My eye was caught this week by the Bank of England (BoE) posting vacancies for several people for jobs related to Central Bank Digital Currencies, including a ‘Stakeholder Analyst – Central Bank Digital Currency’. Not that I am looking for another job – but the relentless shift towards a cashless society and digital payments is a big part of my life.
It’s going to become a big part of your life too.
In April, the BoE and the UK Treasury created a ‘task force’ to study the establishment of a CBDC. The CBDC idea is spreading like wildfire – the National Bank of Georgia said at the start of this month it’s considering launching its own CBDC by creating a digital version of the Georgian currency, the Lari. The CBDC is no longer just a theoretical concept; it’s already been tried and tested in China. Cash – paper money – is dying on its feet. In the euro area, cash transactions account for around 10% of GDP. In the UK and US it is around 5%. In Sweden, it is less than 1%.
The Bank for International Settlements (BIS – the central bankers’ bank) put out a report last year, a collaborative study from seven central banks (including the US Federal Reserve) on the ‘foundational principles and core features’ of CBDCs. The first sentences of this report say: “central banks have been providing trusted money to the public for hundreds of years as part of their public policy objectives. Trusted money is a public good”.
The problem for central banks – which they hope to redress by developing CBDCs – is that ‘trusted money’ has become a scarce commodity. Declining confidence in fiat currencies has followed the decline in their purchasing power – that essentially explains why privately-created cryptocurrencies have been created. People have lost confidence in governments and understandably want to control their own assets; they hope to do that via cryptocurrencies.
A major fight is looming and there are more questions than answers. Who issues and controls this ‘public good’? Will CBDCs in our country be identity-based rather than token-based? As one commentator says: “the state of the discussion is so specialised and technical, new monetary systems risk being swept in without any democratic oversight at all”.
The issue of public money was on no-one’s agenda in the latest elections in the UK, where some 48 million people on Thursday this week were eligible to vote in the most extensive range of local elections in almost 50 years. In Scotland – still part of the UK – voters chose the 129 MSPs of the Scottish Parliament, with the Scottish National Party, which backs Scotland’s independence, seen as returning with a majority. The ties that have bound Scotland are bound to be tested again soon; those that link Northern Ireland to the UK feel looser, post-Brexit, than for many years.
Against the background of one of the most shattering events in recent history – the pandemic – the world feels poised on the verge of momentous changes. It’s a bit like the W.B. Yeats poem The Second Coming:
“Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world”,
Countries divided, monetary systems changing, previous certainties tossed aside, authoritarian creep in many places – the need for control over what one has, has rarely been more important. In the midst of all this gold provides some certainty – some security. If gold is security, then Glint is its key.
Until next week,
When’s a good time to buy gold? It’s a question on many minds at the moment, with the price languishing about $258 an ounce (£274) from its peak of over $2000 per oz last August.
There’s no simple answer. The obvious response is “buy it when it’s cheap and use it when it’s expensive”. But that’s not useful; none of us has a crystal ball to peer into the future. Quite obviously no-one who may have bought their gold at last year’s peak wants to spend it now, and crystallise those ‘losses’.
Maybe ‘experts’ know something you or I don’t? According to the latest Reuters poll of 42 gold analysts and traders, the consensus is for a median (i.e. mid-point) gold price of $1,784 an ounce for 2021 and $1,743 for 2022. But just three months ago the same analysts were forecasting $1,925 and $1,908 an ounce for 2021 and 2022 respectively. What has changed so fundamentally in the past three months? “Most of the drivers (of the rally) are fading”, said one of those polled.
Really? Analysts are like sheep – they don’t like deviating from the herd. They also like to hedge their bets. So Reuters also reported that “interest in gold could be rekindled by events such as a weakening of the US dollar, an inflation surge, falling stock markets or a wave of coronavirus infections big enough to derail economic growth”.
These analysts don’t seem to be taking much notice of the inflation that’s already here, in everything from the price of beach huts in Essex, England (being snapped up at an 80% higher price than this time last year, according to one renter) to basic foodstuffs. The international price of soybeans – China is the world’s biggest soybean buyer, mostly for animal feed; it bought 100 million tonnes of soybeans in 2020 – has gone up by more than 70% since this time last year. Other basic commodities have also increased in cost astronomically.
