tv Bloomberg Businessweek Debrief A Conversation With Justin Trudeau Bloomberg May 31, 2019 6:00pm-6:31pm EDT
♪ david: what expertise did you have to start your own company? thomas: i have no expertise. david: why did you get out? thomas: i said i can't even program my vcr. you have got the wrong guy. david: the u.s. has most of its gold in fort knox. thomas: large gold bars. that is the way it looked in "goldfinger." david: what made you interested in rembrandt? thomas: it spoke to me and i said please take me back to the rembrandt. david: what does it that makes a leader? thomas: the longer i live, the more i realize that character is
really destiny. >> would you fix your tie, please? david: people wouldn't recognize me. just leave it this way? all right. ♪ david: i don't consider myself a journalist and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? ♪ david: where are you from originally? thomas: i was born in new york. david: your father was a businessperson? thomas: my father was a businessman. i lived in new york until i was eight, then moved to florida. david: you wanted to reduce your taxes, you moved to florida. is that why you moved? thomas: i was very precocious. i knew at eight capital gains taxes were best paid in florida. david: you went to high school at the rose, one of the most famous boarding schools in the
world, in switzerland. then, oxford and you got a phd in history. what type of history? thomas: the undergrad was in what is called modern history which, by english standards, means when the romans leave britain. david: when did you move back to the united states? thomas: what happened was as i was working at oxford on my thesis, i took a business trip to israel. the six-day drop -- a lot can happen in israel and it turned into a six week trip because i met the girl who would become my wife and we have been together 30 years since then. the entire time. ultimately, i got interested in commodities and went off and started my own company. david: where were you living? thomas: new york. david: you were starting your own company but what expertise did you have to start your own company in the business world? thomas: i had no expertise.
there was really no reason to give me any backing. fortunately, my first foray was in silver in 1993. the zeitgeist was silver was going to go down to two dollars because of silver halide. i believe people got the analysis wrong and silver had a better chance of going back to $50. i put my money on silver options and silver went from $3.50 to $5.50 in short order and i made enough money to decide i've didn't want to do that anymore but i would take all of that buying anput that on option in silver property. david: where did you get the money to buy the options? thomas: i started with $10,000. i had a little bit of savings. turned that into hundreds of thousands of dollars and then put the money on a property in
idaho. and i realized around that time that we didn't have much competition. so, i took whatever money i had and went to peru and bolivia and mexico and i would put down options on these properties. after a certain time, i found i had as interesting a portfolio of option properties as any existing silver company. i knew even though i wasn't ready for prime time. , even though the story was a little bit flaky and delusional, a new york type with no background in engineering or geology starting a mining company, i kept it low-key, but i was introduced to george soros. he and his brother paul invested in me. david: how old were you? thomas: i was 32, 33. david: you were married then?
thomas: i was engaged. david: did your fiancee say what do you do for a living? thomas: she was instrumental in the entire process. when i had the vision of buying silver mines, it was in the middle of the night and she was at nyu. she had left the israeli air force and was studying at nyu . and apparently at 3:00 in the morning, i sat up in bed and said write this down so i don't forget it -- buy silver mines. me, byt day, she said to the way, last night you told me to write down buy silver mines. i am reminding you but i am also saying that is so sexy. she has an unerring insight. david: how did it work out? thomas: i found that it suited my aptitudes to take that money
and buy assets and hold those assets. having a historical bend allowed me to see the market through the prism of history. when you see these cycles, and you understand human psychology and fear and greed, the history gives you a great perspective. if you own the assets, and you don't go into debt, it becomes a function of time before you become fashionable again. we made a huge discovery in bolivia. that is where the fortune originated. david: did you ever visit bolivia? thomas: many times. david: why did you get out? usually when people make money and silver they will stay and keep doing it. it is like going to las vegas and gambling. thomas: i retired from the silver company when it came time to build it. i said i can't even program my vcr. to build the biggest mine in the history of bolivia, you have got the wrong guy. let me go.
so, they said i could. i went into platinum and got lucky, and went into hydrocarbons in the early 2000's and that is where we had our biggest score. east texas. david: what did you know about oil and gas? thomas: nothing. but that was already a very good pedigree in terms of what had happened previously. i felt oil which was in the high teens, and which again, the conventional wisdom was oil was going to go back to a normative 12 to 15, maybe under 10 again, my view was it would go to 100. i created a company called lior, named after our two children, and we went prospecting in east texas. and again as in bolivia, got really, really lucky with what we found. david: oil and gas went up.
