phone icon (877) 258-0181

Category: Bullion Bulletin

Bullion Bulletin: China and India gold purchasing

   |   By  |  0 Comments

Bullion Bulletin India China Gold

At the start of 2022, the World Gold Council (WGC) took a cautiously optimistic view of the prospects for China’s gold buying this year. Wang Lixin, the Council’s managing director in China said in January the “relatively stable gold price outlook will provide support for gold jewellery demand in China’s market for 2022”. Much has changed since January, not least in China – gold demand this year will be hit by the country’s zero-Covid policy.

Gold demand in China, which vies with India for the position of the world’s biggest gold consumer, was hit by the Covid-19 pandemic in 2020. Last year saw a big rebound in its gold imports, which were 36% higher than in 2020 at 818 tonnes, according to Chinese customs’ data.

Similar growth cannot be expected this year. China’s macroeconomic data from April were alarming: real estate activity collapsed, with construction starts falling 44%; export growth was 4% against 15% growth in March; and retail sales were down 11% year-on-year, against an expected decline of less than 7%. Xi Jingping’s China increasingly resembles that of Mao Zedong – the authority of the communist party is as important as the economy. President Xi’s zero-Covid policy with its enforced lockdowns is hitting everything from microchip production to consumer purchases. China has an official growth target for 2022 of 5.5%, which would be its lowest official target in three decades, but without a rapid easing of its lockdowns it will struggle to achieve that.

In India it’s the recent high price of gold that’s having a negative effect on gold demand. The WGC Q1 2022 Gold Demand Trends report says that India’s gold demand in that quarter fell by 18% to 135.5 tonnes against the same period of 2021. The WGC attributed the decline to higher prices, which it said rose by 8% in the first quarter, to more than Rupees 140,890 (around $1,817) per troy ounce. The Reserve Bank of India (RBI) bought eight tonnes during the first quarter of this year; the central bank began buying gold from late 2017, and since then, has bought 200 tonnes.

The International Monetary Fund (IMF) in its latest World Economic Outlook growth projections sees India’s economy this year growing almost twice as fast as China’s, 8.2% versus 4.4%. In 2021 India’s economy registered 8.9% growth and China’s 8.1%. Last year, according to the WGC, global gold demand rose by 10% year-on-year, thanks largely to a staggering 50% surge in demand in the final quarter of the year. Russia’s Credit Bank of Moscow (MKB), one of the country’s biggest private banks, has obtained a gold export licence from the government, becoming the latest Russian bank to turn to precious metals to try to offset the impact of sanctions.

Central banks have been adding gold to their portfolios in the past few years according to the IMF. Interest in the diversification of assets, away from the Dollar, has increased after Russia’s invasion of Ukraine incurred international sanctions against the former. Thailand’s central bank added 90 tonnes of gold last year, one of the highest purchases among emerging markets.

Bullion Bulletin: Our currency but your problem

   |   By  |  0 Comments

Bullion Bulletin Currency Dollar Question

Control of money is inextricably linked with the exercise of power. Nowhere better illustrates this than Russia’s attempt to enforce on the citizens of the occupied Ukrainian city of Kherson the use of the Rouble, displacing Ukraine’s currency, the Hryvnia. Russia has blitzed the city with missiles. Kherson has been under military Russian occupation since early March. The Russian-backed ‘authorities’ in Kherson are now insisting that only Russian currency is legal tender. Russia is fighting this war on several fronts, including the financial – it is demanding that countries deemed to be ‘hostile’ pay for its exported gas in Roubles.

Control of money and what can be used as money is synonymous with the power of government, reinforced if necessary by punishment. If the ‘hostile’ gas importing countries refuse to pay in Roubles, Russia has threatened to cut off their supply. In Kherson people have come out on the streets against the removal of Ukrainian flags, the re-routing of Internet access through Russian-annexed Crimea, that schoolteachers must adopt the Russian curriculum, the currency diktat and other symbolic demonstrations of Russian authority. But such protests have dried up after people have been arrested, abducted, tortured and otherwise harmed. Enforcing a switch of money has its brutal side.

The US Dollar has for many years been seen as a place of safety, thanks largely to US economic hegemony and trust in US judicial institutions; recently the Dollar has reached its highest levels since 2002 and has gained nearly 9% against a basket of currencies since Russia invaded Ukraine. It is still seen by many investors, governments and individuals as the world’s reserve currency.