If you believe, as I do, that the supply of fiat currency – paper money – in the financial system correlates to inflation, then we could be in for a strong inflationary shock later this year. Money supply – M2 in the jargon – is growing at around 27%, the fastest rate ever. The latest US consumer price index (CPI) data from the US showed prices rising by an annualised 2.6% in March – the highest since August 2018. But house prices are not captured by the CPI – and they rose by 17% in March; almost half of homes are getting sold within a week of listing. Officially everything is under control; unofficially I have my doubts. Official inflation figures do not reflect what’s really happening.
Does this give you a clue as to when it is a good time to buy gold? Trust the ‘experts'(who can evidently turn on a dime) or trust your own experience? However you play it, gold remains an inflationary defence par excellence.
Getting the timing right is virtually impossible – it’s probably wiser to follow the trend. Let’s suppose that you bought gold months before that July/August 2020 peak. Had you bought gold on 9 March 2020 for example – when a major dip happened – then you would now be sitting on a ‘gain’ of $281 an ounce. If you had bought gold when Glint was still an infant, say towards the end of November 2016, your ‘gain’ would by now have been more than $1,600.
For me, and all of us at Glint, gold is money, and it should and can, be used as money – it’s your gold and it can be spent or saved as you wish. As the financial system in the US and elsewhere is flooded with paper money and cryptocurrencies remain incredibly volatile, for me any time is a good time to buy gold.
Until next week,
Jason Cozens, CEO and Founder
As I stir the ashes of this week’s campfire I find myself in a state of slight confusion – will I need a vaccine ‘passport’ to able to go the pub for a drink and a much-needed ‘in person’ meet-up with my Glint team? Or to travel abroad? Or to sit down for a meal in a restaurant?
According to the UK Prime Minister Boris Johnson, when non-essential shops and pub gardens in England re-open on 12 April “there is absolutely no question of people being asked to produce a certification or a Covid status report when they go to the shops or to the pub garden or to the hairdressers or whatever…”
For good measure, he added “we’re not planning that for step three, either”. Step 3 (which will be no earlier than 17 May) will see the re-opening of theatres, cinemas, galleries “subject to specific conditions: that they comply with COVID-Secure guidance including taking reasonable steps to limit the risk of transmission, complete a related risk assessment; and ensure that those attending do not mix beyond what is permitted by the social contact limits”. Those social contact limits ban groups of more than six people or two households indoors. How will that work in a cinema or pool hall for example?
Not even by 21 June is it guaranteed that the abnormal conditions of life which have been imposed by the government (and heartily supported by the general public, if most opinion polls are to be believed) during Covid-19 might be removed. “This is subject to the outcome of the Events Research Programme, and a review of social distancing measures”, says the government’s website. Restrictions on what we can do, how we can mingle, where we can go, are being lifted; at a snail’s pace.
But the introduction of vaccine certificates or passports – which would include vaccination status, test results or evidence of someone having contracted and recovered from Covid-19 – “could potentially play a role” in the future, says the government.
Boris Johnson said during a debate on national identity cards, when a previous (Labour) government introduced plans for them in 2003: “I will in no circumstances carry one and even were I compelled to do so, I would take it out and destroy it on the spot were I ever asked to produce it. It is a plastic poll tax that will do nothing to assist the struggle against terrorists and will hugely expand the powers of the state over the individual”.
The last time the UK legally imposed compulsory identity cards was during the Second World War – everyone had to carry the card at all times and failure to do so was a criminal offence. That lasted until 1952 – seven years after the war ended.
The sheer bureaucracy of administering all these ‘steps’ (the ‘tier’ system has been quietly dropped in England at least) and ensuring compliance is mind-boggling. Whole new businesses have grown up around Covid testing, like moss on an ill-tended garden path.
