Recently, we featured articles on the efforts by economist Keith Weiner and the new gold payment system Glint to encourage people to use gold as money again. There is a bit of a trend in place now around the world as various initiatives move forward on that front.
Below we will list a few of the more high profile efforts underway and provide a brief update on where each one stands as of today. We will follow this over time to see if the trend continues and picks up momentum.
--------------------------------------------------------------------------------------------------------Goldmoney - Precious metals investing and payment system
Goldmoney has been involved in the effort to make it easier to use gold like money for some time now. They offer a variety of precious metals investments and also a payment system app they describe this way on their web site:
"The Goldmoney™ App for iOS and Android provides access to all Dashboard features and functions, enabling you to manage your Holding and buy, sell, exchange, and redeem precious metal bullion through an easy-to-use and highly secure interface. Need to make a payment? Send and accept precious metal payments to and from other Goldmoney Holdings and businesses, and earn metals by referring friends and family to Goldmoney."
Goldmoney has also announced they plan to expand their services into China. This is some news that will be interesting to follow over time. In their most recent conference call, CEO Roy Sebag talked about moving into China:
"If I can move on to Goldmoney China. This is a venture we’re also very excited about. We are rapidly approaching launch date.
. . . . .
What we’re presently doing, in terms of the technical aspects of the launch, is we are hiring and training Mandarin-speaking relationship managers, Mandarin-speaking compliant staff, and beginning to test out live accounts. The entire build-out of Goldmoney China has been completed in both the back-end and the front-end. The URL is actually available. We purchased the domain Goldmoney.cn. And, we have also set up a local server within the Great Chinese Firewall. So, we ask our investors to stay tuned, but we expect this venture will be launched within the next four to eight weeks (comments made in late June 2018)"
Goldmoney is a public company and its stock trades in Canada (TO:XAU) and in the US under the symbol (XAUMF). Goldmoney also offers users the opportunity to buy cryptocurrency. They describe that process on their web site here.
Glint - UK based gold payments system
We have previously covered Glint here both at their initial launch last November and also with a recent update on their new expansion plans. Glint is preparing to launch into the United States this fall. The Glint app allows users to move funds between gold and various fiat currencies (USD, pounds, euros) for a fee of .50% per transaction (50 cents on a $100 transaction). This can be done on a mobile phone app so any gold owned is quite liquid. Notice that users can also exchange fiat currencies for a very low transaction fee compared to many other such services offered by regular banks, etc.
I would encourage readers to look at our very recent interview with CEO Jason Cozens for the details. Here is one Q&A from that interview:
Q: One hurdle that gold faces is the tendency for people who own gold to hold it rather than spend it. How does Glint encourage users to spend gold rather than just to hold it more like a long term investment?
A: If all you can do is hold gold then that’s what you are going to do, you’ve never been able to do anything but save and trade in and out of it so that’s where the ‘tendency’ comes from. The mere fact that, for the first time, Glint clients can now spend their gold at the electric point of sale, in real-time without selling it in advance, means that clients can and are spending their gold.
There is an education taking place for some about the benefits of a gold currency and a behaviour change for others, but the Glint App makes that very easy. People are starting to realise that saving and spending from their Glint gold account insulates them from inflation, protects them from banking and systemic risks (let's hope we don't have another financial crisis) and allows them to move to one Global Currency that transcends all others. - Jason Cozens, Glint CEO
Glint is also completing a successful crowdfunding as part of an overall fundraising of 15 million pounds. They will use these funds for the upcoming expansion efforts in the US, Japan and other locations. Glint is privately held.
Monetary Metals - Keith Weiner is the CEO - Offers gold based yields and financing
As noted above, we have recently featured the efforts of CEO Keith Weiner to get the State of Nevada to allow the issuance of gold and silver bonds (see recent Kitco article here). We also featured his proposal for an unadulterated gold standard. Both of these efforts are intended to encourage a return to gold being used like money again. Keith takes a bit of a different route by offering creative ways for gold related entities and gold investors to interact with each other by using gold for various kinds of financing arrangements. Investors who are gold lenders can earn a yield paid with actual gold. Gold related entities who want to borrow gold can reduce hedging sometimes needed to offset gold price volatility risk (examples might be jewelers, pawn brokers or bullion dealers).