But the Dollar’s position as top dog is increasingly being questioned. The International Monetary Fund (IMF) points out that a strong Dollar is piling pressure on low-income countries, with about 60% of them at risk of debt distress. A former US Treasury Secretary, John Connally, said in the 1970s the dollar is ‘our currency, but it’s your problem’. That’s still true today.

Attempts to bypass the Dollar’s dominance and achieve monetary ‘independence’ need not be as crass as what Russia is trying. The creation of Bitcoin was seen (at least in part) as a means of dispensing with the Dollar, of trying to avoid it being ‘your problem’. But even cryptocurrencies are not impervious to questions of confidence. Cryptocurrency fans had a nasty jolt last week. More than $200 billion was wiped from the entire crypto market in a day. The spark for the collapse was the tanking of a Stablecoin, TerraUSD, which was supposed to mirror the value of the Dollar. But it slid to less than 30 cents on Wednesday last week.

There are growing signs that we could be on the verge of a bear market. The S&P 500 is on the edge of moving into bear market territory, which is usually held to be a drop of 20% or more from its last peak. By Thursday last week, the index was down about 18% from its 3 January peak. The Nasdaq Composite is well into bear market territory, down 29% from its November high. The last serious bear market started on 11 October 2007; two years later stock markets were down by around 35%; the gold price was up by 40%.

In a bear market, there is generally a ‘dash for cash’ – liquidity becomes more important. Gold tends to do well. With Glint you have gold in an ultra-liquid form, gold that can be used as money. At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

Bullion Bulletin: Hard and Soft Assets

   |   By  |  0 Comments

Bullion Bulletin Assets Rabbit Image

Mark Twain once gave a piece of investment advice: “Buy land”, he said. His justification was “they’re not making it anymore”.

Except of course ‘they’ are.

At the end of November last year, DappRadar, a crypto analytics site, reported that people had spent – it feels wrong, somehow, to describe this as ‘invested’ – more than $100 million in one week alone on fake land, land that exists only in the Metaverse, the network of 3D virtual worlds.

The craze to hunt down new assets that might give a better yield (or indeed any yield) has only intensified as inflation has turned more serious (about 60% of advanced economies now have inflation above 5%) and we are still living in a world of real negative interest rates.

The decentralisation of the right to issue ‘money’ (and, further along, the decentralisation of what constitutes ‘value’), which is essentially what cryptocurrency is all about, has brought in its wake a less useful phenomenon – it’s divided the world into believers and doubters.

For the former, of course it make sense to be into cryptocurrency or spend millions on fake land; for the latter, such activities are nothing more than a very clever Ponzi scheme – returns from later investors are the means of profit for earlier investors. An entire universe is being erected on the basis of a business model built on a speculative bubble that drives up prices (value).

Cryptocurrencies, non-fungible tokens (NFTs), and the like may just be for the technical elite. But the revolution that Web3.0 is bringing about has delineated one important matter: it’s questioned an assumption we all share, which is that money is what our governments define as legal tender, fiat currency. In 2022, the status of money has been, is being, thrown into question. This rabbit is never going back into the hat.

Agustín Carstens, general manager of the Bank for International Settlements (BIS), has called bitcoin “a combination of a bubble, a Ponzi scheme and an environmental disaster”. That may be true. But as Bloomberg pointed out on 1 May: “when the pandemic began, you really were well advised to put some money into Bitcoin and Ethereum. Relative to January 2020, your investments are up by factors of, respectively, 21.7 and 5.4. Your gold position is up just 25%”.

What are you buying when you purchase an NFT? According to Samson Mow, Chief Strategy Officer at Blockstream, a Canadian-based blockchain technology company, that “can vary drastically from issuer to issuer. Some… don’t really entitle you to anything — all you can do is look at them inside an app and brag about owning them” – a bit like hanging a painting on a wall in your lounge. With others, you are buying entry into a very select club, with very real benefits. You’re NFT token is your key to unlocking both real world and Metaverse treats and experiences that would otherwise be out of reach.

The Bloomberg writer Matt Levine has a lot of fun writing about NFTs and value. This week he wrote: “An NFT of the first tweet from Twitter Inc. co-founder Jack Dorsey sold in March 2021 for $2.9 million to Sina Estavi, the chief executive of Malaysia-based blockchain company Bridge Oracle.

