Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Hello and welcome to
Speaker 1: another episode of the Odd Lots podcast. I'm Jill Wisenthal.
Speaker 2: And I'm Tracy Alloway.
Speaker 1: Tracy, you've actually benefited a little bit from this move
Speaker 1: up in gold lady. Right, you're a bit of a
Speaker 1: bullion hoarder.
Speaker 3: Right.
Speaker 2: I thought you were about to call me a gold bug.
Speaker 1: I know, I know you're not a full on gold bug.
Speaker 1: You're a but you're like gold bug adjacent or silver
Speaker 1: bug adjacent or something like that.
Speaker 2: I let me just be clear. I have inherited my
Speaker 2: long gold position, I guess, and silver as well. So
Speaker 2: for some reason, every year, for my birthday and for Christmas,
Speaker 2: my dad gives me either a gold coin or a
Speaker 2: silver coin from his personal collection. He got it in
Speaker 2: his mind that, like I, I really enjoy coins, I guess,
Speaker 2: and now I kind of do. There is something satisfying
Speaker 2: about having physical coins and sitting there. And I don't
Speaker 2: stack them on YouTube or anything, but I do like
Speaker 2: to check occasionally that they're still there, and I do
Speaker 2: get a little bit of satisfaction when I look at
Speaker 2: my little, my little pile of gold and silver.
Speaker 1: I have to say, you know the one thing. I
Speaker 1: don't own any physical gold. I do like the idea
Speaker 1: of owning a bunch of silver and stacking it on
Speaker 1: a table and doing a YouTube video about that. Everyone
Speaker 1: should go look at the silver stackers on YouTube that
Speaker 1: you're great. I would be scared, you know, you could
Speaker 1: like bury them somewhere like out in the wilderness of Connecticut.
Speaker 1: I would be scared to hold a lot of buoyon
Speaker 1: on my person. And then I would be scared to
Speaker 1: hold them in a bank because if everything goes bad,
Speaker 1: is the bank even going to be open in a
Speaker 1: safe deposit box? So I like the idea in theory
Speaker 1: of having a lot of precious metal. Anyway, precious metal
Speaker 1: has been doing really well lately.
Speaker 2: It has. I was just looking at chart of gold.
Speaker 2: So it hit another record high just at sort of
Speaker 2: mid April, and then it came down quite a bit,
Speaker 2: and now it's up again, like we're almost back to
Speaker 2: that record.
Speaker 1: It's pretty extraordinary. Gold is is sort of living up
Speaker 1: to the hype because there's all this chaos and all
Speaker 1: everything in the markets and the economy and politics, and
Speaker 1: gold is up.
Speaker 2: So yeah, yes, you know what I like about gold?
Speaker 2: Tell me I like the advertisements that you see on TV.
Speaker 2: And the interesting thing to me is like, obviously the
Speaker 2: companies that are doing those ads are pitching an investment,
Speaker 2: but so much of the investment pitch is sort of
Speaker 2: mixed up with cultural values totally. So for instance, I
Speaker 2: was watching one earlier in preparation for this episode, and
Speaker 2: they were talking about how when you're walking down inflation
Speaker 2: Boulevard and global instability Avenue, you really need the safety
Speaker 2: of a gold coin, which not only represents security via gold,
Speaker 2: but also the security of the United States of America.
Speaker 2: Like you get all these cultural references wrapped up in coins.
Speaker 1: At one hundred percent, and every coin has its design
Speaker 1: and evokes all this stuff about heritage and everything. Anyway,
Speaker 1: I'm really excited because we actually do literally have the
Speaker 1: perfect guest because it touches on many things that were
Speaker 1: interested in. It's someone who I've actually known for a while,
Speaker 1: I've talked to before, someone who we're going to talk
Speaker 1: about coins, but we're not going to talk about well, let's.
Speaker 2: Just my most hated coin.
Speaker 1: Yeah, see, there's one coin that Tracy hates. So we
Speaker 1: are going to talk to Philip Deal. He is the
Speaker 1: President of the US Money Reserve which sells gold. He
Speaker 1: was also I think one of the great mint directors
Speaker 1: in US history. He was the thirty fifth director of
Speaker 1: the US Mint, where he, among other things, had numerous accomplishments.
