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Allocated Bullion Exchange unveils its vision for the future of money after seven-year development programme

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Allocated Bullion Exchange unveils its vision for the future of money after seven-year development programme

Kinesis system to use wholly backed 1:1 by physical gold and silver stored in fully insured top-security vaults across the world 

Small day-to-day transactions via debit card to take 2-3 seconds

There is an argument that the traditional banking system is broken.

As Bitcoin values nosedived on August 14, the former CEO of Paypal, Bill Harris, told CNBC’s Fast Money programme that Bitcoin had no value, was slow to transact, volatile and had scalability problems.

“The cult of Bitcoin [makes] many claims,” he said, “that it’s instant, free, scalable, efficient, secure, globally accepted and useful – it is none of those things.”

These are common weaknesses across crypto currencies.

So what is the answer? We believe it is Kinesis, which has the potential to meet all of Harris’s criticisms.

Set to be launched by the Allocated Bullion Exchange (ABX) – the world’s first electronic institutional allocated physical precious metal bullion exchange – Kinesis is a wholly integrated value exchange system, linking to globally accessible crypto currencies that are directly backed by hard assets in gold and silver, giving them intrinsic value.

The real challenge for an alternative global system of value exchange is not for it to be a wealth creation exercise for the elite, but an effective method of transfer that is stable, cannot be manipulated by institutions or governments, protects the individual, has an intrinsic value and can be used quickly for ordinary, day-to-day transactions.

It should also act as a barrier to crime, particularly money laundering and terrorism financing, and offer a reasonable alternative to expensive wire transfers for the ‘unbanked’.

The Kinesis currencies will fulfil all of these objectives.

The Kinesis currencies

KAU (gold-backed, 1 KAU = 1 gram of gold) and KAG (silver-backed, 1 KAG = 10 grams of silver) are linked directly to above ground gold or silver, so can never be sold below the current price of gold and silver, which gives them stability. The currencies are protected, as they decentralise control from banks to the individual, who retains 100% title to their value at all times, unlike bank deposits.

The deposits of fully insured gold and silver are held in third-party vaults with the highest security rating across the world and these holdings will be subject to semi-annual third-party holding audits. To put that in perspective, the last full audit of the gold held in Fort Knox took place in 1954. The Kinesis system is based on LBMA (London Bullion Market Association) bars, officially recognised via the legacy system, with all associated taxes paid.

In short, Kinesis is an ethical system that enhances money as both a store of value and a medium of exchange.

Transactions take just 2-3 seconds and are proportionate to what you are buying, so, unlike other crypto currencies, these can actually be used in day-to-day transactions like buying a cup of coffee.

When you pay over the currency unit, which can be allocated using your Kinesis debit card, you are also paying over that percentage share of the gold or silver that goes with it. At the same time, transactions costs are a fraction of alternatives, making the whole system viable for day-to-day use in even small amounts. And the Kinesis debit card can be used to access cash at ATMs.

This is a credible and auditable system and has already won the backing of, among others, the Indonesian Post Office, which has signed up to use it in handling its $12.5 billion of assets. What’s more, Kinesis is Sharia compliant because it makes its yield from transaction fees not interest.

What this also means is that for the first time ever precious metals attract yield as physical assets in a way that encourages trade and transactions.

The Kinesis system is an evolutionary step beyond any current monetary system available in the world today. It enhances money as both a store of value and a medium of exchange.

Kinesis Velocity Tokens and how they work

Underpinning it is a unique multifaceted yield system that promotes the use of Kinesis as a medium of exchange while distributing back the wealth generated according to proportionate KVT (Kinesis Velocity Token) holdings and velocity.

The KVT is an investment in the soon to be launched Kinesis Monetary system. Stakeholders are essentially buying into the success of the system. Holders of the KVT tokens will receive a 20% proportional share of the transaction fees from the Kinesis Monetary System.

