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Category: Economics

What Does Fractional Reserve Banking Mean for Your Finances?

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Have you heard the term “fractional reserve banking” before but aren’t sure what it entails? Perhaps you’re wondering exactly what happens after you’ve made a deposit with your bank? Whatever reason you’re reading this article, we’re here to help answer both of those questions.

Here, we’ll run through reserve banking in more detail, dive into its history, and provide some of the advantages and disadvantages that this kind of banking has to offer.

What is fractional reserve banking?

You may be under the impression that banks have to hold onto 100% of customer deposits in reserves. However, that’s not actually the case.

Notice the fractional in fractional reserve banking? It’s there for a reason. See, fractional reserve banking is a banking system that requires banks to hold only a portion of the money you deposit with them as reserves. Your fraction stays with an account within the central bank, while the rest – and this may surprise you – is free to be invested or lent out by the bank.

So, rather than simply sitting there, small deposits are grouped together to make loans and earn the bank money. The remaining funds ensure that there’s enough to cover customer withdrawals.

For example, if someone deposits $1,000 in a bank account, the bank cannot lend out all the money. It is not required to keep all the deposits in the bank’s cash vault. Instead, it’s only required to keep 10% (or $100) as reserves. From here, it can then lend out the other $900.

unlocking safety deposit box

The history of fractional reserve banking

So, how did this concept first come about? It’s never been fully confirmed, but some state that it originated through an unnamed goldsmith. Realizing he could lend out a portion of gold, and earn interest on it, the crafty goldsmith would then sneak it back into the reserves before anyone else twigged what he was doing.

Others point to the Early Middle Ages as the source of its origins. With people increasingly storing their money with banks, they wanted a simplified way of paying for goods and services. Rather than guaranteeing that you would receive the exact same coins that were originally deposited when a customer chose to withdraw them, the deposit balance acted more as an IOU.

By doing so, banks could then transfer coins from one account to another as a form of payment between two customers, rather than a customer having to withdraw their coins, pay a fee for the trouble, and hand the coins to the person requiring payment.

What are the pros and cons of fractional reserve banking?

The pros of fractional reserve banking

The system has its merits, namely more readily available credit, and the ability for banks to earn additional money for their reserves. In theory, customers will benefit from these additional reserves in the form of interest on their bank deposits.

The cons of fractional reserve banking

Fractional reserve banking can be something of a catalyst when it comes to inflation. The system gives rise to the money multiplier effect – the proportional amount of increase in final income as a result of an injection or withdrawal of capital. This increases the supply of money, which decreases the value of a dollar, which in turn decreases the US dollar’s purchasing power.

If everyone under a fractional reserve system attempted to withdraw their money at the same time, the system can easily collapse. Banks do not hold enough cash in reserve at any one time to supply people with all their cash when they need it.

image of stock market tracking

These instances, known as bank runs, happen when a customer believes that banks are about to fail. In fact, it’s what happened during the Great Depression, with many people losing their life savings. We have this to thank for the creation of the Banking Act of 1933, which protects deposits in participating banks up to certain limits.

Likewise, if banks recklessly lend their money out, as in the case of sub-prime mortgages, money may simply never be repaid, as unqualified borrowers default on their loans. This can cause recessions to take place, as it did in 2008. Bear Sterns lent excessively more than they had in their deposits, while over in the UK, Northern Rock did exactly the same.

The relationship between fractional reserve banking and the gold market

In the same way that your monetary deposits are affected by fractional reserve banking, so too is gold – if it’s held in an “unallocated” account. So, while it’s safely locked away from thieves in a well-protected bullion bank vault, it’s still subject to the same risk as your cash is – meaning that only a fraction is only immediately available for withdrawal.

Allocated gold like the gold offered by Glint, on the other hand, is exempt from these effects. That’s because you genuinely own it. It’s allocated to you, and the gold is held in allocated storage under a custody agreement.

That means banks or financial institutions are unable to lease out your bars for the simple reason that they don’t and can’t have access to the allocated bullion. That’s not all: if you buy gold through Glint, then you’ll only be paying for the actual amount of gold that you want.

stack of gold bars

As a result, you can rest assured knowing that your gold is free from the risks of fractional banking, and any sneaky thieves who may be lying in wait to make their move. And since you own the gold, it can be used to make the same everyday purchases online and in-store, from something as small as a cup of coffee to your next vacation!


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.

To learn more, visit our homepage or give us a call at 1(877) 258-0181.

Understanding the Relationship Between Fiat Money and the Gold Standard

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As a status symbol, gold is worth its weight in, well, gold. But as sought after as it is now, it used to carry even more clout.

Although fiat currency is the norm and has been for some time, it was the gold standard that once ruled the economic roost, playing a role in everything from international trade to the value of currency. But how do the two compare? How did they originate? And what are their pros and cons in the present day?

We’ll take a look at the gold standard vs. fiat money in more detail to see how things have changed over the decades.

What is the gold standard?

You’ve probably heard the term ‘gold standard’ used as a benchmark of quality. Well, the expression has its roots in the actual monetary system, where the value of a country’s currency is linked directly to gold.

So, a country using the gold standard would set a fixed price for gold, say, $100 an ounce, and then buy and sell it at that price. This fixed price would then be used to determine the value of the country’s currency. In this case, $1 would be worth 1/100th of an ounce of gold.

A quick history of the gold standard

We can trace the origins of the gold standard, in the US at least, back to the 1800s. During this time, we used a bimetallic system of money, i.e., a combination of gold and silver. But since very little silver was traded, we pretty much used a gold standard.

