Philip Judge, Chief Executive Officer, Islamic Finance News June 2018
Interview with Philip Judge, CEO of Physical Gold Fund IFN brings you an interview with Philip Judge, CEO of Physical Gold Fund, to find out more about the Shariah compliant fund and the motivation behind its creation as well the outlook for the global gold market for 2018, among others.
Tell us more about Physical Gold Fund. What are your investment targets and investor profile?
Physical Gold Fund was started in 2012 and is designed to allow investors access to allocated gold bullion within a fully regulated fund structure. We believe gold can only truly be classed as a wealth protection asset if liquidity is assured and access to the physical gold itself is available at all times. The fund’s unique structure and settlement procedures provide high liquidity while reducing counterparty risk as well as allowing for the delivery of the physical bullion if required. Shares in the fund are at all times backed 100% by allocated physical gold that is held in LBMA-approved high security vaults. Shares are redeemable for cash or bullion at any time.
The fund is suitable for both private and professional investors and has clients around the world. Currently, we are increasing our exposure to the MENA countries and the Islamic finance sector.
What is your motivation behind forming Physical Gold Fund in the first place?
I have been in the private allocated custody and logistics of precious metals business for close to 30 years and we established a company providing these services in the early 1990s which became quite prominent in this sector throughout the 1990s and into the first decade of the 2000s. Heading into 2008-09, we were seeing an important shift to higher regulation and greater transparency in this industry. As a result, we sought to be ahead of the curve and establish a fully regulated and highly transparent solution that caters to this growing market. Today, that is our Physical Gold Fund. Importantly, I think we approached the establishment of the fund with vast experience and unique relationships in the physical precious metals acquisition and custody industry, rather than from a purely financial services background. I think this makes us unique in this space.
Physical Gold Fund recently secured a Fatwa certifying its compliance to Shariah. Why the decision for Shariah endorsement and how important is this in your business strategy? Has it always been in your plan to be Shariah compliant? What triggered it?
The Islamic World has always been of great interest to Physical Gold Fund given its long tradition of gold ownership and the understanding it has of gold’s unique benefits. It is only fairly recently, however, that gold as an investment or as a financial product has become more prominent in the Islamic finance sector. As such, the World Gold Council worked closely with Amanie Advisors to produce a new standard for Shariah certification for gold-related products. Physical Gold Fund is proud to have received its Fatwa from the Shariah board of Amanie Advisors in February of this year and we are already in discussions with several key players within the Islamic finance sector. We believe we can meet the needs of this growing sector and are dedicating resources to establish Physical Gold Fund in several Islamic countries.
Many have compared bitcoin to gold, even calling it Gold 2.0. What are your thoughts on that? Are bitcoin and cryptocurrencies comparable to gold as an investment asset class?
It is interesting that almost all cryptocurrencies represent themselves visually as gold coins in what seems to be an attempt to harness gold’s legitimacy and I think this in part has led to cryptocurrencies being labeled as digital gold or Gold 2.0. But cryptocurrencies are not gold and never can be. I think that some of the comparisons that are being made are valid up to a point as both gold and cryptocurrencies can be considered as mediums of exchange; in fact, for transaction purposes, it can be said that cryptocurrencies and the underlying blockchain technology are a more efficient medium of exchange than gold.
However, as a store of value, gold has been and will continue to be unrivaled. Gold has served as a store of value for thousands of years due to the fact that it is indestructible, it has unique physical qualities, it cannot be hacked or erased, it cannot be undermined by new technology, it does not rely on any external factors for functionality and it requires no maintenance. All other financial instruments will fall apart and devalue if left unattended. Gold will always be gold. I am a believer in cryptocurrency technology and believe it has an important role to play, and I think gold and cryptocurrencies have a fantastic synergy and can benefit each other greatly. In short, cryptocurrencies can never replace gold but there is huge potential for the two to work together.
We’ve seen fintech change the business dynamics of the financial industry, including in the gold sector where gold trading fintech start-ups are gaining prominence. Is this a concern for Physical Gold Fund and if so, what measures will you take to stay ahead of the game?
As a fund that deals solely in gold bullion, we are relatively immune from disruptive technologies and we see fintech gold trading companies as potential clients rather than competitors. We are regularly approached by fintech companies trading in gold that wish to explore business relationships with us, be it for gold backing for cryptocurrency tokens or for investment into the fund for other purposes. We welcome such enquiries but as a regulated entity, we are very cautious who we engage with. We have, however, recently entered into an agreement with a fintech start-up that has developed a fantastic business model based around using gold to back financial transactions. We will be providing the structure to support the gold backing as well as any logistical support on the gold delivery side. We will make an official announcement on the deal in due course.
What is your outlook for the global gold market for 2018? What trends or events should investors look out for?
2018 promises to be an interesting year for gold and we believe the price will likely continue to climb as it has in the previous two years. There appears to be a return to volatility in the stock markets and the chances of a significant correction seem to be increasing. Trade disputes are on the horizon and the geopolitical landscape is looking precarious. All this would suggest that investors will increasingly be looking for safety and gold will, as always, be high up on the list as a way to achieve that. It is important to remember that only physical gold provides a true safe haven and the ability to liquidate at the right price is extremely important.
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