The token rewards participants, proportionately to the growth of Kinesis Monetary System. To perpetuate growth of the Kinesis Monetary System, Kinesis have released the Kinesis Velocity Token (KVT). KVT’s are limited to 300,000 only. This will create an additional layer of income for token holders on top of the value of the token itself.

This is not a gimmick that has suddenly emerged from nowhere, but a system carefully devised over seven years, based on the accredited ABX exchange, which will employ the block chain to ensure global security.

“We provide a value and a unit of account and we solve the medium of exchange issue, while the system produces a yield,” says CEO Thomas Coughlin.

The only way to bring this currency to the people is to digitize it and allow it to trade in very small amounts.

 So what is Kinesis?

  • A banking and monetary system, Kinesis has an advantage over other crypto currencies because it has been born out of an established organisation: Allocated Bullion Exchange ABX (2011). That enjoys an unblemished track record, which it is vital to retain, so the reliability of Kinesis is paramount because there is so much at stake.
  • The top tier of Kinesis is the primary market in which the average person can mint their money by converting fiat currency into KAU (gold-backed, 1 KAU = 1 gram of gold) or KAG (silver-backed, 1 KAG = 10 grams of silver) linked directly to above ground gold or silver.
  • It is then admitted into the secondary market using block chain, where it becomes an efficient medium of exchange of value, because it can be traded quickly and reliably and is not volatile. Transfer of value takes 2 to 3 seconds anywhere in the world, and the use of block chain protects users against fraud and cash flow problems.
  • Kinesis incentivises the money to move because all parties involved share in the proceeds of the transactional fees that arise as a result. It is the only system in the world where people get a benefit from spending their money.
  • The system is ethical because it’s based on LBMA (London Bullion Market Association) bars. It’s officially recognised via the legacy system and the taxes have been paid.

Where is the gold and silver stored?

  • The gold and silver backing Kinesis is stored in fully insured third-party vaults with the highest security rating around the world that will be subject to semi-annual third-party holding audits. It is assigned to Kinesis via KVT (Kinesis Velocity Tokens), held by founding investors in the Kinesis system.

Why is Kinesis attractive to the consumer and investor?

  • Depositing money in a bank in the traditional way effectively means taking on bank risk where you are exposed above the guarantee limit. Kinesis does not expose you in this way because it is backed gram for gram by gold and silver. There is no counter-party risk because the depositor retains title to the gold and silver represented by their deposit. With paper deposits, the bank retains title and issues a warrant of title to the depositor. If the bank fails, the risk is passed on to the paper depositor above the guarantee limit.
  • As Kinesis is managed via the block chain rather than the traditional banking system, it protects against haircuts for depositors, as happened in Cyprus (2012-13)
  • With other crypto currencies the title can be held by the exchange and the end user holds a warrant to that title. This is why crypto exchanges get hacked, because they are effectively treasuries.
  • With Kinesis title to the associated gold or silver remains 100% with the depositor.
  • This gives power to the individual over the institutions.
  • Kinesis is also cost efficient, with transactional costs at just 0.45% (with Western Union it can be up to 20-25%, but typically 5-10%).

Why would countries back you when what you are doing would limit their ability to control currency?

  • Most governments hate cash, because it limits their ability to fight crime like terrorism. Kinesis digitises the system and anyone who wants to participate in the system has to go through the Know Your Customer (KYC) process, working through Unified Signal, before they can gain access to it. Unified Signal control every cell phone for billing in the US, as well as the medical systems for the US, and provide the digital wallet through which Kinesis operates. This means there is no way of laundering the money through the system. You have to establish credibility before you are allowed to join.
  • Because of the above, governments will be more empowered to tackle tax evasion.

What evidence is there to show the credibility of Kinesis?

