Glint founders Jason Cozens & Ben Davies describe how their disillusion with global financial systems led them to create Glint, providing the security and flexibility to use gold as money
Glint is a financial technology invention that allows people to spend gold as money. It’s been forged primarily by mine and my co-founder, Ben Davies’, collective experience with technology, finance and money.
Like so many people I can recall the difficulties of the financial crash that began ten years ago. Huge institutions were failing and exposing innocent people to life changing financial loss. At that time many people sought gold, because it was a solid, safe asset and a hedge against so many other investments that were losing people money. But gold was not easily accessible to most people, it was guarded by brokers and seen as the preserve of those who were already investment professionals.
As a former trader my journey to Glint started almost two decades earlier, and is based on my personal experience of how the monetary system, now known as Bretton Woods II, was working in reality on a daily basis. In the early 2000s I was running the rates trading desk at the investment bank, RBS Greenwich (formerly Greenwich Natwest). At the time, it was the number one primary dealer in US government bonds, agencies and mortgages.
This afforded me a unique inside track as to what one of the largest players in capital and trade flows was doing – China. Working for a US primary dealer, I sold bonds almost daily and in increasingly vast sums to the Chinese Central bank. In doing so I was able to see in real-time the build-up in China’s foreign currency reserves and how they were impacting US long end rates. They were driving them down demonstratively. By doing this the Chinese were supporting greater US mortgage and consumer credit creation, while at the same time creating a dearth of yield for pensions and endowment funds as rates got lower and lower. The fall-out of this was the advent of financial engineering which led to the Great Financial Crisis (GFC) or sub-prime crisis.
The GFC was really then a product of Bretton Woods II, which I refer to as a semi-fixed exchange rate mechanism with Asian currencies where the US is centric.
In essence, China and other Asian countries were more or less pegging their currencies to the dollar without the backing of gold to maintain their relative competitive ability to sell things cheaply to the US. The definitive nature of the whole monetary system was financing the US’s huge deficits, both fiscal and trade. If we’d had a gold conversion or standard we could have had restraint on that build-up of reserve currency, that would have been the natural equilibrating mechanism of the trade balance. We didn’t have that so we had this egregious proliferation of credit as a consequence.
From June 2004 to June 2006 interest rates went from 1.25% to 5.25% and over 70% of home owners were on adjustable rate mortgages (ARMs) due to reset to higher rates in 2006. When that reset happened the timer on the debt bomb began ticking because Wall Street had re-packaged those mortgages as investable securities and they were now underpinning big institutions like pension funds. At that time, I could see there was so much leveraged debt ingrained that the banking system would almost certainly collapse. For the record, don’t think for a second I was alone in my fears; I wasn’t, just many didn’t want to believe it. All real assets – equities, real estate and most commodities, were highly overvalued but gold remained remarkably undervalued. It was ready for a major bull market – a rise in price. The antecedents to this bull market were already in play. If the banks failed as I suspected, I knew it was the asset of last resort which would protect investors against default and maintain their purchasing power.
The GFC for most people really undermined their faith in our financial and political hegemony. It made them question the value of their daily labour in terms of what money was. I myself began to question it and look for a more reliable form of money and thus financial system. Through my own search for answers I could see the problems stemmed right back to 1971, when Richard Nixon took the US dollar off a gold peg, in response to Charles De Gaulle’s demand that France’s trade balance be settled in gold. Nixon declined and chose instead to settle with France in dollars. (Back then French warships laboured back and forth across the Atlantic, merrily laden with the gold used to balance trade payments). Nixon’s actions were the biggest testimony to the worth of gold, yet ironically it ended the gold standard for good, well until now…
While Ben was able to see the clouds gathering, I experienced the storm break in 2008 with a nasty sense of déjà vue. We think the financial crisis was completely unprecedented and unpredictable, but it had all happened before, just somewhere else. I used to work in Hong Kong and when I left I decided to go overland back to the UK via train through China, Mongolia and Russia. It proved a good time to leave. I remember waiting for the ferry on the actual day of my departure and seeing huge queues and security vans hurtling between different banks. They were trying to get enough cash to the banks because there was a run on them as people ran to get their savings out in time.
This was back in 1997 when there was a financial crisis in Asia. I’d gone to Hong Kong as an architect but I’d had mixed success. I’d actually almost failed to qualify because I’d struggled to realise my designs on paper. Then, in Hong Kong, I discovered my first computer. I put in all the reference points for my degree design and one night I saw a visualisation of it. It was a complete revolution, up until that point it had only been in my head. That night I felt computers were going to change society, how we communicate, how we work and how we think.
I went on to start a company called Visuality which gave people the power to see their projects before construction. We worked on the Sydney Olympic stadium, the new Wembley stadium in London and the vaulted ceilings of the Queen’s chapel in Windsor Castle following the devastating fire there.