thomas: oil went from $18 to $100. $100 was my target. we hit that in 2007 and we sold the energy company in november 2007. david: after you sold, did you say i should retire or what did you decide to do next? thomas: i have been a failure at retirement. i wanted to retire at 40, then i came up with the idea of the energy company. company,old the energy i briefly thought of retiring but oil was at $100, $120. gold was around $650. i was a believer we were going to have an economic crisis which is why we sold in 2007 the platinum and oil because they were sensitive. i wanted to go into an undervalued currency and felt
gold offered the best risk-reward proposition. david: when you got into gold, it was roughly $600 an noounce. today, gold is trading at? thomas: almost $1300. david: the u.s. has most of its gold at fort knox? thomas: most. david: is it in jewelry or little gold bars? how does it sit there? thomas: i believe large gold bars. that is the way it looked in "goldfinger." that would be my closest approximation. we never lived with our paintings. david: where did you put them? thomas: museums. it gave us more joy knowing these paintings in private collections were all on loan so we created a lending library, and we lent these paintings anonymously. all in the museum's knew. ♪
part of your life which is art. you are the owner of more rembrandts than any individual. thomas: we have 16 rembrandts. david: rembrandt painted how many paintings? thomas: approximately 350. david: what made you interested in rembrandt? rembrandt is a great painter, but there are a lot of great painters. thomas: i fell in love with rembrandt as an artist when i was six years old, when my mother took me to the metropolitan and i encountered rembrandt for the very first time. and, it spoke to me. to use that cliched expression. there was something about it. i can't possibly imagine that i was that precocious to understand his insights on the human condition, but nonetheless, whether it was the contrast of light and dark, whether it was the intensity of the inner life, it spoke to me.
from that time on, every weekend, we would go to visit rembrandt. david: did your mother say there is something wrong with my son who is focused on rembrandt? there aren't that many six-year-olds focused on rembrandt. did you ever mention this to you as being unusual? thomas: she voted with her feet. probably after the 10th or 12th weekend we went to visit rembrandt, she said i think it is time for me to broaden his horizons. she took me to moma. david: ok. thomas: i remember encountering a white canvas with a red line across it. and so she says, i was missing my two front teeth. i crossed my arms, shook my head and said mommy, please take me back to the rembrandt. [laughter] thomas: we went back to the metropolitan. david: when you were successful in business, you said now i can
afford to buy some rembrandts, is that right? thomas: no. self-knowledge is a journey. so, i never intended to become an art collector. in fact, when my wife's mother who is an artist said you really should become an art collector. you are a historian, you love classical art and perhaps because it was my mother-in-law, i said to her i will never become a vulgar materialist. three months later, daphne and i were embarked upon a buying spree that was roughly, on average, one painting a week for five years. david: dutch paintings? thomas: all dutch, golden age. david: golden age of dutch painting was what years roughly?
thomas: in the 17th century. david: were they more modestly priced because people were not trying to buy old masters when you were doing it? thomas: we clearly found there was a vacuum in the marketplace. what we loved was undervalued. we were able to buy masterpieces of rembrandt for less than the price of andy warhols. there are 70,000 pieces of andy warhol. there is one collector who has 10,000 of them. when you compare the scarcity of the warhols with the rembrandt, we didn't collect in that area because we felt it was good value, but we collected because people allowed us to be able to take advantage of the fact that we had that rapacious method and taste. we took it. david: when you are buying rembrandts, you don't want a lot of people to know you are buying
them. it might drive the price up if people know you are the buyer. how did you mask the fact you were the buyer or did you not? thomas: for the first -- we began collecting in 2003. and for the first 13, 14, 15 years of our collecting, we were anonymous. we never lived with our paintings. david: where did you put them? thomas: museums. we felt that we were taking them out of the private domain and that it gave us more joy knowing that these paintings which were in private collections were all on loan. we created a lending library and we lent these paintings anonymously. only the museums know. so people didn't really know who was behind the collection and we liked it like that. david: today your collection is called -- thomas: the light in the
collection. david: how many works are in it? thomas: 250. david: and you have lent to places like the louvre? does the louvre take a lot of american artists' works? is that common? thomas: no. we had our coming out party at the louvre in 2017. we were persuaded we should put all of the scholarship online and make the academic and scholarly attributes of the collection available to curators, students, historians, dealers, collectors, but we also knew the trade-off was we would lose the anonymity. that was our rubicon. once we decided to do that, it was also let's have an exhibition of some of the pieces of the collection. we started with the louvre with 30. the collection can't be replicated. literally the numbers, it cannot be done. the next largest collection of rembrandt has two paintings in
it. there are only 35 or so in private hands. this is basically as large of a collection as the largest national museums. it is a responsibility we have to be able to find a way to advance the cause of helping rembrandt have another 350, 400 years of relevance. we believe he is the most important painter who ever lived. david: i am a trustee of the national gallery of art. youould be happy to talk to if you have an interest in the national gallery. do people call you up and say i have a rembrandt but i don't want people to know and sometimes it is a fake? thomas: what they usually call me about, not really fake but they are after rembrandt, school of rembrandt. on occasion, the ones i love the most are when people come to me and offer me paintings we already own.
