Edward Snowden’s Wrong About Gold

I saw an article a few days ago about a speech given by famed whistleblower Edward Snowden at a recent cryptocurrency conference. Reportedly, Snowden said “Gold is great, but gold is not portable. Gold is not transmissible beyond borders at the tap of a button. But Bitcoin and crypto, more broadly, are.”

Up until about six months ago, I would have thought he was right. However, I have discovered that the marketplace was several steps ahead of Snowden and had already anticipated, and addressed, his concern. It’s too bad he doesn’t know about it.

There are now several offerings in the marketplace of gold-backed digital currencies that can indeed be moved at the tap of a button.

I have looked at a few, but the one I have chosen to try out over the past few months is called Kinesis Money. It has been in the works for about ten years, and it now offers a gold-backed currency (called a KAU) in which one unit of the currency is backed by a gram of gold. There’s also a silver-backed currency unit (a KAG) backed by an ounce of silver. (Cryptocurrencies are also available through Kinesis, but I’m not particularly interested in them. I’m there for the digital gold.)

If you exchange your US dollars (or any other fiat money, or cryptocurrency) for KAUs or KAGs, your holdings will be kept in a digital account on Kinesis’s platform, accessible by computer or phone app.  You can buy, sell, exchange, send, or receive very finely divisible units of KAUs or KAGs literally at the tap of a few buttons.

If you want to pay someone in gold or silver, you can send the payment from your Kinesis account, so long as you’ve got the recipient’s email address or a physical address. The company is working on introducing a debit card within the next month or two that will let you pay anyone, in any major currency they desire, and have the equivalent amount debited to your gold or silver account.

In essence, you’ll be able to live on the gold standard if you choose, storing your wealth in precious metals but also using gold or silver as a medium of exchange when required.

Some of Kinesis’s competitors already offer metal-backed debit cards but I was turned off by some VAT complications that seemed to arise from their location within the Eurozone. Kinesis Money’s platform is operated by a company incorporated in the Cayman Islands.

KAU and KAG accounts are accurate to six decimal places. With silver currently selling at about US$22.00 an ounce, and gold at about US$60 per gram, this means that you can theoretically transfer an amount as small as a fraction of a cent. The fees for making transfers or currency exchanges are proportionate to the amount transferred, and I think they’re very reasonable.

Consequently, this market product seems to have eliminated most of the inconveniences of using gold and silver as a medium of exchange. You don’t have to carry coins or bars around. The digital currency can be divided into units small enough to pay for a stick of chewing gum. And you don’t have to bury it in your back yard to keep it safe—although prudence would dictate that you should probably keep a certain amount of your gold and silver holdings in a form that lets you physically put your hands on it in an emergency.

Kinesis stores its clients’ gold and silver in thirteen vaults located in nine countries around the world. The vaults are audited regularly to ensure that the currencies really are backed up by the metals as they’re supposed to be. Here’s the November, 2020 audit report showing that at that time, it had gold and silver in storage worth about $17.7 million. Since then, its customer base has expanded considerably; individuals around the world have now purchased about $137 million of its metal-backed currencies. That’s still tiny compared to crypto, but it’s growing very rapidly.

Of course, there’s always the chance that various governments around the world will conspire to confiscate the metals in the vaults. Readers of this site are probably all aware that the US government did precisely this in the 1930s. Obviously, every investment has its risks and you should avoid putting all your eggs in one basket.

As a Canadian who had the chutzpah to donate financially to the Canadian Trucker Convoy this past February, I had some nervous moments over whether or not my Canadian bank accounts would be among the ones frozen by the government. Fortunately, they weren’t. However, it increased my determination to minimize my vulnerability to prime minister Trudeau’s tyrannical whims. A Kinesis employee told me that Canadians seeking privacy and security have flooded into KAU and KAG accounts following that little episode.

There has been some speculation lately about whether Russia or even China might be planning to go on the gold standard. I wouldn’t hold my breath waiting. But individuals don’t need to wait for authoritarian governments to offer them the option of a metal-backed currency. The marketplace is already doing it, and I’m doing my bit to encourage people to make the move now. Our fiat money is rapidly losing its value. We mustn’t let our governments steal it all.

If you want more details about Kinesis Money, please watch this video I made a few months ago. Please use my referral link if you want to sign up. There’s a promotion on until the end of June, incidentally. If you sign up through a referrer’s link and invest at least $3,000, you’ll get half an ounce of silver and so will the person who referred you.

And you’ll have the satisfaction of knowing you’re ahead of Edward Snowden.