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Go Physical: Precious Metals Boutique Educates Wealth Advisors
16 March 2020
While its fortunes wax and wane as a safe-haven asset, recent turbulent markets ensure that gold is unlikely to lose its shine for investors concerned about protecting wealth and staying liquid if they need to do so. Proxies and the Real McCoy
Whether it is Hong Kong-based investors shifting some gold holdings to rival financial hubs such as Singapore following last year’s unrest, or more recent adjustments brought on by the COVID-19 outbreaks, the precious metal remains part of the financial jigsaw puzzle.
A player in the market with plenty of views about gold is , a blockchain-driven KYC as-a-service platform business. The partnership offers precious metal services to PASS Club members, including six-month free gold storage. Blockpass serves firms in areas such as crypto wallets and exchanges. Its app allows users to create a verified portable identity that is compatible with any service in the Blockpass ecosystem.
This is the kind of venture that Joshua Rotbart, managing partner and founder of his eponymous firm, is keen to make, blending the centuries-old case for holding gold with bang-up-to-date technology used to validate and track transactions. The fusion of distributed ledger technology and precious metals is something of a trend.
Rotbart spoke to WealthBriefingAsia recently about his business, arguing that the case for holding actual physical gold, rather than proxies (gold-backed exchange traded funds, etc) was insufficiently appreciated in the wealth management industry, such as among family offices.
“Single family offices, for example, are deeper into gold and often they are via ETFs. We see under-exposure to gold….it is still via ETFs rather than the physical side."
This publication regularly covers gold from a variety of angles, such as how it is possible to earn yields from gold - according to US-based firm - breaking a conventional piece of wisdom that gold is a zero-yielding asset; it even figures in inheritance cases, as shown here.
What does he say to ETF holders? Rotbart replied by citing the case of a client holding a large amount of gold with a European bank: “Only upon instructing the bank to transport the gold to a private vault in Asia, the family learnt that they were holding a position in the bank’s gold and did not own their own allocated gold. They had to close their position with the bank and purchase physical gold with the proceeds.”
A lot of what Rotbart’s firm does is to educate clients on why holding physical gold is less daunting than might appear. (To some extent the glamour, or mystery, surrounding this metal, inflated in literature or films, doesn’t help.)
The firm seeks to make buying/selling and holding gold as easy as trading into a liquid security, he said. J Rotbart & Co earns commissions on transactions and also for storage and transportation. It does not charge for its advice.
“What many people may not understand is that gold transactions will not involve shipping gold around but putting a different label on it in a vault. Most trading is done by inter-vault transactions,” he said.
With a background in logistics – a sector very much in the public eye amid global supply chain disruptions - Rotbart is a bit different from some of the investment banking “rocket scientists” one often finds in parts of the financial services sector. Rotbart was previously the general manager of Hong Kong based Malca-Amit Precious Metals (MAPM), the gold and silver bullion procurement and bespoke services subsidiary of the logistics group, Malca-Amit Global. He studied law (LLB) and marketing (MBA) at the Hebrew University of Jerusalem’s special program for outstanding students.
Rotbart joined the Malca-Amit Group in 2010 and was appointed head of business development for the group’s flagship vault in the Singapore Freeport. In 2013, he was asked to move to Malca-Amit Global’s head office in Hong Kong to set up and manage the new Malca-Amit Precious Metals venture.
He is based in Hong Kong, and has had a close look at the some of the financial flows prompted by the political unrest in that Asian jurisdiction.
About five per cent of gold holdings in Hong Hong have shifted to Singapore in recent months amid the recent political protests; some has moved to Switzerland. “There’s not much new appetite to store assets in Hong Kong,” he said.
The recent coronavirus emergency has also encouraged some shifting of assets out of Asia. “It had been going the other way a few years ago,” he continued.
Developments such as the opening in 2012 of the Singapore Freeport has been important for that jurisdiction’s market. One of the consequences was that people could bring their gold closer to home in Asia.
Challenges and education
For people interested in gold, it is not always easy to find people who know about physical gold and where to access it. There are some banks that can do this, but this can be difficult and expensive. This is also a challenge in Asia, North America and Europe, Rotbart said.
In the Middle East, the local market and its infrastructure appears more gold-friendly. Banks operating under Shariah law are a good example of those that are more comfortable and helpful with this commodity.
The recent Blockpass partnership is another turn in Rotbart’s drive to make physical gold and other precious metals a more straightforward area for HNW individuals and advisors to operate in. Given recent events, it is unlikely that business in Rotbart’s area will be dull.
While its fortunes wax and wane as a safe-haven asset, recent turbulent markets ensure that gold is unlikely to lose its shine for investors concerned about protecting wealth and staying liquid if they need to do so.
Proxies and the Real McCoy