Robin Lee, the former CFO of the World Gold Council and currently the founder and CEO of HelloGold Sdn, Bhd., sees vast potential in melding of the blockchain with traditional gold trading, particularly as a hedge against financial shocks and economic turbulence that have characterised the last decade.
In an email exchange with DEALSTREETASIA, Lee says he has seen how such turbulence can have a devastating impact.
“I worked for the Securities Commission in Malaysia during the Asian financial crisis and I saw at first-hand how “bad things can happen to good people” for no fault of their own. In the case of the 1997 crisis, the man in the street saw domestic currencies hit by extreme devaluation – in the case of both the Thai baht and the Malaysian ringgit, this was in excess of 50%; in Indonesia, the rupiah went from 2,600 to the dollar to over 14,000 to the dollar,” he said.
“The inequitable impact of these events on the people who were least able to fend themselves and their families left a lasting impression in my mind.”
Lee credits his stint at the World Gold Council as having helped him realise the potential of gold and how it can help consumers deal with some fundamental challenges inherent in emerging markets.
“There’s an over-reliance on cash savings where more than 42% of household savings is held in cash, with returns that are significantly below inflation rates. In contrast, the return on gold, in the long run, tends to be in line with inflation,” he said.
Remittance & growth plans
Remittances are an area that Lee plans to expand into. He says, “The cost of traditional remittance is estimated at 5-10% (assuming minimum transaction of US$200 with an average settlement cycle of between two and five days). In contrast, HelloGold plans to enable its customers to gift gold instantly at no cost to their friends and family.”
Lee expresses concern that “the next few years will likely see another global crisis that may well dwarf the great financial crisis of 2008” but is confident that HelloGold customers are cushioned by the value preservation offered by gold.
HelloGold has short-term plans to enter Indonesia, the Philippines, Thailand and China. Lee says the firm is also in exploratory discussions with potential partners to introduce HelloGold into the Middle East and India. There are medium-term plans to cater to the entire ASEAN region.
To date, HelloGold has raised $1 million in funding from friends, family and high net worth investors located in Southeast Asia and is “planning to secure more funding to fuel (its) growth plans”.
The venture has ambitious plans to expand both its product and asset class portfolios so that its appeal is widened “beyond the mass market and into the mass affluent”, with discussions ongoing with a wealth manager to manufacture physical gold products that generate tangible yields for customers.
With the potential to emerge as something comparable to the Singapore Diamond Exchange, the HelloGold platform has reportedly been built with the flexibility to become an exchange.
Cryptocurrencies & exit strategy
HelloGold is currently building a contract based on Ethereum to ensure that it has an indelible record of customer transactions, with plans to commence the migration of customer data before the end of Q2 2017.
On competition from cryptocurrencies, Lee says, “It will take a considerable amount of time before any cryptocurrency enters the mainstream where the man in the street has the same level of understanding and comfort about it as he does with gold. We are planning to develop a HelloGold gold-backed token that provides early adopters of cryptocurrency with the best of both asset classes.”
In the medium term, HelloGold intends to develop more products that cater to the ‘bottom of the pyramid’, to small and micro business, and different real assets. White labelling (i.e. licensing) its software product is also a possibility; Lee claims to have received preliminary enquiries from the Middle East.
For its exit strategy, Lee explained: “The HelloGold team is committed to delivering its five-year financial plan and to build a profitable footprint across the region that supports the financial goals of our customers. When we achieve our targets, we will have created a significant business which will be highly attractive to any number of parties – for instance, financial companies in China that are looking to extend their reach outside China through our platform.”