Speaker 1: He was instrumental in the sakajuwea dollar or a dollar
Speaker 1: coin that was very successful lease sold to collectors. He
Speaker 1: was behind the fifty State Quarters project, which if you
Speaker 1: remember the nineties, they made a quarter for each of
Speaker 1: the states. Turns out our producer Dash has all of
Speaker 1: the fifty state quarters, which I didn't know and we're
Speaker 1: not going to talk about this, although maybe relevant again
Speaker 1: with the dead sealing come up. He was also the
Speaker 1: one that got the language in the law that in
Speaker 1: theory allows for the creation of a platinum coin of
Speaker 1: high denomination which could be used to circumvent the dead sealing.
Speaker 1: We're not going to talk about the trillion dollar coin
Speaker 1: on this episode. We are going to talk about gold coins.
Speaker 1: Philip Deal thrilled to have you on to talk now,
Speaker 1: appreciate you coming on Odd Laws.
Speaker 3: It's great to be on. I've looked forward to this.
Speaker 1: I'm so excited. Tell us about uh where to start
Speaker 1: even just tell us you're what the US Money Reserve
Speaker 1: is so people understand, you know where you're coming from.
Speaker 1: What is the business of the US Money Reserve.
Speaker 3: We're a retailer of gold, silver, and platinum coins to
Speaker 3: the US market. We sell mostly US government coins issued coins,
Speaker 3: but also coins of other nations. We are probably in
Speaker 3: the upper mid level of the marketplace, and I'd say
Speaker 3: that we're different from our competitors because we market very differently.
Speaker 3: I have a very different approach from what is typical
Speaker 3: in the industry. This is something that I've really focused
Speaker 3: on for the last several years. For example, all of
Speaker 3: those advertisements that really harp on the end of the
Speaker 3: world and how gold is your go to investment for
Speaker 3: really hard times. A lot of that has meant. When
Speaker 3: you look at the record, gold has performed extraordinarily well
Speaker 3: over the last twenty five years in good times and
Speaker 3: bad times. Great example of that is right now. Of course,
Speaker 3: this has been a hard year for stocks, and stocks
Speaker 3: are down probably the less time I check course this
Speaker 3: change is daily that down about seven percent and gold
Speaker 3: is up twenty seven percent this year. But last year
Speaker 3: was a great year for stocks, and stocks were up
Speaker 3: twenty three percent. The gold beat it it's twenty eight percent.
Speaker 3: And when you look back over the last ten years,
Speaker 3: five out a teen year gold has been beat this
Speaker 3: and P five hundred.
Speaker 2: To this point, my mom asked me last year if
Speaker 2: she should invest in gold, and hate I hate it
Speaker 2: when family members ask you these kind of questions because
Speaker 2: I'm not in the business of providing investment advice. But
Speaker 2: I told her, you know, sure, why not, just don't
Speaker 2: put all of your money in gold. And now fast
Speaker 2: forward like eight months, she's mad at me for not
Speaker 2: recommending that she buy even more gold. She took apparently
Speaker 2: a conservative position and should have been more. But maybe
Speaker 2: I'll start with my most my biggest question, which is
Speaker 2: what makes a coin popular.
Speaker 3: Well, a number of factors go into it. One is
Speaker 3: the denomination, for obvious reasons, the bigger the better. Also,
Speaker 3: the metallic matters, gold more popular than silver. And design
Speaker 3: also is hugely important, and this is something that we
Speaker 3: really played on with a Sacagawea Golden dollar. It's important
Speaker 3: that a coin be distinguishable to not be confused with
Speaker 3: another coin. The Susan b Anthony had that reputation with
Speaker 3: confusion with a quarter. Also, the design was not a
Speaker 3: popular design Susan B. Anthony was not attractive on that design.
Speaker 3: So one of the things we wanted to do when
Speaker 3: we introduced the new dollar coin was to find a
Speaker 3: topic that the topic itself would be hugely popular. And
Speaker 3: the book Undaunted Courage had come out probably about a
Speaker 3: year before we launched that coin, and of course a
Speaker 3: part of that story was the story of Sakagawa and
Speaker 3: her role in leading the Lewis and Clark expedition across
Speaker 3: the Rocky Mountains, and that had really captured the imagination
Speaker 3: of Americans, and especially the story of Sectia carrying her
Speaker 3: infant son, John Baptiste on her back through that entire journey.
