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Bridging Gold and Cryptocurrency

By Richard Melbourne, Head of Member Services, Kinesis Money

Published on June 4, 2018

Since the global financial crisis of 2007–2008, the world has become increasingly disenchanted with governmental monetary policy and the banking system at large. So strong were these feelings of betrayal and mistrust, that a very talented few started the crypto revolution by developing mechanisms that empower the larger populace to actively pull away from the traditional banking and financial systems.

Many of these alternative currencies are fantastic in theory and principle; however, it has become evident that there are significant obstacles that have prevented the global adoption of such a neo-monetary system. Both volatility and intrinsic valuation are two major issues that must be addressed to achieve this dream of a true alternative currency.

Why gold?

With unpredictable volatility and questions surrounding valuations being an ongoing concern within the crypto space, investment-grade physical gold bullion has arguably the polar opposites of such issues. Gold is a tremendous, historically proven store of value. An ounce of gold has bought the same amount of bread throughout history, meaning gold has protected purchasing power as the cost of goods and services inflate in price. This preservation of wealth sees gold achieving lower price volatility when compared against select financial investment instruments, and various cryptocurrencies (Figure 1).

Figure 1: Gold’s volatility compared to major cryptocurrencies

Cryptocurrencies as safe haven asset?

So, will cryptocurrencies become the next precious metals-esque asset? This topic has been covered at large by both internationally respected global bullion associations, as well as crypto and blockchain heavyweights. Is Bitcoin the next gold, or, Ethereum the next silver? Perhaps Ripple is the next platinum? Some say yes, they believe that certain cryptocurrencies are indeed the next gold.

With the technical scarcity of some cryptocurrencies, combined with the human-driven “value” of such an asset, many come to the conclusion that cryptocurrencies are indeed digital gold. Some say no; 1’s and 0’s will never replace the surety of holding cold, hard physical bullion. There is no historical precedent that digital currencies will provide any store of value, especially when compared to the likes of golds historical performance. Perhaps a healthy medium should be sought here; something that takes the best of both cryptocurrency and gold to deliver something that addresses the fundamental issues with each.

What if there was a cryptocurrency which is: 1) backed by physical gold at a 1:1 ratio to provide a proven store of value and intrinsic value, and 2) has an entire monetary system built around it to promote an efficient medium of exchange and encourage users to engage in a true alternative cryptocurrency?

Kinesis’ gold-backed cryptocurrency is designed to address the uncertainty of volatility (Image: Kinesis)

The Kinesis solution

Kinesis has developed exactly this: a stablecoin designed to address the uncertainty of volatility and to give back the power of choice to the people by building not only a currency but also an entire monetary system. It gets even better: for the first time in history, physical allocated gold can now become an income-producing asset.

The Kinesis gold-backed currency is designed for use in everyday life as a high-velocity alternative currency. Participants of the Kinesis Monetary System and its suite of currencies (there is also a silver-backed currency) are entitled to a share of the transaction fees generated when the currency is spent or traded between participants within the Kinesis Monetary System.

This hybrid of cryptocurrency, safe-haven asset, and a yield-producing monetary system creates a truly unique, internationally fungible alternative currency that is backed by a proven store of value with real intrinsic value. Theoretically, the price of each of these precious metals-backed cryptocurrencies should not fall below the spot price of the underlying precious metal. In fact, the Kinesis suite of currencies is anticipated to consistently trade at a premium to the face value of the underlying backing due to the unique yield-producing factor. Furthermore, if a participant should ever want to redeem their currency for physical gold (or silver), they can easily do so. Kinesis has set out to deliver a rewarding and empowering monetary system that provides participants with surety, transparency, and integrity; we believe we have achieved this.

The features of the Kinesis Monetary System are vast and have been designed to deliver an honest monetary system. The Kinesis currencies offer a near instantaneous settlement with its custom Kinesis blockchain, which also protects participants with the multiple security features built in. There are also debit card payment facilities attached to the suite of Kinesis currencies that promotes convenience for day-to-day use. The low transaction fees associated with the Kinesis suite of currencies not only encourages cost-efficient, international payments; it also means lower transaction costs for merchants who embrace the Kinesis Monetary System. Kinesis believes this system will empower everyone, including the world’s unbanked populace, as it provides a borderless, low-cost and efficient medium of exchange, backed by assets that are historically proven excellent stores of value.

Learn more about Kinesis at https://kinesis.money

Richard Melbourne is Head of Member Services at Kinesis Money and the Allocated Bullion Exchange (ABX). The Kinesis Monetary System is an evolutionary step beyond any monetary system available in the world today. It enhances money as both a store of value and a medium of exchange and has been developed for the benefit of all. Aside from offering the greatest store of value and striving to provide the most efficient medium of exchange, Kinesis is a monetary system focused on: minimising risk; maximising return; stimulating velocity and maximising the rate of adoption.

Disclaimer: The views and opinions expressed in this article belong solely to the author, and do not reflect the view of BSE.

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Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

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Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

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Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

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Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

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Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

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Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.