Earlier this year, Mr. Estavi put the NFT up for auction. He didn’t receive any bids above $14,000, which he didn’t accept… .

‘I will never regret buying it because this NFT is my capital’, he said.

It’s true, 99.5% drops are possible in any market! And yet! In general, when you buy something and its price drops 99.5%, you say things like “oops” or “boy I regret buying that thing”. “I will never regret buying it because this NFT is my capital”! Not anymore it isn’t!”

One of the most popular NFT collections is known as the ‘Bored Ape Yacht Club’. The creator of the Bored Apes, Yuga Labs, on 2 May launched a sale of virtual land deeds for its yet-to-be-released metaverse project called ‘Otherside’. Yuga did very well – it made $320 million selling these so-called ‘Otherdeeds’ in a single weekend. But the blockchain became choked and froze for several hours; a record amount of cryptocurrency was permanently destroyed, and the price of ApeCoin, the cryptocurrency linked to the Bored Ape Yacht Club, collapsed. Buying land that does not exist in the real world seems insane to some but entirely reasonable to others. It depends on how literal you’re being and how open to something’s potential. To each his or her own.

At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

Bullion Bulletin: Farewell, soft landing

   |   By  |  0 Comments

As recently as mid-2020 the US central bank, the Federal Reserve, was ‘targeting’ inflation – i.e. trying to ensure inflation was – 2% a year. Whoops – the Consumer Price Index (CPI) in March came in at 8.5%, the fastest pace of inflation in 40 years.

The Fed, like all central banks, has two main tasks – achieving price stability while maintaining maximum employment. It’s clearly failed on the first and is in danger of bringing about failure for the second.

The Fed wants to bring about what’s called a ‘soft landing’, a slowdown in the economy such that high inflation is choked off while unemployment does not increase beyond tolerable levels. The trouble is that the Fed is caught between a rock and a hard place.

Inflation has much further to go, thanks to Russia’s invasion of Ukraine, a ‘black swan’ (unexpected and unpredicted) if ever there was one. The World Bank has said that the world is now facing “the largest commodity shock… since the 1970s…[which] is being aggravated by a surge in restrictions in trade of food, fuel and fertilizers”. It reckons that energy prices will rise more than 50% and agriculture and metals’ prices will go up almost 20% this year. Countries are starting to adopt protectionist measures, restricting exports of key products – Indonesia this week banned exports of palm oil. Sunflower oil exports – of which Ukraine leads the way – are evaporating, increasing demand for alternatives such as palm oil, a key ingredient in everything from lipstick to cookies to biodiesel. Higher palm oil prices are dragging up prices of alternatives, such as soyoil. Supermarkets in the UK have started limiting cooking oil purchases. The Commodity Research Bureau (CRB) Index, a basket of 19 commodities, has more than doubled since the US emerged from pandemic lockdowns.

In other words, there are plenty of reasons to think that there is so much momentum backlogged into inflation prospects that – even if peace broke out tomorrow in Ukraine – consumer prices will carry on inexorably rising. In the face of this, what can the Fed do? The conventional method of tackling inflation is to push interest rates above the inflation level, to make money and credit more expensive, and (it is hoped) that will discourage spending. But consumers in the US, the UK, the Eurozone, have so long lived with interest rates at or close to zero that getting to around 10% will be politically difficult and economically destructive – a massive recession would swiftly follow. “Nine times since 1961, the central bank [the Fed] has embarked on a series of interest rate increases to rein in inflation. Eight times a recession followed”. Let’s not forget the political dimension to this – the Democrats in the US will face testing mid-term elections later this year and inflation is bound to be a hot-button issue.

It’s starting to feel as though we are in for a repetition of the 1970s, when stagflation – elevated price increases combined with stagnant economic growth – was an all-too familiar word. According to some commentators, a stagflationary environment creates the perfect combination of factors to drive strong performances in both gold and the dollar – both of which are seen as defensive assets at times of economic stress, such as now.

Bullion Bulletin: ETFs and the ownership of gold – read the fine print

   |   By  |  0 Comments

Bullion Bulletin ETFs Gold

Gold exchange traded funds (ETFs) in the first quarter of 2022 had net inflows of 269 tonnes, the highest quarterly net inflow since Q3 2020. The total assets under management in these ETFs now stands at 3,836 tonnes, or $240 billion (based on the London Bullion Market Association’s afternoon gold price of 28 February), the highest tonnage level since November 2020. The underlying explanations are that rapidly rising inflation and unexpected geopolitical risks more than offset the drag from higher nominal rates, and the promise of yet higher interest rates ahead.

