Amid all the gloom that mires the world right now I can at least report that Glint has had a wonderfully successful first quarter.
Our friends at Incrementum, who publish the unmissable In Gold We Trust report (the next one is promised for 24 May) tell us that the gold price in nine major currencies has gone up by an average of 7.2% as of the end of March – by 6% in US Dollars. 9.1% in Pounds Sterling and 12% in Japanese Yen. The drivers for the higher price are obvious – rampant inflation in the US, the UK, the EU and growing fears of a serious sovereign debt default (by perhaps Russia, which would put that of Sri Lanka’s this week in the shadows) and the Russian invasion of Ukraine have added enormously to the uncertainty of the short-term outlook.
I won’t bring to your attention some of the more extreme price forecasts or wilder speculations. Suffice to say that cooler analysts from Goldman Sachs and other banks have been updating their price forecasts – Goldman has recently forecast $2,500 per ounce over the next few months.
But it’s not just this evidence that gold retains its attraction as a ‘safe haven’ – Glint’s model of using gold-as-money is clearly attracting wider interest. We now have more than 100,000 registered users. That figure is growing by 10% a month right now. Glint clients have increased their gold holdings by almost 30% in the last 12 months. And our service to clients is trusted – we have a score of 4.6 on Trustpilot; our current App Store Connect rating is 4.6 in the UK and 4.8 in the US; and our Google My Business rating is 4 in the US and 4.3 in the UK.
It’s also notable that you appear to be enjoying this, your weekly Glint Newsletter, where we see a regular open rate of around 40%, which is almost unheard of for a Fintech, where most newsletters achieve around a 23% open rate. So, thank you all for your continued support right here!
But perhaps the biggest endorsement of our work has come from the major precious metals producer, Sibanye-Stillwater, which has decided to invest significantly in Glint. Neal Froneman, CEO of Sibanye-Stillwater says: “This partnership with Glint provides Sibanye-Stillwater with the ability to support new end markets for gold on an innovative, digital and highly regulated platform, backed by physical gold”.
We’re spreading our wings and it’s all thanks to you, our very special friend. Wherever you happen to live, know that your continued support is vital for our success. And remember – Gold is security. Glint its key.
My personal thanks and best wishes,
Jason Cozens, founder and CEO.
The Spanish-born but American-raised philosopher George Santayana wrote in 1905 that “those who cannot remember the past are condemned to repeat it”.
It’s only 33 years since the Berlin Wall came down, marking the end of the Cold War – but now we are in another Cold War, or maybe an extension of the previous one which perhaps never ended. The old Cold War was horrible, for everyone.
Not least because it meant living with the constant anxiety that it might deliberately or accidentally turn into a Hot War, with nuclear weapons destroying the world.
The fragility of the ordered life we all took for granted has now been laid bare – in the course of little more than one week. I’m not the only one to be giving my children more hugs than usual; the million and more Ukrainians who have fled their country are all hugging their little ones more tightly than ever.
It’s not for me to express fear when Ukrainians who are facing Cruise missiles, bombs, and bullets are showing remarkable courage and determination. Yet, given the apparent determination of President Putin to double-down on his invasion of Ukraine, anxiety is inevitable.
What will this war mean for our daily lives? The travel industry, rocked by Covid-19, will again be hit as airlines are banned in a tit-for-tat fashion; record-high energy prices will climb still higher; fracking for gas and nuclear energy will be back on the agenda; there will be more government spending on the military; the economic impact will mean even more money printing by governments; inflation at a high level will be with us for years. With luck that won’t spill over into hyperinflation, which is defined as prices rising by 50% each month.
I fervently hope that this latest Cold War remains in deep freeze. The alternative is too ghastly to contemplate.
William Chesney Martin was chairman of the US Federal Reserve, America’s central bank, between 1951 and 1970. In October 1955, he gave a speech to the New York group of the Investment Bankers Association of America.
In that speech, Martin reminded us about the danger of inflation: “there are some who contend that a little inflation – a creeping inflation – is necessary and desirable in promoting our goal of maximum employment”. That idea was a fallacy: “inflation seems to be putting money into our pockets when it is in fact robbing the saver, the pensioner, the retired workman, the aged – those least able to defend themselves”.