Gold as a way of evaluating currency, however, has been around for centuries and was used before World War I as a means of international trade. Countries with trade surpluses would receive gold as payment for their exports. Those with deficits, on the other hand, would have to spend gold as payment for their imports.

Come 1900, the Gold Standard Act saw the fruition of a true gold standard, establishing gold as the only metal for redeeming paper currency in the US. This meant that transactions no longer had to be carried out with heavy gold bullion or coins – good news for those used to lugging gold around town!

bank vault with safety deposit boxes

Why was the gold standard abandoned?

The gold standard came to an end for several different reasons.

Between 1900 and 1932, the US was thrown into disarray. The country entered World War I in 1917, which led to a short recession between 1918 and 1919. Economic strife would rear its head again after the stock market crash of 1929, with the country entering The Great Depression over the next few years.

With banks failing, cash supplies low, and the Federal Reserve System collapsing, the gold standard, now entirely unsustainable, was ended in 1933. It was dealt a further blow after the Gold Reserve Act of 1934 prohibited the ownership of gold except under license.

Any traces of the gold standard were erased in 1971 when Nixon ended the trading of gold at fixed prices. Since then, the gold standard has not been used in any major economy.

The pros and cons of the gold standard

What are the pros of the gold standard?

Reduce uncertainty of economic trade: The exchange rates of any countries operating under the gold standard would be fixed. When importing, a country indirectly pays in gold, which reduces the money supply. Countries that are exporting receive gold as payment, which further helps to control the money supply.

Retains value across the globe: Fiat money can be printed without limit, and thus has no real value. Gold, on the other hand, holds real, stable value thanks to its scarcity.

Restricts the printing of money at will: A gold standard ensures that new money could only be printed if a corresponding amount of gold was also available to back the currency.

close up of gold bars

What are the cons of the gold standard?

Only beneficial to gold-producing countries: Not all countries are lucky enough to have gold mines. Places like the US, China, Australia, South Africa, and Russia have huge gold reserves to rely on. Those without would only be able to obtain it through a trade surplus.

Limits economic growth: As the money supply increases, the supply of gold in the economy must also grow at an equal rate. But gold is scarce, so economic growth would have to be at a lower rate.

Destabilizes the economy: The periodic deflations of the gold standard could result in a destabilized economy. It could also harm national security by restricting a country’s ability to finance national defense.

How does fiat money differ from the gold standard?

Rather than being made or backed by precious metals, fiat money is a government-issued currency backed by the government that issued it. This includes currencies such as:

  • Dollars, quarters, dimes, and nickels in the US
  • The Mexican peso
  • The Euro
  • The British pound sterling
  • The Chinese yuan

It’s because of this government backing that fiat money holds value. And since it isn’t linked to any valuable commodities like rare metals or oil, governments or banks can limit the supply of their currencies in order to protect its value. In times of recession, or as economies are on the brink of recession, this currency can be inflated to stimulate growth.

printing US dollar bills

The pros and cons of fiat money

 What are the pros of fiat money?

Greater stability: Unlike commodity-backed currencies which can fluctuate, fiat money is relatively stable and easily stores currency value.

More versatile: Fiat money is more widely accepted and can be used as legal tender in various settings and countries.

Cost-efficient: Not only is fiat money cost-efficient to produce, it’s easy to carry around and exchange.

What are the cons of fiat money?

Not entirely foolproof: As the global financial crisis proved, fiat money doesn’t cushion against the impacts of a recession.

Increased risk of hyperinflation: Though hyperinflation is a rare occurrence, the unlimited supply of money, and the ease with which it can be printed, can stoke inflation.

Potential for depreciation: Since it’s tied to a government, fiat currencies can depreciate drastically should the issuer even run into economic hardship.


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.

To learn more, visit our homepage or give us a call at + 1(877) 258-0181.

A Guide to Hyperinflation and What it Means

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printing dollar bills

Uncommon but hugely damaging, hyperinflation can destroy economies. Here’s everything you need to know…

Hyperinflation is, thankfully, a rare occurrence. But given that the inflation rate in this country has been hovering around 9% as of May 2022, this article feels especially relevant.

While this number might look scary – and will have its fair share of consequences across the nation – it’s also, you’ll be happy to hear, a whole different ballgame compared to hyperinflation.

So, what do we mean by hyperinflation? Mentions in your high school textbooks aside, it might not be a term you’re familiar with. If that’s the case, we’re here to help.

Below, we’ll look at hyperinflation in more detail, so you can get up to speed on what it means, what causes it, and how you can protect against it should it arise in the future.

What does hyperinflation mean?

Hyperinflation is the term used to describe rapid, excessive, and out-of-control general price increases in an economy. In periods of hyperinflation, these prices rise to more than 50% per month. Hikes like this mean that something as everyday as a loaf of bread or a cup of coffee might cost a certain amount in the morning and a higher amount later in the day.

Like we said up top, hyperinflation is a rare occurrence, particularly in developed economies. That said, it has occurred many times throughout history, including in China, Germany, Russia, Hungary, and Argentina.

woman worried checking bills

What is the difference between inflation and hyperinflation?

So, how does this differ from regular inflation? Inflation is a sustained price increase in goods and services that’s caused by an increase in money supply by a government. Inflation can also happen as a result of periods of economic growth that create more demand for skilled employees and resources. This creates higher salaries, which in turn creates higher prices.