ETFs enable the smaller investor to have exposure to the gold price, and the costs of the storage and insurance of the gold are wrapped into the fund’s ongoing fees. ETFs that track the price of gold have a number of things to be noted in their favour but the issue of ownership is a little opaque.

According to materials submitted to the US Securities and Exchange Commission (SEC) the gold in some ETFs is ‘allocated’. The SEC is responsible for protecting investors by enforcing US securities laws. But there is ‘allocated’…and then there is ‘allocated’. If the gold is ‘allocated’ then it is owned outright by an investor and stored in a professional bullion vault. If the metal is ‘unallocated’ then it remains the property of the bank or other intermediary and the person who has paid for the metal is essentially no more than a creditor of the bank. So it is vital to know what you have actually bought – which in the case of Glint is gold that is allocated directly to you. In the case of some gold ETFs the gold is “allocated to the Trustee”, but it is “not allocated to individual ETF holders”, which means “indirect ownership to ETF holders”. Because an ETF is exchange-traded, the names of ETF shareholders keep changing every day, which cannot be reflected on bullion every day.

Moreover, with ETFs there is ‘counter-party risk’, i.e. the possibility that the other party in an agreement (which in the case of an ETF is the fund) will default or fail to live up to their obligations. Given that one of gold’s primary benefits is being a financial asset that is not simultaneously somebody else’s liability, owning a gold ETF rather than gold via Glint is a poor substitute. When you invest in a gold ETF you in reality become a shareholder in the trust that manages the ETF, not a gold holder. So the price of gold could be soaring while the ETF is going bankrupt at the same time.

With Glint you have both immediate liquidity and direct allocated ownership of your gold; isn’t this a most sensible way to save gold?

Bullion Bulletin: Fantasy Land

   |   By  |  0 Comments

Bullion Bulletin Inflation Fantasy

It’s been 42 years since inflation in the US was so high. Annualised consumer price inflation (CPI) at 8.5% – meaning among other things that Dollars idling in bank deposit accounts are annually losing around 8% of their purchasing power – will bring joy to very few.

Russia’s President Putin, who seems averse to smiling in public, however might be doing a little jig; he said rising fuel and food prices would soon start putting pressure on Western politicians. He’s right. In the past 12 months, gasoline pump prices have gone up in the US by 48%. That price rise in a nation of drivers such as the US is politically unpalatable. President Joe Biden’s public approval rating dropped to 41% this week. US policymakers will no doubt take comfort from the fact that once volatile items such as food and energy are stripped out, ‘core’ CPI advanced only 0.3% in March, the slowest rise since September last year. Maybe that’s good news – but only if commodity price rises can be constrained, and (given what’s happening in Ukraine) there’s no certainty on that front.

The White House likes to pin the blame for the fuel inflation on the Kremlin but that’s not strictly true. “I banned Russian-imported oil here in America, Republicans and Democrats in Congress called for it and support it”, said President Biden on 31 March. In fact the US uses very little Russian oil. Out of the 19.78 million barrels of petroleum per day it consumed in 2021, only 672,000 barrels were Russian crude or refined products.

On the other side of the Atlantic things are not looking so great either. In the UK, the consumer price index went up by 7% in March, the fastest rise in 30 years, with energy bills the guiltiest party. The UK’s dependence on Russian energy imports is relatively low; just 4% of its gas and 8% of its oil, although 13% of its diesel comes from Russia. In the Eurozone, the annualised rate of inflation hit 7.5% in March, up from 5.9% in February.

On both sides of the Atlantic, senior figures think their respective policymakers are living in a fantasy. Otmar Issing, one of the architects of the Euro, has publicly accused the European Central Bank (ECB) of having lived “in a fantasy” about the dangers of inflation perhaps getting beyond its control. “Inflation was a sleeping dragon; this dragon has now awoken”, he said.

Issing is not the first to resort to an animal metaphor for inflation – Andy Haldane, the former chief economist of the Bank of England reminded the world in a speech in February 2021 of Friedrich von Hayek’s description of trying to control inflation as being like trying to catch a tiger by its tail. “It is obvious the ECB is late to react, [to inflationary pressures] while the Fed might be even more behind the curve” said Issing.

