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Speaker 1: Welcome to Fear and Greed q and A, where we

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Speaker 1: ask and answer questions about business, investing, economics, politics and more.

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Speaker 1: I'm Sean Almer. Long cues outside the ABC Bullion store

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Speaker 1: in Sydney have become on an almost familiar sight to

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Speaker 1: anyone passing through Martin Place. Over the last year, the

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Speaker 1: soaring price of gold has seen thousands of people lining

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Speaker 1: up to purchase the precious metal. And it's not just gold.

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Speaker 1: Investors are also buying silver as the medal recorded one

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Speaker 1: of the strongest run in decades. Remember this is general

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Speaker 1: information only and you should always see advice tailored to

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Speaker 1: your circumstances before making any investment decisions. Jordian Alessio is

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Speaker 1: the general manager of ABC Bullion, which is a great

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Speaker 1: supporter of Fear and Greed. Jordan, Welcome to Fear and

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Speaker 1: Greed QR and.

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Speaker 2: A thank you for having me Sean.

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Speaker 1: So just explain. I mean I know ABC Bullion because

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Speaker 1: I saw the cues out the front as the price

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Speaker 1: of gold was going up. What does ABC Bullion do?

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Speaker 2: So? The company was founded in nineteen seventy two and

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Speaker 2: over the last fifty years we've built our business providing

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Speaker 2: a two way market for precious metal investment in Australia.

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Speaker 2: So when people are looking to buy, we will sell

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Speaker 2: them precious metals. If they're looking to sell medals they've

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Speaker 2: bought from us, we're they're to buy them back. And

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Speaker 2: we also provide a range of storage or custodial solutions

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Speaker 2: to clients as well. So you know you mentioned the

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Speaker 2: cues that you see or that have been seen around

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Speaker 2: Martin Place for most of the last six months. That's

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Speaker 2: actually a very small segment of our business. About eighty

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Speaker 2: percent of our clients actually transact either over the phone

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Speaker 2: or through our website. We offer a twenty four to

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Speaker 2: seven market for precious metals through ABC billion, dot com

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Speaker 2: dot Au and actually the vast majority of our clients

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Speaker 2: not only buy, but also store and then eventually sell

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Speaker 2: through us as well. So essentially we're a market maker

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Speaker 2: in precious metals.

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Speaker 1: Okay, So who are the vast majority of your clients?

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Speaker 1: Then we saw the retail investors in the street, right,

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Speaker 1: but presumably it's they DIY super fun are family officers

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Speaker 1: who are your main clients?

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Speaker 2: Yes, So the big growth area in the last couple

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Speaker 2: of years has been people with self managed super funds.

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Speaker 2: So you know, typically putting somewhere between ten and twenty

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Speaker 2: percent of their portfolio, so one hundred to two hundred

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Speaker 2: two hundred and fifty grand into precious metals. That area

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Speaker 2: has really grown in the last two or three years,

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Speaker 2: but in fact, you could trace back the growth of

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Speaker 2: SMSF interest in precious metals to the global financial crisis

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Speaker 2: almost twenty years ago. Now you also have yes, family

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Speaker 2: officers and high net worths that typically will be putting

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Speaker 2: anywhere from ten to twenty five thirty million dollars into

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Speaker 2: into physical metal. Importantly, both of those investor cohorts they

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Speaker 2: exclusively store as well, that they're not obviously self storing

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Speaker 2: that that kind of metal. But really we also see

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Speaker 2: you know, let's call it mum and dad Australians putting

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Speaker 2: ten twenty thousand dollars into bullion. And indeed, in the

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Speaker 2: last three years we've seen in near tenfold increase in

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Speaker 2: the use of our ABC Bullion Gold Savior product, and

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Speaker 2: that's just a direct debit auto investment plan that allows

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Speaker 2: people to start investing in gold from as little as

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Speaker 2: fifty dollars a month. So one of the beauties of

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Speaker 2: gold and I think many years ago. When I first

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Speaker 2: got into the industry, there was a perception that you

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Speaker 2: really needed a lot of money to be an investor

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Speaker 2: in gold. That actually couldn't be further from the truth.

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Speaker 2: You can start with as little as fifty dollars, and

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Speaker 2: that sort of democratization of gold ownership has really helped

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Speaker 2: the market grow over the last decade or so.

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Speaker 1: So do you own a unit or something within a

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Speaker 1: larger fund.