There is already opposition building among MPs and others outside Parliament to any idea of compelling the introduction of ‘Covid passports’ – but the private sector may start imposing them anyway. The risk is not just Covid-19 but widespread confusion as to what is or is not permitted, and on what basis.
Until next week!
Spring is here and finally, we have some sunshine! In the UK, the mood is lifting, nicely coinciding with the easing of the government’s restrictions on social interaction. As of Monday, this week the rules allow six people (or two households) to be free to meet outdoors, and outdoor sports and open-air swimming pools are again open.
In the past 12 months – the UK went into its first ‘lockdown’ 23 March 2020 – we have acquired lots of new vocabulary; ‘social-distancing’, ‘flattening the curve’, ‘lateral flow tests’, ‘immunocompromised’, ‘intubation’, ‘personal protective equipment’, ‘proning’ … the list goes on. Will we still be using them a year from now or will they just be distant bad memories. We are told that Covid-19 (or some variants) will still be with us but that we will have to live with that. They can’t lock us away forever though. Economic need is starting to trump health anxieties. Policymakers are starting to realise (I hope) that they need to get the economy restarted.
From 12 April, gyms, hairdressers and other venues can re-open in England but not until 21 June (on current plans) will all legally-imposed limits on social contact be removed. Nightclubs from that date can throw their doors again.
Brits can, in other words, look forward to going back to ‘normal’. But after a year of more or less enforced social distancing, we have no idea what that might be. I presume that at most social gatherings there will be one main topic of conversation – ‘how was life for you under lockdown?’
But at least it will soon be legal to rub shoulders with strangers, shake hands with friends, and hug one another again – crowding will be back and I can’t wait.
For the Glint team, crowds are starting to re-appear. As we have been advertising in recent editions of The Treasury, we are offering Glint clients the chance to pre-register their interest in investing in Glint, and to join our gold-as-money movement. Very soon now, we are throwing the invitation open to the wider public – crowds are back!
Have a great week!
I have just filled in my census form. It’s a job that comes round every 10 years, although Scotland is pushing back its census until 2022, “due to the impact of the Covid-19 pandemic” which, oddly enough, has not delayed that of England, Wales or Northern Ireland. The US also runs a census every 10 years – their next one is due in 2030.
What do I think of these great data-gathering exercises? A nosey-parker intrusion by the state into the private lives of 68 million people? Or a useful exercise which enables the government to make better policy decisions? On the basis of many past government errors, I’m not very hopeful about the latter.
But unless I want a criminal record, I have no choice – failure to complete the census risks a £1,000 ($1,383) fine. Refusing to complete the US census risks a fine of up to $5,000 (£3,600). Four UK ‘refuseniks’ were fined a £1,000 after the 2011 UK census; 270 more were fined an average of £218.
Censuses have expanded their probing over time. As with the first (1790) US census, there were just six questions in the first (1801) UK census – no names or addresses. From 1871 to 1911, the UK one even asked if anyone was blind, deaf, dumb, an imbecile or lunatic.
For 2021’s model the (now) 50 questions range from “what is your name and date of birth” to “how well can you speak English?” and (voluntary) ones about religion and gender.
Personal data is big business these days. The UK’s Office for National Statistics promises “your information is safe with us” and will remain confidential for 100 years. But how strong can that promise be? The US moved its census on-line to an outsourced company from 2016; but it was hacked from IP addresses in Russia during 2018 testing.
There were ‘thousands’ of data breaches in UK government departments between 2019 and 2020. The UK government awarded a £65 million contract for administering this year’s on-line census to a US-based company called Leidos, which the Stockholm International Peace Research Institute (SIPRI), listed as the 19th biggest arms and military services company in the world in 2019. The 2011 census was run by the US-based arms company Lockheed Martin.
Gathering and using information on individuals is probably the biggest growth industry of the early 21st century. China does it very effectively and, with its Central Bank Digital Currency – and CBDCs will soon be everywhere – is tightening its grip over its citizens. Your fiat money is not really yours; your personal data is not really yours.
At Glint, we take your data security very seriously. So, I urge you to be vigilant and protect your personal data.
Until next week, stay safe.