Issing’s view is shared by James Bullard, president of the St Louis branch of the US central bank, the Federal Reserve. Bullard said it is a “fantasy” to think that interest rates – the only tool central banks have for tackling inflation – can be put up sufficiently high to halt rising prices without damaging the economy.

Unforeseen shocks – such as a resurgence of the Covid pandemic and further lockdowns in China or other major markets – could exacerbate the inflationary pressures, says Bullard, who wants the Fed to show households that it’s “serious” about quelling inflation – or else. That ‘or else’ is the decision by the former Federal Reserve chairman Paul Volcker to put interest rates to 20% in the early 1980s – which killed runaway inflation but tossed millions out of work.

Bullion Bulletin: UK seeks crypto ‘global hub’ status

   |   By  |  0 Comments

Stablecoins Bullion Bulletin

The UK government is starting to court digital asset companies. John Glen, minister for the City, said a week ago that the UK is determined to show the country is “open for crypto businesses”. As an “emblem of the forward-looking approach” the UK Treasury is working with the Royal Mint on the creation of a non-fungible token; a questionable use of taxpayers’ money to say the least.

Glen went on: “We see enormous potential in crypto… and we want to give ourselves every chance to take maximum advantage. We aren’t going to lower our standards, but we are going to sustain our technological neutral approach”. This move will distress some in government and perhaps some at the helm of the Bank of England (BoE), which has consistently argued that investors in cryptocurrencies could lose all their money. Indeed, as the UK government was unveiling its plans to throw open the doors to crypto businesses, Andrew Bailey, governor of the BoE, was giving a speech in which he referred to cryptocurrencies as a “front line” for scams. In 2020, Bailey said that Bitcoin, the biggest cryptocurrency, had “no connection” to money and was “highly risky”.

Is Britain’s financial establishment experiencing a bout of mental dissociation?

Probably not. Since leaving the European Union the Conservative government has been running in all directions, hunting for novel ways to demonstrate that the UK can become a global centre for the latest technologically-innovative industries.

And the BoE’s Financial Policy Committee (FPS) published a report in the days before John Glen’s enthusiastic endorsement of the digital currency world, a report that largely follows the existing regulatory framework regarding crypto technology in traditional finance, and also embraced the Treasury’s proposal to regulate stablecoins and backed international efforts to regulate DeFi applications.

The biggest news is that Glen said “I can confirm that we will be legislating to bring certain stablecoins into our payments framework, creating the conditions for stablecoin issuers and service providers to operate and grow in the UK”. So stablecoins are to be recognised in the UK as a valid form of payment.

Former Prime Minister Harold Wilson addressed his party’s faithful at the annual conference in 1963, where he spoke of his intention to help Britain forge a new industrial model “in the white heat” of a revolution. Glen sounded a bit like Wilson, promising to “position the UK as a pro-innovation jurisdiction” and getting the Financial Conduct Authority (FCA) to organise a series of “crypto-sprints”.

But although this will be a revolution it may not be white hot. The doors to the digital revolution have cracked ajar rather than being flung wide open. Unlike El Salvador, which has embraced Bitcoin as legal tender, or the Swiss city Lugano, which is hoping to do the same, the UK will limit itself to accepting stablecoins as legal payments.

Stablecoins are arguably the acceptable face of the cryptocurrency Wild West; a stablecoin is pegged to an underlying asset, normally a currency such as the US Dollar. It is thought (hoped?) that by pegging the token to something else they have greater stability – hence the name. There is only a handful of stablecoins pegged to the Pound Sterling. Stablecoins have not escaped controversy; Tether, a Hong Kong based company which issues Tether tokens, is supposedly pegged to the US Dollar. It’s the largest stablecoin, is by far the most-traded coin; its price should logically be $1 per token. Tether settled a legal case with the US Commodity Futures Trading Commission (CFTC) in October 2021, in which the company paid a $41 million fine. The CFTC accused Tether of lying about its coin being fully backed by Dollars. The Bank for International Settlements (BIS) published its ‘working paper 973’ last October in which it warned that “stablecoin systems could pose severe risks to the integrity of the global financial system” Stablecoins may be wrongly named – ‘slightly-less-insecure-than-other-cryptocurrencies’ might be better.

John Glen posed an interesting question at the end of his speech: “So what does the future of crypto here in the UK look like?” Which he answered: “No-one knows for sure”. That uncertainty hangs over the whole enterprise.

