Gold expert offers cover from weak peso

Joshua Rotbart, a 45-year-old Israeli lawyer who has built a lucrative career in Asia’s wealth management, now offers rich Filipinos a safe cover against the depreciating peso and volatile inflation rate­—gold.  

“Gold has been a traditional asset.  It has been around for 3,000 to 4,000 years.  It is very recognized globally.  It performs very well in the long term.  It is always valuable,” Rotbart, the founder and managing partner of Hong Kong-based J. Rotbart & Co., says in an interview at the sidelines of Hubbis Philippines Wealth Management Forum 2019 at Hotel Fairmont Makati.

Rotbart, a descendant of the famous Goldberg merchant family who resided in Poland for centuries, is the first member of his family to be born in Israel.  He studied law and marketing at the Hebrew University of Jerusalem.  In his career, he has procured and arranged for the transportation and storage of bullion worth over $1 billion.

J. Rotbart & Co., established four years ago, buys and sells gold, silver, platinum and palladium bars and coins.  It also offers storage and safe deposit box services in 10 tax-free vaults globally.

The company has recently opened an office in Manila to offer gold investment services from buying and selling to transportation and storage.

Rotbart says while the peso weakened about 5 percent against the US dollar in 2018, the price of gold performed better than most equities and currencies.  “In 2018, it did better than stocks and currencies.  Ten years ago, it did better.  Twenty years ago, it did better.  If you are looking at the long term, it is doing very, very well,” he says.

Rotbart says that in the Philippines, the historical gold performance shows a significant rise in the price of 1 ounce of gold from around P10,000 in the 1990s to nearly P70,000 today.

He says gold shines the most during periods of uncertainty, like when it hit $1,300 an ounce in the second week of May this year after US President Donald Trump threatened to raise tariff against China’s exports.

Rotbart says the world’s central banks are in fact the biggest buyers of gold.  “The first quarter of 2019 marked the highest gold purchases by central banks in six years. There is a strong gold demand by central banks, and it is expected to continue in the coming years as countries diversify their assets and reduce their dollar dependency,” he says.

Rotbart says unlike stocks, gold prices have remained stable over the years.  “If you buy a share, that share may go down and become zero if the company becomes bankrupt.  If you buy a property, it may do well or it may not.  But gold has always been valuable and it will remain valuable,” he says.

“When the markets are not doing well, gold particularly performs well.  We believe in medium to long-term prospects especially for physical gold.  If the clients are looking for long-term or succession planning, then gold physically is best,” he says.

He says his company offers physical gold, and not just mining stocks or shares in a metal financing company.  “We offer gold bars or gold coins minted by non-government.  What we tell clients is they need to have their own gold bars with serial number.  They can access it anytime.  It is not a share,” he says.

Rotbart explains that these gold bars are not pieces of jewelry.  “Jewelry is nice but if you want to sell it, it is not an investment product.  It is good if you wear it, but not good for investment,” he says.

“For investment, you need investment product.  We help them buy it, we help them store it in Hong Kong and Singapore.  They are invited to come and see it and look at it to make sure it is there,” he says.

J. Rotbart & Co. teamed up with BDO Private Bank Inc., the wealth management unit of BDO Unibank Inc., to offer gold investment services in the Philippines.

On why the company established a presence in the country, Rotbart says: “We believe in the Philippine market.  It is a growing economy and we have some concerns over the inflation and the currency depreciation.  Gold is perfect for that,” he says. 

“Nobody is doing it here.  So there is enough commercial business opportunity for us because no one else is doing it in this market now. That’s how we signed a deal with BDO Private Bank to market our services to their clients,” he says.

Rotbart who often visits the Philippines says he has already talked to about 10 Filipino families about investing in gold, which is just a small fraction of a few thousand high net-worth families in the country.

“We have Filipino clients coming to Hong Kong and Singapore to check their safety box to make sure it is there.  They take pictures,” he says.

Rotbart says the potential gold market in the Philippines is growing.  “We are talking about few thousands of families.  There is a lot of work to be done here.  We met maybe ten.  We still have a lot to go because we just started.  There is a lot of potential here.  The more people are doing business, the wealthier they become and there’s more work to be done,” he says.

Rotbart says a 250-gram gold bar is currently valued at P500,000 at the moment.  “This is like money and you can pay with it, trade it and exchange it for money in the Philippines, Hong Kong, Switzerland, anywhere. Gold is money before they invented paper money,” he says.

“It is very safe in the sense that it will always be valuable.  We call it more than an investment.  We call it insurance.  If something goes wrong, you have something that pays you back.  If there is a financial crisis tomorrow, gold will go up.  If there is a war, gold will go up.  In this sense, it is very, very safe,” he says.

He advises rich families to allocate about 5 percent to 10 percent of their wealth to gold investment.    “Not everything.  You can still invest in stocks, bonds, property and all these.  We think 5 to 10 percent is enough,” he says.

Rotbart, however, says the company does not promise any particular returns on investment.  “The price of gold is the price of gold.  It is like buying a house.  If it goes up, it goes up.  If it doesn’t, it doesn’t.  You cannot promise anything,” he says.

“In times of political uncertainty, gold price usually appreciates in any country.  In Vietnam, they buy a lot of gold because of high inflation.  In Indonesia, they buy a lot of gold. India takes a quarter of the world’s gold.  Another quarter is bought by China,” he says.

Rotbart says the minimum investment is about $100,000 because the gold bars are stored in Hong Kong and Singapore which have tax-free vaults.

J. Rotbart & Co. offers to handle the entire gold investment process for clients.  “We make it our job to make it simple.  We take care of everything.  We take care of selling the real gold, from good reputable refiners that are known internationally, mostly Swiss.  We find them good storage facilities.  We arrange for insurance.  Later if they want to sell it, we sell it for them. We handle the entire process from A to Z,” says Rotbart.

“Gold is a serious investment, so important that you assay its purity and examine its authenticity whether they are in the form of bars or coins. Safe storage is important to protect your high-value assets, and transportation must be done with top-notch security. If you’re not privy to this, then it’s highly recommended to ask professionals for help,” Rotbart says.

Rotbart says the Philippines can become a center of gold trading in the region, because of its rich deposits of minerals. The challenge, he says, is that gold is highly taxed in the country.  

“We are confident that the market will grow here but the BSP [Bangko Sentral ng Pilipinas] needs to change its policy and open the market like Singapore did which is now a big gold center.  The Philippines can be in the same position because you mine gold and you buy gold.  So assuming the government changes its policy, I see a bright future for the bullion market here,” he says.