via The TIMES UK (IRE Edition)

Two days after he started his first job in the Big Apple, Stephen Flood knew he had to quit. As a wide-eyed 21-year-old fresh out of a business course in Dublin, he had thumbed through The New York Times for a way to break into the high-flying world of the US financial services industry.

Armed with an Irish accent that went down a treat with the locals, he had his “pick and choice” and joined a stockbroking company.

“I walked into this huge room, past these glass offices with these enormously wealthy, fat, well-dressed individuals sitting behind these big desks with gold rings and I just thought: ‘Wow, these guys are loaded.’ ”

He was led past the big offices, though, to a bare room where dozens of young men were cold-calling in search of someone with cash to invest.

“You would ask, ‘What sort of money do you have to invest?’ And if they said anything less than $200,000, you just hang up the phone. You get these old people who had their retirement [money], and if they were worth over that amount you would pass them onto the guys at the top of the room.

“They would pretend to be advisers,but they only had one stock that they were selling, one or two. It would have been some garage or something on the side of some motorway down in Florida. They would buy the company, start the IPO process even though it was a piece of shit, and would then pump up the stock price.”

This was Mr Flood’s introduction to “pump and dump” schemes, in which promoters get cheap shares in a potentially worthless company and hype up the stock, luring in unwitting investors before selling out, leaving those who bought in sitting on a loss.

The young Dubliner quit almost immediately, but his brief stint in the broker was an eye-opener. “I was appalled that people could be so callous. Taking people’s money, and these were very vulnerable people. You see that there are people out there who will do whatever it takes, to take whatever they can.”

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Mr Flood, now 46 and the head of Dublin gold brokerage GoldCore, says the experience helped to inform his philosophy for doing business, which he says is “the exact opposite”.

“We turn away business if we don’t think it’s appropriate for someone. We do have people ring up and say ‘I’ve just sold my house, I want to put all my money into gold’. And I have to say ‘No, that’s completely crazy’.”

Mr Flood had taken a job as an equity trader at Goldman Sachs in New York but moved back to Ireland for a better work-life balance.

“My boss lived in an enormous mansion, and he would get up around 5 o’clock every morning, would be in the office for 6.45, and would work all the way through until 10 at night. He would sleep most of Saturday, and on a Sunday would kind of play with his kids half-heartedly because he was so exhausted. I said, ‘That’s not a sustainable life’. I had just got married and we knew we wanted to have kids, so we made the decision to come back to Ireland. I have three beautiful boys and we get to have breakfast in the morning and dinner at night.”

Mr Flood joined GoldCore in 2004,shortly after it was set up by Mark O’Byrne, a former schoolmate. As well as acting as a broker and facilitating people to buy and sell gold, the firm offers a storage service in secure vaults all over the world.

The pair started running the operation from Mr O’Byrne’ apartment in Temple Bar, slowly building up a business “one customer at a time”.

“Mark had been very visionary in seeing that people needed to have gold bullion a hedge against what he saw as a credit and property bubble and the inevitable global financial crisis. Gold was only trading around $350 an ounce at that time, and so for the next six or seven years, the gold price rose in response to that risk in the markets.”

The value of gold shot up in the aftermath of the global financial crisis in 2008. GoldCore has predicted both the crisis and that gold would rise as a safe haven asset. The price of the precious metal topped as much as $1,900 in 2011, with investors piling in to find a safe haven for their cash. This created a spike in demand for GoldCore’s services. The company expanded to about 17 staff and set up a wealth management business for wealthier clients.

Mr Flood says that at its peak in 2009, the company turned over $180 million in a year. However, Mr Flood’s relatively mellow business philosophy was to be tested after the highs of 2011 turned out to be a peak for gold.

“In 2011 to 2012, that [turnover] would have fallen to around $35 million, so it was like an 80 per cent drop in turnover in 18 months. From 2012 we’ve grown from about $35 million to about $60 million last year. We’ve done that on the back of our storage business.

“We’re doing as many transactions now as we did then due to our technology.”  The price of the precious metal has recovered to about $1,300 an ounce, and the Dubliner says he hopes that the business will double its headcount over the next 12 to 18 months. Despite the relatively low price of gold over the past few years, the GoldCore chief executive cannot resist singing the praises of the precious metal.

“You could fit all the gold in the world onto the centre court in Wimbledon, that’s it, there’s no more. And the population of the world is seven billion. By the time my son, who is 15, is my age, there will be 40 per cent more people in the world. And there’s not going to be any more gold, so where will the price go?”

Mr Flood and GoldCore would be interested in one day moving into blockchain, the technology that underpins digital currencies. Proponents say that it could cut out the need for middlemen, ie, the banks.

“I think that GoldCore will be the beneficiary of another cycle in the gold market demand. I think the next two to three years will be very busy for GoldCore, and I want to be there for that. I’ve always had a great interest in financial technology and we look at blockchain as being an enormous change event for the world,” Mr Flood says.

Perhaps somewhat ironically for a man whose business involves storing precious metals in high-end secured vaults, the Dubliner says the lack of trust people have in each other is lamentable. And he says that blockchain could help fix that.

“We spend so much of our time securing what we have, and to protect what we own . . . The amount of money we spend, basically not trusting each other. But if we had an algorithm that showed either you own it or you don’t, you don’t need a lawyer, or an auditor, or a corporate finance specialist, or any of these people to find out if you’re telling the truth. They all go away. Suddenly you have almost friction less transactions, which is just incredible. It’s a whole new world and it will be great for the gold industry, and everything else.”

via The TIMES UK (IRE Edition) – Subscription required