silver for about 8% over the spot price including shipping, withdrawal fees, insurance, delivered to his door.) Those following the silver market these past few months will realize that premiums have recently been as high as 30% on physical silver. Online bullion dealers are currently selling 100 oz silver bars for a 15-20% premium over the spot price. This ability to acquire physical silver or gold at a discount will likely catch on with people who want to accumulate the precious metals.
An exciting thing about this system is that it rewards users for keeping, using, and transferring gold and silver within the system. The fee on each transfer is 0.45%, about half of which will be redistributed to all the users of the platform. So instead of paying a vault company to store your gold or silver Kinesis will pay the user. The other half of the fee is split between large partners and overheads (storage, insurance, company costs, etc.). The Partner yield is particularly important in motivating partners to encourage usage among their user bases.
Kinesis currently has a public private partnership with the post office of Indonesia. The Post office plans to start paying their employees in Kinesis gold (KAU) and to use the Kinesis system as their primary bank. At this time, it is estimated that two thirds of Indonesians don't have a bank account or are under banked). Kinesis investors believe a system like this can provide value to individuals and economies which have limited access to traditional banking institutions.
People who live in advanced economies should be concerned that their governments are printing trillions of dollars in aid and stimulus (again and again!). Developing economies often have unstable local currencies and their citizens may not want to store or save money in their local currency due to potential for rapid devaluation. Venezuela, Turkey, and Lebanon have all been in the news recently due to loss of faith in their currency.
Want to have the ability to spend your gold, silver or cryptocurrencies? Kinesis has rolled out a physical debit card with a limit of $20,000 in the US. Later this year the card should also be available in the UK and Europe. They also have a virtual Visa debit card for worldwide use with a modest limit of $500 dollars.
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Potential major markets I predict they could break into, disrupt, and take a major dominant market share over the next decade:
1. Physical gold and silver bullion storage. Currently it costs about 0.5 to 2% annually to store your bullion in a vault. This is the primary disadvantage to owning physical gold and silver, it pays no yield and costs money to store large quantities. With Kinesis you can earn a small yield on your gold and silver which will be competitive in a world of near zero to negatively yielding bonds. There is no fractional/derivative aspect like the COMEX or unallocated bullion dealers.
Each gram of gold or ounce of silver is legally titled and held by a single person on the blockchain. A token is not created in the system until they buy and store the metal in the Kinesis vaults. The tokens are easily divisible into smaller fractions similar to bitcoin. This plus the tight trading spreads on the gold and silver in the Kinesis system make them viable to be used as alternative currencies.
2. International money transferemittances. Kinesis Money charges a flat 0.45% fee to transfer your digital gold and silver to anyone in another country with an account. This would be an ideal system for international workers from less affluent countries looking to send money back home to their families. No forex fees. The transfer happens immediately. They report their system can handle ~3000 transactions per second so there is a significant ability to scale.
Typical Western Union or Paypal international transfer fees are about 5% plus up to 6% forex conversion and another 2-3% if you paid via credit card.
The yearly remittance transfers across the globe are quite substantial.
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3. Credit card processors. Visa, Mastercard, AmEx and Discovery. The way their business model works is that they charge the business 1.4-3.5% of your total every time you use a credit card machine. Businesses eat this cost so it is not passed directly on to the consumer, but consumers pay this via higher prices.
The way the Kinesis Visa card currently works is that you sell some KAU/KAG and "top up" your card with money. Doing this on the Kinesis exchange will cost you 0.22%. Visa is likely still charging something as well, but paid by the merchant.
The goal is to get merchants to start transacting directly via KAU/KAG transfers. In that case, instead of paying 1.4-3.5% to the credit card companies, it's 0.45% which could be huge savings to merchants doing a high volume of credit card transactions. This means that merchants can save money relative to Visa, Paypal and other credit and online money transfer services. Kinesis offers businesses the ability to partner with them and earn a return on all of the transactions done through their system.
4. Banking. Indonesia has about 270 million people. Indonesia has a young population and it is estimated that two thirds do not have a bank account or have very limited banking access. Now if you have a smartphone you can use Kinesis as your banking system. Kinesis is currently launching a public private partnership with the government of Indonesia to use as the main payment system for the entire postal service in Indonesia. They are building a gold and silver vault in Jakarta to service the country's needs. Kinesis is reportedly currently in talks with other countries as well. I estimate that there are at least a billion people worldwide that don't have a formal bank account but do have a smartphone.
5. Bring cryptocurrency users into the gold and silver markets. Easily convert some of your crypto profits into a more stable, less volatile asset for diversification. It is quick and seamless to send your cryptocurrency to your Kinesis wallet. You can also buy, sell, send, receive, and store Bitcoin, Ethereum, and USD tether. Kinesis management reports they are working to bring more cryptocurrencies to the Kinesis exchange.
6. Increasing investment demand for precious metals. Most people have no allocation to gold or silver in their personal investments. The average US investor only has about 0.5% of their total investments in gold and silver. If this increases to a modest 5% that would be a 10x increase in demand for the metals.
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7. Partnerships with large institutions or investment funds. Kinesis states that they can tailor solutions for multinationals, investment banks, brokers, pension funds, asset managers, trading firms, and precious metals refiners and traders. They are partnered with Deutsche Börse, a European asset trading and clearing platform. This ability to partner with large groups opens the potential for exponential growth in precious metal trading on the platform. The targeted institutional partners for Kinesis are listed below:
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8. Direct competition with modern central banks. Are you concerned about the massive money printing the Fed and our government is currently doing? Are you concerned about inflation and the erosion of purchasing power of the dollar?