For the most part, a certain amount of inflation is a good thing for the economy. As prices go up, consumers have more of an incentive to spend their money. The spiraling prices of hyperinflation, on the other hand, can wreak havoc on an economy, causing everyday essentials like food and fuel to become scarce, and incomes to drop, as a result.

Once hyperinflation is underway, correcting it becomes an uphill battle. Reducing government spending is a common approach, but the drastic cuts to social spending, military spending, and subsidies come at a price. Slashing the money supply can also help, although this causes interest rates to soar. Anyone in the market for a new house or vehicle is going to struggle in this scenario.

In extreme circumstances, other countries have resorted to replacing their currency with a more stable foreign currency. In 2000, Ecuador replaced its currency, the sucre, with the US dollar, while in 1991, Argentina created a new version of its currency tied to the US dollar, which helped to ease hyperinflation greatly.

us dollars

What causes hyperinflation?

There are two reasons why hyperinflation can happen.

The first is a rapid increase in a country’s money supply, usually when a government prints more and more money. While this might sound like a good thing, there’s a reason for the upswing in money printing: to pay for its excessive spending. As the amount of money increases, the value of each individual unit of currency drops, and prices rise.

The second cause, demand-pull inflation, takes place when a surge in demand outstrips supply, causing prices to skyrocket. This happens due to increased consumer spending due to a growing economy, abrupt rises in exports, or increases in government spending.

What happens when there is hyperinflation?

Across individuals and economies, the effects of hyperinflation can be disastrous.

With people rushing to avoid paying more for goods, hoarding becomes commonplace. What might start with durable goods soon leads to perishable goods like bread and milk. As these everyday goods become scarcer and more expensive, people are unable to pay for even the most basic of necessities.

As money loses its value, savings become worthless. This means that the elderly are often hit the hardest during periods of hyperinflation. Likewise, with loans losing value and people halting their deposits, banks and lenders soon go bankrupt.

Hyperinflation also causes the value of the currency in foreign exchange markets to come crashing down. With the cost of foreign goods at all-time highs, importers go out of business. With the loss of so many jobs and the bankrupting of so many businesses, unemployment increases as a result. Meanwhile, government tax revenues fall, struggling to pay for what were once basic services.

woman putting savings in piggy bank

There are small, specific positives to hyperinflation, however. Those who took out loans will benefit; their debt will be next to worthless until it’s all but wiped out. The falling value of local currency also makes exports far cheaper than foreign competitors. Exporters receive hard foreign currency too, which increases in value against the falling local currency.

All told, however, the fallout of hyperinflation can cause nations to fall into extreme recessions and even depressions.

How to protect your finances against hyperinflation

We’ve spoken about protecting from inflation before, but clearly, hyperinflation is an entirely different beast.

To protect your finances against hyperinflation, it’s well worth keeping an eye on your personal balance sheet and budget. Both inflation and hyperinflation can turn your savings to dust. To stay ahead of rising or out-of-control inflation, people have used some of their savings to pay off debt, cutting off rising interest rates at the pass so they have less debt service to deal with during periods of rising inflation.

Making some changes to your budget can also help with weathering any potential storms. If there are areas where you can minimize your spending and create larger cash flow, it may be possible to combat the increase in the cost of goods.

Even a few small changes, such as quitting your gym membership, eating out less, carpooling to work, or downsizing that gas guzzler, can make all the difference.


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.

To learn more, visit our homepage or give us a call at 1(877) 258-0181.

Economic Theories You Should Know About

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In this day and age, it pays to stay up to date with the current economic climate, especially when things are as up in the air as they are right now. With a handle on some of the most well-known economic theories and concepts, you’ll be able to improve your awareness of major economic trends, consumer behavior, and developments in the financial market.

Below, we’ll run through some basic concepts of economics to give you a stronger foundation when it comes to the money matters that surround our everyday lives.

What is an economic theory?

Things are going to get technical pretty quickly here, but it’s all in the name of knowledge, of course.

Basically, an economic theory is a set of ideas and principles that detail how different economies function. Certain theories might aim to describe specific economic developments such as supply and demand, whereas others can allow economists to analyze, interpret, and predict the ways in which financial markets, industries, and governments might behave.

What are the main economic theories?

Supply and demand

Supply and demand refers to the relationship between the price of a product and how willing people are to buy or sell it. This unit price will vary until it settles at a point of economic equilibrium – or when the quantity at which consumers demand a product equals the quantity at which a consumer supplies it.

In other words, as the supply of a product decreases but there’s still a demand for it, the price of it might soar. In this example, the demand is greater than the supply.

picture showing supply and demand in warehouse


A key economic concept, scarcity refers to when the demand for a product or service is greater than its availability. This is paramount for understanding how products and services are valued. Take diamonds, gold, or even certain kinds of knowledge, for instance. These things are scarce – and are more valuable for being scarce – since those who sell such things can set higher prices.

They’re aware that because more people want these products or services, and availability is low, they can find buyers at a higher cost.

Opportunity cost

Opportunity cost is the amount of potential gain an investor misses out on when they commit to one investment choice over another. In laymen’s terms, it’s the loss you take to make a gain or the loss of one gain for another gain.

Let’s say an investor has the choice of selling stock shares now or holding onto them to sell later. Selling them now would provide immediate gains, but they’d be losing out on any gains the investment might make them in the future.

Opportunity cost doesn’t necessarily have to be applied to investments or money either; you can just as easily apply it to life decisions, no matter how small.


In the economic world, incentives are what encourage or motivate us to act in certain ways financially. They’re what make consumers and businesses respond to market changes like prices and financial benefits.