He concluded by saying that the Fed, after a recent interest rate rise, “is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up”.
It’s a metaphor that central bankers in the major economies seem to have forgotten. Today the punch bowl is not just full but overflowing.
Trillions of US Dollars have been pumped into the global money supply in the past 18 months. The US fiscal deficit – the difference between government spending and the revenues it gets through taxes – is currently more than $2.5 trillion (£1.8 trillion). That’s about 10% lower than in 2020 but triple that of 2019. In July, thanks to rising inflation and growing debt, the federal government paid $10 billion more in interest than in July 2020. Somehow the US government will have to square this circle – and it won’t be pretty.
The US government’s aim has been to maintain high employment levels – and let the risks of inflation go hang.
But we don’t know any longer – if we ever did – how labour markets are really behaving. We scour reports from the media, banks, governments, to try to figure out whether our economies are running too hot (threatening inflation) or too cold (threatening a recession). But they all disagree.
So we have zero certainty about the level of risk facing financial markets. With the US apparently little interested in acting as democracy’s policeman, the financial and monetary risks will become wider and deeper. Will the US defend the Dollar as the world’s international reserve currency? Fifty years since President Nixon finally removed the Dollar’s gold backing it feels to me that the world is going through seismic shifts – a boat without a rudder headed into a tornado.
Founding Glint – which allows anyone to use gold as everyday currency – seems to me to be increasingly prescient. As we say here at Glint: Gold is security. Glint its key.
Till next time,
I’ve recently been shedding a few tears for Generation Rent as I watch the staggering rise in house prices. Generation Rent comprises those young adults (roughly aged between 18 and 40) who, unless they are lucky enough to have some source of wealth, have been priced out of the housing market yet are shelling out a big stack of their earnings on rent. Accumulating enough to put down the necessary deposit – which mortgage lenders regard as your investment in the property, how much you are willing to risk – can take years. Especially if you save in cash, given that bank interest rates are so low.
Put a little away every now and then. And after a few years you may have – still not enough, as house price rises are currently roaring ahead, while the purchasing power of fiat (paper) money continues to fall, thanks to inflation. Would it be better to start saving in gold? The gold price can and does go up and down so it’s not risk-free, but it’s worth considering gold as a savings asset.
Whether that cash stowed away will be enough to put down as a deposit depends on many factors – not least being the price you have in mind for the home you want to buy, and how you save.
House prices have been steaming ahead, up by 10% in May in the UK, following 9.6% in April. They’re pretty hot almost wherever you look. The following chart shows how house prices have risen in major markets, up to the end of June this year.
In the UK, where I live, the typical deposit a first-time buyer needs to put down now averages nearly £59,000 ($82,000), about £12,000 ($16,000) more for a deposit than they would have done a year ago, according to Halifax. The calculations for first-time buyers in the US are more complicated but a 20% deposit avoids having to pay primary mortgage insurance (PMI). PMI premiums can mount up – they range from $30-$70 per month for every $100,000 borrowed.
50 years ago, in 1970, the average house price in a London suburb cost about £5,000 ($7,000) and the average annual salary was about £1,000 ($1,390) a year. The interest rate was 7%. To buy that house would have taken 281.25 ounces of gold at the price of £16 ($22) an ounce. By 1990 the same house would have cost some £87,000 ($120,700) and needed around 395 ounces of gold, at around £220 ($305)/oz. Clearly gold did not keep up with house price inflation between 1970 and 1990.
By 2010, the average house price in a London suburb was £235,000 ($326,000), almost 5,000% higher than in 1970, while the average salary had risen to around £26,000 ($36,000), a rise just half that of house prices – and the gold price fluctuated around £800 ($1,110)/oz. So the same house which took 281.25 ounces of gold in 1970 would have needed almost 294 ounces in 2010. By May this year the average house price in London was almost £498,000 ($691,000) – about the same as around 382 ounces of gold. So in the decade of 2010-20 the London suburb house price more than doubled in fiat money terms; but in gold terms the cost rose by less than 30%.
