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Physical Gold Backing

Every KGOLD is intended to represent one gram of fine gold that physically exists in a vault. This page explains how that backing is structured. The binding terms are set out in the KGOLD Token Terms and Conditions.

Gold First, Then Token​

KGOLD is not minted before the gold that backs it is in place. Under the Token Terms, no KGOLD is created or enters circulation until the corresponding physical gold has been purchased, allocated, and deposited with the designated custodian. Kulce maintains a 100% physical gold backing ratio at all times.

Where the Gold Is Held​

Kulce does not operate its own vaults. Physical custody, vaulting, and safekeeping are provided by independent third-party custodians appointed by Kulce, using LBMA-approved vault infrastructure. The underlying gold consists of LBMA Gold 1 kilogram bars or LBMA Good Delivery bars.

The gold is held on an allocated and segregated basis. It is kept separate from the assets of Kulce, the custodian, and any third party, and is not commingled with Kulce's own assets or general estate. Where applicable, the reserve is maintained under a traceable structure that includes bar-level identification.

Who Owns the Gold​

Before a unit of KGOLD is purchased by a holder, legal ownership of the corresponding portion of the gold sits with Kulce. When KGOLD is purchased or transferred to a holder, legal ownership of the corresponding portion of the gold passes to that holder and stays with them until they transfer the KGOLD again.

Because the gold is held on a segregated basis and owned by holders rather than by Kulce, the Token Terms provide that, in an insolvency of Kulce, the underlying gold is treated as the property of KGOLD holders and held separately from Kulce's general assets and liabilities, subject to applicable law and the custody arrangements.

Encumbrance and Insurance​

The reserve gold backing circulating KGOLD is not pledged, lent, leased, or otherwise encumbered. The Token Terms allow only limited futures, leasing, or hedging arrangements for risk management, and only where they do not affect holders' ownership, the required backing, or redemption rights.

Physical gold may be covered by insurance maintained or arranged by the relevant custodian or vault provider, subject to that policy's terms, limits, and exclusions. Kulce does not itself provide insurance, and there is no government-backed deposit protection for KGOLD or the underlying gold.

Verification​

The sufficiency of the physical gold backing is checked by an independent Proof of Reserves process, described on the Reserve Management page.