Speaker 3: And we ended up having the design competition for a
Speaker 3: design that fit that theme, and we ended up with
Speaker 3: a beautiful design done by a goodacre And as a
Speaker 3: result also we did a lot of market research on
Speaker 3: what would be necessary to make this coin successful, and
Speaker 3: when we launched it through a Walmart, they had people
Speaker 3: standing in lines around blocks all over the country. We
Speaker 3: have something like one hundred and fifty million of them
Speaker 3: distributed within the first month, and it was an enormous success.
Speaker 3: But one of the things that is always a challenge
Speaker 3: for a dollar coin in the United States is you've
Speaker 3: really got to withdraw the dollar bill when you introduce
Speaker 3: the dollar coin. And that's been the case all through
Speaker 3: the Western economies where the high denomination bill has to
Speaker 3: our low denomination bill has to be eliminated when this
Speaker 3: high denomination coin comes in.
Speaker 2: How do you actually measure sure the success of a coin,
Speaker 2: because if I think about something like the Sacagway a
Speaker 2: dollar you're talking about. Initially there there was a lot
Speaker 2: of interest in it, but I think like production didn't
Speaker 2: last for very long, and there are some people out
Speaker 2: there who would say, actually, it wasn't that popular with
Speaker 2: investors or Americans over the longer term.
Speaker 3: Yes, we really a circulating coin like the Sacatary Golden
Speaker 3: dollar is successful if it circulates, if Americans use it
Speaker 3: in commerce, and we saw one of the challenges you
Speaker 3: face is a plane of the pump. Unless you get
Speaker 3: a lot of coins in circulation immediately, then it doesn't
Speaker 3: really enter circulation. And one of the constraints the coins
Speaker 3: face is the change tray in a cash register. At
Speaker 3: least that was the case twenty five years ago when
Speaker 3: we were launching the golden dollar. Is not really a
Speaker 3: place for a new denomination coin unless that is made
Speaker 3: by the commercial unity by taking a quarter rolls out
Speaker 3: of one of the bins. And so that was the
Speaker 3: first big challenge that we faced. And you would think
Speaker 3: that it would be relatively straightforward because the Federal Reserve
Speaker 3: is our customer, the us Men's customer for circulating coinage.
Speaker 3: The us MEN produces the coins, the Federal Reserve purchases
Speaker 3: us them at a markup I believe it or not.
Speaker 3: Us Men is a profit making enterprise, and then they
Speaker 3: are distributed around the country, and then banks purchased them
Speaker 3: from the Federal Reserve. But when we went to the
Speaker 3: Federal Reserve in part of our market research and talked
Speaker 3: to the banks, they still remembered sort of the disaster
Speaker 3: that the Anthony launch had been twenty years actually forty
Speaker 3: years earlier, and they said, well, all you have to
Speaker 3: do is proved us that this coin will be accepted
Speaker 3: by the American people and then we'll order it. Well,
Speaker 3: that was a catch twenty two for us, because of
Speaker 3: course unless they ordered it, we couldn't make it work.
Speaker 3: And so I ended up going to Walmart and asking
Speaker 3: if they'd be interested in launching the coin in all
Speaker 3: Walmart and Sam's locations on the same day at the
Speaker 3: end of January two thousand and they caught the vision
Speaker 3: of what that would mean and was huge success for them,
Speaker 3: and we produced over a billion Secretaria coins in that
Speaker 3: first year and distributed them first through Walmart. We had
Speaker 3: a contract with them to provide three hundred million sacagaris,
Speaker 3: and we had to go back to them after the
Speaker 3: first half had been delivered and say we need to
Speaker 3: be we need to be let out of the second
Speaker 3: half of that because now the banks are calling and
Speaker 3: they haven't ordered any and they really unhappy that customers
Speaker 3: come to them they don't have the sacagaria and they're
Speaker 3: calling the the Secretary of the Treasury in the head
Speaker 3: of the Federalserve and complaining. So we want to if
Speaker 3: we want to take your of them as fast as
Speaker 3: we can. So it was an enormous success, and not
Speaker 3: just because people collected it, but because they were also
Speaker 3: using it. But banks don't like coins, They like bows,
Speaker 3: they don't like coins because coins are more expensive for
Speaker 3: them to handle the ship, and we expected that there
Speaker 3: was a natural resistance to it. My term expired in
Speaker 3: early two thousand, so Secretaria lost a champion at the
Speaker 3: top of the mint at that time, and it and
Speaker 3: the momentum was lost over the next several.
