Posts by: Glint

• The US central bank confirmed market expectations by raising the main interest rate by 0.25%.
• US Federal Reserve funds rate is now 0.25%-0.50%.
• This might be the first of at least four further rate rises this year, and more in 2023.
• Borrowing costs for everything from credit cards to mortgages are headed higher.

In the past 12 months, the annual inflation rate in the US has moved from an official 2.62% to 7.9% – a 40-year high. Jerome Powell, chairman of the US Federal Reserve, and Janet Yellen, US Treasury Secretary, have shifted their narrative about inflation. A year ago they called it ‘transitory’. Yellen warned last week that Americans will probably see another year of what she called “uncomfortably high inflation”.

Putting up interest rates is a central bank’s main tool when it comes to trying to prevent inflation from spiraling beyond control. But this inflation is largely imported and probably beyond the control of anything the US Fed can do. The fall-out from the war in Ukraine has pushed energy and grains prices to record levels; China’s zero-Covid policy continues to disrupt supply chains. The risk is that making borrowing more expensive could throw the US economic recovery off-course, while failing to cool red-hot prices. According to a note to clients from Bank of America, for the US “economic growth and profit expectations are recessionary”. Kristalina Georgieva, managing director of the International Monetary Fund (IMF) has Tweeted that the “entire global economy will feel the economic ‘ripple effects’ of the war in Ukraine, with slower growth and faster inflation”.

It’s commonly held that rising US interest rates are bearish for gold, but in fact there is little correlation between interest rates and the gold price; the 1980s saw declining interest rates and a bear market in gold, while in much of the 1970s gold prices rose, in tandem with rising interest rates. According to the World Gold Council, there is usually a negative correlation between gold and interest rates. Higher interest rates are thought to push gold lower because of increased competition from higher-yielding investments.

Gold has traditionally been regarded as a safe haven asset at times of intense uncertainty and anxiety, such as now. The Dollar price hit $2,070 after Russia launched its invasion of Ukraine; Goldman Sachs has raised its price forecast for gold to $2,500 over the next six months, $450 higher than previously. Glint, the global gold-based payments platform makes gold easier: simpler to access, simpler to share and for the first time ever, a viable option to spend.

While we strongly believe that gold is the fairest and most reliable currency on the planet, we must point out that it isn’t 100% risk free. We have seen a steady increase over time but the value of gold can fall, which means the purchasing power of the customer can also fall.

Jason Cozens, Founder & CEO of Glint, says: “The markets have long been expecting this interest rate rise by the US Federal Reserve. This rate rise is probably just the first in a sequence that will push the US base rate to 2%, which historically is still a very low level. The Fed is in a very uncomfortable place. If it tightens credit and the money supply the US might face a severe recession; if it doesn’t, it may be criticized for failing to address inflation – even though the causes of this inflation lay beyond its shores”.

“We are living through deeply troubling and uncertain times. The Dollar’s status as the international reserve currency has been further chipped away by the news that Saudi Arabia may price some of the oil it sells to China in Yuan”.

“Gold will become increasingly important as an alternative to fiat currencies; the turbulence of today merely reinforces that. Glint has a vision of a global, gold-based alternative to banking, payments and money. We have the capacity and opportunity to build a significantly scalable financial eco-system, connected to, but outside of the existing banking and cryptocurrency systems”.

ENDS

Press information

About Glint
At a time of extraordinary monetary policy and when trust in currencies, banks and existing payment systems has been eroded, Glint helps us move to a more stable global economy. Glint is bringing reliability, independence, choice, and control to clients, by reintroducing the most universally trusted form of money, Gold.

Glint Pay Ltd. (glintpay.com) is a fintech company, based in London, Boulder (US) and Tokyo, that uses gold as an alternative global currency to enable its clients instantly to buy, sell, save, spend, and send their physical gold and other currencies, through the Glint Mastercard® and Glint App.

Glint offers no credit facilities, it allows users to transfer, receive and save real gold, which is secured in Brink’s vaults in Switzerland.

Glint is able to issue cards to clients around the world and can open accounts in over 200 countries. With more than 90,000 registered users, Glint has completed over $300million worth of transactions to date.

Glint is authorised and regulated by the UK’s Financial Conduct Authority which has given permission for Glint to issue electronic money (e-money) and provide payment services (FRN 900657).

