All is not gold that Glints

GATA sent me this snippet of an article from Financial Times.  It's yet another case where assholes take your money, promise the moon and the stars for faaaar less than it actually costs to deliver them and then rely on debt "to get started".  Sounds kind of like a drug addict who needs a fix "to get started" in the day.  Folks, these dust ups happen all the time in the business world but generally you do not hear about it because the debtors find ways to get the additional roll overs they need.  But now we see a second example of a company in the UK which was allowed to suddenly go bust and abruptly cease operations for the same reason: they could not find anyone to loan them money.  Well geez Louise, that sounds a Hell of a lot like the early stages of a liquidity crisis.  First Thomas Cook was put into receivership and now Glint.

But don't worry, your gold held with them is still safe.

Or is it?

After all, whose gold is it really at this point?  If I borrow money from the bank and my company goes BK, the bank can get in line with the other creditors in BK court.  If I were the banks who Glint was defaulting on I would assume that all the assets of Glint's customers were fair game to repay the debt Glint defaulted on.

So these assholes can spew all the "guarantees" they want to but at the end of the day if they are using debt to run their businesses and they get caught up in the next liquidity crisis, which will necessarily be larger than the last one in 2008, then all their bullshit guarantees will not buy you a cup of coffee.

Putting your gold in storage anywhere except your own personally controlled premises is gambling.  Holding your own gold is saving.  What part of that is so difficult to understand?

Keep your eyes open for more of these sudden defaults happening in Europe, especially the UK since Brexit could push the marginal players over the edge.  But know this: the marginal players are a microcosm.  One day we will wake up and the banks will be closed and anyone stupid enough to leave excess cash in them will not have access.  And while they keep your money hostage it will be your problem if you need cash. So anyone reading this do yourself a favor.  Go find a mirror.  Look into your reflection deeply and repeat after me: "I was clearly warned what was going to eventually happen.  When it finally does happen, don't act like it was a surprise.  If I get caught up in it it will be because I was lazy and careless.  There is no question what the right action is - take your cash out of the banks.  Run on the banks before everyone else does." 

By Henry Samuelson
Financial Times, London
Wednesday, September 25, 2019

A U.K. startup that promised to allow people to pay for goods in gold has collapsed, dealing a blow to its backers including Conservative MP Steve Baker, who had promoted the company on Twitter.

The Glint app allowed people to load credit in various currencies, which was then used to buy a portion of a physical gold bar, stored in a vault in Switzerland. Customers could use that gold via mobile and debit card-based payments. Glint said it had attracted tens of thousands of registered users since its launch last year, and had handled transactions worth more than $50 million.

But the company's administrators said on Tuesday that Glint had blocked all customer withdrawal and payment requests, after the company's board was unable to secure funding to repay an outstanding loan. Glint did not respond to a request for comment.

"Following a dispute with the secured creditor, the board were unable to secure sufficient funding in time to repay the outstanding loan," said FRP Advisory LLP, which was appointed as Glint's joint administrator.

The company's demise comes just a few months after Glint started operations in the United States. It also raised L5 million in a private placement in June this year, led by Canadian asset manager Sprott, which is one of the largest institutional investors in precious metals with $8 billion in assets under management.

The administrators will work with the board of Glint to seek investment to rescue the company, or if that fails, look to transfer the business and assets "to an appropriately regulated entity," FRP said. ...

Glint said on its website that customers' gold was legally allocated and "held in a secure, insured, and independent" vault run by Brink's, the US-based security company, in Switzerland. "There has been no change to this arrangement as a result of the administration," it said.

"The administrators' team is also reviewing these arrangements to verify that the amount of gold held by customers per Glint's records reconciles with the physical gold at Brinks, which the directors and management of Glint assure the administrators they do," the notice said. ...

... For the remainder of the report:

https://www.ft.com/content/48ce96a8-decb-11e9-b112-9624ec9edc59