US M1 and M2 money supply:
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Stimulus money printed in the past year: (not including the new $3-4 Trillion dollar infrastructure bill that's getting drafted now or the 2nd stimulus bill of 2021 that’s being proposed by the current US administration). It's really easy to make a few trillion dollars with the touch of a mouse these days. Free money for everyone!
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Gold is mined at a stable 1.5-2% per year for centuries. Exceptions were in the California and Alaskan gold rushes when large amounts were found in a short period of time. I follow the mining markets very closely and there are no major discoveries in the pipeline. It usually takes a decade or more to bring a large mine into production so even if the largest discovery ever was found next week it wouldn't have any immediate impact. Gold has been valued across every nation equally and has been for the past 5000+ years. When inflation hits from all this money printing many people will naturally move into gold or silver.
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Potential problems and hurdles that Kinesis needs to overcome:
Being shut down or blocked in a certain country by some sort of regulatory agency such as the SEC, FINRA or other international counterparts. The company says they are being very careful and trying to comply and partner with all the regulations in this area. They are based in the Cayman Islands and Lichtenstein for the very strong protection that these countries offer in terms of banking and personal property laws. The development teams are located in Australia, Europe, Latin and South America.
There have been efforts at the state and federal levels over the years to make gold and silver true currencies again (i.e. remove any taxation of gold or silver in the US.) Citizens for Sound Money is a nonprofit group that is working to help advance and advocate for using sound money like gold and silver again. They will be working at a national political level in the US to help protect and advance this cause which will in turn help support Kinesis.
Another potential vulnerability for Kinesis is competition from another similar platform, although I think this is not likely to affect them in the near term. They are currently the leader in this new industry and I think that they have a serious competitive advantage over anyone else because they already control a global precious metals bullion storage business with vaults in multiple countries and continents. There have been multiple gold linked cryptocurrencies but they don’t have the full suite of options that Kinesis offers. They look very rudimentary compared to the system Kinesis is using.
KAU and KAG do not currently trade outside the Kinesis exchange, but will be integrated into other crypto exchanges eventually. I suspect that people who want to own bitcoin, and other cryptocurrencies in addition to gold and silver would be very at home on the Kinesis platform. I’ve sent bitcoin over from my Coinbase app a few times and it arrived in 20-30 min. You can then immediately convert that to silver (KAG) or gold (KAU). I found this to be the easiest and fastest way to fund my account. (Note: Coinbase made me wait 6 days before transferring new crypto deposits out of their system.)
The ability to internationally wire money into the Kinesis system is currently slow and clunky and will need to be optimized by the platform (compared to sending a domestic wire transfer). I think that this needs to be optimized if they want to increase user participation and rapid onboarding. The ACH transfer system is another option. The rollout of integrated banking should make depositing simpler as it happens on a regional basis. Expect a $10 wire fee plus anything that your bank will also charge to send a wire in.
They will need to have a strong sales and promotions team to help drive the adoption of the platform going forward since this is such a radical idea for many people. The educational videos they have produced are high quality and help make this concept more understandable, but the concept is still very niche. I think helping people to understand and trust the platform and what’s going on behind the scenes will represent one of their greatest challenges for broad world world adoption. Hopefully this research helps you to do that personally.
Overall the app and website need a bit more polishing but work pretty well. They are still releasing new features and continue to improve the app and desktop experience. The Kinesis support team is responsive and generally helpful with any issues that arise.
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Kinesis allows you to store gold and silver with no cost in their allocated, insured vaults. How does the company make money?
With every transaction in the system there is the 0.45% fee that is charged by Kinesis. For Exchange trades, the fee is 0.22%. These fees go into what they call the “master fee pool”. Kinesis will take 17.5% of this fee to keep the business running, vault storage, blockchain technology, tech support, etc.
Kinesis Commercial Center will be an online aggregator of commercial goods and service providers who use Kinesis currency suite as their payment method (thus bypassing the Visa, Mastercard, PayPal and other payment processors charges.) Kinesis will take a 20% fee of the KCC commissions, KVT holders will continue to also get a 20% return.
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What makes this system so exciting for people who already want to buy, hold or trade precious metals is that the other 52.5% is distributed back to the users and holders in the system. They use a unique yield system that will pay you to use Kinesis.
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How do you make money while using Kinesis?
Minters Yield: 5% of master fee pool
This is for people who bring money into the Kinesis ecosystem, a process called minting.
Depositors yield: 5% of master fee pool
Want to get paid forever on the initial amount of money or crypto you deposited and turned into silver or gold in the Kinesis system? You have 2 weeks to lock in your depositors yield which will be paid in perpetuity.
Referrer’s yield: 7.5% of the fee's generated by those you directly refer
Have a group of friends and family who you think would like to use real money to transact with? Kinesis has a great referral system where you will receive a percentage of the fees that your referrals generate. This is not a multilevel marketing system as it only applies to the people you directly referred into the system. This makes it much more of a flat referral model.
Holders Yield: 15% of master fee pool
Those who hold their gold or silver in the Kinesis vaults will receive 15% of the money from the master fee pool. Your personal share of this is calculated by taking your percentage of how much gold and silver divided by the total amount that is stored. This way your gold and silver earns a dividend instead of you having to pay the typical storage fee.
KVT yield: 20% of master fee pool
So how does one best profit from this should Kinesis become a major success? From my research the best way is to acquire KVT (Kinesis Velocity Tokens). The KVTs allow you to participate in the company’s success by receiving a dividend of gold or silver. They essentially function similarly to a non voting share of stock that will pay a perpetual monthly dividend based on the amount of silver and gold that gets traded across the platform. Kinesis started the company by selling KVTs for $1000 each raising an initial $200 million in start-up capital.