Speaker 1: Years, Tracy, I could listen to like technical detain stories
Speaker 1: public yeah, and like you know, the fact about change
Speaker 1: trays and the you know, and how difficult that is.
Speaker 1: I could listen to that for a really long time. Also,
Speaker 1: what I appreciate about this story is the sort of
Speaker 1: the entrepreneurialism involved of like having to go out to
Speaker 1: the Walmart and the SAMs.
Speaker 2: And stuff that it's like a product launch, yeah, which we.
Speaker 1: Don't normally associate with anything in the government for the
Speaker 1: most part, except you know, the Mint is unique also
Speaker 1: of course a policy entrepreneur. But we're not gonna we're
Speaker 1: not going to talk about that specific area of the
Speaker 1: trillion dollar coin. Okay, I'm on the US Money Reserve
Speaker 1: website and I see that you have a one right
Speaker 1: at today's price is a one ounce gold American Eagle
Speaker 1: type two coin for three eight hundred and nine dollars
Speaker 1: and seventy one cents a one out South African gold
Speaker 1: krue Grand. Something very sexy about holding krewe Grand specifically,
Speaker 1: I've always thought that's one eight hundred and six dollars
Speaker 1: and thirty one cents same price for the Austrian gold
Speaker 1: Harmonic Philharmonic coin.
Speaker 2: Oh, I have one of those, really. Yeah, and I
Speaker 2: have the Maria Theresa gold coins too. I probably shouldn't
Speaker 2: say those podcast.
Speaker 3: You have one hundred of these coins and give the
Speaker 3: location at home.
Speaker 1: Yeah, and then also some silver coins that depict battles.
Speaker 1: But I want to just ask a little bit about
Speaker 1: the sort of basic supply chain here of some of
Speaker 1: these coins. So these are official government coins that the
Speaker 1: US Mint still produces and then sells them to some
Speaker 1: distributor at a markup, and then you sell it at
Speaker 1: a further markup. Is that basically the gist of how
Speaker 1: these coins come into existence?
Speaker 3: Yes, just like any other product. And you're exactly right
Speaker 3: that we had treated a number of new products as
Speaker 3: typical commercial product launches, and so, just like any other product,
Speaker 3: the manufacturer has a markup, the distributor has a markup,
Speaker 3: and then also the retailer has a markup. And that's
Speaker 3: true for all brillion coins that are produced by other
Speaker 3: nations as well. And it is a competitive market in
Speaker 3: the US. You can purchase any number of bullion coins
Speaker 3: produced by other nations, and they market them in similar
Speaker 3: fashion and mark them up in a similar fashion. It's
Speaker 3: a very competitive market.
Speaker 2: So speaking of markups, one thing I've always struggled with
Speaker 2: when it comes to coins is how much of the
Speaker 2: value is derived from the actual precious metal content, whether
Speaker 2: it's gold or silver or platinum versus how much of
Speaker 2: the value is derived from the collectibility and the general
Speaker 2: design or availability of the coin.
Speaker 3: Okay, it's important here to distinguish two different kinds of coins,
Speaker 3: actually three different kinds. One is bullion coins, precious metal
Speaker 3: coins that are sold at a slight premium above the
Speaker 3: spot price of gold when they are sold. Then a
Speaker 3: second type is a collectible coin, like a nuismatic coin.
Speaker 3: A US Mint produces annual sets also precious metal commemorative coins,
Speaker 3: and than circulating coins. So the precious metal coins that
Speaker 3: are boin coins and collectible coins are priced and marketed
Speaker 3: in very different ways. Commmittive coins are produced to much
Speaker 3: finer quality, and the strike is they're almost one offs.
Speaker 3: There are multiple strikes in order to get that fine design.