Bullion Bulletin: What is currency?

   |   By  |  0 Comments

Bullion Bulletin Currency

What links the Kip, the Inti, and the Manat?

They all were currencies; they all are no more; and all died as a result of hyperinflation – three extinct currencies out of a list of almost 600.

We might think that the inflation we are experiencing, somewhere between 5% and 10% a year (much more for individual items, such as astonishing spikes in energy bills) is insufferable. Hyperinflation puts this into the shade however.

Economists concur that the definition of hyperinflation is when prices rise by 50% per month. Unsurprisingly, hyperinflationary bursts tend not to last very long – the currency turns into wallpaper and the government (if government survives) will knock several zeroes off the currency, call it something else, and try to carry on.

History is littered with objects that have been used as currency, or money. Are there any differences between money and currency? In our daily life we use the two words interchangeably without problems but there are subtle differences. Perhaps the most important is that money is a concept – a concept representing value. ‘Money’ is intangible; currency is tangible, it’s what we use in our transactions. This economist’s pedantry can be ignored – for most of us the two are one and the same.

In his 1875 book, the British economist William Stanley Jevons said there were four functions that an object needed to fulfil to be accepted as money: it needed to be accepted as a medium of exchange, a common measure of value, a standard of value, and a store of value. Feathers, stone wheels, teeth and shells have all been used as a store of wealth. Throughout history, gold, silver, copper and other metals have also been used to store wealth, measure value, and as a means of exchange. They have occupied the place of money and currency.

We’re about to live through something very unusual, something which is a little alarming – a big battle over currencies. Nations that are usually identified as ‘the West’ – more for ideological than geographic reasons – have sanctioned Russia, and are trying to do to the Rouble what Russian missiles have done to Mariupol. Much of Europe currently depends on Russian fossil fuels, supplied on long-term contracts and paid for in US Dollars.

President Putin is now retaliating to the sanctions by saying that if they want Russian gas, ‘unfriendly’ countries (the West) must open Russian bank accounts and pay in Roubles. US Dollars will no longer be acceptable, he says.

No wonder the International Monetary Fund’s (IMF) first deputy managing director, Gita Gopinath, foresees a more fragmented international monetary system, with the dominance of the US Dollar in official reserves starting to be undermined. It’s not just alternate currencies that will be in more demand she thinks: cryptocurrencies, stablecoins, central bank digital currencies (CBDCs) will be too.

The re-ordering of international finance will not happen overnight, but it is one of the consequences of the Ukraine conflict and President Putin’s push to have Russia’s key exports priced in Roubles.

Libertarians and those who find government burdensome flock to cryptocurrencies, but their status as ‘currencies’ is questionable; for one thing these are just so many, about 17,000, with new ones coming along all the time. Which to choose? Bitcoin currently dominates but will it always?

To be regarded as a currency – whether a private digital token, a government-licensed paper, or a central bank created token – an object needs to enjoy the confidence of a mass of people. What do people want from a currency? Stability of purchasing power, universal acceptance, easy transfer into other currencies – reliability. They want to know that the currency will be able to buy next year the same as it can buy today.

Bullion Bulletin: Sustainability for gold

   |   By  |  0 Comments

Bullion Bulletin E-waste Sustainability

What’s heavier than 4,500 Eiffel Towers? The amount of electronic waste or e-waste, from electronic products (mobile phones, computers) we no longer use, each year. It’s a staggering amount of trashed plastic; globally more than 57 million tonnes in 2021. The World Economic Forum suggests that by 2050 the figure could be 120 million tonnes.

It’s thought that less than 20% of this e-waste gets appropriately recycled; the other 80% ends up in landfill or is exported, to be disposed of by workers in developing countries, operating in hazardous conditions. Even in the European Union, which has had comprehensive Extended Producer Responsibility (EPR) legislation in place for nearly two decades, consisting of targets and legal responsibilities, the EU’s formal e-waste collection rate is in 2018 was just 55%.

There are several dumping grounds for all this e-waste. The biggest dump globally is thought to be Agbogbloshie, a run-down area near Accra, capital of Ghana, although it is closely rivalled by Guiyu, in China’s Guangdong province. Agbogbloshie is known by locals as ‘Sodom and Gomorrah’.

