Could you provide a brief journey of how you arrived where you are today? I was an investment manager at a Swiss private bank and later became a hedge fund manager investing in gold and commodities. I realized that Alan Greenspan was keeping the property bubble pumped up and became a cynic of the western banking system. I spent two years writing my book The Final Crash which was published in 2007. I searched for solutions and came across Islamic finance, then took the Securities Institute IFQ exam later that year. I spent 2009 speaking at conferences around the world while looking for employment or consultancy work in Islamic finance. It was disappointing to find there was little of substance so I treat the topic as a complement rather than a core offering.
What does your role involve?
I buy and sell precious metals for all types of investors from 1 oz coins to 1 kilo bars. I can cater for Islamic clients by ensuring that the purchase and sale process avoids forbidden actions. I have also been made a non-executive director of a bullion-backed fund called Offshore Gold Limited which provides precious metal exposure for portfolio investors who do not want physical gold.
What is your greatest achievement to date?
Writing The Final Crash is likely my best-timed work although I made mistakes in 2008 and lost my job as a hedge fund manager. With the benefit of hindsight I should have parked my personal funds in gold, stayed in private banking and kept my mouth shut. There’s a generation of bankers who toe the line, take no personal risk and get a lot of reward but I am not the sort of person who can do or say nothing when they know a disaster is on the way.
Which of your products/services deliver the best results?
We are in a long-term commodity upswing and gold is undoubtedly the place to be. Other commodities will perform well but are more of a speculative wild-ride. I think of gold as an insurance policy — reliable but ultimately unemotional.
What are the strengths of your business?
Bullion appeals to both conventional and Islamic investors and returned 280% in the last decade. It is an area where conventional portfolio managers are heavily underweight and do not really understand because it has been out of favor for so long. Most investment managers are schooled in interest-based systems and have grown to love paper assets rather than real assets. They are also fearful of change, which is why they cling to the US$ as a “safe haven” long after it has begun to decay.
What are the factors contributing to the success of your company?
The conference work and writing have contributed to a heavy internet presence which is reassuring to investors. I also have the credibility that I called the crash in advance and can offer solutions that are outside of normal thinking, particularly for a westerner. It can be a blessing and a curse because one can sound like a preacher or be branded a maverick. Ultimately I believe clients will back those who are honest, even if they are sometimes wrong.
What are the obstacles faced in running your business today?
There is an army of bureaucrats and service providers who demand high fixed fees yet don’t give guidance or take any risks themselves. I wouldn’t mind if anti-money laundering regulations had some impact on criminal behavior but I haven’t seen any evidence of a decline. I suspect that law-abiding professionals bear the burden of bureaucracy while criminals operate without hindrance as their advisers can work the system. My skeptical side questions whether such legislation is a convenient front for greater tax collection. I don’t mind the foundation but I do mind the falsehood. It is rather like the “War on Terror” that proclaims to protect our freedom while undermining it in reality.
Where do you see the Islamic finance industry in, say, the next five years or so?
I believe the crash in both conventional and Islamic banking is a blessing in disguise. The latter seems to mimic the former and I’m not the only person to question the substance of some of its methods. Debates on Linked-In frequently revolve around the beauty of Islamic principles being sullied by man-made practices. Islamic finance is in an adolescent phase where it wants to follow the crowd but is trying to establish its own identity. When it emerges into adulthood, its practitioners will have the confidence to commit to sharing risk and reward rather than copying a failed financial system.
Name one thing you would like to see change in the world of Islamic finance.
Greater accessibility and affordability of scholars. It takes a long time to nurture the combination of religious and financial expertise, so the supply is somewhat inelastic. The price of obtaining a single fatwa can be the same as the setting up of a fund from start to finish, which seems disproportionate. It would be easy to be cynical and say that charging for knowledge is a form of hoarding but scholars have overheads and need to make a living, too. It would be better for them to take equity to share the risk but this then presents a potential conflict of interest. Either way, only large institutions can afford single scholars or entire boards. This is a major barrier to entry for start-ups and innovators who wish to launch products. I would not mind using a junior scholar or understudy but access is pretty difficult — just try finding one on the internet with a price list for their services and you will understand the dilemma.
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