That ability of technology to solve complex problems and translate them into simple interfaces is critical to Glint. We wanted to look at the difficulties in our financial systems and see if there was a simple solution we could present to anyone using our technology. The simple solution was money. We wanted to give people money that didn’t devalue over time as governments printed more, money that was recognised and accepted everywhere without punitive FX charges and money that people could really save their wealth in. That money is gold.
In 2006 I set up a gold based hedge fund called Hinde Capital with Mark Mahaffey, who originally hired me at Greenwich. Hinde was arguably the first hedge fund that enabled investors to hold physical gold in safe storage outside the investment banking system. We spent a lot of time educating people about gold and why it was such a good protector of wealth and diversifier in portfolios. However, what was frustrating was the fact that the person in the street could not benefit from Hinde as we were a professional fund set up for institutions and high net worth, sophisticated investors, with minimum investment sums, beyond the reach of most.
Mark and I spent a decade writing our monthly HindeSight Investor letter which we made available to the public to help educate anyone interested in a changing economic and political landscape. We spoke about how gold had once been money and how its replacement by governments with fiat or paper money sowed the seeds for decades of boom bust cycles predicated on too much credit creation. Gold isn’t really an investment, it’s just became so as it was phased out as money because it stopped governments creating debt to pay for welfare and war. Gold should be a saving that you spend from.
I remember in the aftermath of the crisis, being on the phone to my brother, who ran a cutting-edge mobile technology company. I was driving home from witnessing yet another wild day in the markets. I was chewing his ear off about my day and how we needed to stop this incessant boom and bust. We needed to reintroduce gold as money and we needed to combine technology with gold to make it digital and thus truly portable again.
He began telling me about how Google was rumoured to be creating the Android phone wallet where one could make payments at the point-of-sale in a shop. How great it would be if you could pay with gold from this wallet? He joked that soon we would all be on a ‘Google Gold Standard’ and I remember laughing (nervously), what if they have that idea and really act on it!?
Fast forward to 2011: I was speaking at a conference at the City of London’s Guild Hall hosted by Cheviot Asset Management; after I finished speaking, Jason came up to me asking for some advice on how his son could get into finance. But then he began talking about his company Gold Made Simple and his own journey into gold from the world of e-commerce. I thought it was wonderful that without any background in finance he had arrived at the same conclusions I had. Like me, he wanted to democratise gold for people to spend as money.
Ben immediately understood all the opportunities and challenges we faced, eventually joining me as co-founder. On starting Glint we were given the strongest possible mandate by our partners and investors. Oliver Bolitho: former chairman of Goldman Sachs Asset Management Asia; Marcus Grubb: former MD of Investment & Strategy at the World Gold Council and Haruko Fukuda OBE: former CEO of the World Gold Council, have all come on board as non-executive directors.
Having that expertise at your back is incredible but it also gave us huge confidence in what we were doing.
We believe that if banks have diluted their promise to keep value in money then people are entitled to look around and choose the money they want to use. I believe cryptocurrencies have been a fantastic expression of that, but even they are still based on a ledger of promised value which is the cryptocurrency code itself. We’ve seen only recently how that value fluctuates massively with opinion. Gold doesn’t do that, you can’t fake gold, you can’t change it, you can’t manipulate it, you can’t print it. It is finite and it’s special: most of the Earth’s gold comes from a process involving not one, but three, supernovas.
I personally believe that money as a system of exchange is a promise from one person to another – and that should never be corruptible. During this period of historic low pay quantitative easing has made people’s money worth less. That is not fair. Now you can use gold instead and save and spend it as freely as any other currency.
That concept behind Glint, seems so simple now but it came from a long process of enlightenment. After the disasters caused by financial engineering I gave a speech in Australia – entitled the Singularity – Transcendent Money. I spoke about how I felt money had to change and that we were close to a ‘monetary singularity’– a unique event. This is the point where technology and gold merge. Technology will enable the transactional use of gold as money in the world.
I told a narrative of how gold will rise inversely to the diminishing returns of a failed fiat paper currency system. By free market forces gold could yet become the stabiliser to the global economy through a merger with technology and payment systems: a ‘Transcendent Money’. Transcendent because it is a money system beyond our level of current belief and a money that transcends the corruptible money of a fiat currency system. I followed this up by saying I am significantly delusional enough to pursue that outcome.
Without Jason I may never have pursued this seeming delusion, which is fast becoming reality. After we first met Jason tenaciously pursued the journey of reintroducing gold into the electronic payment system. Despite his daily remonstrations for me to join him, I couldn’t at that point as I had a commitment to Hinde Capital but I am extremely grateful for his perseverance and providing the platform for us to go and raise money together in order to make Glint a reality.
With Glint we are offering a better, fairer form of money – and I want to be part of that. Global indebtedness hasn’t gone away and paper, or fiat, money remains volatile and a faith-based concept. The only utility of paper money is that people think it’s money, it has no worth. Whereas gold has a utility because it has an intrinsic value. What we have now is a tangible representation of that. Glint has married technology with the oldest form of currency gold. Gold is both a stabiliser and equaliser of value and Glint gives that to everyone.
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