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Speaker 2: That's right, you own effectively a fractional interest in gold

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Speaker 2: or silver or platinum. You can do it in palladium

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Speaker 2: as well, or there's a much smaller market for that,

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Speaker 2: and then that medal is fully physically backed, so there

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Speaker 2: is enough physical metal to meet the potential redemption needs

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Speaker 2: of all clients that are using those products. Clients can

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Speaker 2: then effectively do one of two things. Once they have

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Speaker 2: appalled holding or a gold saver holding, they can sell

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Speaker 2: back for cash twenty four to seven, you know, at

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Speaker 2: the appropriate market price, or if they want to, they

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Speaker 2: can actually say, you know, I'm going to take possession.

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Speaker 2: I've built up an ounce of gold in my gold

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Speaker 2: saver holding program. I want to take an ounce of

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Speaker 2: gold home with me, And they know we very simply

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Speaker 2: debit their gold saver holding, give them a physical ounce.

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Speaker 2: There's a fabrication charge associated, and the medal. Is this

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Speaker 2: very simple?

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Speaker 1: I had no idea. In fact, we a reader got

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Speaker 1: in touch with this because I was saying, I don't know,

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Speaker 1: you can buy gold physically, and someone said, yeah, go

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Speaker 1: to the ABC Bullion store and that's actually where this

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Speaker 1: six months ago or so this all arose gold fifty

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Speaker 1: one hundred US announce or they'reabouts. Why buy gold now?

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Speaker 2: Yeah, look, that's that's a great question. And obviously gold

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Speaker 2: price is up about sixty percent in the last year,

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Speaker 2: so it obviously isn't as cheap as what it once was. Think. Look,

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Speaker 2: the decision to buy gold or silver, or any other

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Speaker 2: asset for that matter, you know, is an entirely personal one.

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Speaker 2: It's impossible to give advice. You don't know what else

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Speaker 2: is in people's portfolios or their cash flow needs, their

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Speaker 2: debt profile, et cetera, et cetera. But if you were

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Speaker 2: to look at most portfolios, most portfolios tend to have

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Speaker 2: very heavy allocations to equities, fairly sizeable allocations to cash

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Speaker 2: and term deposits, particularly if they're self directed portfolios, and

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Speaker 2: government bonds and the like if you were to look

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Speaker 2: at the last fifty or sixty years of market data,

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Speaker 2: gold really has unique qualities that help diversify and protect

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Speaker 2: a portfolios. So you know, when equities sell off, there

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Speaker 2: is no one single asset class that tends to do

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Speaker 2: better and go up by more than gold. When inflation

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Speaker 2: is at more problematic levels, Gold's performance really comes into

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Speaker 2: its own. So you know, last year, obviously God had

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Speaker 2: a bump a year silver was even better. If you

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Speaker 2: look at the long run returns, they're closer to ten

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Speaker 2: to eleven percent per annum, and that's a multi decade timeframe.

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Speaker 2: But in periods where, for example, inflation is three percent

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Speaker 2: or higher and it's definitely going to be that in Australia,

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Speaker 2: the average return of gold in those higher inflation years

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Speaker 2: is closer to fifteen percent. You know, for silver the

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Speaker 2: numbers actually closer to twenty And so you know, if

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Speaker 2: you think we're in a world where you know, there's

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Speaker 2: some geopolitical instability, to put it mildly, equities are fairly expensive.

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Speaker 2: They're not cheap either, and so you say, well, what's

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Speaker 2: an ass that I can put into my portfolio to

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Speaker 2: provide a bit of balance provide a bit of stability

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Speaker 2: and provide the opportunity for growth when those other things

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Speaker 2: might not be doing so well. I think gold still

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Speaker 2: ticks a lot of boxes in that regard, and that's

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Speaker 2: why we're seeing people, you know, add it to their

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Speaker 2: portfolio every day here in Australia.

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Speaker 1: And presumably silver is the same argument.

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Speaker 2: Basically, well, silver is an interesting one, so it has

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Speaker 2: many of the let's call it in investment and long

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Speaker 2: term monetary qualities that gold is most famous for. But

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Speaker 2: what silver also has is an extremely large and growing

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Speaker 2: industrial use case and that's contributing to this very significant

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Speaker 2: supply deficit that we've seen in the silver market for

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Speaker 2: many years, and that's not really showing any signs of changing.

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Speaker 2: If you're a believer in the sort of the adoption

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Speaker 2: of AI, if you're a believer in the green energy transition,

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Speaker 2: all of these things require silver as a sort of

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Speaker 2: industrial input. Now the price for one of a better

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Speaker 2: term or the downside is that you want to sort

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Speaker 2: of give both sides of the story here is that

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Speaker 2: also makes silver more volatile than gold, because gold trades

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Speaker 2: almost exclusively as a monetary and as an investment asset.

