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.

BullionCoin Launches Web Site

Today BullionCoin launched its new web site and released its white paper. The web site can be viewed here and this is the link to the white paper. The white paper is 27 pages long. In a quick review of the white paper, I did not see any information that did not agree with the basic concepts of BullionCoin that are out on the GoldVu web site we mentioned in our earlier article. The white paper makes no mention of the Allocated BullionExchange (ABX).

Here is some information from the web site about the debit card that BullionCard will offer:

"In order to simplify payments in global “fiat” currencies, like US dollars, BullionCoin members have the opportunity to ask for a BullionCoin MasterCard. This highly convenient prepaid card facility is denominated in gold (XAAU) or silver (XAAG) BullionCoins and allows members to pay directly in BullionCoins.

The Prepaid BullionCoin Debit Card is a world-class financial product allowing you to be topped-up at any moment without having to sell BullionCoins. The prepaid card converts XAAU or XAAG BullionCoins instantly into any fiat currency to complete a payment or transaction. Prepaid card payments are only limited by the balance of member’s account."

This description make it sound like this debit card will actually convert the physical gold or silver in the card holders account to the local fiat currency of choice instantly at the point of sale. I do not know if that would be viewed as "sale" of the actual gold or silver for tax reporting purposes or not. I did not see any tax issues discussed on the web site or in the white paper. 

One item of interest on page 19 of the white paper is that BullionCoin chose to setup a centralized KYC (Know Your Client) process. They feel an advantage to this is that a lost or stolen BullionCoin eWallet can be recovered providing more safety than many crytocurrencies do in this regard.

At first glance, BullionCoin appears to work pretty much like it has been described on the GoldVu web site and the information about how it will work are all on the web site and in the white paper. All that remains now is to see what kind of support actually exists for BullionCoin. 

Along those lines, there was no further news on the 250 ton gold buy order that has been said to be coming on the web site launched today. Since that is probably the major question people will have related to what has been talked about all this year leading to a gold price "reset", here is the information I have at this point in a bullet point list:

- in this article, I published David Gibson (of GoldVu) stating by email that only Andrew Maguire knew the details related to those comments about sovereign sized buy orders of 250 tons. He also told me BullionCoin should launch within 3-4 weeks which has turned out to be correct. 

- in one twitter comment  recently, Andrew Maguire said that the one of the events he has talked about this year would lead to the 250 ton gold buy. We assume he meant the launch of BullionCoin, but David Gibson has said that it is possible that the 250 ton buy order is not directly related to demand from the launch of BullionCoin. We also have this recent twitter comment. We simply do not have very clear information on this so far and it seems clear that not even ABX member David Gibson knows the details behind these general comments.

- in Twitter comments here, David Gibson (GoldVu) responds to some questions on the 250 ton gold buy order. He repeats what he told me by email that many people are assuming the the BullionCoin launch would generate the 250 ton buy order, but that may not be the case and people should not assume that. In other words, the 250 ton buy order might be a separate event not directly related to initial demand for BullionCoin.

- in this article I laid out the full timeline of articles and interviews done by Andrew Maguire in 2017 talking about a coming gold price reset and the 250 ton gold buy order. At this point we are still waiting for this to materialize. I will update this article for about another month to see if anything further of significance surfaces related to BullionCoin and then post the full timeline again. Unless we get some bigger news by then, that will be the final update here on BullionCoin. (update note: looks like we got bigger news already today, see news update article just above)

At this point, until there is some kind of tangible news or evidence related to the large gold buy orders that have been predicted and substantial institutional support for BullionCoin, there is not much more to report in relation to what we try to cover here.

If news on that does surface, we will cover it. Otherwise we will just move on since thus far BullionCoin has not made any significant impact on the gold market that can be seen. The market has not given any indication so far that anyone sees a big immediate demand for physical gold or silver coming soon that cannot be met with supply. If that does happen, it will clearly take the market by surprise. 

Update 8-15-17 (3:45 pm CST): The ink on this article was barely dry when this news from the ABX broke. The ABX announces it has severed ties with BullionCoin and will move in another direction. It does not appear that BullionCoin will have any significant impact on the gold market so we will not cover it further here since that was the original reason we did try to cover it.

Mid Year Review - Where is this Blog Headed into 2018?

Amazingly, we are more than half way through another year. I started this blog in 2014 with an expectation that some kind of major reform or reset of the current monetary system seemed likely not too far into the future. Here we are over 3 and 1/2 years later and no such event has happened. A fair question to ask would be how much longer will I continue to write articles on this? What if Janet Yellen is right and we don't see a another new major global crisis in our lifetime?

As of right now, my thinking is to continue to monitor events and try to write fairly regular articles until mid 2018 when I can find relevant news to write about. I feel like by then it will be more clear as to whether there is much point to continue writing new articles. Here is my logic for that conclusion.