This can be something as simple as offering buy-one-get-one-free discounts or government subsidies that allow businesses to financially benefit from carrying out certain actions.

Willingness to pay

Willingness to pay (WTP) is the maximum price that a customer is willing to pay for a product or service. This amount varies from person to person and is usually informed by extrinsic and intrinsic differences.

Extrinsic differences are demographic factors such as age, gender, race, income, and level of education. Intrinsic differences, meanwhile, go a little deeper.

These are factors that you’d unearth by asking specific questions rather than something you can identify through observing people. These differences might include someone’s risk tolerance, their desire to fit in with others, and their interest levels in different subjects.

customer shopping in retail store

Purchasing power

This concept refers to the number of goods or services that a certain amount of money can buy at any one time. As such, it’s an indicator of the current market condition, since it allows businesses (or individuals) to work out how far their money will go.

Classical economics

Established way back in the 18th and 19th centuries by the likes of economists and political thinkers such as Adam Smith, John Stuart Mill, and others, classical economics posits that market economies are, by definition, self-regulating systems ruled by the laws of production and exchange.

It’s also where we get the invisible hand concept. Smith noted that by following their self-interest, consumers and firms can create an efficient allocation of resources for the whole of society.

Confused? OK, here’s a clearer explanation: a company charges a very high price for a certain item at $6. This incentivizes another company to charge $4 for their version of the item.

Consumers then switch from the high-price item to the lower-price item. This puts pressure on the first company to lower the price until the equilibrium between supply and demand has been reached.

couple planning budgets and finances

Malthusian economics

Malthusian economics takes the view that while population growth rapidly increases, the supply of food and other resources is linear. This means that when a population grows over time and overtakes a society’s ability to produce resources, their standard of living may reduce and result in depopulation.


Monetarism puts forward the idea that governments can achieve economic stability by controlling monetary supply. Its central principle believes that the total amount of money circulating in an economy is the main factor that determines its growth.

New growth theory

The New Growth Theory (NGT) focuses on how the individual’s desires and needs act as the main reason for economic growth. People purchase, sell and invest depending on their wants and needs, all of which results in GDP growth.

A large part of NGT is the assumption that competition flattens profit, causing people to look for better, more efficient methods of doing things to maximize their profit-earning potential.

Moral hazard theory

An economic phenomenon that involves parties entering contracts in bad faith, moral hazards arise when an entity, such as a corporation, increases its exposure to risk during a transaction so they can maximize profit. Typically, this is to potentially avoid the consequences associated with taking on that risk.

In these scenarios, it’s the other party that has to bear the cost of such risks.

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.

To learn more, visit our homepage or give us a call at 1(877) 258-0181.

What is a Stablecoin and How Do They Work?

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You’ve heard of bitcoin, crypto and blockchain, but what about stablecoin? If you’re unfamiliar with this new, up-and-coming digital currency, it’s high time you studied up to realize its benefits and potential.

To help you get to grips with stablecoin, we’ve put together this need-to-know guide covering what it is, how it works and – most crucially – whether it’s safe, secure, and worth investing in.

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What is a Stablecoin and How Do They Work?

Stablecoin is a digital currency that is backed by assets such as gold and fiat currency. It was developed as a safer alternative to other cryptocurrencies, which have historically been highly volatile and liable to peaks and plummets in value.

While the rise of cryptocurrencies was meteoric, they remain a divisive asset among investors. This is largely due to their instability and unpredictability, which make it difficult for investors to choose the right coin and forecast their expected return.

Stablecoin goes some way to solving this problem, affording investors greater certainty of value. Unlike other digital currencies, these coins are attached to ‘stable’ assets such as gold or fiat money, which means they circumvent the dramatic peaks and troughs in value that other crypto can suffer.

As well as this, stablecoins are also decentralized; they’re not attached to a single organization, system, or agency like other crypto. This affords greater liquidity, simpler access, and enhanced autonomy, so they’re much easier to trade and transfer.

To summarize then, stablecoin essentially bridges the gap between fiat money and cryptocurrency, providing a safer and more attractive prospect for investors. And while it does have its risks and drawbacks (including low yields compared to other crypto), it’s fast becoming one of the most popular ways to invest in the cryptocurrency ecosystem.

What Affects Stablecoin Prices?

Stablecoins act much differently to other cryptocurrencies. Because they’re pegged to fiat money, commodities or physical assets like gold, their price is affected by economic performance, demand for US currency and the current monetary policy of the Federal Reserve.

When looking at the value of stablecoin, it’s worth touching on an important point: the likelihood of making a return.

In the eyes of many investors, one of the key drawbacks of stablecoin is the low rate of return compared to other crypto. This is due to stablecoins being tied to the performance and value of other assets.

For this reason, you shouldn’t see stablecoins as a boom-or-bust investment like other cryptocurrencies. Their stability means they offer a low-risk but ultimately low-reward investment opportunity, with interest the only real way of making money in the long term.

Instead, consider stablecoin a safe jumping-off point into the world of digital currency. With the security of fiat money backing and streamlined accessibility, it affords an attractive means of dipping your toe in crypto without taking a huge risk.

How Safe Are Stablecoins?

In short, very. Not only are stablecoins backed by a combination of fiat money, gold, and commodities, but their value is also monitored and maintained by algorithmic mechanisms, which further enhance their safety and stability.

To put it another way, stablecoins are subject to the same risks as the assets that back them. So, just as the US dollar can rise and fall in line with economic health, so too will the value of stablecoins.