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Speaker 2: Silver has those qualities, but it has this kind of

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Speaker 2: industrial overlay as well, so it is less reliable as

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Speaker 2: a safe haven than gold is. I would say if

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Speaker 2: you look at the last sort of fifty plus years

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Speaker 2: of market data at the same time, in the last

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Speaker 2: twelve months have been a good example of this, and

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Speaker 2: I suspect the next few years might be similar. There

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Speaker 2: are times where it very strongly outperforms in precious metal

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Speaker 2: bull markets, and so I think for people that have

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Speaker 2: a bit of a longer timeframe and can say stomach

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Speaker 2: a bit more volatility, it makes sense why they might

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Speaker 2: put part of their precious metal allocation into silver rather

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Speaker 2: than just going into gold.

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Speaker 1: Okay, now we're not on an investment podcast, so no

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Speaker 1: advice here. I'm just interested not so much retail, but

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Speaker 1: kind of their high net wealth individuals, the self managed

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Speaker 1: server funds. Are they as keen on gold now as

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Speaker 1: they were six months ago? Or is it waning?

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Speaker 2: Someone looking in the last the last six months as

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Speaker 2: a whole would be probably the strongest six month period

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Speaker 2: on record for demand from that cohort. And I've been

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Speaker 2: in the precious metal space as an investor for twenty

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Speaker 2: five years and worked in the industry for over fifteen,

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Speaker 2: so I've sort of had a bit of a front

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Speaker 2: road or what happened when the GFC hit, what happened

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Speaker 2: when Breggs had occurred, and what happened when the pandemic occurred.

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Speaker 2: The last six months has been the demand has been

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Speaker 2: more significant than those three periods combined, So it has

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Speaker 2: been I wouldn't say gold has gone mainstream, but it

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Speaker 2: is no longer a niche asset class like it was

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Speaker 2: for really the majority of the last decade and before.

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Speaker 2: The interest is so things have eased back a little

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Speaker 2: bit in the in the last couple of weeks, but no,

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Speaker 2: if I think of the number of people opening accounts,

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Speaker 2: sending in inquiries either to add to existing holdings, but

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Speaker 2: more more relevantly, to make inquiries about allocating for the

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Speaker 2: first time, those numbers are still extremely strong.

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Speaker 1: And I presume most people that walk into ABC billion

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Speaker 1: in Sydney don't actually walk out with gold in their pocket.

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Speaker 1: Literally they presumably you hold it for him.

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Speaker 2: Mostly yes, So, like I was saying before, the vast

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Speaker 2: majority of our clients actually store with us, so they're

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Speaker 2: you know, they're they're not only using us for one

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Speaker 2: of a better term as the broker to buy and sell.

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Speaker 2: They're using us for a stodial solution as well. But

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Speaker 2: we do also offer a we have a private vaulting

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Speaker 2: arm to our business which doesn't just store bullying. It

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Speaker 2: can store documents, valuables, other things as well. So a

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Speaker 2: decent portion of our clients will buy bullion from us

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Speaker 2: but store it in the private vaults. A much smaller

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Speaker 2: sub section of the overall client base are doing what

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Speaker 2: you referred to, you know, buying, putting it in the

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Speaker 2: pocket and keeping it by the bedside table.

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Speaker 1: I couldn't do it. Tell me you are also famous

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Speaker 1: for manufacturing the Melbourne Cup and the odsie open to

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Speaker 1: I think.

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Speaker 2: That right, Yeah, that is correct. So through our sister

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Speaker 2: company w J. Sanders, we do do a lot of work,

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Speaker 2: you know, manufacturing trophies in the ecclesiastical space as well.

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Speaker 2: And so yeah, I think it's been basically a decade

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Speaker 2: now that we've been making the Melbourne Cup, which is

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Speaker 2: a hugely prestigious and honorable sort of association for us

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Speaker 2: and obviously a great talking point where you know, podcast

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Speaker 2: in it all all kinds of things.

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Speaker 1: You said the ecclesiastical space, which I have thought of it,

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Speaker 1: but certainly churches and religions have goal i mean goal

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Speaker 1: plated things all over the I mean that's probably really

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Speaker 1: good business, is it.

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Speaker 2: Absolutely? Yeah, yeah, very different to bullion investing obviously, but

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Speaker 2: yeah no, and it's obviously you know, it's it's it

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Speaker 2: also though, speaks to the history of gold and its permanence,

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Speaker 2: and it's you know, it endures, you know, and so yeah,

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Speaker 2: another part of our business that we're extremely proud to

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Speaker 2: be to be a part of them, to service to offer.

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Speaker 1: Absolutely, Jordan, thank you for talking to Fear and Greed.

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Speaker 2: My pleasure.

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Speaker 1: That was Jordan Nlessier, general manager of ABC Bullion, A

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Speaker 1: great supporter of this podcast. I'm sure, I'm like, this

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Speaker 1: is Fear and Greed Q and A