[laughter] david: what is it you think makes a leader? thomas: the greatest quality of leadership is character and the greatest quality of character is genuinely understanding why you are leading people to do something and giving back. cicero said that gratitude is the greatest of all the virtues and the mother of all the rest. i have no doubt that that is the key. ♪
as a family, we have a very strong affinity for the belief that we have to give back to the environment. human beings as a species are effectively parasites on the planet earth. our great passion are the big cats. it is something that has fascinated me from the time of fell in love with rembrandt, from the time i fell in love with history. all of my passions date back to the ages of six and 12. i had a dream that if i was going to go into business one day, i would be able to pivot back to this first grade love and to enable the great wildlife conservationists who did have those aptitudes so they would be able to save the species that we love. that is what led to the creation of panthera, which is the only
global organization solely dedicated to the conservation of big cats, their critical habitats and working with the people. david: lions? thomas: lions, tigers, snow leopards. david: what is the basic problem that is likely to lead to their extinction? thomas: the real threat to the big cats is that cats need a wide range. they need lots of land, they need protein. when you have human encroachment, first of all, it means they have smaller quantities of land, the prey density shrinks, and unfortunately, there is a propensity for human-animal conflict. lions can be dangerous in close proximity to people. you have seen the population of lions shrink by 90% over the last century.
a lot of that follows the shrinkage of land in africa but it is the same with tigers. you are involved with many different things. what is your greatest passion in what we have discussed? thomas: the area that moves me the most is wildlife conservation. environmental philanthropy maybe makes up 2%, 3% tops of global philanthropy and most of it is dealing with global warming. very few people actually give to the conservation of species and i genuinely believe that the greatest gratification i have had is knowing that there are certain species that will not blink out, at least in my lifetime, because of the efforts that my wife daphne and i have made in this area. david: what would you like your legacy to be? thomas: when people describe to me the word which is most often used is passionate.
and until relatively recently, i never thought very much about that word. i assumed everyone was passionate about something. and i have come to realize that most people are fortunate if they are even passionate about their children. to the extent that i am passionate about being able to use art as a way to build bridges, to save endangered species, to give back to the study of history, i am very blessed. i won't be able to shape my legacy. the only way in which i deserve to have a legacy is if i move the needle in any of those areas in which i have bring my passion to bear. david: you have been a leader in many different areas. what is it you think makes a leader? what are the skill sets? thomas: the longer i live, the more i realize character is really destiny.
the more that i have experienced human interaction, the more i have come to believe that the greatest quality of leadership is character and the greatest quality of character is genuinely understanding why you are leading people to do something and giving back. cicero said that gratitude is the greatest of all the virtues and the mother of all the rest. i have no doubt that that is the key. that is the beginning of happiness. david: let's conclude with two final passions. one is three-piece suits. where did that passion come from? thomas: a year before my bar mitzvah. [laughter] thomas: i had my first three-piece suit, and being someone with an affinity for a relatively conservative outlook,
not conservative necessarily in the sense of what we call social or political, but i prefer present happiness to future utopia. and i haven't changed. and the beautiful part about it is every three, four, five years, i become fashionable. [laughter] david: the second and last passion we will talk about is the 92nd street y. thomas: it has always been a home to every race, creed, belief as an area where we have elevated discourse, open to the arts and where we provide a venue where people can come and engage in the greatest aspect of our democracy which is genuine conversation held in elevated and tolerant spirit. i view philanthropy as being
scarlet: i'm scarlet fu. this is "etf iq." where we focus on the access, risks, and rewards offered from exchanged traded funds. ♪ scarlet: searching for protection. gold may be the safest of havens in these volatile markets but it is not getting the love that bonds are. the boston fed jumps into the debate on the shift from active to passive. we speak with one of the lead authors. milking it. cash is king when it comes to cash cow etf's.