Speaker 3: Who raise the design and get the polished finish of
Speaker 3: those coins. And because the production process is much more detailed.
Speaker 3: There are fuel coins produce many fewer coins produced. They
Speaker 3: are priced differently, they're marketed differently. They're sold directly by
Speaker 3: the United States meant and those coins, a substantial portion
Speaker 3: of the cost is reflected in those additional costs. And
Speaker 3: so you know, very depending on which metal you're talking about,
Speaker 3: but maybe in percent of the price or so of
Speaker 3: a gold coin or a platinum coin is represented by
Speaker 3: those additional costs. Whereas for a bullion coin, as I
Speaker 3: was saying, those are highly competitive. There are, they're produced
Speaker 3: in very large numbers. They're not produced as collectibles. Sometimes
Speaker 3: they are collected, but they're not produced for.
Speaker 2: That reason, Would an American eagle account as a bullion
Speaker 2: coin or a sort of finite collectible item, because I
Speaker 2: know they issue them by year, Yes.
Speaker 3: They do. There are two version of it produced. The
Speaker 3: bullion coin is produced in very large quantities by law.
Speaker 3: They're supposed to be produced to meet public demand, the
Speaker 3: law states, although sometimes the mint runs into bottlenecks and
Speaker 3: cannot fully meet demand, and they are produced in a
Speaker 3: very rapid mass manufacturing processes. The eagle is also produced
Speaker 3: in a collectible and it's called the proof gold Eagle
Speaker 3: and it is produced according to those very high standards
Speaker 3: I was describing earlier, and is sold at a significant
Speaker 3: break premium above the spot price of gold.
Speaker 1: I'm looking again at the website and the other one
Speaker 1: of the other things you sell is a Pearl Harbor
Speaker 1: gold coin, which is identified as exclusive to the US
Speaker 1: Money Reserve and features Queen Elizabeth the Second on the obverse,
Speaker 1: Navy ships and Japanese fighter planes on the reverse. Can
Speaker 1: you talk a little bit? Is that a US government coin?
Speaker 1: Because there is also private stamping, right, like someone can
Speaker 1: you know someone could get gold and stamp whatever they
Speaker 1: want on it and sell it.
Speaker 3: Yes, can you tell? Yeah, talk a little bit about
Speaker 3: that that's not really coins, Okay, when they're produced that
Speaker 3: they have to be legal tender to be coins. Okay,
Speaker 3: you know you see it football games and coin toss. Well,
Speaker 3: those aren't coins. Those are medals. They're medallions because they're
Speaker 3: not legal tender. It's not a US coin. We usually
Speaker 3: don't put royalty, foreign royalty on our coins, and this
Speaker 3: is like Brien Elizabeth in this case, these are coins
Speaker 3: by other nations that the risk meant does not do this.
Speaker 3: It does not produce bespoke coins according to order, but
Speaker 3: other nations do and it's not unique to US Money Reserve.
Speaker 3: Other companies do this too, but we have been more
Speaker 3: aggressive in developing coins through other governments in limited quantities
Speaker 3: that are collectibles in precious metal and marketing those. Typically
Speaker 3: we are celebrating an anniversary. A percentage of these coins,
Speaker 3: the sole price of these coins typically goes to a
Speaker 3: charitable purpose. We have been very supportive of the US
Speaker 3: Navy memorial, so that's one of the ones that we
Speaker 3: really stood behind.
Speaker 2: One thing I wanted to ask is when you're designing
Speaker 2: a coin, So when you were at the US Mint,
Speaker 2: and I'm not talking about precious metal coins here, but
Speaker 2: just your sort of standard coin, how much does profitability
Speaker 2: come into considerations for designing a coin? Because I know,
Speaker 2: with the Trump administration talking about maybe getting rid of
Speaker 2: the penny, this seems to be even more of an
Speaker 2: issue than it used to be, although people have been
Speaker 2: debating the existence of the penny or whether it should
Speaker 2: exist for decades now. But do you do you sit
Speaker 2: there and you know, write on a napkin. It's going
Speaker 2: to cost me x to produce and I'll be able
Speaker 2: to sell it to the Federal Reserve and the banks
Speaker 2: for why amount.