There are only 300,000 KVT tokens that were ever created making them fixed like bitcoin. You will will receive your # of KVTs/300,000 x .20 of the master fee pool. If Kinesis is able to capture 1% of the total gold investment market over the next few years a single KVT could payout thousands of dollars in dividend yields each year.
A current issue is that Kinesis themselves can't currently directly sell KVTs to US investors. Kinesis doesn't want to get into trouble with the SEC as KVTs are similar to an initial stock offering. When Kinesis starts paying the dividend yield on KVTs (estimated to be late Q2 to Q3 2021) they will become freely tradable and available to directly purchase by US investors.
Kinesis is currently incentivizing trading on the platform by offering a free KVT when you mint $50K worth of gold or silver (i.e. buy $50K once or trade $5K 10 times). They started with 10,000 KVTs last July and have 3300 left in the system as of mid March 2021. The offer will end when all the KVTs have been claimed by the minting process.
In order to get KVTs into the hands of smaller investors who are non accredited and don’t have the ability to trade $50K, there is a current offer by the non profit group called Citizens For Sound Money. They will sell you one KVT for $750 with additional KVTs available for $1000. This is a grassroots effort to bring new members into the system. I bought some through the group and can personally vouch for them. You can also mint your own KVTs while they last during the PMO offer, however this requires time, effort and skill, capital, and if in the US, also requires you to be accredited investor.
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Why you should start using Kinesis today:
Using Kinesis money will allow you to personally use a currency not controlled by central banks or governments. You will be able to keep your personal wealth safe from major political turmoil, natural/manmade disasters, or any other unpredictable economic volatility that may occur in your home country. Holding KAU or KAG will give you the ability to be able to travel to another country and have wealth stored there and waiting.
Getting in now allows you to become an early adopter of the fusion of the future of value transfer (blockchain) and the most trusted money supply across borders and continents for the past 5000+ years. The Kinesis platform removes the traditional problems of using gold and silver as money, including: poor divisibility of physical metals, transport, and storage concerns. You even get the bonus of getting paid a small yield, allowing you to increase your wealth over time instead of having inflation slowly strip away your buying power.
Every fiat currency in history generally fails after it is decoupled from a gold or silver standard. This is because politicians find it easier and more politically convenient to create new money than raise taxes. As you can see below fiat currencies have periods of stability and periods of rapid devaluation. Once people lose faith in the ability of a currency to hold it’s value they often try to rapidly get rid of the currency because they know it’s value will fall quickly. If this gets out of control it can lead to hyperinflation.
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Hyperinflation. While I don't suspect that the US will go through a Venezuelan style hyperinflation, one must remember that we had high inflation a few decades ago. In the late 1970s into the early 1980s inflation ran up into the double digits. Paul Volcker, the Federal Reserve Chairman at that time “broke the back of inflation” by aggressively raising the interest rates. The prime lending rate hit a high of 21.5% in 1980. With $30 trillion dollars of debt the US doesn’t have the ability to aggressively raise interest rates to deal with inflation this time. The interest payments on $30 trillion dollars of US debt at 12.5% would equal $3.75 trillion, which is slightly more than the total amount of taxes the US government collected in 2020. For those living in countries with developing economies the threat of hyperinflation is a very real and ongoing threat, and could be a major selling point for Kinesis’ adoption there.
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There is a growing populist movement across the globe where people are turning to sound money again to store their wealth. Many people around the world are concerned that the massive printing of new money by governments in response to the pandemic will diminish their future purchasing power through inflation.
Gold and silver have been a traditional store of value over the past 5000+ years. However, over the past several decades, they have been commoditized and traded like iron, copper, wheat, and soybeans. In 2020 JP Morgan was fined $920 million for acting as a "criminal enterprise" due to illegally shorting and manipulating silver contracts. Eventually gold and silver will escape the control of the commodity trading departments of banks and speculative traders who have been able to control the price for the past few decades. The time to take a core position is before this break happens.
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“If you don’t hold it, you don’t own it”
This is the argument of the true hardcore gold and silver bugs. They do not want to have to trust anyone else or have any third party risk. I have not seen a cheaper way to accumulate physical gold and silver than through Kinesis. The caveat is that you just need to save up until you can afford to take delivery on 200 oz of silver or 100 grams of gold. Using Kinesis you can buy every week or month to lock in the best spot prices while you accumulate the required number of oz or grams to take delivery.
Kinesis is the most efficient way to acquire physical silver for non institutional investors.
Here is the math on buying physical silver (math likely very similar with gold):
When you read this the spot prices will probably be slightly higher or lower but the concepts remain the same. As of the first weekend of April 2021 the silver spot price was ~ $25/oz. The cheapest bars online at JMBullion or APMEX are going for about $30/oz. If you spend $1000 at one of these merchants you would end up with about 33.3 oz of silver delivered to you personally. However, at the spot price that 33.3 oz of silver is only worth $865.
If you are living in the UK (or many other countries) you had to pay a 20% value added tax (VAT) on top of the premium. In that case your $1000 only buys you 27.7 oz of silver, worth just $692 at the spot prices.
If this community wants to most efficiently squeeze the silver supply, COMEX and bullion banks we need to get the most bang for our buck. To borrow from TheHappyHawaiian’s example, buying gold and silver in small retail lots is like buying hamburgers to squeeze the cattle market: expensive and inefficient.
Buying silver on Kinesis your $1000 dollars buys $995.50 silver or 39.8 oz silver. Should you want to take delivery and remove any counterparty risk you would pay ~ 8% on a delivery, shipping and insurance for 200 oz.