This is the time of year when UK (excluding Northern Ireland) property owners get their annual council tax demand for the next year. If ever there was a confirmation that inflation is back, it’s this – my council tax for April 2021-April 2022 is up by 4.8% compared to the previous year. One item – for the local police and crime commissioner’s services – has gone up by a whopping 7.4%!
Meanwhile, the government says the Consumer Prices Index (CPI) rose by 0.7% in the 12 months to January this year. The CPIH (which includes owner-occupiers’ housing costs, including council tax) rose by 0.9% in the 12 months to January this year, according to government figures. My council tax went up by 4.99% in 2019-20 and 3.99% in 2020-21. So over three years, this tax has risen by an average 4.59% a year. Across the country council tax this year will go up by an average 6.6%. Yet the government figure for the annual CPIH nationwide in 2019 was 1.4% and 0.8% in December 2020. There seems to be a discrepancy somewhere…
This creeping inflation and stealth tax hits us all; the poorest households hardest. Many have racked up debts during the Covid-19 lockdowns. Total UK household debt in the third quarter of 2020 was almost £1.9 trillion, 2.4% higher year-on-year. It’s difficult to accurately assess how many and what types of people are struggling in the UK – there are so many ways of calculating this. But the increase in foodbank use – up by 88% rise in demand during February-October 2020 compared to the same period in 2019 say independent food bank operators – gives a clue.
Yet at the same time, many UK households have managed to save during the Covid-19 lockdowns. Since March 2020 UK households have accumulated an estimated £125 billion in savings, according to the Bank of England (BoE).
Where will all this unusual savings go? It may well be just as quickly spent once the Covid-19 lockdown ends, although maybe it needs to be saved for rainy days ahead.
For the UK’s Chancellor, Rishi Sunak, has in mind a series of stealth taxes, by de-indexing the tax system. From 2022 through 2026 there will be no adjustments of income, inheritance or capital gains tax brackets, of pension lifetime allowances or of value-added tax (VAT) for small-business thresholds. This de-indexing will see him gather an additional £25 billion in taxes over four years and push 1.3 million new taxpayers onto the tax rolls by 2026 – with the majority at the bottom end.
Like a frog dropped into a saucepan of cool water that is actually being boiled up, a percentage here and a percentage there feels rather painless at the time. All of us facing an inflationary council tax bill will have to grit our teeth and bear it.
Is gold a good hedge against inflation? This debate rages. And opinion is deeply divided about where inflation is headed.
In any case at Glint, we promote gold not purely as a hedge against inflation, but as money, to be bought, spent and used as an alternative to paper money; since 1933 the US dollar has lost more than 90% of its purchasing power. And the amount of dollars in circulation is now 60 times greater than in 1933. Some of you may have more cash around as a result of policy decisions by your government; but holding it as cash or putting it into a bank account may not be the best use of it in these volatile times.
All the best,
Anyone who watched all four seasons of the Netflix drama The Crown will have seen a dysfunctional family in full spate. Very few would willingly join such a family, or ‘the firm’ as the Royals call it.
Poor Harry was born into dysfunctionality, but Meghan volunteered for it. Love is blind, they say. Since the Harry + Meghan show relocated to California mutual accusations have criss-crossed the Atlantic – hints of Meghan’s bullying of her staff by the Palace, suggestions by her of racism at the heart of ‘the firm’…this could run and run. The Crown’s scriptwriters are probably rubbing their hands with glee.
Meanwhile, Prince Philip has been hospitalised with heart problems. The Queen is in her 94th year. It’s all starting to feel like another annus horribilis, which is how the Queen described 1992 after that year’s sequence of unpleasant events for ‘the firm’.
Will this internal struggle, playing out on a TV near you, damage the monarchy’s standing? Last December a YouGov poll found that while 67% of Brits (and 84% of over-65s) want to keep the monarchy, just 21% would prefer an elected head of state. But many would like to see Prince William leapfrog Prince Charles and become the next monarch.