One thing to note, however, is that many people believe you should always look to invest in decentralized stablecoins, and not those linked to a single agency or organization. That’s because they’re much more vulnerable to theft, disruption and interference when stored in a central location, as opposed to being open, global, and accessible.

It’s worth remembering, too, that stablecoins are a relatively new type of digital currency. And given the pace of change within the crypto ecosystem, there may yet be some undiscovered risks associated with this type of coin, so be sure to undertake the appropriate due diligence before you invest.

How is Stablecoin Regulated?

Despite being billed as a safe digital currency, stablecoin isn’t currently regulated in the US and many other parts of the world. This is despite plans to regulate it having reached the halls of Congress, where it is still being debated by members months later.

The issue of regulating stablecoin is a complex one. While many high-profile corporations, including Meta, have come forward in support of regulating the currency, the President’s Working Group on Financial Markets, who are tasked with assessing stablecoin’s viability, have raised questions about what bringing the currency into the mainstream could mean for market integrity and economic health.

It argues that while the majority of stablecoins are claimed to be pegged to fiat money, some are actually backed by other assets, including US Treasury Debt (USD Coin) and Tether, another type of cryptocurrency. This ultimately makes general regulation much more difficult, since there may be huge variances in what different stablecoins are worth at any given time.

So, while stablecoin regulation could well happen, the currency has a few hurdles to overcome before it’s officially rubber-stamped.

Different Types of Stablecoin Explained

As if the world of stablecoin wasn’t confusing enough, there are four types of coins you need to be aware of. We’ve broken these down below.

  1. Fiat-collateralized stablecoins – these are the most prevalent form of stablecoins and comprise of a digital currency backed by a fiat currency like the US Dollar. Since they’re based on real money, they can easily be exchanged and transferred, so they’re among the simplest stablecoins to manage and purchase.
  2. Commodity-backed stablecoins – commodity-backed stablecoins are those backed by assets including gold and other precious metals, as well as things like oil and gas. Though not as liquid as the fiat-collateralized variant, they’re more likely to fetch a higher return since the value of commodities isn’t tied to currency rates.

  1. Algorithmic stablecoins – this is where the world of stablecoin can get confusing. The algorithmic variation is controlled by unique mechanisms that monitor supply and demand, raising or reducing the number of available stablecoins to match. Unlike other stablecoin types, there’s no commodity or cash backing here, so investors are more at risk of sizeable losses.
  2. Crypto-backed stablecoins – backing stablecoins with cryptocurrency may sound counterintuitive, but it’s all about optimizing decentralization. Typically, stablecoins of this type are backed by a combination of cryptocurrencies, spreading the risk while allowing the opportunity to make a greater return on your investment.

We understand that the stablecoin ecosystem can be confusing. But with millions currently being invested into this type of digital currency each year, it’s something many investors are looking to consider in the future.


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.
To learn more, visit our homepage or give us a call at +44(0)203 915 8111.

Which Investments Are the Best Hedges Against Inflation?

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Inflation has long been a thorn in the side of investors, influencing where they place their money and how much they’ll get in return. The good news is there are ways to combat the negative effects of inflation, and this all starts with hedging.

Hedging against inflation is a sensible option for investors looking to safeguard their assets against loss of value. But how do you do it? And what’s involved?

In this post, we’re looking at the best hedges against inflation, covering what the inflation hedging process involves and the key things to consider. Whilst we are passionate about gold, we’re not involved in investments, so you can rest assured the information here is completely impartial.

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How to Hedge Against Inflation

To understand inflation hedging, you need to be clear on what inflation is and how it can affect the value of an investment. As a quick refresher, we’ve included a definition below, but please skip ahead if you’re already familiar with the term and its implications.

What is Inflation?

 Inflation represents the rate at which the value of a currency is falling, and the price of goods and services is rising. It’s a quantitative prediction that uses price changes over a range of products and services to give an indication of purchasing power within an economy.

So, back to the issue of hedging against inflation. Used by investors, it involves taking steps to protect an investment from the negative effects of inflation – retaining value where possible.

Without diversifying your investments to hedge against inflation, you might see losses. For example, if you’ve invested in something that’s increasing in value by 3% a year but inflation is 4%, you’ll see a -1% decrease in value.

That’s why hedging against inflation is such a popular tactic. It helps to retain the value of your investments even when inflation is on the up.

So, how do you do it?

Essentially, to hedge against inflation, you need to build a diverse investment portfolio that offers fallback against currency value change. That means investing in assets that aren’t easily affected by inflation, and which hold their value even in times of economic uncertainty.

Examples of assets that are typically used to hedge against inflation include gold, silver, and other precious metals, commodities such as oil and gas, stocks and bonds, and other physical assets, including real estate. We’ll look at the best inflation hedge investments in more detail below.

What Are the Best Inflation Hedge Investments?

Diversifying your investment portfolio is good practice for lots of different reasons, not least hedging against inflation. But what assets are best for safeguarding your investments against the effects of inflation?

Let’s take a look.


Gold is one of the most popular and well-documented inflation hedge investments. Why? It comes down to gold’s reliability and value retention, as well as its resistance to economic shock and uncertainty.

Generally, the value of gold outperforms or keeps pace with the inflation rate, so the risk of value loss is low compared to cash assets. There have been times, however, when the value of gold has fallen out of step with inflation, so it’s by no means a guaranteed silver bullet against future inflation.


Silver protects against inflation in the same way as gold. Since it’s a precious metal, and thus a tangible, physical asset, it’s widely considered a safe place to put your money when inflation is on the up.

