What is Bullion Capital?
Let's have a look at their FY 2022 financial statements to see what we can learn
What is Bullion Capital? It seems to be another shell company in the orbit of the “Kinesis Monetary System,” controlled by the same four individuals that control Allocated Bullion Exchange (ABX) and Kinesis itself:
Thomas RA Coughlin, Director and Chairman
Michael T Coughlin, Director and Secretary
David A Charles, Director
David F Underwood, Director
Unlike Allocated Bullion Exchange, Bullion Capital appears to have no real substance at all. In FY 2022, it reported $866 million AUD in revenue but expenses (in addition to COGS) of only $252,731. $40,953 (16%) of these expenses were audit expense, and the company only had $152,945 cash on hand at the end of FY 2022. They reported a miniscule $696,542 in profit (0.09%), which did not even offset the $1,079,274 loss on the previous year’s $2.8 billion in revenue.
Undoubtedly, precious metals trading is a low margin business, but how does a company manage to generate more than $3.6 billion in sales while reporting cumulative losses of $382,732?
Bullion Capital also benefited from a $3.5 million foreign exchange gain, an amount that is very close to the $3.3 million foreign exchange loss reported by ABX reported for the same period.
Bullion Capital borrowed $6.6 million in FY 2021 which is a similar amount to the $6.9 million in profit reported by ABX in FY 2022.
Perhaps most interesting is that ABX is responsible for 99.4% of Bullion Capital’s revenues and 98.1% of Bullion Capital’s sales were offset by $850 million in purchases from ABX.
Strangely, these related party transactions do not match up with ABX’s financial statements which show less than $1.2 million of trading volume with Bullion Capital. Is one of these sets of financial statements incorrect or is there another legal entity called “Allocated Bullion Exchange Limited” somewhere else? If so, why is there only one “Allocated Bullion Exchange Limited” on Bullion Capital’s financial statements?
Another obvious question to ask is where are all the bullion sales to Kinesis users occurring? Kinesis maintains that KAU and KAG token holders have legal title to the metal backing the tokens, therefore some company must be making these sales direct to end users. If this is all taking place inside of Kinesis Cayman (an entity that has never published financial statements or audits), where is it purchasing the gold and silver from? During FY 2022 (July 1, 2021 - June 30, 2022) only one audit (dated June 20, 2022) covering the underlying gold and silver was provided.
The previous audit in October 2020 showed only a fraction of this gold and silver on hand.
Since there are no audits covering October 2020 through June 2022, should investors assume the entire increase in silver and gold holdings took place between October 17, 2020, and June 30, 2021, or does Kinesis Cayman purchase their gold elsewhere? FY2022 shows only sales of $4.2 million from Kinesis Cayman to Bullion Capital.
Like ABX, Bullion Capital received a qualified opinion from their auditor.
Something doesn’t add up here. If readers would like to examine these statements in their entirety, they can download a copy here.