Using the $1000 example and an 8% Kinesis premium over spot for physical silver delivery your thousand dollars could buy $922 oz of physical silver or 36.9 oz. Buying your silver from Kinesis lets you undercut the bullion dealers and buy directly from the pool of used commoditized institutional large format silver bars. The bars may not be brand new or shiny but it’s hard to beat this price on a per oz basis.
What about the PSLV? There is another way to purchase large amounts of silver without being undercut by hefty fees: the Sprott Physical Silver Trust (PSLV) ETF. However most people (myself included) reading this will never be able to take the minimum delivery of 10,000 oz of silver from PSLV. This would cost over $250,000 right now. Most readers of this document will understand the inferior synthetic/papederivative contract nature of the SLV ETF and I won’t dive into this topic further. The blockchain system Kinesis uses will ensure that every bar of silver and gold in the vaults are directly linked in a 1:1 ratio to the owner of that asset.
I think that many individual investors will be able to accumulate and buy silver on Kinesis, then they can take physical delivery once they reach 200 oz of silver. Kinesis offers an advanced way to stack more ounces at the lowest “commoditized” silver prices. This allows Wallstreetgold members to be most effective with their purchases while continuing to drain the physical silver or gold from the COMEX, LBMA, and the bullion banks.
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A few thoughts on crypto:
Kinesis will appeal and help form a bridge from the physical precious metals to the cryptocurrency community. Cryptocurrencies have seen an explosive rise in popularity over the past decade. Would you like to have a crypto exchange where you can easily convert crypto into a much less volatile money like gold and silver? Bitcoin has been notorious for huge run ups in price followed by face melting crashes. The Kinesis platform allows you to easily move between bitcoin, ethereum, gold, and silver. This can help hedge your crypto portfolio during the next major crash and provide you buying power when the prices stabilize and cryptos are undervalued. As a unified group, the crypto and precious metals communities could join forces and be extremely powerful over the next decade. Both groups have similar goals.
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Concluding thoughts
Let's get some discussion going on this! What are your reactions and thoughts?
Let's hear the good and bad. Please attack my thesis on why this could be a good investment.
If you have never used any sort of block chain application before this will seem like a very strange world at first. This took me a few days to fully wrap my brain around what they are trying to do here. I would love to hear your personal experiences of using Kinesis.
-Dave “TheGoldenSpeculator”
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Good videos and articles to learn from:
Watch the Kinesis intro videos first:
https://www.youtube.com/watch?v=hFxfHQS_aJU
Review:
https://www.youtube.com/watch?v=AIJTr_Gwba8
2nd Review:
https://www.youtube.com/watch?v=KKpPf79ZoTk
CEO and other execs talk about roadmap for 2021:
https://www.youtube.com/watch?v=yRBhkftfOW4
Kinesis CEO chats with Wallstreetsilver crew:
https://www.youtube.com/watch?v=QZhTt2pfSVU
For more information on Kinesis yields:
https://kinesis.money/yields/
How to mint KVT guide:
https://www.reddit.com/Wallstreetsilvecomments/llb8fy/mint_cycling_for_dummies_and_nondummies_ie/
Process of converting Kinesis silver to physical silver delivered to your home:
https://www.reddit.com/Wallstreetsilvecomments/m0ofk7/the_cheapest_source_of_physical_silver_available/
Kinesis blueprint/white paper:
https://kinesis.money/resources/kinesis-blueprint-en.pdf
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If you like what you learn after doing further research and want to sign up for Kinesis, please consider using my referral code:
https://kms.kinesis.money/signup?referrer=KM13495120
KVT offer (while the public minting offer is still available.) Use referral code “theGoldenSpeculator” if you’re buying KVTs and want to help me out by compiling and writing this research document.
https://forms.gle/FCZL3MiuCzJ1vz6G7
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Disclaimer: I don’t work for Kinesis or have any special ties to them. I found out about them a little over 3 weeks ago and started spending a significant amount of time doing research. I have already bought some KVTs from Citizens for Sound Money. I’m not a licensed financial broker or advisor and don’t want any of this DD or research to be construed as financial advice. Please do your own research and due diligence. I have no formal economic or financial education, I’m just an ER doctor who has been buying physical silver, gold and precious metals mining stocks since 2016.
I personally think that we are in the 2nd or 3rd inning of a major bull market in gold and silver. I think that this bull market in silver could be significantly amplified by a loss of faith in fiat currencies due to unrestrained money printing. I’m an entrepreneur at heart and wanted to share this with the rest of the community so that you have the ability to become an early adopter of Kinesis as well.
A special thank you to Jim Forsythe (u/Forsytjr2), Uchiki (on Telegram Kinesis discussion), Jim B (u/oblongflight), Jesse B, Steven H (u/PreciousMetalFriend), and Garrett M (u/garrettthemac) for helping with the many edits on this document. Thanks to Jim and Rhyno for minting me some KVTs through Citizens for Sound Money.

Kinesis Monetary System is positioning itself to be one of the most revolutionary monetary systems in the history of the world. This company blossomed out of the Allocated Bullion Exchange, an Australia based gold and silver physical bullion storage company founded in 2011. Kinesis combines the power of blockchain with physical gold and silver bullion, creating a potential alternative to long held fiat currencies such as the dollar, euro, pound and yen. If Kinesis is successful, early purchase of Kinesis Velocity Tokens could be comparable to buying Google or Facebook stock in their first few years.