Like many other assets, timing is everything – prices, including that of gold, go up and down. And no-one knows how house prices are going to perform relative to the gold price over the next few months or years.
And a further factor to throw into the mix is our old friend, a black swan event, something unexpected which might jolt all markets. On that front, the next chart is interesting, as it suggests that in black swan events gold tends to do better than other investments.
My view is that one can never tell when it’s a good time to buy gold; its price is difficult to predict. But I don’t intend to stand idly by and watch the value of my savings dribble away. Buying gold, saving in gold, spending gold-as-money is my personal philosophy, which is why we say ‘Gold is security. Glint its key’.
Till next time,
I’ve been in Milan for a few days, flying with British Airways, to talk to potential investors in Glint. Traveling anywhere these days is a bit risky – one never knows whether an abrupt rule change will be introduced that would scupper all plans. Happily, the trip was super-easy, even though Italy is on the UK government’s ‘amber’ list, which means I now have to ‘quarantine’ for five days.
The flight to Milan was packed, with everyone masked-up. It was very sad at Heathrow to see lines of planes queued up on the tarmac; the aviation industry is going through very tough times.
I have been ‘double-jabbed’ but like everyone I still found it necessary to take COVID tests before I could step onto the aircraft. It seems crazy to be forced to shell out around £350 (almost $500) to have these tests after being vaccinated to the max, and especially when mask-wearing is mandatory just about everywhere. Who is profiting from this extra ‘tax’ on travel?
In between my meetings I managed to see the Duomo Di Milano, Milan’s Cathedral, construction of which started in 1386. The cathedral has literally stood the test of time – like gold. Wars, civil conflicts, fascism, 66 different governments (and that’s only since 1946) – the cathedral has impassively, monumentally, stood there, a mute observer of humanity’s foibles and frailties.
For me, gold is the monetary equivalent of the Duomo. Always there, through thick and thin, through successive waves of different monetary systems. Cryptocurrencies are just the latest in a long line of substitute-money creations – and they might not have long, given the steady move towards Central Bank Digital Currencies and government determination to exert more authority over private enterprise. People have always resisted the debasement of ‘legal tender’: gold, indestructible, widely held, has always been there and always will be there.
All the best
“One can never predict the future with perfect confidence”, the UK government’s Cabinet Office minister Michael Gove told the BBC today. He wasn’t interviewing for a job as a financial services’ compliance officer but instead seeking to justify why the government has just announced a postponement of the lifting of all remaining anti-Covid lockdown measures in England, from 21st June to 19th July.
The changing regulations leave many people confused about what is or is not ‘permitted’. I can testify that many more people are out and about than this time last year; trains seem to be full, the London Underground is full, road traffic seems back to ‘normal’. Mask-wearing is ubiquitous.
I’m full of admiration for those who are still planning to travel abroad in the next month – not because they are risking infection but because they might find themselves scrambling for vastly inflated prices to get on a plane home before they are required to ‘quarantine’.
Around 75,000 Brits were in Portugal – the only mainstream destination they could travel to without quarantining on their return – when at the start of June the government took the country off the ‘green’ list, the list of countries to which we can travel without quarantining, a kind of domestic lockdown, on your return. According to the consumer protection body Which less than 1% of travel insurance policies give people full comprehensive cover for COVID-related disruption. People who rushed to Faro or Lisbon airports to buy a pre-quarantine ticket back to Blighty found they had to pay several times what the pre-panic tickets cost.
Such is the quixotic nature of this virus and the government’s rule-making that I don’t think it’s worth the risk.
I had intended to take the family away for some much needed post-Crowdfunding R&R but I am now putting it back until all the mess has sorted itself out. Vacations are about relaxation after all.