  • The Indonesian post office has already signed up to the Kinesis system. It has $12.5 billion of assets.
  • Deutsche Bourse is set to become a liquidity provider to ABX
  • Kinesis has already reached target for pre-launch investment.
  • No one is being permitted to take a concentrated position on the currency.
  • The Kinesis advisory board includes precious metals specialist Andrew Maguire, who exposed the manipulation of the silver markets to the US authorities, and now also sits as an advisory board member for the ABX. Others include major figures across the global precious metals markets

In summary, then, Kinesis crypto currencies are suitable for day-to-day use and the feature of consumer banking because:

  • The currencies are backed by precious metals gram for gram, giving them intrinsic value and stability
  • Title to the currencies’ value remains with the end user, not a bank
  • Transactions are easy and take only 2-3 seconds
  • They are scalable because they can be used for instant transactions in small amounts, such as paying for a cup of coffee, with payment via a debit card.
  • Transaction fees are a fraction of other payment methods.
  • The system is secured in the block chain, defending it against market manipulation and money laundering

From a social and geo-political standpoint, Kinesis has the following potential: 

  • Protection against corruption, money laundering and tax evasion
  • Protection for the ‘unbanked’ against exploitative fees from money transfer services
  • Protection against market manipulation by banking and other institutions
  • Empowerment of the private individual

Trading

How has the online trading landscape changed in 2020?

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How has the online trading landscape changed in 2020? 1

By Dáire Ferguson, CEO, AvaTrade 

This year has been all about change following the outbreak of coronavirus and the subsequent global economic downturn which has impacted nearly every aspect of personal and business life. The online trading world has been no exception to this change as volatility in the financial markets has soared.

Although the global markets have been on a rollercoaster for some time with various geopolitical tensions, the market swings that we have witnessed since March have undoubtedly been unlike anything seen before. While these are indeed challenging times, for the online trading community, the increased volatility has proven tempting for those looking to profit handsomely.

However, with the opportunity to make greater profits also comes the possibility to make a loss, so how has 2020 changed the online trading landscape and how can retail investors stay safe?

Lockdown boost

Interest rates offered by banks and other traditional forms of consumer investments have been uninspiring for some time, but with the current economic frailty, the Bank of England cut interest rates to an all-time low. This has left many people in search of more exciting and rewarding ways to grow their savings which is indeed something online trading can provide.

When the pandemic hit earlier this year, it was widely reported that user numbers for online trading rocketed due to disappointing savings rates but also because the enforced lockdown gave more people the time to learn a new skill and educate themselves on online trading.

Dáire Ferguson

Dáire Ferguson

A volatile market certainly offers great scope for profit and new sources of revenue for those that are savvy enough to put their convictions to the test. However, where people stand the chance to profit greatly from market volatility, there is also the possibility to make a loss, particularly for those that are new to online trading or who are still developing their understanding of the market.

The sharp rise in online trading over lockdown paired with this year’s unpredictable global economy has led to some financial losses, but with a number of risk management tools now available this does not necessarily have to be the case.

Protect your assets

Although not yet widely available across the retail market, risk management tools are slowly becoming more prevalent and being offered by online traders as an extra layer of security for those seeking to trade in riskier climates.

There are a range of options available for traders, but amongst the common tools are “take profit” orders in conjunction with “stop loss” orders. A take profit order is a type of limit order that specifies the exact price for traders to close out an open position for a profit, and if the price of the security does not reach the limit price, the take profit order will not be fulfilled. A stop loss order can limit the trader’s loss on a security position by buying or selling a stock when it reaches a certain price.

Take profit and stop loss orders are good for mitigating risk, but for those that are new to the game or who would prefer extra support, there are even some risk management tools, such as AvaProtect, that provide total protection against loss for a defined period. This means that if the market moves in the wrong direction than originally anticipated, traders can recoup their losses, minus the cost of taking out the protection.

Not a day has gone by this year without the news prompting a change in the financial markets. Until a cure for the coronavirus is discovered, we are unlikely to return to ‘normal’ and the global markets will continue to remain highly volatile. In addition, later this year we will witness one of the most critical US presidential elections in history and the UK’s transition period for Brexit will come to an end. The outcome of these events may well trigger further volatility.