Like gold, however, silver offers no guarantees against inflation. Indeed, the reason gold is often favored is that silver’s value is more volatile, with more external factors affecting its day-to-day price.


Commodities like energy, food, and other essential services are rapidly becoming a popular inflation hedge. And when you think about it, this makes sense, because inflation is driven by the rising cost of goods and services compared to purchasing power.

As inflation rises, so too does the value of commodities and the share prices of companies that provide them. So, investing in commodities such as oil, gas or food can be an effective way to hedge against inflation – provided you choose the appropriate goods and services to invest in from the outset.


Investing in stocks can be a safe way to protect your money from inflation, but you need to perform the appropriate due diligence and buy into the right businesses. Remember that, as inflation rises, most companies need to increase the retail cost of goods and services, meaning that your investment should, in theory, keep pace with inflation.

That said, there are no guarantees with stocks, and price volatility is much higher than with precious metals like gold and silver. Still, if you invest wisely and are willing to accept the risk of value liquidity, investing in shares can be an effective way to hedge against inflation.

Real Estate

Real estate is another inflation hedge that has proven increasingly popular over the past two decades or so. Given that property prices generally increase when inflation is on the rise, buying domestic or commercial premises is a safe bet to combat value degradation.

Of course, there are lots of ways to invest in real estate, and some (e.g., becoming a landlord) are more hands-on than others. You can invest in real estate without any long-term commitments, typically through a real estate investment trust (REIT) which effectively treats property like a stock or exchange-traded fund (EFT).


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.
To learn more, visit our homepage or give us a call at +44(0)203 915 8111.

Asset Class List: Categories of Investment Explained

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Glint is a gold-based digital payments platform, enabling its clients to buy, save, send, and spend real, allocated gold and other fiat currencies. But whilst our core service is unrelated to investments, we understand that gold is part of a wider conversation about investing – a topic which is in-depth and sometimes convoluted.

That’s why we’ve put together this comprehensive guide detailing the characteristics of common asset groups, including their benefits and risks.

Use the links below to navigate or read on for the complete guide.

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What is an Asset Class?

An asset class is a way to group assets that share similar characteristics. For example, equities (stocks) are comparable in terms of risk, return, and methods of trading, so they fall under a single asset class.

That’s not to say that all assets within a class are the same, however. Some assets carry higher risks or may be less liquid than others, but they’re still largely comparable and thus are treated within a single asset class.

The differences between asset classes are much broader than for individual assets. For example, how assets are regulated can play a significant role in defining their classification, with stocks and bonds treated wholly differently from a regulatory perspective.

So, now that we’ve covered the broad definition of what asset classes are, let’s move on to look at the main asset classes, their characteristics, and benefits.

What Are the Main Asset Classes?

While there are no hard-and-fast rules on asset classification, there are three principal asset classes that are considered the traditional categories. These are:

  • Equities (stocks)
  • Fixed income (bonds)
  • Cash (and cash equivalents)

Let’s take a closer look at the typical characteristics, benefits, and risks of these three main asset classes.



Equities in the form of stocks are typically shares of ownership in publicly traded companies. Highly liquid, equities are very sensitive to peaks and troughs in the economic landscape, making them a high-risk, high-return investment prospect.


Managed well, and equities can bring high, long-term returns, providing both capital growth and sustainable income. They also have low transaction costs compared to other asset classes, and are considered among the easiest starter assets for beginners at the start of their investment journey.


With huge fluctuations in share prices, equities are a high-risk asset by nature. Prices move considerably faster than other asset classes, which means careful management is needed to curtail risk and protect capital. Equities are also within the asset class most easily influenced by performance drivers, including market confidence, economic growth, and individual company profits.

Fixed Income


The fixed income asset class is primarily based around bonds, a type of loan that’s issued by an investor to a borrower (usually a business or government). Since fixed income assets are a form of debt, they’re sensitive to interest rates and credit risk, with returns consisting of bond price per growth and income (in the form of coupon payments).


Fixed income assets offer unique benefits from an investment perspective. First, they’re considered less risky than equities, since bondholders are always paid before shareholders, so there’s more assurance of reliable returns. This, in turn, makes them a reliable income source, as well as an excellent means of diversifying an existing investment portfolio.


Though considered marginally safer than equities, naturally, fixed income assets aren’t without risk. Steeply rising interest rates and inflation can cause income to flatline for bondholders, while there’s also a risk of losing high capital volumes should a company go belly-up. What’s more, it’s generally more difficult to understand what you’re investing in and how your money is being used with bonds, which can be disconcerting as an investor.



A cash asset refers to cash that’s available to hand, either in a bank or savings account, or in items that can be easily and readily converted to cash (such as life insurance or marketable securities). Other examples of cash assets include treasury bills, commercial papers, and money market funds. Cash is the safest and most liquid asset, though low returns may mean they’re not the most lucrative option.


Cash assets are without doubt the safest asset class, with none of the risks associated with equities and bonds. They’re also the most liquid, meaning they can be used quickly within the market at a price that reflects their intrinsic value.


The disadvantages of cash assets are less about risk and more about missed opportunities. Without strategic investment and placement, cash assets offer very little by way of returns. What’s more, their value can be eroded by inflation in the long term, so careful management is needed to get the balance right.

Alternative Asset Classes Beyond the ‘Big Three’

Of course, there is a whole lot more to the investment landscape than these three traditional asset classes, and new categories and opportunities continue to emerge. But where else do investors place their money beyond the ‘big three’ asset classes? Let’s take a look.