Exporting toxic waste was banned in 1989 under the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal; but crucially the Convention permits exports for ‘re-use and repair’, which can (and does) cover a multitude of sins. Undamaged computer hard drives are especially prized at Agbogbloshie. An Agbogbloshie computer expert has claimed that he can “retrieve all your money from your accounts… If ever somebody gets your hard drive, he can get every information about you from the drive, no matter where it is hidden”. That alone should encourage greater caution about disposing e-waste.

The discarded product will be smashed up, the chip-board removed and the plastic burned. The chip-board will be ‘cooked’ to melt out the metals. The careless dumping is not simply a health hazard and environmentally polluting – it’s also giving away money. The US Geological Survey reckons there’s about 0.034 grams of gold in a cell phone, as well as 16 grams of copper, 0.35 grams of silver and a tiny amount of platinum. A gold mine is hidden away inside the estimated 151 million mobile phones trashed in the US each year.

In the UK, the Royal Mint, which retails coins and bars, says it’s now going to process up to 90 tonnes of circuit boards a week, retrieving hundreds of kilogrammes of gold to be re-used. The Mint is teaming up with Excir, a Canadian company, which claims to be able to recover almost all the gold contained in e-waste “in a matter of seconds”, recovering the metals at room temperature and thus reducing the toxic emissions from this process.

Sustainability and greater concern for environmental protection are becoming firmly entrenched in all kinds of activities that once were considered polluting. Glint has a firm commitment to a strong code of ethics and we take great care to obtain our gold from sources that support strong principles of environmental, social and governance (ESG) performance. One of our leading investors is the major gold-miner Sibanye-Stillwater, which leads the way on ESG in the mining industry.

Bullion Bulletin: Geo-political worries cast a long shadow

   |   By  |  0 Comments

The Dollar price of gold is being pulled in (at least) two different directions – geo-political anxieties (Russia & Ukraine, China & Taiwan) are giving support, while higher interest rates in the US (with the UK following, and the European Central Bank suggesting it could start raising Eurozone rates in the final quarter of this year) are acting as a drag.

For the moment the former seems to be in the driving seat. Russia’s invasion of Ukraine started on 24 February although the start of the conflict could also be dated from 18 March 2014, when Russia forcibly annexed Crimea. Nobody – apart from President Putin perhaps – knows what will satisfy the Russian leader and thus what might bring about a cease fire. This uncertainty is keeping gold on tenterhooks.

Since 24 February, the Dollar gold price has been on a rollercoaster. It shot up by more than $67 an ounce in 24 hours, between 08:00 on 23 February and the same time on the day of the invasion, to $1,961.92, only to lose more than $73 by the afternoon of 24 February, to $1,888.15. By 9 March, it was above $2,057, within spitting distance of its $2,075 record high of August 2020, only to fall again to trade around $1,945 yesterday.

Analysts are hastily revising price forecasts made late in 2021. Credit Suisse for example considered last December that in 2022 a range of $1,691-$1,877 would be seen but now sees a “sustained break above $2,075 in due course with resistance seen at $2,120 initially ahead of $2,167 and eventually our new core upside objective at $2,285/$2,300”.

Forecasting the short-to-medium term gold price is a mug’s game – something will always come along to throw ashes on the forecast. What is true is that gold lost 5.73% in 2021 but has this year recovered all that lost ground plus around a couple of percent.

Elon Musk, the great proponent of cryptocurrencies (and boss of Tesla) gave some sensible advice recently when he said “it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high…” Michael Saylor, a huge Bitcoin supporter, backed Musk when he Tweeted that “USD consumer inflation will continue near all- time highs, and asset inflation will run at double the rate of consumer inflation. Weaker currencies will collapse, and the flight of capital from cash, debt, & value stocks to scarce property like #bitcoin will intensify…” Saylor is however no fan of gold, although his understanding of how gold is created seems wrong. He told a recent podcast that “the reason bitcoin is ‘magical’ is because only 21 million tokens can ever be created, and it’s likely the only scarcity known to humanity… I can create more real estate in New York City. I can create more cars. I can create more luxury watches. I can create more gold. I can create more shares of a stock. I can create more bonds, I can create any commodity; they’re commodities by definition. Given enough money and time, I can create infinite of any of them”. Saylor is powerful, but even he can’t make two neutron stars collide – which is currently the only way of creating gold.

Gold is for those able to take a long-term, years rather than weeks, view. And with Glint, it is also for the immediate term, to be used as money in your everyday life. At Glint we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.