Of course, this may also encourage more people to dip their toes into online trading for a chance to profit. As more people take an interest and sign up to online trading platforms, providers will certainly look to increase or improve the risk management tools on offer to try and keep new users on board, and this could spell a new era for the online trading world.

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Trading Strategies

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Trading Strategies 2

By Paddy Osborn, Academic Dean, London Academy of Trading

Whether you’re negotiating a business deal, playing a sport or trading financial markets, it’s vital that you have a plan. Top golfers will have a strategy to get around the course in the fewest number of shots possible, and without this plan, their score will undoubtedly be worse. It’s the same with trading. You can’t just open a trading account and trade off hunches and hopes. You need to create a structured and robust plan of attack. This will not only improve your profitability, but will also significantly reduce your stress levels during the decision-making process.

In my opinion, there are four stages to any trading strategy.

S – Set-up

T – Trigger

E – Execution

M – Management

Good trading performance STEMs from a structured trading process, so you should have one or more specific rules for each stage of this process.

Before executing any trades, you need to decide on your criteria for making your trading decisions. Should you base your trades off fundamental analysis, or maybe political news or macroeconomic data? If so, then you need to understand these subjects and how markets react to specific news events.

Alternatively, of course, there’s technical analysis, whereby you base your decisions off charts and previous price action, but again, you need a set of specific rules to enable you to trade with a consistent strategy. Many traders combine both fundamental and technical analysis to initiate their positions, which, I believe, has merit.

Set-up

What needs to happen for you to say “Ah, this looks interesting! Here’s a potential trade.”? It may be a news event, a major macro data announcement (such as interest rates, employment data or inflation), or a chart level breakout. The key ingredient throughout is to fix specific and measurable rules (not rough guidelines that can be over-ridden on a whim with an emotional decision). For me, I may take a view on the potential direction of an asset (i.e. whether to be long or short) through fundamental analysis, but the actual execution of the trade is always technical, based off a very specific set of rules.

To take a simple example, let’s assume an asset has been trending higher, but has stopped at a certain price, let’s say 150. The chart is telling us that, although buyers are in long-term control, sellers are dominant at 150, willing to sell each time the price touches this level. However, the uptrend may still be in place, since each time the price pulls back from the 150 level, the selling is weaker and the price makes a higher short-term low. This clearly suggests that upward pressure remains, and there’s potential to profit from the uptrend if the price breaks higher.

Trigger

Once you’ve found a potential new trade set-up, the next step is to decide when to pull the trigger on the trade. However, there are two steps to this process… finger on trigger, then pull the trigger to execute.

Paddy Osborn

Paddy Osborn

Continuing the example above, the trigger would be to buy if the price breaks above the resistance level at 150. This would indicate that the sellers at 150 have been exhausted, and the buyers have re-established control of the uptrend.  Also, it is often the case that after pause in a trend such as this, the pent-up buying returns and the price surges higher. So the trigger for this trade is a breakout above 150.

Execution

We have a finger on the trigger, but now we need to decide when to squeeze it. What if the price touches 150.10 for 10 seconds only? Has our resistance level broken sufficiently to execute the trade? I’d say not, so you need to set rules to define exactly how far the price needs to break above 150 – or for how long it needs to stay above 150 – for you to execute the trade. You’re basically looking for sufficient evidence that the uptrend is continuing. Of course, the higher the price goes (or the longer it stays above 150), the more confident you can be that the breakout is valid, but the higher price you will need to pay. There’s no perfect solution to this decision, and it depends on many things, such as the amount of other supporting evidence that you have, your levels of aggression, and so on. The critical point here is to fix a set of specific rules and stick to those rules every time.