- Donald Trump will be well into the second year of his term. By then we should know if anything dramatic is really going to happen related to his ability to stay in office. I don't just mean something forcing him to leave office. I am thinking by then it should be clear if Congress has moved his agenda forward and if it is showing signs of working or not by then. The Republican Congress probably has to do this or face losing some level of control. At some point failure to move an agenda might impact markets and systemic stability.

- If by mid 2018 Trump has overcome all the obstacles placed in his path (including those of his making) to get his agenda passed and it seems to be working, it is unlikely that we would see anything happen to radically change the current monetary system. It is hard to imagine the public demanding that kind of major change if things are going well. 

-If by mid 2018 we are in the middle of a new full fledged crisis regardless of what causes it, then it will be obvious I need to continue to monitor events regularly and I will try to do that if there are people that can use the information.
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The primary signals I continue to watch pretty much stay the same. If the US stock market has not had any kind of sharp severe decline, the US dollar is holding up reasonably well (despite falling some this year), and gold has not made any kind of new sharp move higher (towards its previous high), I will assume that no new crisis is on the horizon and that Trump is likely to stay in office for 8 years along with a Republican Congress. In other words, nothing that would suggest major monetary system change is coming any time soon.

On the flip side, if the signals above go in the opposite direction, I will be on high alert for the potential for the kind of monetary system change I have discussed here extensively to become more likely. A new major crisis of course makes that more likely.
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Looking back to the start of this blog, this is interesting to me. One of the first articles I wrote for this blog in 2014 was this one. It talks about the prediction made way back in 1988 in The Economist magazine that we would see a new major global reserve currency by the year 2018 (they named it the Phoenix and pictured a gold colored coin on the cover -see below). Time flies and now it's almost 2018. We'll soon see if that prediction holds up or not. 

I do find it interesting that something like I have been writing about here for over 3 years now does appear to be coming soon. BullionCoin is a gold backed cryptocurrency that could function as a global currency and be used by anyone with a mobile phone. I had thought something like this might come from the IMF (perhaps a new kind of SDR for example) and would not be tied to blockchain technology. However, it appears this new gold backed currency will debut in the private sector instead. It will be interesting to see what kind of "sovereign and institutional support" there is for it. For anything to gain widespread public adoption, I think it will need strong support like that to help promote it. I plan to follow the BullionCoin story until its launch and beyond if it appears it may have a substantial global impact as an alternative currency. (update note 8-16-17: see news update on BullionCoin here)

note: I should add that I plan to leave this blog online permanently whether I stop producing regular new articles or not. The information in the links on the right panel of the blog (systemic risk warnings & monetary system reform ideas) will be available for anyone who can use it and most of the information will stay relevant over time. There really is a lot of valuable information collected from a variety of experts contained there and it did take a lot of time and effort to compile it all in one place.

The only reason the blog would not be available is if Google stopped supporting Blogger for some reason. There is no indication that will happen that I know about.

January 1988 Cover for The Economist

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Added note: Dr. Warren Coats, who we have featured here on the blog in a number of articles, notes Milton Friedman day (7-31-17) with this Twitter comment. 

Dr. Warren L Coats @wcoats2

22 Quotes to Celebrate Milton Friedman Day (my mentor) (link: http://dailysign.al/1fQepuJ) dailysign.al/1fQepuJ via @samantha_reinis @DailySignal

News: The New Gold Backed Cryptocurrency (BullionCoin) Mentioned by Andrew Maguire

We have been following the somewhat cryptic comments that London metals trader Andrew Maguire has made about an event coming in the gold market that he suggests will be significant. We submitted a brief written set of questions to his representative to get more details, but have not heard back yet. We believe Mr. Maguire has probably been traveling and perhaps working on activities related to the launch of the new gold backed product he has tweeted about. If he does get time to reply, we will publish his answers to the questions.

Meanwhile, we did a little sleuthing and actually have found quite a bit of information about this new gold backed cryptocurrency. David Gibson of Goldvu.com confirmed by email that this is the new product Andrew was talking about. It will be called BullionCoin. Here is quite a bit more detail about it. Below are some key bullet points from the web site on how it will work and then a few added comments.
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Simple Summary of How It All Works

The following is a simple overview of the whole BCX and BullionCoin process:

1. Primary market participants buy physical precious metals at the wholesale contract rates & hold Title of Ownership to it
2. Those participants then authorise for BullionCoins to be created/minted against their precious metals
3. Minting / creating BullionCoins is just a process of digitisation of the Title of Ownership to that metal
4. Primary market participants then sell those digital coins into the secondary (retail) market
5. That sale, is the selling of the Title of Ownership from the primary market participant to multiple retail investors
6. The digital coins that those investors now hold, act as an electronic Bearer's Title to the physical gold & silver that's backing it
7. Coin holders can use them in transactions and trades, in the same way that you use fiat currency
8. As the coins are electronic Bearer's Titles to the physical precious metals backing them, investors holding those coins can then redeem them at any time in exchange for the equivalent quantity of physical gold & silver that those coins represent

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My added comments: Now that we see how this new gold backed cryptocurrency product will work, a question in my mind was if the 250 tons of gold buy orders that Andrew Maguire has talked about recently might tie in to the launch for this new product. I am advised by David Gibson of GoldVu (see email exchanges below) that the two events are likely separate and that as far as he (David Gibson) knows the 250 tons of sovereign gold buy order does not relate to the launch of the new gold backed cryptocurrency - only Andrew can confirm that.