Commodities have long been a popular means of portfolio diversification, offering a way to hedge against inflation while making reliable returns in times of economic disruption. There are lots of commodities out there, but some of the most popular (and lucrative) include gold and other precious metals, agricultural commodities, and energy.

Real Estate

A low-risk, low-return asset, real estate assets include sales of both residential and commercial property, as well as land. While real estate is sensitive to changing market conditions, it does generally offer consistent returns in the form of capital gains and income. Of course, location and purchase price are key value drivers for this asset class, while transaction and administrative costs are high.


Providing a good inflation hedge and lower risk than equities, infrastructure is a long-term asset class that shares similarities with real estate. Examples of infrastructure assets include roads, railways, water and energy production, storage, and distribution.

Private Equity 

Like standard equity, private equity is a stake in a business. However, such opportunities aren’t traded on public exchanges, which means they can offer higher returns but also higher risk than their public counterparts. As such, comprehensive due diligence is needed to assess volatility and risk.

Other Asset Classes

Today, there are a huge number of asset classes out there, and investors are always looking for new avenues through which to diversify. From insurance and hedge funds to art, collectables, wine and forestry, each asset class brings its own pros, cons, and prospective returns, so careful management is needed to balance risk with reward.

Why Asset Class Diversification is Important

Typically, investors seek to ‘diversify’ their asset portfolio as a means of making the biggest return with the least amount of risk. That means the most successful financiers acquire a carefully considered mix of assets, usually from two or more asset classes.

Diversification is all about mitigating risk while driving potential returns. So, a single investment portfolio might contain assets of multiple classes, each counteracting the other to ensure reliable long-term income and reduced risk of loss.

Say, for example, you were to invest in an equity. Though capable of generating big returns, such assets are high risk, and susceptible to external influences and market conditions. Investing in other assets, such as commodities, can counteract this risk, ensuring reliable income in times of economic uncertainty.

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.
To learn more, visit our homepage or give us a call at +44(0)203 915 8111.

Around the campfire: Pandemics, Parsnips and Pounds

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Jason Cozens, Glint’s founder and CEO, reflects on the important things in life…

The pandemic has brought many things into focus, especially the things we need most. It has made me think about food. Not just snacking, but nutritional stuff. Where does it come from? How is it made? How much effort? What’s its value?

The first thing I did when the pandemic started was to build some sustainable home-grown food production, such as tomato plants, and a raised vegetable bed. Heath Robinson-style I used whatever I could get my hands on. And it worked! I harvested the first fruits of my labour yesterday – some lettuce.

It was so perfect, so beautiful, it didn’t even need cleaning. I appreciated its value like never before. It took a bit of hard work and careful tending, but boy it was worth it. It tastes great, like the lettuce I remember as a child.

What do you need to do, to feed a family of four? The first thing, if you are a novice like me, is to do your research:

My local pub has turned itself into an outdoor market, selling locally produced things. I’ve got a bit of a sweet tooth and always liked a bit of cake. At first, I was shocked that a few slices of cake cost £10, but then I thought: how much would I sell my home-made cakes for? Suddenly £10 didn’t seem that expensive at all.

The cost of food is going to go up, partly because supply chains have been disrupted; and it will go up even more as the value of our money is eroded due to global currency debasement.

The new lens, through which we now view the world, doesn’t just make us look afresh at our food. We all are now, (or should be), re-assessing the nature of everything around us. It’s making people like you and me look again at the nature of money: where does it come from, how is its nature defined, how does it work?

As the world borrows gigantic amounts of money, people are turning to real gold (not paper money), as a reliable and incorruptible store of wealth. That’s why Glint’s time has arrived – because it enables you to own, some actual, solid gold and use it as money.

Gold and Covid-19

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Everyone seems to be fleeing for the exit right now. At a time of global fear, gold is proving its mettle as part of your portfolio. When the world is losing perspective, it is time to inject some – and one obvious point is that gold is a safe haven during these difficult, globally nervous times.

The spread of the coronavirus – Covid-19 – now seems to be much faster outside China than within its country of origin. The head of the World Health Organization (WHO), Tedros Adhanom Ghebreyesus, says almost eight times as many cases have been reported outside China as inside in the previous 24 hours, adding the risk of coronavirus spreading at a global level was now very high.

Certainly we seem to be just a few steps away from a global pandemic not so much of Covid-19 but of Covid-19-inspired fear. With the number of cases now exceeding 90,000 and more than 3,000 deaths – a mortality rate of more than 3% – that fear seems justified. But set that against data for common-or-garden seasonal influenza, which, according to the Montreal-based Centre for Research on Globalization, accounts for five million ‘severe’ cases worldwide and 650,000 deaths annually and Covid-19 anxieties seem overplayed, at least for now.

Nevertheless global stock markets lost some $6 trillion in the week ending 28 February (but have since rallied), and the gold price swiftly sped to a seven-year high of $1,689/ounce. It has since eased to $1,643/ounce, the decline explained by some as caused by a large seller of gold selling to cover margin calls in other tumbling investments. Gold has gained 6% in US dollar terms and 8% in Sterling this year. It would be comforting to say that the spread of Covid-19 is a clear buying ‘signal’ for gold and to some extent that is true. When all other assets seem to be in meltdown, gold traditionally is regarded as a safe haven. Certainly the head of global commodities research for Goldman Sachs, Jeff Currie believes that “while so much about the current environment remains unclear, there’s one thing that isn’t: gold, which – unlike people and our economies – is immune to the virus.”