The premise is this: An investor can exchange cash or crypto currency for physical gold or silver and have it stored in Kinesis’ privately allocated vaults in New York, London, Sydney, Hong Kong, Singapore, Dubai, Lichtenstein or Zurich. The investor then has the ability to store, spend or transfer gold or silver to other Kinesis investors (members). Each transaction is recorded using the blockchain as a public ledger, thus keeping track of who actually owns the physical gold and silver in the vaults. The Kinesis vaults are audited on a semi annually basis by an independent auditing service that has been in business for over 100 years. The Kinesis exchange therefore provides a digital currency, backed by precious metals, that investors and consumers will find is very liquid, secure, and in units that work in everyday transactions.
Investors in Kinesis also have the ability to withdraw their physical gold and silver and have it shipped directly to their home. The minimum withdrawal is 200 oz silver or 100 grams of gold. This is at very competitive prices (for example, one user redeemed 200 oz silver for about 8% over the spot price including shipping, withdrawal fees, insurance, delivered to his door.) Those following the silver market these past few months will realize that premiums have recently been as high as 30% on physical silver. Online bullion dealers are currently selling 100 oz silver bars for a 15-20% premium over the spot price. This ability to acquire physical silver or gold at a discount will likely catch on with people who want to accumulate the precious metals.
An exciting thing about this system is that it rewards users for keeping, using, and transferring gold and silver within the system. The fee on each transfer is 0.45%, about half of which will be redistributed to all the users of the platform. So instead of paying a vault company to store your gold or silver Kinesis will pay the user. The other half of the fee is split between large partners and overheads (storage, insurance, company costs, etc.). The Partner yield is particularly important in motivating partners to encourage usage among their user bases.
Kinesis currently has a public private partnership with the post office of Indonesia. The Post office plans to start paying their employees in Kinesis gold (KAU) and to use the Kinesis system as their primary bank. At this time, it is estimated that two thirds of Indonesians don't have a bank account or are under banked). Kinesis investors believe a system like this can provide value to individuals and economies which have limited access to traditional banking institutions.
People who live in advanced economies should be concerned that their governments are printing trillions of dollars in aid and stimulus (again and again!). Developing economies often have unstable local currencies and their citizens may not want to store or save money in their local currency due to potential for rapid devaluation. Venezuela, Turkey, and Lebanon have all been in the news recently due to loss of faith in their currency.
Want to have the ability to spend your gold, silver or cryptocurrencies? Kinesis has rolled out a physical debit card with a limit of $20,000 in the US. Later this year the card should also be available in the UK and Europe. They also have a virtual Visa debit card for worldwide use with a modest limit of $500 dollars.
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Potential major markets I predict they could break into, disrupt, and take a major dominant market share over the next decade:
1. Physical gold and silver bullion storage. Currently it costs about 0.5 to 2% annually to store your bullion in a vault. This is the primary disadvantage to owning physical gold and silver, it pays no yield and costs money to store large quantities. With Kinesis you can earn a small yield on your gold and silver which will be competitive in a world of near zero to negatively yielding bonds. There is no fractional/derivative aspect like the COMEX or unallocated bullion dealers.
Each gram of gold or ounce of silver is legally titled and held by a single person on the blockchain. A token is not created in the system until they buy and store the metal in the Kinesis vaults. The tokens are easily divisible into smaller fractions similar to bitcoin. This plus the tight trading spreads on the gold and silver in the Kinesis system make them viable to be used as alternative currencies.
2. International money transferemittances. Kinesis Money charges a flat 0.45% fee to transfer your digital gold and silver to anyone in another country with an account. This would be an ideal system for international workers from less affluent countries looking to send money back home to their families. No forex fees. The transfer happens immediately. They report their system can handle ~3000 transactions per second so there is a significant ability to scale.
Typical Western Union or Paypal international transfer fees are about 5% plus up to 6% forex conversion and another 2-3% if you paid via credit card.
The yearly remittance transfers across the globe are quite substantial.
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3. Credit card processors. Visa, Mastercard, AmEx and Discovery. The way their business model works is that they charge the business 1.4-3.5% of your total every time you use a credit card machine. Businesses eat this cost so it is not passed directly on to the consumer, but consumers pay this via higher prices.
The way the Kinesis Visa card currently works is that you sell some KAU/KAG and "top up" your card with money. Doing this on the Kinesis exchange will cost you 0.22%. Visa is likely still charging something as well, but paid by the merchant.
The goal is to get merchants to start transacting directly via KAU/KAG transfers. In that case, instead of paying 1.4-3.5% to the credit card companies, it's 0.45% which could be huge savings to merchants doing a high volume of credit card transactions. This means that merchants can save money relative to Visa, Paypal and other credit and online money transfer services. Kinesis offers businesses the ability to partner with them and earn a return on all of the transactions done through their system.
4. Banking. Indonesia has about 270 million people. Indonesia has a young population and it is estimated that two thirds do not have a bank account or have very limited banking access. Now if you have a smartphone you can use Kinesis as your banking system. Kinesis is currently launching a public private partnership with the government of Indonesia to use as the main payment system for the entire postal service in Indonesia. They are building a gold and silver vault in Jakarta to service the country's needs. Kinesis is reportedly currently in talks with other countries as well. I estimate that there are at least a billion people worldwide that don't have a formal bank account but do have a smartphone.
5. Bring cryptocurrency users into the gold and silver markets. Easily convert some of your crypto profits into a more stable, less volatile asset for diversification. It is quick and seamless to send your cryptocurrency to your Kinesis wallet. You can also buy, sell, send, receive, and store Bitcoin, Ethereum, and USD tether. Kinesis management reports they are working to bring more cryptocurrencies to the Kinesis exchange.