But when I do eventually hit foreign beaches I know that one risk – exchange rates’ rip-offs – is just a bad nightmare, thanks to my Glint account. Glint gives you the freedom to use gold as money. But it also gives you the freedom to spend gold (or Dollars, Pounds or Euros) around the world. We’re also up to 6 times cheaper than banks, and there are no hidden or disguised fees. You can use Glint to pay for products and services in shops, restaurants and online, anywhere in the world, at the best available wholesale market rates (no mark-ups here) and with only a small 0.5% transaction fee. You no longer have to worry about the risk of losing significant sums of money from shifts in exchange rates. If you need some extra cash when traveling abroad then you can withdraw up to £300 (or $300) per day from ATMs that accept Mastercard®, with only a small fee of £1.50 / $1.50 / €1.50 per withdrawal from Glint, which just covers our costs.
So, if you do decide to travel, you can minimise one risk, unfair charges – take and use your Glint App and card.
Happy travel planning!
The annual In Gold We Trust Incrementum report, the latest of which has just been published, is always essential reading, even at 346 pages. Better still – it’s free! It doesn’t make for comfortable reading, however; one of its concluding remarks states “in our opinion, the financial and monetary system is now in a state of permanent stress, just short of burnout”.
But for anyone who wants to be forewarned and forearmed, it’s a must-read. I’ve made some time this week – in between fielding questions for our now 80% funded, crowdfunding campaign, with Seedrs in the UK and Republic in the US – to sample this compelling report, which goes far beyond gold.
This year’s issue, by Ronald-Peter Stöferle and Mark J. Valek, is no exception – not least because (unlike so many gold commentators) it sticks its neck out and makes a price forecast – the “conservative baseline scenario” gives a price target of $4,800, without “any extraordinary inflationary tendencies”, by the “end of the decade”. Which, if it happened, would be a rise of around 140% from today, or a gain of more than 15% a year. “If the decade was plagued by stronger inflation, a price of $8,900 could be expected by the end of the decade…the risk of inflation is growing visibly”, says the report.
The report reminds us that this year is the 50th anniversary (the ‘golden wedding’) of President Richard Nixon’s decision finally to sever the link of the US Dollar from gold, meaning the greenback was no longer convertible into bullion. The Dollar became a free-floating currency, measurable only by comparing it to other currencies. But only in December 1974, when President Gerald Ford signed new legislation, could Americans freely buy and trade gold, for the first time in more than 40 years.
The gold price exploded by 385% between the end of 1974 and 1980; gold has had in the past 50 years a compound annual growth rate of some 8%.
Since 1971, US government spending has positively exploded, as successive governments have been able to create fiat currency without being limited to how much gold sat in the national coffers. The US national debt is now more than $28 trillion and the national budget deficit greater than $3 trillion. The US now has a debt-based monetary system. As the report says, “central banks can create money without any restrictions and are increasingly making use of this privilege… Ultimately, the public’s trust in unbacked currencies stands or falls on whether central banks do not abuse this money-creation privilege”.
The report argues that “a profound change is taking place before all our eyes, a monetary climate change”. It asserts that “global fiat money is the convention of today. Gold backing is even forbidden in the Articles of Agreement subscribed to by all members of the International Monetary Fund”.
Trust in fiat currencies, including the Dollar, is fading, which is one reason why alternatives like cryptocurrencies and increasing, even with Millennials, gold, have become so popular. But governments know that control over money is the main source of their power.
China has banned cryptocurrency mining; one province has made it possible to ring a telephone hotline that people can use to inform on suspected mining units. In the US, financial authorities are preparing to take a more active role in regulating cryptocurrencies. Governments everywhere are planning to introduce – or in China’s case are introducing – their own Central Bank Digital Currencies, which ultimately aimed at driving private cryptocurrencies into the ground – and maintaining their control over the money we can use.
In Gold We Trust – Glint is putting flesh on those bones. With Glint you have gold-as-money at your fingertips. Gold of course may go down as well as up in value, but governments cannot spin more gold into existence – unlike Dollars, Pounds, Yen, or other fiat money. That gives me some comfort – it enables me to trust something.
Until next week,
This week I’ve been heavily involved in our crowdfunding, which I’m happy to report is going fantastically well, with 66% of our target met already, with three weeks still to run! So, thank you to everyone who has invested so far, and to those of you who haven’t yet please click the funding banner in the below article to come and join our movement to make money fairer and safer around the world, using gold as a real, everyday currency.