Gold is not regulated by the FCA. However, Glint’s clients know their gold is secured in a Brinks Vault in Switzerland, insured by Brinks with Lloyds of London and their policy covers the replacement value of Glint client’s Gold as held in their vault.

The Glint card is issued in the UK by Glint Pay Services Ltd pursuant to licence by Mastercard International Inc.

Glint is a U.S.-based authorized Card Program Manager. Funds are held at Sutton Bank, Member of the Federal Deposit Insurance Corporation (FDIC), in an FDIC-insured account.

Glint Pay Inc. employs effective Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and fraud prevention systems and controls to mitigate and combat risks.

Whilst we strongly believe that gold is the fairest and most reliable currency on the planet, we obviously need to point out that it isn’t 100% risk free. Whilst we have seen a steady increase over time, the value of gold can fall, which means the purchasing power of the customer can also fall.

We see Glint as the key to unlocking the security of gold as sound money, money that can be used by everyone in their daily life. While gold goes up and down in price, over time it has proved a reliable store of value.

Thus, we are always on the look-out for cogent, intelligent and persuasive articles which give a provocative analysis of the current practices of central banks, those bodies which have the most profound influence over our fiat money system.

For that reason, we are delighted to publish here today an essay by Geoff Blanning. In his ‘Put the tools away now, please’ Geoff, who worked in the City for 32 years as an investment manager, savages the quantitative easing policy pursued by the Bank of England (and other central banks) and warns that the creation of vast amounts of new money “represents a debasement of every existing pound in your pocket and mine”. Geoff lays out how higher inflation inevitably follows the extraordinary amount of new money which has been injected into the global system.

Read Geoff Blanning’s ‘Put the tools away now, please’  White Paper here:
https://glintpay.com/wp-content/uploads/2021/09/Geoffrey-Blanning-Put-the-tools-away-now-please.pdf

Listen to the podcast here on Spotify: https://open.spotify.com/show/3QQoOfUpMqozX1Am2VoLRo

Watch our YouTube film here: https://youtu.be/qcUg1OSu8xk

We want you to have as much information as possible when considering investing in Glint, so we asked leading taxation expert Guy Kelland, to share his views on UK investors making an EIS qualifying investment into Glint’s Crowd Funding campaign.

Approaching tax year-end, many people’s thoughts will naturally turn towards tax-efficient investments and ensuring that pension contributions and ISA pots are topped up. But with limits on ISAs and increased restrictions on pensions, once these options are maxed-out the next question should be ‘what’s next?’

The answer could be Enterprise Investment Schemes or EIS’ as they are also known*

EIS’ are a decades-old tax planning tool regularly used by investors for a multitude of purposes. An incentive created and driven by the UK government, this well-established scheme encourages investment in early-stage growth focused companies focused on innovation.

For those who have heard of EIS’, they may know of them as high-risk investments. And it’s true, they are long-term investments in unquoted and illiquid stock. But with high risk can potentially come high reward – provided by both the significant target returns on such schemes and the generous tax incentives offered by the UK government to investors.

The tax reliefs on offer in an EIS can include:

– 30% Income Tax Relief – claimed against either your income tax liability for the current tax year or ‘carried-back’ to the previous tax year. This can be claimed against a maximum of £1M per year per investor (or £2M per year in ‘Knowledge Intensive’ companies that specialise in areas such as life sciences). But take note, you can’t claim back more than you’ve paid!

– Tax-Free Growth – any profits in an EIS are not liable to Capital Gains Tax (CGT)

– Inheritance Tax (IHT) Relief – for those more ‘seasoned’ clients who are starting to look at their IHT liability, if shares in these companies are held for a minimum of 2 years (and on death), the shares could potentially be IHT free.

– Loss Relief – an incredibly useful relief which is only available in an EIS. You would be investing in early stage companies with the ability for some fast growth, however, as they are new companies there is also the possibility that some could tank! With loss relief, if any companies in your investment portfolio do fail, you can potentially claim up to 45% back on this proportion of your investment**

– Unlimited Capital Gains Tax (CGT) Deferral – the payment of tax on a capital gain can be deferred when the gain is invested in an EIS.*** So if, for instance, you’ve sold something valuable such as a property, share portfolio, a wine collection or similar, and realised a gain in the last 3 years, you may be able to claw this CGT payment back and defer this payment for the life of the EIS investment. (Then we have some nifty tricks to chip away at this liability, potentially whittling it down to zero – speak to one of our advisers!)