6. Increasing investment demand for precious metals. Most people have no allocation to gold or silver in their personal investments. The average US investor only has about 0.5% of their total investments in gold and silver. If this increases to a modest 5% that would be a 10x increase in demand for the metals.
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7. Partnerships with large institutions or investment funds. Kinesis states that they can tailor solutions for multinationals, investment banks, brokers, pension funds, asset managers, trading firms, and precious metals refiners and traders. They are partnered with Deutsche Börse, a European asset trading and clearing platform. This ability to partner with large groups opens the potential for exponential growth in precious metal trading on the platform. The targeted institutional partners for Kinesis are listed below:
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8. Direct competition with modern central banks. Are you concerned about the massive money printing the Fed and our government is currently doing? Are you concerned about inflation and the erosion of purchasing power of the dollar?
US M1 and M2 money supply:
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Stimulus money printed in the past year: (not including the new $3-4 Trillion dollar infrastructure bill that's getting drafted now or the 2nd stimulus bill of 2021 that’s being proposed by the current US administration). It's really easy to make a few trillion dollars with the touch of a mouse these days. Free money for everyone!
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Gold is mined at a stable 1.5-2% per year for centuries. Exceptions were in the California and Alaskan gold rushes when large amounts were found in a short period of time. I follow the mining markets very closely and there are no major discoveries in the pipeline. It usually takes a decade or more to bring a large mine into production so even if the largest discovery ever was found next week it wouldn't have any immediate impact. Gold has been valued across every nation equally and has been for the past 5000+ years. When inflation hits from all this money printing many people will naturally move into gold or silver.
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Potential problems and hurdles that Kinesis needs to overcome:
Being shut down or blocked in a certain country by some sort of regulatory agency such as the SEC, FINRA or other international counterparts. The company says they are being very careful and trying to comply and partner with all the regulations in this area. They are based in the Cayman Islands and Lichtenstein for the very strong protection that these countries offer in terms of banking and personal property laws. The development teams are located in Australia, Europe, Latin and South America.
There have been efforts at the state and federal levels over the years to make gold and silver true currencies again (i.e. remove any taxation of gold or silver in the US.) Citizens for Sound Money is a nonprofit group that is working to help advance and advocate for using sound money like gold and silver again. They will be working at a national political level in the US to help protect and advance this cause which will in turn help support Kinesis.
Another potential vulnerability for Kinesis is competition from another similar platform, although I think this is not likely to affect them in the near term. They are currently the leader in this new industry and I think that they have a serious competitive advantage over anyone else because they already control a global precious metals bullion storage business with vaults in multiple countries and continents. There have been multiple gold linked cryptocurrencies but they don’t have the full suite of options that Kinesis offers. They look very rudimentary compared to the system Kinesis is using.
KAU and KAG do not currently trade outside the Kinesis exchange, but will be integrated into other crypto exchanges eventually. I suspect that people who want to own bitcoin, and other cryptocurrencies in addition to gold and silver would be very at home on the Kinesis platform. I’ve sent bitcoin over from my Coinbase app a few times and it arrived in 20-30 min. You can then immediately convert that to silver (KAG) or gold (KAU). I found this to be the easiest and fastest way to fund my account. (Note: Coinbase made me wait 6 days before transferring new crypto deposits out of their system.)
The ability to internationally wire money into the Kinesis system is currently slow and clunky and will need to be optimized by the platform (compared to sending a domestic wire transfer). I think that this needs to be optimized if they want to increase user participation and rapid onboarding. The ACH transfer system is another option. The rollout of integrated banking should make depositing simpler as it happens on a regional basis. Expect a $10 wire fee plus anything that your bank will also charge to send a wire in.
They will need to have a strong sales and promotions team to help drive the adoption of the platform going forward since this is such a radical idea for many people. The educational videos they have produced are high quality and help make this concept more understandable, but the concept is still very niche. I think helping people to understand and trust the platform and what’s going on behind the scenes will represent one of their greatest challenges for broad world world adoption. Hopefully this research helps you to do that personally.
Overall the app and website need a bit more polishing but work pretty well. They are still releasing new features and continue to improve the app and desktop experience. The Kinesis support team is responsive and generally helpful with any issues that arise.
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Kinesis allows you to store gold and silver with no cost in their allocated, insured vaults. How does the company make money?
With every transaction in the system there is the 0.45% fee that is charged by Kinesis. For Exchange trades, the fee is 0.22%. These fees go into what they call the “master fee pool”. Kinesis will take 17.5% of this fee to keep the business running, vault storage, blockchain technology, tech support, etc.
Kinesis Commercial Center will be an online aggregator of commercial goods and service providers who use Kinesis currency suite as their payment method (thus bypassing the Visa, Mastercard, PayPal and other payment processors charges.) Kinesis will take a 20% fee of the KCC commissions, KVT holders will continue to also get a 20% return.
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What makes this system so exciting for people who already want to buy, hold or trade precious metals is that the other 52.5% is distributed back to the users and holders in the system. They use a unique yield system that will pay you to use Kinesis.
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How do you make money while using Kinesis?
Minters Yield: 5% of master fee pool
This is for people who bring money into the Kinesis ecosystem, a process called minting.
Depositors yield: 5% of master fee pool
Want to get paid forever on the initial amount of money or crypto you deposited and turned into silver or gold in the Kinesis system? You have 2 weeks to lock in your depositors yield which will be paid in perpetuity.
Referrer’s yield: 7.5% of the fee's generated by those you directly refer
Have a group of friends and family who you think would like to use real money to transact with? Kinesis has a great referral system where you will receive a percentage of the fees that your referrals generate. This is not a multilevel marketing system as it only applies to the people you directly referred into the system. This makes it much more of a flat referral model.