Whilst speaking to investors and carrying out my daily duties as CEO of an international FinTech, I’ve still found time to ponder the future for cryptocurrencies, a topic that seems to be on everyone’s lips, prompted partly by the recent precipitous collapse in the value/price of Bitcoin, as well as many other altcoins like Ether or Tez… don’t even get me started on Doge.
How can something that swings so wildly make a claim to be money? Bitcoin – the biggest and best-known cryptocurrency – was by Monday this week down by almost 50% from its high this year on 14 April, only one month ago! I would feel uncomfortable about trying to use a Bitcoin to buy anything (even if it was possible), with this kind of rapid rise and fall. The pizza I order could be twice as expensive – or 50% cheaper – by the time I pay for it.
Cryptocurrency supporters like to say that “crypto markets are volatile because they are free. Can you think of a more powerful narrative than that?” Noel Quinn, CEO of the global bank HSBC, obviously can. He said on Monday: “Given the volatility we are not into Bitcoin as an asset class, if our clients want to be there, then of course they are, but we are not promoting it as an asset class within our wealth management business”. He continued: “I view Bitcoin as more of an asset class than a payments vehicle, with very difficult questions about how to value it on the balance sheet of clients because it is so volatile”.
Mind you, HSBC may not be entirely neutral. HSBC has nailed its future to that of China; and last week China gave cryptocurrencies a good kicking, banning financial institutions and payment companies from providing services related to cryptocurrency transactions. The more evidently neutral Andrew Bailey, governor of the Bank of England, said in early May that cryptocurrencies “have no intrinsic value” and people who invest in them should be prepared to lose all their money.
In 2008, Bitcoin was nothing more than a PDF with an idea – that PDF traded at a spot price of zero. A rise to around $40,000 in 13 years is pretty impressive. But that very rise inhibits Bitcoin’s claims to be money, even though its fans reiterate that it’s the money of the future and will replace dollars, pounds, euros and yen. Some of the forecasts now around for Bitcoin’s future valuations are astronomical.
What might prevent Bitcoin from becoming money? Lots of things. For one, it’s just the leading cryptocurrency among thousands of others, all of them vying for attention. For another, producing Bitcoins (and other cryptocurrencies) is a “dirty business”, thanks to its massive consumption of energy, according to Professor Brian Lucey of Trinity College, Dublin. That’s why Elon Musk of Tesla fame did a recent U-turn and said Tesla would not accept Bitcoins in payment.
But perhaps the biggest reason why cryptocurrencies – undoubtedly a brilliant idea – will not become money is because the owners of our fiat currencies (the dollars, pounds, etc.) won’t let them. China will increasingly clamp down on cryptocurrency mining and use, and other jurisdictions are already signalling their determination not to cede control over money.
Lael Brainard, who sits on the US Federal Reserve board of governors, gave a speech this week in which she said a US Central Bank Digital Currency (CBDC) would preserve general access to safe central bank money; promote competition and diversity and lower transactions costs; improve efficiency; reduce cross-border frictions; complement currency and bank deposits; protect privacy and safeguard financial integrity; and increase financial inclusion. Brainard would not have spoken so openly and so emphatically without an OK from the highest level. The US, she said, “is stepping up its research and public engagement on a digital version of the US dollar”.
The widespread yearning for sound money, money that stands a good chance of maintaining its purchasing power, is completely understandable; in that belief, we are aligned with the cryptos, it’s just that I see gold – which can of course fall in value as well as rise – doing that rather better in the long term, than any cryptocurrency.
Until next week,
Elon Musk, founder and CEO of SpaceX, product architect of Tesla, and father of the child X Æ A-Xii, likes to joke on Twitter, where he has more than 46 million followers. He has just sent the cryptocurrency Twitterverse nuts by appearing to cast doubts on Bitcoin, the leading cryptocurrency. Bitcoin lost 24% of its value after Musk’s view became public. It has since then lost even more following a statement from China’s central bank.
The People’s Bank of China has just issued a stern warning to the country’s financial institutions against dealing in cryptocurrencies. All of them immediately collapsed in value.