Gold’s ‘immunity’ to the virus is thanks in part to it being beyond any centralised control. The global macroeconomic outlook has certainly darkened considerably, but with interest rates either negative or close to zero, there is little policymakers can do to provide counter-balancing stimulus. Biggest news is that the US Federal Reserve cut its benchmark interest rate by a half-percentage point in an effort to support the economy in the face of the spreading coronavirus. It was the biggest rate cut since 2009 and sent a strong signal that it will not hesitate to do what it can to contain the economic repercussions of Covid-19. The Bank of England’s outgoing governor Mark Carney told the UK Parliament’s Treasury Committee this week that Covid-19 will cause an “economic shock that could prove large but will ultimately be temporary” yet will not be as bad as the 2008 financial crisis. He added: “The Bank will take all necessary steps to support the UK economy and financial system”. So far, Australia and Malaysia have cut interest rates because of the coronavirus outbreak. The OECD has said a prolonged outbreak of Covid-19 could halve the forecast global growth rate from almost 3% to 1.5% this year. Hong Kong’s government has taken the highly unusual (and certainly inflationary) step of introducing ‘helicopter money’ by pledging to give by mid-2020 HK$10,000 in cash to every permanent resident aged 18 and above. This will cost Hong Kong the equivalent of $10 billion. Paul Chan, Hong Kong’s finance minister, expects a budget deficit of $139.1bn for 2020-2021, accounting for 4.8% of gross domestic product, which would be the largest deficit on record. Macau is to give residents shopping vouchers and Singapore is to give residents up to $300 in a one-off payment. Making money cheaper, which is what interest rate cuts do, do nothing to combat the virus but the hope of policymakers is that they will provide a stimulus to keep economic activity going.

Yet the supply/demand macroeconomic shocks that trail in the wake of Covid-19 include a probable dent in the demand for gold jewellery, certainly in China. According to Zhang Yongtao, CEO of the China Gold Association, “people are not in the mood to shop for jewellery. Stores and shopping malls are closed because of the virus. The sales of gold jewellery and bars will drop substantially this year.”

So while in general Covid-19 so far seems only moderately lethal, it has nevertheless prompted a knee-jerk selling of most assets and a shift into gold. It is an ill wind that does no-one any good and disease and death are never cause for celebration, but it needs to be accepted that gold in these uncertain times is proving its merit.

Yet Glint Pay does not advocate obtaining and using its Mastercard on the basis of what will inevitably prove a temporary (although perhaps longer-than-expected) globally disruptive event. You have the Glint Pay Mastercard for the long-term because gold is real money. In our view, the ‘helicopter money’ in Hong Kong is a straw in the wind – the cheapening of paper money which this act signifies is alarming. Giving away paper money generates more demand in an economy without creating more supply and threatens to stoke inflation; and if that ‘virus’ spreads it will indeed be momentous for gold.

Motherhood, cream cakes, and everything you want

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Question: Why does 12 December feel like Christmas day?

Answer: Because both seemed like they will never arrive – and then they come in a rush.

12 December may not be, to quote President Roosevelt on 7 December 1941, “a date that will live in infamy”, but for the UK’s 46 million general election voters it certainly feels like that. The politicians of all parties in this election have promised the earth. Sometimes it feels like they have been promising to deliver heaven-on-earth.

The turmoil is financial as well as political. This election result will certainly produce a lot of confusion for currencies, as forex traders try to figure out the implications for the UK’s economy.

Currency traders will be at their desks before dawn on 12 December for a 24-hour slog. They will be glued to their multi-screens, trying to track the Pound Sterling’s moves against the Euro, the US Dollar, and other paper currencies. Their aim is to make money for big corporations, fund managers, private banks and others, who could win or lose a fortune on how the election goes – and how the Pound performs.

Their task has got more difficult thanks to social media. According to one, Jordan Rochester, “It used to be quite simple, you’d look at your Bloomberg and there’d be a headline up there saying Mark Carney said this or UK data says that. Now you refresh Twitter and it turns out there’s been some poll you didn’t expect to see.”

If this is a complex nightmare for big players, what’s it like for individuals trying to protect their savings? The currency moves will be fairly dramatic, no matter what. Christmas gifts could turn out to be cheaper if you paid for them in Euros – or they might cost you more.

Let’s imagine the Conservative Party wins a majority. Expectations of this are strong, and the Pound has risen against the US Dollar by more than 2% in the last two weeks, precisely on those expectations. The Pound will strengthen if they win a strong majority.

If on the other hand Labour wins a majority, currency traders expect the Pound to fall against the US Dollar.

No-one expects the Liberal-Democrats to win a majority but the vote might produce a hung Parliament – in which case the Lib-Dems could become a significant potential coalition partner.

This election is, objectively, another referendum on whether the UK should leave the European Union. That further complicates the outlook, for if the Conservatives win by just a small majority then the Brexit debate might drag on well into 2020.

The electioneering by all parties has verged on the hysterical. Whatever the result, don’t expect an old-fashioned gentlemanly shaking of hands and an acceptance that the best team won. The kind of rancorousness that has plagued the campaign will continue. Forex traders will need to sit at their desks long into nights to come.

Where is gold in this mix? Currency traders don’t look at gold. They ignore it. If you want to dip out of the frenzy and put your savings into real money; if you want to protect yourself against the ups and downs of currency movements, then try Glint. Not only can you buy things on your Glint card using Pounds, Euros and US Dollars. You can also buy Gold – and sit out the hairy ride ahead.