Holders Yield: 15% of master fee pool
Those who hold their gold or silver in the Kinesis vaults will receive 15% of the money from the master fee pool. Your personal share of this is calculated by taking your percentage of how much gold and silver divided by the total amount that is stored. This way your gold and silver earns a dividend instead of you having to pay the typical storage fee.
KVT yield: 20% of master fee pool
So how does one best profit from this should Kinesis become a major success? From my research the best way is to acquire KVT (Kinesis Velocity Tokens). The KVTs allow you to participate in the company’s success by receiving a dividend of gold or silver. They essentially function similarly to a non voting share of stock that will pay a perpetual monthly dividend based on the amount of silver and gold that gets traded across the platform. Kinesis started the company by selling KVTs for $1000 each raising an initial $200 million in start-up capital.
There are only 300,000 KVT tokens that were ever created making them fixed like bitcoin. You will will receive your # of KVTs/300,000 x .20 of the master fee pool. If Kinesis is able to capture 1% of the total gold investment market over the next few years a single KVT could payout thousands of dollars in dividend yields each year.
A current issue is that Kinesis themselves can't currently directly sell KVTs to US investors. Kinesis doesn't want to get into trouble with the SEC as KVTs are similar to an initial stock offering. When Kinesis starts paying the dividend yield on KVTs (estimated to be late Q2 to Q3 2021) they will become freely tradable and available to directly purchase by US investors.
Kinesis is currently incentivizing trading on the platform by offering a free KVT when you mint $50K worth of gold or silver (i.e. buy $50K once or trade $5K 10 times). They started with 10,000 KVTs last July and have 3300 left in the system as of mid March 2021. The offer will end when all the KVTs have been claimed by the minting process.
In order to get KVTs into the hands of smaller investors who are non accredited and don’t have the ability to trade $50K, there is a current offer by the non profit group called Citizens For Sound Money. They will sell you one KVT for $750 with additional KVTs available for $1000. This is a grassroots effort to bring new members into the system. I bought some through the group and can personally vouch for them. You can also mint your own KVTs while they last during the PMO offer, however this requires time, effort and skill, capital, and if in the US, also requires you to be accredited investor.
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Why you should start using Kinesis today:
Using Kinesis money will allow you to personally use a currency not controlled by central banks or governments. You will be able to keep your personal wealth safe from major political turmoil, natural/manmade disasters, or any other unpredictable economic volatility that may occur in your home country. Holding KAU or KAG will give you the ability to be able to travel to another country and have wealth stored there and waiting.
Getting in now allows you to become an early adopter of the fusion of the future of value transfer (blockchain) and the most trusted money supply across borders and continents for the past 5000+ years. The Kinesis platform removes the traditional problems of using gold and silver as money, including: poor divisibility of physical metals, transport, and storage concerns. You even get the bonus of getting paid a small yield, allowing you to increase your wealth over time instead of having inflation slowly strip away your buying power.
Every fiat currency in history generally fails after it is decoupled from a gold or silver standard. This is because politicians find it easier and more politically convenient to create new money than raise taxes. As you can see below fiat currencies have periods of stability and periods of rapid devaluation. Once people lose faith in the ability of a currency to hold it’s value they often try to rapidly get rid of the currency because they know it’s value will fall quickly. If this gets out of control it can lead to hyperinflation.
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Hyperinflation. While I don't suspect that the US will go through a Venezuelan style hyperinflation, one must remember that we had high inflation a few decades ago. In the late 1970s into the early 1980s inflation ran up into the double digits. Paul Volcker, the Federal Reserve Chairman at that time “broke the back of inflation” by aggressively raising the interest rates. The prime lending rate hit a high of 21.5% in 1980. With $30 trillion dollars of debt the US doesn’t have the ability to aggressively raise interest rates to deal with inflation this time. The interest payments on $30 trillion dollars of US debt at 12.5% would equal $3.75 trillion, which is slightly more than the total amount of taxes the US government collected in 2020. For those living in countries with developing economies the threat of hyperinflation is a very real and ongoing threat, and could be a major selling point for Kinesis’ adoption there.
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There is a growing populist movement across the globe where people are turning to sound money again to store their wealth. Many people around the world are concerned that the massive printing of new money by governments in response to the pandemic will diminish their future purchasing power through inflation.
Gold and silver have been a traditional store of value over the past 5000+ years. However, over the past several decades, they have been commoditized and traded like iron, copper, wheat, and soybeans. In 2020 JP Morgan was fined $920 million for acting as a "criminal enterprise" due to illegally shorting and manipulating silver contracts. Eventually gold and silver will escape the control of the commodity trading departments of banks and speculative traders who have been able to control the price for the past few decades. The time to take a core position is before this break happens.
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“If you don’t hold it, you don’t own it”
This is the argument of the true hardcore gold and silver bugs. They do not want to have to trust anyone else or have any third party risk. I have not seen a cheaper way to accumulate physical gold and silver than through Kinesis. The caveat is that you just need to save up until you can afford to take delivery on 200 oz of silver or 100 grams of gold. Using Kinesis you can buy every week or month to lock in the best spot prices while you accumulate the required number of oz or grams to take delivery.
Kinesis is the most efficient way to acquire physical silver for non institutional investors.
Here is the math on buying physical silver:
When you read this the spot prices will probably be slightly higher or lower but the concepts remain the same. As of the first weekend of April 2021 the silver spot price was ~ $25/oz. The cheapest bars online at JMBullion or APMEX are going for about $30/oz. If you spend $1000 at one of these merchants you would end up with about 33.3 oz of silver delivered to you personally. However, at the spot price that 33.3 oz of silver is only worth $865.