Tantrums in a teacup, you say. There are much bigger issues – the return of kids to school this week, and the paradoxical possibility of there being an upsurge in influenza cases (which kills around 11,000 people in England every year) later this year because there have been almost no infections thanks to the Covid-19 lockdowns. Like Meghan, we might be asking ourselves, ‘will we ever be free again?’ Britain has had the tightest lockdown in the developed world in this ‘second wave’; each additional week of lockdown costs taxpayers £6 billion according to the Adam Smith Institute.
That’s almost enough to fund Boris Johnson’s latest wizard scheme, a White House –style ‘situation centre’ in the basement of the Cabinet Office costing £9 billion (minus overrun costs). The ‘SitCen’ is due to open this summer. It will be the government’s ‘command bunker’ for emergencies such as terrorist attacks or pandemics.
It used to be said of Labour governments that they were ‘tax and spend’ machines. It’s starting to look like Conservative governments are no different. As we face a £2 trillion national debt, tax rises are already starting to happen. Inflation is cooked into the cake. The Harry + Meghan episode signals a further erosion of stability – what we have known and lived with for decades past is fast changing.
In this increasingly uncertain world, where both money and monarchy are besieged, gold-as-money, thanks to Glint, may well help you provide a shelter from the storm.
Until next week.
As schools are poised to re-open in the UK, many people are thinking about when they might be able to travel again without breaking the law or being required to go into a two-week quarantine. UK households are also in the fortunate position of being able to afford a break – the Bank of England says that in January alone this year households stashed £18.5 billion into bank accounts as they saved cash they might otherwise have spent on restaurants, retailers and other businesses. That’s a lot of cash – the six months to February 2020 saw them save a monthly average of £4.8 billion.
This week’s UK Budget avoided any hasty measure to claw back some of the £407 billion that has been (and is being) spent on dealing with the pandemic. Meanwhile, the private sector is already making stealthy hikes to try to recover all the losses it made last year.
Take Heathow Airport. In 2019, almost 81 million people passed through Heathrow; last year traffic collapsed by 73% and just 22.1 million used Heathrow. Heathrow lost £2 billion last year. Heathrow is owned and operated by BAA Limited, which itself is owned by an international group led by the Spanish transport company Ferrovial.
Heathrow has just said it is now adding a new charge to all outbound flights. It calls this extra charge a “United Kingdom Exceptional Regulatory Charge”. All passengers now flying from Heathrow will find themselves paying an extra £8.90. This will go on the bill to airlines, who will no doubt pass it onto their passengers. Even if only 50 million passengers take an outward bound flight, Heathrow will gain an extra £45 million. In July 2019, the union Unite threatened a strike over a refusal to award them a 4.5% increase; meanwhile, the CEO, John Holland-Kaye, got a 103% pay rise, taking him to £4.2 million.
Will other UK airports start charging this Covid-loss tax? They say not, but as passenger numbers collapsed everywhere, it must be tempting.
Passengers will no doubt meekly accept this tax – a tenner on the cost of a seat, it doesn’t ‘feel’ like a lot. That’s the nature of taxes – a little bit here and there and one hardly notices. But having imposed it, will this Covid-19 surcharge ever be removed? I doubt it. Covid-19 (or variants thereof) will no doubt always be with us, and so will the flight surcharge/s. Taxes stick around longer than their original justification. You should think yourselves lucky there’s no flu seat surcharge.
Income tax was first introduced in the UK in 1799 – and was then regarded as a ‘temporary measure’ to cover the cost of wars against Napoleon. Repealed in 1816 after the Battle of Waterloo it was reintroduced in 1842 by Sir Robert Peel to deal with a massive public deficit. Income tax is still a ‘temporary’ tax; it’s just automatically renewed each year on 5 April as part of the annual Finance Bill.
The UK now has a welfare state in which the bills for all kinds of public ‘services’ are shouldered by the government, i.e. by the taxpayer. Governments everywhere have pumped – whether freshly printed or borrowed the effect is the same – trillions of dollars into the financial system. This is a very peculiar time. The world economy has been at a standstill for a year, yet the price of a barrel of oil is now almost what it was in September 2019, pre-pandemic.
