More Facebook Reaction - Open Letter from Steve Forbes to Mark Zuckerberg

It did not take long for long time gold advocate Steve Forbes to offer up his reaction to the Facebook Project Libra news. He pens this open letter to Mark Zuckerberg appearing in Forbes magazine. Below I have pasted in the introduction to his open letter. Mr. Forbes says the Libra should be backed by gold and also suggests a potential name change for the currency.

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Dear Mr. Zuckerberg:

"Your company made big headlines when it announced it would be launching a cryptocurrency called the Libra in 2020. Not surprisingly, given the nature of the times, the project has been greeted with intense criticism and skepticism. Don’t lose heart. In one sense, the idea of a company creating its own kind of money is an old one. The airlines’ frequent-flier miles are really a form of money that customers can earn and use to buy trips and various other things. Credit card companies, hotels and numerous retailers have all sorts of loyalty programs in which people earn points that will let them buy all manner of goodies.

But if you play your cards right with the Libra, you could be to money and finance what Henry Ford was to automobiles. Your new currency could take its place alongside the inventions of coins and paper money many centuries ago. It could replace the U.S. dollar as the global currency.

. . . .

Here are crucial tips to turn the Libra into one of history’s truly seminal creations:

Make it as good as gold. Backing your new money—as you plan to do—with a basket of currencies won’t cut it. In today’s monetary system the values of currencies jump up and down, so you won’t get the stability you need.

Countries that became global powerhouses–Holland, followed by Britain (Isaac Newton, as director of the Royal Mint, fixed the pound to gold at a ratio that held for more than two centuries) and then the U.S. (thanks to Alexander Hamilton)—all had their currencies linked to gold."    . . . . click here to read the full open letter

from Steve

to Mark

see the open letter here

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My added comments: In some ways this whole topic of potential monetary system change has been difficult to cover because I mostly have had to report that not much that could initiate major change has been happening lately. 

But suddenly, with the global release of Facebook's Project Libra proposal, there is a huge uptick in interest if for no other reason than the enormous footprint Facebook has globally with its user base.

Now we have a leading gold advocate joining in the reaction parade writing the open letter linked above. Ironically, later this year Kinesis is expected to launch its own fully physically backed gold and silver currencies that will operate on a blockchain. They just put out this interesting news release. Kinesis is already attempting to do what Steve Forbes is calling on Mark Zuckerberg to do with the Libra. Kinesis says in this news release that they will partner with the Post Office in Indonesia to offer their gold and silver backed currencies across the region.

"In accordance with the new regulation, Kinesis, OZL and the Indonesian Government Postal Service (PT POS) are planning to develop, build and operate an international standard vaulting facility in Jakarta.

Additional stakeholders in the project include, Jakarta Futures Exchange (JFX), government clearinghouse Kliring Berjangka Indonesia (KBI) and religious organisation – Nahdlatul Ulama (NU) who have 100+ million members."

. . . .

"POS Indonesia have indicated they will facilitate and contribute significant resources and support for the project, including the contribution of land; licenses for Free Zone/Bonded Warehouse designation, and duty-free imports; permits for expedited building, construction and utilities; as well as significant post-launch marketing and logistical support."  excerpted from news release


So maybe we are starting to see some fireworks (no 4th of July pun intended) flare up related to this whole topic of monetary system reform. It's way too early to know if any of this will significantly impact the present monetary system. On the other hand, we can't just ignore a tech giant company with over 1 billion users jumping into the arena, Steve Forbes writing open letters about it, and people like Kinesis partnering up with state organizations like the Indonesian Post Office. It's news we do need to cover and follow over time.

As always, we will monitor events and report what actually happens with these various proposals as they attempt to launch and gain broad public adoption. 
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Added notes: IMF warns that giant tech firms could "present a unique systemic challenge to financial stability"

Kinesis issues this new press release about their CEO speaking at the UN (speech starts around the 31 minute mark)

News notes 7-2-19: IMF's Lagarde nominated to head the ECB

Dr. Judy Shelton nominated for a position at the Fed

VP Pence cancels a planned appearance and is said to have met at the White House on something not as yet disclosed to the public. His spokesman says "there will be more later" and then defines later as in "a few weeks"

News reports of a fire on a Russian sub also surfaced with additional reports that Putin also cancelled a planned appearance to participate in some kind of emergency meeting at the Kremlin. One completely unconfirmed source said an incident took place near Alaska involving a Russian submarine. 

Meanwhile, other news reports said tension is ramping up between Israel and Iran and that the US has moved more fighter jets into the Persian Gulf area.

So much odd news today it is hard to sort it all out and discern what is valid and what may not be valid. But it does seem like something unusual happened today behind the scenes that the public has not yet been told about. Gold spiked sharply higher as well. We'll see what happens in the next few days.