If you are living in the UK (or many other countries) you had to pay a 20% value added tax (VAT) on top of the premium. In that case your $1000 only buys you 27.7 oz of silver, worth just $692 at the spot prices.
If this community wants to most efficiently squeeze the silver supply, COMEX and bullion banks we need to get the most bang for our buck. To borrow from TheHappyHawaiian’s example, buying gold and silver in small retail lots is like buying hamburgers to squeeze the cattle market: expensive and inefficient.
Buying silver on Kinesis your $1000 dollars buys $995.50 silver or 39.8 oz silver. Should you want to take delivery and remove any counterparty risk you would pay ~ 8% on a delivery, shipping and insurance for 200 oz.
Using the $1000 example and an 8% Kinesis premium over spot for physical silver delivery your thousand dollars could buy $922 oz of physical silver or 36.9 oz. Buying your silver from Kinesis lets you undercut the bullion dealers and buy directly from the pool of used commoditized institutional large format silver bars. The bars may not be brand new or shiny but it’s hard to beat this price on a per oz basis.
What about the PSLV? There is another way to purchase large amounts of silver without being undercut by hefty fees: the Sprott Physical Silver Trust (PSLV) ETF. However most people (myself included) reading this will never be able to take the minimum delivery of 10,000 oz of silver from PSLV. This would cost over $250,000 right now. Most readers of this document will understand the inferior synthetic/papederivative contract nature of the SLV ETF and I won’t dive into this topic further. The blockchain system Kinesis uses will ensure that every bar of silver and gold in the vaults are directly linked in a 1:1 ratio to the owner of that asset.
I think that many individual investors will be able to accumulate and buy silver on Kinesis, then they can take physical delivery once they reach 200 oz of silver. Kinesis offers an advanced way to stack more ounces at the lowest “commoditized” silver prices. This allows Wallstreetsilver members to be most effective with their purchases while continuing to drain the physical silver from the COMEX, LBMA, and the bullion banks.
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A few thoughts on crypto:
Kinesis will appeal and help form a bridge from the physical precious metals to the cryptocurrency community. Cryptocurrencies have seen an explosive rise in popularity over the past decade. Would you like to have a crypto exchange where you can easily convert crypto into a much less volatile money like gold and silver? Bitcoin has been notorious for huge run ups in price followed by face melting crashes. The Kinesis platform allows you to easily move between bitcoin, ethereum, gold, and silver. This can help hedge your crypto portfolio during the next major crash and provide you buying power when the prices stabilize and cryptos are undervalued. As a unified group, the crypto and precious metals communities could join forces and be extremely powerful over the next decade. Both groups have similar goals.
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Concluding thoughts
Let's get some discussion going on this! What are your reactions and thoughts?
Let's hear the good and bad. Please attack my thesis on why this could be a good investment.
If you have never used any sort of block chain application before this will seem like a very strange world at first. This took me a few days to fully wrap my brain around what they are trying to do here. I would love to hear your personal experiences of using Kinesis.
-Dave “TheGoldenSpeculator”
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Good videos and articles to learn from:
Watch the Kinesis intro videos first:
https://www.youtube.com/watch?v=hFxfHQS_aJU
Review:
https://www.youtube.com/watch?v=AIJTr_Gwba8
2nd Review:
https://www.youtube.com/watch?v=KKpPf79ZoTk
CEO and other execs talk about roadmap for 2021:
https://www.youtube.com/watch?v=yRBhkftfOW4
Kinesis CEO chats with Wallstreetsilver crew:
https://www.youtube.com/watch?v=QZhTt2pfSVU
For more information on Kinesis yields:
https://kinesis.money/yields/
How to mint KVT guide:
https://www.reddit.com/Wallstreetsilvecomments/llb8fy/mint_cycling_for_dummies_and_nondummies_ie/
Process of converting Kinesis silver to physical silver delivered to your home:
https://www.reddit.com/Wallstreetsilvecomments/m0ofk7/the_cheapest_source_of_physical_silver_available/
Kinesis blueprint/white paper:
https://kinesis.money/resources/kinesis-blueprint-en.pdf
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If you like what you learn after doing further research and want to sign up for Kinesis, please consider using my referral code:
https://kms.kinesis.money/signup?referrer=KM13495120
KVT offer (while the public minting offer is still available.) Use referral code “theGoldenSpeculator” if you’re buying KVTs and want to help me out by compiling and writing this research document.
https://forms.gle/FCZL3MiuCzJ1vz6G7
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Disclaimer: I don’t work for Kinesis or have any special ties to them. I found out about them a little over 3 weeks ago and started spending a significant amount of time doing research. I have already bought some KVTs from Citizens for Sound Money. I’m not a licensed financial broker or advisor and don’t want any of this DD or research to be construed as financial advice. Please do your own research and due diligence. I have no formal economic or financial education, I’m just an ER doctor who has been buying physical silver, gold and precious metals mining stocks since 2016.
I personally think that we are in the 2nd or 3rd inning of a major bull market in gold and silver. I think that this bull market in silver could be significantly amplified by a loss of faith in fiat currencies due to unrestrained money printing. I’m an entrepreneur at heart and wanted to share this with the rest of the community so that you have the ability to become an early adopter of Kinesis as well.
A special thank you to Jim Forsythe (u/Forsytjr2), Uchiki (on Telegram Kinesis discussion), Jim B (u/oblongflight), Jesse B, Steven H (u/PreciousMetalFriend), and Garrett M (u/garrettthemac) for helping with the many edits on this document. Thanks to Jim and Rhyno for minting me some KVTs through Citizens for Sound Money.