Keith argues that gold needs to produce a yield to encourage broader use of it as money. Monetary Metals has been at this for some time and Keith is clearly working towards encouraging state governments (especially those with gold producing mines) to issue gold and silver bonds that are denominated in ounces of gold and silver and pay interest in actual gold and silver.
Keith offered this comment by email to include in this article:
"Interest is the key to circulation of gold. Without interest, even a working gold standard would seize up, as people would pull gold coins out of circulation to hoard. Interest is the only force that can pull gold out of private hoards." -- Keith Weiner (8-1-18)
Kinesis - A Proposed Alternative Monetary System
Kinesis is still in its startup phase. Kinesis comes at this objective with a completely different approach. Kinesis is a proposal for an entire alternative monetary system based on two cryptocurrencies that are 100% backed by allocated gold and silver. Kinesis also plans to use the blockchain to offer initial investors its investment token (Kinesis Velocity Token) that is based on the ethereum platform. The gold and silver currencies (KAU and KAG) will operate on a Stellar based platform (for better transaction speed and volume). In public interviews, the Kinesis CEO has indicated that Kinesis plans to bring together precious metals investors, users, wholesalers, producers, along with crypto users and anyone else who would like to participate in a completely new alternative monetary system.
The thing that makes Kinesis unique is that all of the participants in the system are eligible to earn a yield derived from the transaction fees the system generates. Kinesis believes that this yield based system will encourage retail uptake and also velocity of their KAU and KAG currencies. They hope that this incentive will allow gold and silver to overcome "Gresham's Law" such that people will be willing to use gold and silver like money again rather than just hold it as an investment. This is because the higher the velocity in the system, the more fees they can distribute back to system participants in the form of various yields. Basically, in the Kinesis system, everyone can become like a bank and share in the overall transaction fees that normally would only go to the bank. The fee per each transaction is .45% (45 cents on a $100 transaction).
Kinesis through its partner ABX (Allocated Bullion Exchange) has announced some partnerships (here and here) that will be interesting to follow over time. Kinesis plans its currency launch next spring so it's early days yet. It will be interesting to see how things unfold with this creative new idea. Kinesis is funded by investors who buy the KVT tokens, which are currently available for sale on their website. In a recent webinar update, CEO Tom Coughlin announced initial funding targets (exceeding $15 million USD) have been met. You can read the white paper here.
Ryan Case, Head of Trading and Sales at Kinesis, offered us this comment to include in this article:
"Kinesis has already received backing from institutional and retail investors and has recently begun announcing agreements with precious metal market participants. In addition to its technology-driven approach, Kinesis brings strong precious metal industry expertise, attracting a lot of positive attention."
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My added comments: In looking at the various initiatives above, one common goal pops out very quickly. All of these efforts are directed towards encouraging people to use gold (and in some cases silver) like money in new and creative ways. These are clearly not your grandfather's classical gold standard :-)
They combine old forms of money (gold and silver) with a variety of new technologies in an effort to make it easier and more practical to use gold and silver on a daily basis for the average person. Interestingly, the gold based payment systems mentioned above are also designed to integrate with the existing banking system and fiat currencies in an effort to offer the end user maximum choice and flexibility.
It appears at this time that all of these efforts are meeting with some success and are moving forward with plans for expansion. All of them have a goal of eventually achieving widespread public adoption. The process obviously takes time, but it is worth following over time to see if it leads to either reforms in our present monetary system or even a viable alternative monetary system. Precious metals based systems do have to contend with legal tender laws and tax regulations that may vary across the globe. Central banks currently favor the fiat currencies they issue in that regard.
If the current monetary system were to fail in another major global crisis, these new initiatives could see wide scale adoption very quickly as people searched for viable alternatives. But they are also designed to compete and function as viable alternatives under the present monetary system without relying on some kind of systemic failure to succeed. The current global gold market is north of $7 Trillion, so there is plenty of room for these ventures to compete and succeed in that space. They are also designed to attract interest from more mainstream investors outside the precious metals markets which allows for expansion beyond the current gold market over time. It will be interesting to see what happens.
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Added note: Just for the record, I do not have any financial interest or affiliation with any of the entities featured here on the blog (including the ones mentioned in this article). Information presented here is intended to be educational for readers about various efforts to reform the monetary system or offer new alternatives to it. Gold being used like money falls into that category, so I try to cover that as news when I get information related to it. This blog does not offer investment advice and is not intended for that purpose. Articles featuring products or services are not intended to be endorsements.