Efforts to Make Gold Money Popping Up Around the Globe

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.

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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.

Andrew Maguire Announces "Kinesis" -- Gold/Silver Backed Cryptocurrencies

This is a followup on news we have covered here for awhile. Recently, Andrew Maguire posted this news on his Twitter feed. It is announcing the startup of "Kinesis".  Andrew Maguire is a member of the Allocated Bullion Exchange (ABX) Advisory Committee.

Kinesis is a new effort at a gold and silver backed cryptocurrency with plans to expand beyond that. You can take a look at the detailed blueprint released for Kinesis here. Below is a key section from page 5 of the Kinesis blueprint (I added the underline for emphasis).

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from page 5 of Kinesis Blueprint document

"This model is highly revolutionary alone, however to take it the next step further, already in place is a highly disruptive retail and institutional commercialisation strategy with unique distribution and committed adoption from day one of launch.

Pre-existing investment commitments are in place for the Kinesis currency suite which will surpass the largest ICO to date by a significant multitude. Kinesis is being developed and being brought to launch by a consortium of industry leading organisations in the precious metal trading, mining, refining, exchange, technology, blockchain, mobile banking, vaulting, postal system and marketing spheres. From launch the system will have extensive institutional and retail distribution, integration, liquidity and adoption.

Our liquidity, which will be provided by professional bullion market participants and others, will enable billions of dollars of value to efficiently enter and exit the market. Direct and indirect integrations will provide for immediate adoption into hundreds of millions of users."

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My added comments: I believe the paragraphs posted just above are a major key for readers to watch for as this product rolls out during 2018. When I originally tried to cover this story back in the summer of 2017, I was aware that there was supposed to be significant institutional support behind this concept at its launch. For whatever reasons, that launch was aborted. 

Later the Allocated Bullion Exchange (ABX) released this news and this news that confirmed some of the information I had heard about back in the summer of 2017 (but did not publish since no public announcement was made at that time).

Now it appears that the ABX is ready to launch this new gold and silver backed cryptocurrency product during 2018 with a new partner called Kinesis. They plan an ICO (Initial Coin Offering) in mid 2018 which has a goal to raise $200 million in capital (see page 40 of the blueprint).

Based on the earlier news releases from the ABX cited above and the information on pages 5 and 20 of the Kinesis Blueprint document, I am assuming that Kinesis is saying that this product will launch with support from the Indonesian Post Office and with the support of an Islamic organization that claims to have 100 million members (refer to the chart on page 20 of the blueprint which says under "Kinesis Distribution Partners" -- "the largest Islamic organization in the world with 100 million members"). 

If this kind of support does indeed emerge as this product rolls out, then we will continue to follow this as a news item to cover for readers here. Obviously, that kind of support could impact the physical gold and silver markets.

Allocated Bullion Exchange (ABX) Releases News

Last summer we attempted to cover what was supposed to be some major news from the Allocated Bullion Exchange (ABX) that could impact the world gold market. Unfortunately, something went wrong with their deal with BullionCoin and that partnership was called off.

While working on that story back in the summer of 2017, I did come across some information that convinced me that this news could be quite significant in terms of an impact on the world gold market which is why I worked so hard to try and cover it here for readers. When the deal with BullionCoin did not work out, I had to drop the story and wait to see if any further news did emerge.

It now appears that there was some significant news related to the ABX in line with some things I had heard might be possible. That news has now been announced by the ABX and below are links to the various news releases coming out. They are provided here in an effort to alert readers to this news. Andrew Maguire of the ABX says more news is coming as well  in recent comments on his Twitter feed.

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First, we have this news from last November:

European Commodity Clearing announces partnership with Allocated Bullion Exchange

and some comments on this from Andrew Maguire here

Now this week we have this news release:

Allocated Bullion Exchange announces exclusive strategic partnership with Indonesian Government Post Office

On top of these news releases from ABX, we have these Twitter comments from Andrew Maguire:

https://twitter.com/andrewmaguire1/status/955773241326436353

https://twitter.com/andrewmaguire1/status/956116031596040192

There is also this brief discussion on Twitter that seems to imply the potential for large physical gold purchases as best I can tell:

https://twitter.com/Lord_Snooty_III/status/956623070692872198

Here is a recent audio interview with Andrew Maguire and the ABX CEO on all this:

http://radio.goldseek.com/nuggets/coughlin.01.23.2018.mp3

There is quite a bit of potentially significant information discussed in the audio interview linked just above so I would suggest anyone interested in these issues listen to it. 

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My added comments: I will keep an eye out for any more news on this and report it here if more significant news is announced. In the interview linked above, there is a suggestion that more large partners involved with this will be announced including banking relationships and large institutions with very large memberships in the Eastern part of the world. Again, they imply that all this will lead to very large additional global demand for physical gold and silver, especially in the East.