Some people are very angry at Elon – and one swiftly created a very rude new cryptocurrency in defiance of Musk. This new obscenely-named cryptocurrency joined the almost 10,000 other cryptocurrencies in existence – and that’s just the ones that CoinMarket Cap lists as ‘Actual Serious Established Crypto Coins’.
For a supposed decentralised digital currency Bitcoin is empirically demonstrating some strong centralised characteristics. As a few words from Jerome Powell, the US Federal Reserve chairman, or Janet Yellen, the US Treasury Secretary, can shift the US dollar’s value, so too it seems can a brief statement from Elon Musk have a disproportionate impact on Bitcoin’s value.
This is not how cryptocurrencies are meant to operate. Cryptocurrencies are intended to be anonymous, beyond the reach of governments and/or other would-be manipulators; they are meant to facilitate confidence in transactions, thanks to their decentralised nature. Yet despite being based on supposedly hack-proof computer coding, the financial world is littered with cryptocurrency scams, scandals and cautionary tales – and I am not even talking about the love that fraudsters and crooks have for them.
In February this year the New York District Attorney suspended Tether (originally known as Realcoin) and its sister crypto exchange Bitfinex and fined them $18.5 million on the basis that they deceived clients and the market by over-stating their reserves and hiding about $850 million in losses. This clearly hasn’t much damaged Tether – which supposedly is a ‘stablecoin’, i.e. it claimed that its digital tokens were backed one-to-one by US dollars held in cash reserves. When it was fined in February Tether was worth $35 billion (£24.82 billion) but today it is worth around £58 billion (£41.15 billion). It’s a very odd world where a company fined for fraud not only stays in business but does even better.
I’ve said it before but it’s worth repeating. I ‘get’ why cryptocurrencies exist and people are flocking to them – it’s because people have lost/are losing faith in the fiat currencies issued by their governments. But the risks of being manipulated by external loud voices are just as great with cryptocurrencies as they are with dollars, pounds, or euros. Gold is not risk-free; the gold price can and does go up and down, although with rather less velocity than Bitcoin.
But if you want an alternative currency that can be spent readily and which has no Mars’ mission devotee influencing the price from the side-lines, then gold with Glint gives you that.
Have a great week,
In the UK, that is. Prime Minister Boris Johnson said on Monday that from next Monday pubs and restaurants in England will be allowed to re-open for indoor services – museums, theatres, cinemas and children’s indoor play areas will also reopen. Pretty much the same relaxation of the rules will also be true for Scotland. UK deaths from Covid-19 are now at the lowest level since July last year and England’s Covid-19 alert status has gone down from four – the epidemic is in general circulation and transmission is high – to three, which means the virus is still in general circulation but transmission isn’t high. Things are starting to loosen up everywhere, including the US, where at the height of restrictions in late March and early April more than 310 million Americans were under directives ranging from “shelter in place” to “stay at home”.
I’m giving three cheers for what is starting to look like the final days of Covid-19-caused restraints – being able to hug friends and relations again will be for me, and no doubt for many others, as important as being able to dine out or have a beer inside a pub. Johnson has said England is on an “irreversible” path out of its third nationwide lockdown; but he hasn’t ruled out further restrictions if the virus spreads out of control in the future.
What will you do with this unusual freedom? Those fortunate enough to have escaped unemployment are probably flush with cash – the Bank of England said at the end of March that households put more than £17 billion into the bank in February, well above the monthly average of £15 billion since March 2020 and a monthly average of £4.6 billion in 2019.
Economists are now falling over each other to predict a massive ‘bounce-back’ from last year’s biggest economic contraction in 300 years, fuelled by an assumed consumer pent-up wish to get out and spend. I’m not so sure. The people who will spend will mostly be the ones who need to buy essentials, the have-nots or the approximately one-third of people who last year had less than £600 ($847) in savings. People have got into the habit of saving more of their income, putting aside money for a rainy day or for some big-ticket ‘treat’.
I only wish they would look at the interest rates they are getting from their bank deposits – less than 1% on average, about half what the government would like the inflation rate to be, and much less than what it actually is. In a world where inflation is returning, bank deposits daily lose value.
Get out and hug!
Until next week,