So who says that inflation is not a worry? All kinds of ‘extras’ are now being charged; hundreds of pounds for a Covid-19 test before you fly and now a tax on your seat from Heathrow. With oil prices now almost as high as they were pre-pandemic, the costs of everything are rising. When I next travel from Heathrow I will be taking my Glint card, ready to pay the next Covid-price gouge in gold.
Until next week.
As governments around the world start to unlock their gates the penalties of mass incarceration are being felt – from schoolchildren to their parents, the disruption has been devastating.
In England, it was only Monday that the government announced its plans for the unlocking of the country, in four drawn-out stages, the last “no earlier than 21 June”, when all legal limits will be removed on mixing and the last sectors to remain closed, such as nightclubs, will be allowed to re-open.
My nightclubbing days are past but I could do with some sun – which, given this is rainy and overcast England, probably means travelling overseas. My skill at table-tennis has vastly improved during my home incarceration but I still don’t qualify as an “elite sportsperson”, one of the categories permitted to travel according to government rules.
Going overseas will not be allowed before 17 May, although the rules are a little confusing. We are promised that a government report on international travel rules will be published on 12 April. I can’t wait.
But despite the opacity about when we will be permitted to get some foreign sun, EasyJet’s international holiday bookings surged by 600% (over the previous week) the day after the government signalled it was easing its restrictions.
The patchwork of rules permitting what can and cannot be done is much more complicated in the US, but at least the majority of US states are open for business.
And even though we might be freed to travel internationally by June, hurdles will still need to be jumped – booking a flight and hotel, grabbing your passport and stepping on a plane is clearly going to be a distant memory. The International Air Transport Association (IATA), the trade association of the world’s airlines, is readying a digital travel passport. The promise of liberation through immunisation is receding by the day.
So I am not hurrying to book myself an EasyJet flight, even though I crave the sun. And when we are finally allowed to take a flight, I will remember to take my Glint card – as important for my financial protection as my travel passport will be for the ability to get around.
Until next week.
Since 12 February, we are in a new lunar year, the Year of the Ox, stubborn, hard-working, determined. Traditionally a time when families in China criss-cross the country to spend time together, there isn’t as much of that happening this year because of the risks of spreading Covid-19.
There’s not much travelling going on in Europe or the US either right now, as governments clamp down on the possibility of spreading the disease.
There’s one big difference between China and elsewhere, however. Even stay-at-home Chinese have been given free gifts in the “red packets” traditionally used for gift-giving. These packets come with a difference, however – instead of the usual cash they contain digital Chinese currency. Beijing and Suzhou each gave out 200,000 red packets containing Renmimbi 200 (about $31) via a public lottery.
This is not state philanthropy – it goes much deeper than that. The red packet gifts are a trial run for China’s imposition of a nationwide state-controlled digitalised currency. The Chinese payments system is already largely cash-free. This digital Renminbi is distributed directly to e-wallets of users by state-owned banks, setting up payments’ channels that circumvent private sector ones. As the digital Renminbi is legal tender, no merchant can refuse to accept it and thus they will be obliged to install e-Renminbi terminals and payments’ systems after the state digital currency is formally launched.
This is how I see cryptocurrencies being killed off by central banks and their governments. Central banks are going to encroach on private cryptocurrencies’ turf. When the digital dollar or digital pound is here (and they are coming) and are ‘legal tender’ then they will crowd out private payments’ systems. About 60% of more than 60 central banks surveyed by the Bank for International Settlements last year said they were “conducting experiments or proof-of-concept” studies on digital currencies. Where China goes – driven by a desire to supervise and control its population – it seems other countries will follow.
For me, this is an important reason why those of us who wish to truly democratise and control our own money ought to be thinking about gold for our payments. Gold is independent, has been used for payments for Millennia, and is universal. With Glint It! (the in-app P2P facility from Glint, currently available in the UK and Europe and coming soon to the US) you can send and receive gifts of real gold, digitally – even if you can’t travel right now there’s nothing to stop you sending a gift to someone else to remind them that you care.
Until next week.