This week’s guest is Charlie Morris, the Chairman and Founder of ByteTree.com; an analysis site for bitcoins.
“In 1999 – seems like an age ago – I attended a presentation on gold by John Hathaway from Tocqueville Asset Management. Back then gold was trading under $300; a price not seen for two decades.
John put up several charts that put gold into its historical context. From these I could see that gold has always kept its long-term value and was a safe haven during tough times. In the heady days of the dotcom boom people began to worry it would all end in tears. It did, and gold started a bull run.
In those days it was difficult to invest in gold. Exchange traded funds for gold didn’t start appearing until 2003. Without those there was no way for a professional investor to invest in gold, other than futures and gold mining shares.
Then I met Graham Birch, who managed the Merrill Lynch Gold and General Fund (now part of Blackrock). He made a series of compelling arguments including that central banks would stop selling their gold reserves (they have); predicting lower interest rates (which has happened); and a recovery of sentiment in the sector (that has also happened). Gold mining shares were undervalued, he said, and would rise – and even more so when the gold price took off.
When the dotcom crash happened there was a scramble to sell these formerly highly-rated companies. Anything tangible, such as gold, proved its worth. Since then gold has become the cornerstone of my investment philosophy.”