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Dave Holt, President, Harrow Partners Ltd.

Marsha Cowan, Jewish Foundation of Manitoba CEO

Approximately 90 professionals attend JFM PAC luncheon

Dave Holt discusses gold as an investment



By Raymond Hall, June 9, 2010

On Tuesday, June 8th, the Jewish Foundation of Manitoba hosted its annual Professional Advisory Committee luncheon, featuring guest speaker, Mr. Dave Holt, President and Chief Investment Officer of the Winnipeg-based firm, Harrow Partners Ltd. His presentation was entitled, Golden Opportunities: Do They Really Exist? As described below, his talk dealt with the status of gold as an investment and was well received by the approximately 90 legal and investment professionals who attended.
According to JFM CEO Marsha Cowan, the PAC luncheon provides an opportunity to introduce the Jewish Foundation to professionals from throughout Manitoba who have the responsibility of counselling their clients on matters related to investments, legal affairs and philanthropy—professionals such as financial advisors, investment counsellors, and lawyers who handle testamentary matters. The luncheon is a non-solicitation event whose primary purpose is to acquaint investment and legal professionals with the Foundation in order that they might become sufficiently aware of the Foundation’s objectives and functions to enable them to recommend that their clients consider the Foundation as one of the alternatives in the spectrum of the clients’ investment and philanthropic objectives.

As Cowan stated, the Foundation had three significant messages for the professionals. First, the Foundation oversees a fund whose capital value is currently $64.8 million—it maintains that capital and distributes funds in the forms of grants and scholarships from the interest generated by the fund. 

Second, in 2009, the fund distributed approximately $2.9 million to approximately 200 different organizations. The recipients of those funds consist of a gamut of both Jewish and non-Jewish organizations inside and outside of Manitoba, and touch almost every aspect of our community life for the full range of residents, from the most needy to students pursuing academic development, as well as specific community interest groups. The key distinction between the Foundation’s philanthropic activities and the philanthropic activities of other organizations, she stated, is the fact that over 80% of the Foundation's funds’ distribution choices are directed by the donors’ decisions.

Third, the Foundation maintains the most successful endowment program in Canada—a program entitled the Endowment Book of Life. To date, 557 individuals have made commitments to leave a charitable donation to the Foundation through testamentary instruments, life insurance and other vehicles. The value of these donations and pledges is now estimated to be close to $25 million.

Extensive details of each of these three component messages are provided in the Foundation’s Annual Report, which was distributed to the luncheon attendees, and which is also available on-line.
Dave Holt’s resumé indicates that he has spent over 22 years in the financial services industry in various executive and managerial capacities, including a long period at Winnipeg-based Assante Corporation where he was responsible for product and service development activities. He holds a number of professional designations, including CFA, CGA and CFP.
Holt’s presentation included an extensive historical review of the monetary system, the money supply, the development of the gold standard, and the role that gold, as a commodity, played in the 20th century variations of the money supply and international exchange rates, as well as in post-war restoration programs such as the Marshall Plan.

Of particular note was the role that gold reserves (or lack of gold reserves) played in a number of monetary crises, including the total failure of various nations’ currency, such as that of Argentina in the 1990's. Holt attempted to answer a number of critical investment questions by presenting a number of charts of historical data. For example, how has gold fared in comparison to inflation? Answer: not well, over the long term, horribly at some points, and occasionally, for very short periods, extremely well. 

Should investors consider investing in gold today? Well, on the day of the luncheon, gold hit a record high price of over $1,250 per ounce. Holt went into some detail explaining the prevalence of "the greater fool" theory. On the contrary, as he pointed out, based on a comparison to the Consumer Price Index in the 1970’s, gold’s price today should be over $2,200 per ounce.

I found one remark in his presentation quite humorous, for personal reasons.  I have always been amused at how financial advisors and consultants respond to specific investment decision questions from their clients.  Holt actually referred to an analyst’s answer to an investor’s question about gold using the very same memorable words that my own 1989 stock broker used in answer a question that I posed to him with respect to a specific stock’s performance. My question then was an obvious one, “What do you think this stock will do?” My broker then answered, perhaps typically, “It may go up, or it may go down.” Thanks a lot.
In 1989 I considered that answer somewhat inane, but as Holt hinted Tuesday, it is not usually the role of the investment adviser to assist his clients in their short-term speculation decisions.  If they were so good at speculating, they wouldn't be working as financial advisors, they would be investing on their own account. Rather, he left us with the impression that even the best advisors may find themselves on the wrong side of financial events more often than they would prefer, given the plethora of factors that go into the mix.  Sound portfolio management flows rather from a combination of factors related to managing risk, yield and liquidity in a balanced portfolio geared to the investor’s own objectives and tolerance for risk, rather than on making individual investment decisions.
Holt did point out that recently much of the gold that is supplied to the market is now coming from recycled sources, rather than from actual mining, and that the use of gold in industrial practice has diminished substantially over the last couple of years. That, he stated, could be a direct result of the 50% appreciation in its price, from approximately $850 per once since 2008. He concluded his presentation on a humorous note by stating that in his view, the only businesses that were actually assured of profiting from investing in gold were those businesses who are currently advertising on television encouraging the public to pack their old jewellery into and envelope and ship it off, to receive a cash payment in exchange.
The best message of the hour-long luncheon event was in fact given in absentia by none other than Winnipeg’s most distinguished philanthropist, the late Izzy Asper. Cowan noted in her introduction that the Foundation’s very first Professional Advisory Committee luncheon was addressed by Asper who then stated, “When you encourage your clients to do something in philanthropic terms, you are doing them the biggest favour you could, because you are helping them to make a difference.” Judging by the differences articulated in the Grants and Education Awards Recipients list of the Foundation’s annual report, those words will likely ring true for a very long time to come.
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