Management

Good trade management can save a bad trade, while poor trade management can turn an excellent trade entry into a loser. I could talk for days about in-trade management, since there are many different methods you can use, but the essential ingredient for every trade is a stop loss. This is an order to exit your position for a loss if the market doesn’t perform as expected. By setting a stop loss, you can fix your maximum risk on a trade, which is essential to preserving your capital and managing your overall risk limits. Some traders set their stop loss and target levels and let the trade run to its conclusion, while others manage their trades more actively, trailing stop losses, taking interim profits, or even adding to winning positions. No matter how you decide to manage each trade, it must be the same every time, following a structured and robust process.

Review

The final step in the process is to review every trade to see if you can learn anything, particularly from your losing trades. Are you sticking to your trading rules? Could you have done better? Should you have done the trade in the first place? Only by doing these reviews will you discover any patterns of errors in your trading, and hence be able to put them right. In this way, it’s possible to monitor the success of your strategy. If your trades are random and emotional, with lots of manual intervention, then there’s no fixed process for you to review. You also need to be honest with yourself, and face up to your bad decisions in order to learn from them.

In this way, using a structured and robust trading strategy, you’ll be able to develop your trading skills – and your profits – without the stress of a more random approach.

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Economic recovery likely to prove a ‘stuttering’ affair

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Economic recovery likely to prove a ‘stuttering’ affair 3

By Rupert Thompson, Chief Investment Officer at Kingswood

Equity markets continued their upward trend last week, with global equities gaining 1.2% in local currency terms. Beneath the surface, however, the recovery has been a choppy affair of late. China and the technology sector, the big outperformers year-to-date, retreated last week whereas the UK and Europe, the laggards so far this year, led the gains.

As for US equities, they have re-tested, but so far failed to break above, their post-Covid high in early June and their end-2019 level. The recent choppiness of markets is not that surprising given they are being buffeted by a whole series of conflicting forces.

Developments regarding Covid-19 as ever remain absolutely critical and it is a mixture of bad and good news at the moment. There have been reports of encouraging early trial results for a new treatment and potential vaccine but infection rates continue to climb in the US. Reopening has now been halted or reversed in states accounting for 80% of the population.

We are a long way away from a complete lockdown being re-imposed and these moves are not expected to throw the economy back into reverse. But they do emphasise that the economic recovery, not only in the US but also elsewhere, is likely to prove a ‘stuttering’ affair.

Indeed, the May GDP numbers in the UK undid some of the optimism which had been building recently. Rather than bouncing 5% m/m in May as had been expected, GDP rose a more meagre 1.8% and remains a massive 24.5% below its pre-Covid level in February.

Even in China, where the recovery is now well underway, there is room for some caution. GDP rose a larger than expected 11.5% q/q in the second quarter and regained all of its decline the previous quarter. However, the bounce back is being led by manufacturing and public sector investment, and the recovery in retail sales is proving much more hesitant.

China is not just a focus of attention at the moment because its economy is leading the global upturn but because of the increasing tensions with Hong Kong, the US and UK. UK telecoms companies have now been banned from using Huawei’s 5G equipment in the future and the US is talking of imposing restrictions on Tik Tok, the Chinese social media platform. While this escalation is not as yet a major problem, it is a potential source of market volatility and another, albeit as yet relatively small, unwelcome drag on the global economy.

Government support will be critical over coming months and longer if the global recovery is to be sustained. This week will be crucial in this respect for Europe and the US. The EU, at the time of writing, is still engaged in a marathon four-day summit, trying to reach an agreement on an economic recovery fund.  As is almost always the case, a messy compromise will probably end up being hammered out.

An agreement will be positive but the difficulty in reaching it does highlight the underlying tensions in the EU which have far from gone away with the departure of the UK. Meanwhile in the US, the Democrats and Republicans will this week be engaged in their own battle over extending the government support schemes which would otherwise come to an end this month.

Most of these tensions and uncertainties are not going away any time soon. Markets face a choppy period over the summer and autumn with equities remaining at risk of a correction.

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