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The return of gold as real money

MoneyWeek

 Ben Judge writes for MoneyWeek on the advent of Glint

Appleby Horse Fair © Alamy
A horse… my gold-backed electronic currency for a horse…

Gold has been an excellent store of value over the long run: as gold fans often point out, it’s perhaps the only form of money where the quantity that would have bought you a decent toga in Roman times is still worth a half-decent suit today. Still, as a means of exchange, it’s less useful than it once was.

Out of the vault and into your hands

Unless you’re exchanging a handful of sovereigns for a nag at the Appleby Horse Fair, it’s difficult to swap your gold for anything real. In short, it’s lost its utility as money. But a London-based start-up, Glint, aims to fix that. By marrying the world’s oldest currency with 21st-century technology, Glint’s founders Ben Davies and Jason Cozens hope to get people using gold to buy goods and services, settle debts and send to their friends.

It’s fair to say that Davies is unimpressed with our current monetary system. Since the dollar was untethered from the gold standard 40-odd years ago, central banks have been able to print money at will to fund overspending by modern governments, which has led to the global economy staggering from ever-bigger boom to ever-bigger bust. But following the financial crisis, people are starting to realise that something is wrong, says Davies. Global debt as a percentage of GDP is still at record highs, and – as far as the average punter is concerned – the cost of living continues to rise, but wages are not keeping pace.

“The inequality of wealth is horrific,” says Davies. “Something’s going to change.” Cryptocurrencies are phenomenal, he says, but bitcoin’s problem is that it has no tangible backing. It’s also little use as a currency: high volatility, lengthy transaction times and steep fees make it near-impossible to use as a means of exchange. So Davies believes the time is right for “fairer money” – and to him, that means gold.

Glint marries gold up with the electronic payments system – the firm is regulated as an e-money provider by the Financial Conduct Authority. Using a smartphone app (iOS only now, but Android should follow in early 2018), Glint allows customers to buy gold at 0.5% above the spot price and store it in allocated accounts in vaults in Zurich. Users can check the balance at any time and get a Mastercard debit card, which allows them to “spend” the gold in their account.

Davies claims that they will be able to do this in real time without having to sell first or load money on to their card. Users will be able to spend in a range of fiat currencies using the spot rate for that currency, and will be able to send gold to other users, and make payments into bank accounts.

“The revolution has to start somewhere,” says Davies. He sees a future where vaults around the world are connected to Glint, with merchants accepting gold as payment, bypassing the fees of card processors. He also makes a case for its use in developing countries where currencies may not be robust. Time will tell – but perhaps gold really can return as a global currency.

This article originally appeared on MoneyWeek

Out of the vault and into your hands