This is an interesting new product. It appears to actually combine block chain technology with a new cryptocurrency coin 100% backed by physical gold and silver. The gold Bullioncoin will be equivalent to one gram of gold while the silver Bullioncoin will be equivalent to 50 grams of silver. (note: 1 troy ounce = 31.1 grams)

Investors or institutions that want to be part of the startup process of providing initial liquidity will be offered an opportunity to earn a yield on the newly minted Bullioncoins produced as they are bought and sold over time. The yield comes from a portion of the transaction fee for buying and selling the coins. I assume block chain will be used to track each coin over its life as it is bought and sold.

According to the web site, the coins can also be convertible to actual physical gold or silver at any time and account holders will be issued a debit card allowing them to also be able to spend the coins around the world like cash. To make a purchase using the debit card, the gold or silver backing the coin is instantly converted into the currency of the country desired at the then current spot price for gold or silver at the time of purchase as I understand it from looking at the web site. Here is the info from the web site on that:

The BullionCoin Debit Card (updated as of 7-27-17)

The majority of users of will perform their transactions via the mobile or online payment applications.

However, as mobile payments still haven't been fully adopted worldwide, you are able to get a BullionCoin debit card and use it worldwide similar to the way you currently use Visa, MasterCard, American Express, etc. 

This will be initially given for free to high value accounts only, due to the cost of issuing the card. There may be a possibility that the cards could eventually be bought by people using BullionCoin, but those costs haven't been confirmed yet.

It's unique in that you can use it for any local currency without having to first pre-sell your precious metals holding before using it. When payments are processed at the point of sale, the exchange rate for local currency vs allocated gold or silver is automatically calculated and the equivalent amount of bullion is debited from your e-wallet account.

No other "physical precious metals" debit cards are directly linked in this way to their bullion account. Other providers need you to first sell your gold and silver, after which you then have to transfer/load the realised cash onto your card.

The BullionCoin card is a genuine revolution in physical bullion card payments.

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Finally, how did I confirm that this is the new cryptocurrency product Andrew Maguire has been talking about? I contacted David Gibson and asked him directly. He says the product launch should be in the next 3 or 4 weeks and he also clarified his role in the process. Below are my email exchanges with him. 

This will be an interesting story to continue to follow over time. I expect a lot of interest in this globally based on some new information I have seen but cannot yet discuss. Here is a bit more information from Andrew Maguire's trading web site that is now available online.



My email dated 7-19-17:

Can you confirm if this is the new gold backed cryptocurrency product that Andrew Maguire has mentioned recently in his comments on Twitter? If so, do you know the launch date yet?

Thanks,

Larry

Reply from David Gibson dated 7-19-17:

Dear Larry,

BullionCoin is the digital currency that Andrew Maguire is referring to. The launch date hasn't been fixed yet but should be in the next 3-4 weeks. If you need any further help or information, then please do get back to me.

Yours sincerely,

David 

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David Gibson
Managing Director 

Reply from David Gibson on his role with BullionCoin & the 250 ton gold buy order -  dated 7-19-17

Hi Larry,

In the first paragraph of your added comments, could you word the second sentence to be:

"I am advised by David Gibson of GoldVu (see email exchange below) that the two events are likely separate and that as far as he knows the 250 tons of sovereign gold buy order likely does not relate to the launch of the new gold backed cryptocurrency - only Andrew can confirm that."

This is because:

1) GoldVu is not BullionCoin, nor are we involved in its design or set up. BullionCoin is by a company called Digital Gold Ltd and we are both members of the ABX (so is Andrew Maguire's company). I am only helping to help them to promote BullionCoin in the same way Andrew is. GoldVu is just currently the leading source of specific information relating to BullionCoin prior to its launch.




2) I don't know whether the 250 tons and BullionCoin are or are not linked. So it's best to avoid absolutes one way or another, which is why I added the word 'likely'.

All the best,
David

Added notes 7-21-17: A thank you to Silver Doctors for picking up this article. (one note: Silver Doctors chooses their own title for articles like this that they decide to pick up). Articles they run usually get several thousand additional views so I always appreciate it when they pick one up. A thank you to The Daily Coin as well.

Also, they discussed this in an interview with Bill Murphy. Bill Murphy said during the interview that this news (from Andrew Maguire) has gotten as much attention as anything he has seen over many years. There is clearly a lot of interest in it as I can tell from the blog stats here. We will continue to follow it.

7-29-17: A brief update here after listening in to pre launch webinar on BullionCoin

8-3-17 update: I am advised that readers should wait for Andrew Maguire to provide updates on BullionCoin on his twtter feed and that no one else is authorized to do that.