And what’s in it for the government you may ask? There are some very impressive tax reliefs on offer and some will be suspicious as to why HMRC are being so generous. Investors will rightly feel uncomfortable with the thought of tax ‘evasion’ or tax ‘avoidance’ – this is neither – it is tax incentivised investing fully supported by the government and doing good for the British economy. Britain boasts an incredible variety of entrepreneurs, and EIS investment encourages and supports such innovation.

The EIS scheme was launched in the mid-90s by the government to encourage investment in early-stage companies that help to support the backbone of the UK economy. These fledging start-ups often struggle for investment and funding due to the high-risk nature of investing in a new company. However, that is precisely why the UK government offers generous tax advantages on such investments, as this reduces the financial risk for investors.

Investment in an EIS supports job creation, increases productivity and innovation, and boosts growth. So basically, for the government and HMRC – encouraging EIS investment is good business sense!

We have described the substantial returns and touched on the generous tax reliefs on offer via EIS investments, but there are specific nuances and very stringent rules that must be applied. EIS investing is a complex area and detailed knowledge is required to avoid the potential pitfalls of investing in this space. But there are many benefits, so if you think that this could be a useful tool for your situation and want to learn more, we’d love to talk to you about it!

*There are 2 other useful schemes that can be used for similar purposes – VCTs and SEIS – but in this blog we are focusing on EIS’ due to the varied and generous tax reliefs that are offered.

**relief varies according to tax bracket. 45% applies to additional rate taxpayers.

***and if you have claimed income tax relief also.

Risk warning: Tax relief depends on an individual’s circumstances and may change in the future. In addition, the availability of tax relief depends on the company invested in maintaining its qualifying status. Always seek advice from a qualified financial or tax adviser.

There are a few potential pitfalls, some of which are outlined below.

– Not claiming income tax relief. Unfortunately, not claiming income tax will mean that the gains on the EIS are then subject to CGT.

– Timing of the deployment of capital. Some EIS companies may take a year or more to deploy the capital into EIS qualifying companies, this could be an issue if income tax relief is to be carried back to the previous tax year.

– Investors can only claim back income tax they have paid! It may sound obvious but if you haven’t paid say £10,000 in income tax in the current tax year, you won’t be able to claim back more than £10,000 (but you carry back of course!).

– Exit too soon. If a company say floats on the market within the 3 year the client invested into the company then tax relief will be lost. Not always a bad thing but will depend on how much the investor will make to compensate for any lost tax relief.

– Loss of HMRC EIS approval, the companies must continue to participate in a qualifying trade for the three years following the share issue in order to maintain their EIS status.

Guy Kelland is a Chartered Financial Planner and Managing Director of Kellands Chartered Financial Planners. Guy is responsible for shaping the vision and strategy of Kellands. Previously a trader in The City, Guy founded Kellands Hale over thirty years ago.

Kellands (Hale) is a Chartered Financial Planning Practice, based in Hale, Cheshire. We give quality holistic financial planning and investment advice to both individuals and businesses in Cheshire and across the UK. Our Chartered status demonstrates our professional commitment to raising standards of knowledge, capability and ethical practice. It also helps to distinguish us from our competitors and peers. By offering a whole-of-market choice, we offer our clients the very best unbiased financial advice and ensure correct customer outcomes are achieved. Our aim is to help create, grow and protect our clients’ wealth and to work with them to formulate a financial strategy to meet their key financial goals. We have the resources to provide the research and due diligence required in-house, to deliver the very best whole-of-market investment solutions.

Kellands (Hale) Limited is authorised and regulated by the Financial Conduct Authority. The information contained therein should not be regarded as an offer or solicitation to conduct investment business and should not be viewed as personal financial advice, but instead, it is intended to provide information only as an overview of possible considerations or options.  Formal financial recommendations will be made in writing to you once the decision has been taken by you to formally appoint Kellands as your advisers and we have gained a clear understanding of your personal circumstances, needs and objectives.
Kellands (Hale) Limited (FCA Firm Reference number: 193498).