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Friday, 26 April 2013

2013 exclusive Q1 E/MBA Club with Aram Shishmanian, the CEO of World Gold Council event [at Goldsmith hall] report, independently written by Murad Baig, EMBA06

 other pictures by Gareth Wong

Foster Lane, London EC2V 6BN more pictures
Positioned at the junction of Foster Lane and Gresham Street, north east of St. Paul's Cathedral, the magnificent Hall, opened in 1835, is one of London's hidden treasures.
The company of Goldsmiths was created to regulate the craft of the goldsmith and has been responsible for ensuring the quality of Gold and Silver since 1300.

This was the venue for the 2013 Q1 EMBA event, where many City/Cass MBA alumni {no students, thus quality of attendees are generally very senior business leaders} had gathered to listen from the leadership team about the objectives of World Gold Council (WGC) and some of the important work done by the WGC to actively promote the gold market globally.

  many thanks for our residence photographer Derrick Khan

Introduction to WGC by AramShishmanian, the CEO of WGC  
Aram did his MBA from City University almost 38 years ago and then had an exceptional career at Accenture for almost 27 years. During his time at Accenture Aram held a number of leadership positions including Global Managing Partner of the financial markets industry practice.
Aram gave us a brief introduction into the timeline of gold, a precious metal which has been used within society for more than 4000 years and diffused into all parts of our life, from jewellery and investment, to collateral for security to being used in the creation of high specification electronic devices.  
Aram also provided market context by highlighting some facts around the importance of gold as a precious metal:
1.       40% of the world gold production is recycled
2.       50%, gold mined today becomes jewellery
3.       650%, the price increase of gold since 2002 – today
4.       Central Banks are increasingly buying gold as it is becoming a central component of their investment philosophy towards managing risk
Some of the main drivers which have spurred gold’s growth over the last 10 years:
·         Central Banks are buying more gold to bolster their gold reserves
·         Gold ETFs (exchange traded funds) have mobilised investing in gold within financial marketssince 2005
·         Incredible growth of the Asian markets (India & China accounted for 56% of total jewellery demand) has resulted in higher consumption for gold
·         Scarcity of gold supply

Aram explained that although the last 10 years have shown gold to be on an upward trajectory, the events globally are providing a strong support for the positive gold outlook to continue. Some of the  main themes driving the gold market further are:
·         In the next 10 years there will be a change in the gold market due to a rebalancing of economic transfer between Asia and West
·         Breakdown of trust in financial markets has made more investors turn to gold as a safe haven within their investment portfolios
·         Risk management has failed and gold has shown itself to be a good hedge due to its low correlation with other asset classes
·         Regulation
·         Population is increasing in India & China, countries which already account for 55% of the world gold demand. Shanghai now has its own gold exchange
·         India & China have 50% of their disposable income invested into gold
However set against a bullish factors for gold, are a number of challenges looming on the horizon due to:

·    Differing affinities for gold jewellery between generations and a need to maintain the attraction and relevance of gold to women and to new generations of consumers
·         Women are not asking for gold jewellery as much as before
·         Competing investment products in the future as markets liberalise
·         Resource challenges. Gold mining companies are struggling to raise capital for starting mining projects
·         Geological challenges with some mines 5km deep
·         License to operate is becoming increasingly difficult to obtain for mining companies

Aims of the WGC:
·         Stimulate demand for gold
·         Intervene to create gold demand via new channels and new products
·         Represent most gold producing companies
·         Promoting the sustainability of gold production
Initiatives undertaken by WGC for stimulating and sustaining demand for gold:
·         Gold ETFs
·         Gold based saving accounts
·         Gold is a credible collateral under Basel-3
·         Launched new jewellery brand
·         Accreditation programmes for Central Bankers on leveraging gold as a reserve

 

Marcus Grubb, Managing Director Investment
Marcus Grubb’s key role is to be the gold strategist for the World Gold Council, responsible for the organisation’s view of all aspects of the gold market and asset allocation and to articulate it to investors of all types, from private wealth to institutional and sovereign wealth investors worldwide. Marcus also acts as the global spokesperson, for the World Gold Council speaking at high profile forums and events worldwide.
The following is a summary of Marcus’s presentation around the main drivers which make gold an important part of every asset managers asset allocation strategy:
·         Gold has been a top performing asset class
·         The demand for gold is much higher than supply. Almost 40% of the world gold is recycled
·         India & China continue to dominate global demand, with China now a net importer of gold
·         Investment demand for gold is strong
·         Central banks have become net buyers of gold to hedge against currency and fx risk
·         Mine production has not increased supply of gold
·         New discoveries of gold are less
·         Massive debt market with governments owning a lot of their own bonds
·         Gold is a luxury metal and a currency with unique diversification properties from an investment perspective
·         Gold is a debasement hedge against currency risk
·         Best tail risk hedge
·         Inflation hedge


Natalie Dempster, Public Policy
Natalie explained that the main role of the policy function was to monitor, provide policy creation expertise, lobby and create market intelligence to support the proliferation of gold.
One of the major initiatives undertaken by the policy function was to get the Basel-3 regulation to recognise ‘gold’ as a high quality liquid assetdue to:
·         No credit risk
·         Transparent pricing
·         Low correlation with other financial assets
·         Deep liquidity
Also given the current issues being faced by European governments around the credibility of their sovereign banks, WGC policy function is proposing to secure sovereign bonds by using gold as collateral.

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Editor' note: Many thanks to Murad Baig Partner at INFINIEM, EMBA06 who took time to help us write this event report

As you can imagine and see from pictures and insights shared above, what an honour for fellow City/Cass MBA alum who managed to join us, for those of you that wanted to join a future exclusive E/MBA Club, find us on www.cassalumni.org

we are continuously looking for top of their profession guys fellow city/cass MBA alum to speak & host future E/MBA club gatherings, ping me a message directly or via my @GarethWong or my online profiles.


Thursday, 25 April 2013

Must try this widget & scroll down! only takes minutes "Global Rich List "

Global Rich List:

Must try and share!

it could give people option to choose the best charity, but that would need another greatly designed widget to choose the best charity...

http://www.globalrichlist.com/

Thursday, 18 April 2013

totally agree but need a new "re-evolved" capital market structure to support his proposal!?? Clayton Christensen on "Religion and Capitalism"


Must watch thought provoking video /insights from Prof Clayton

Totally agree with him that we need ways of fixing (paraphrasing):

1) instilling value & honesty (voluntarily and instinctively practiced by the business leaders)
2) solving "principal agent theory" (not only maximising shareholder value, as 95% of market is executed by speculators) pls refer to video!

Challenge on our hand is this:

we need a new ecosystem that promote the above (as the whole value chain is now speculative)..

Surely, our challenge is that our world need to reinvent and/or augment the value chain to "de-volute" or "re-evolve" a viable alternative capital market: it maybe difficult but it will need to incentivise management/boards to focus on long term viability of companies & reward them accordingly (some might argue the bulk of the management incentive delayed by 3-6years just as Prof. Clayton mentioned shareholders held shares for 6years in 1960s)!??

Make sense!??