Speaker 3: Yeah, it's a factor, no doubt about that. And to
Speaker 3: a certain degree, or to a great degree, the US
Speaker 3: Mint doesn't have discretion in the specifications of the coin.
Speaker 3: They are laid out in great detail in the legislation
Speaker 3: that authorized the coin. The long exception to that is
Speaker 3: the platinum bullion coin, in which Congress I'd asked Congress
Speaker 3: for a virtually total discretion on that coin, and they
Speaker 3: gave it to us, and the trillion dollar coin came
Speaker 3: as an unintended consequence of that.
Speaker 2: There's the trillion dollar coin.
Speaker 3: Can't miss it. But yes, all the details are in
Speaker 3: the legislation. But the Mint does attempt to produce those
Speaker 3: coins in the most efficient fashion possible within those constraints.
Speaker 3: And the penny has blown away our capacity to make
Speaker 3: profitable for over thirty years. I was the first Mint
Speaker 3: director thirty years ago to recommend elimination of the penny.
Speaker 3: You can see how much influence I am. But it's
Speaker 3: long overdue to be eliminated. There was a problem back
Speaker 3: in the seventies I believe, where the penny had negative seniorage.
Speaker 3: I can describe what senior riage is here in the moon,
Speaker 3: but it's basically profit and so, and the coin was maing.
Speaker 3: It was all copper. At the time, the coin was
Speaker 3: being melted down because copper, the copper content, was worth
Speaker 3: more than the penny was. And so the wronger stepped
Speaker 3: in and changed the composition of the penny. We had
Speaker 3: a similar situation now with a nickel, where it's a
Speaker 3: money loser. The production of the nickel is a money loser,
Speaker 3: but it might be profitable if there were some changes,
Speaker 3: or at least the amount of money that is lost
Speaker 3: producing each coin would be decreased. Now, one of the
Speaker 3: things that came out of the Sataguria coin in the
Speaker 3: fifty State Quarters program and those two huge projects, very
Speaker 3: entrepreneurial projects, as you were alluding to, Joe, Those were
Speaker 3: launched within about a year of each other, and that
Speaker 3: took the US MINTS profits and our profits. The US
Speaker 3: MINTS profits go to the American taxpayer that go into
Speaker 3: the general fund of the Treasury, and we took profits
Speaker 3: from seven hundred million dollars a year when I came
Speaker 3: into the Mint to two point six billion dollars after
Speaker 3: five years. And I told my staff that they'd all
Speaker 3: be wealthy. We're a private enterprise, but we didn't get
Speaker 3: paid by the by the coin.
Speaker 1: Let's talk a little bit about your the business more
Speaker 1: of selling these collectible coins and bullion coins and so
Speaker 1: forth at gold coins to a retail customer base. I
Speaker 1: have a couple of questions. One is is volume associated
Speaker 1: with price because you must see you know when the
Speaker 1: line is is there when the line is going up
Speaker 1: in terms of the price of announce of gold, do
Speaker 1: you generally see a correlation in pick a pickup in
Speaker 1: people wanting to buy gold coins.
Speaker 3: Absolutely, that's been It's been a tremendous nineteen months since
Speaker 3: this this rally, this bull market began, and over that
Speaker 3: period of time, we've seen prices go up sixteen hundred
Speaker 3: dollars an ounce from eighteen hundred to thirty four hundred
Speaker 3: this warning and it's just it's been one record after
Speaker 3: another being set. So we see a tremendous increase in demand.
Speaker 3: I think most people in the industry do.
Speaker 1: What about the demographics, so obviously you know generally I speak,
Speaker 1: I think of the gold coin buyer who would buy
Speaker 1: from us money reserve is probably someone you know, like
Speaker 1: Tracy's dad's specifically what have you seen demographics do younger generations?
Speaker 1: Does Gen Z or millennials? Do they care yet about
Speaker 1: holding collectible or bullyant coins.
Speaker 3: When I was directed with the MINT, I was in
Speaker 3: my forties and I would describe our buyers as being white, male,
Speaker 3: and over fifty. And there's nothing wrong with that. I
Speaker 3: aspire to be one some day. But worry about that demographic.
Speaker 3: You know, I was fading out over a decade or two.
Speaker 3: That's not the case today. Gold is hugely popular across
Speaker 3: a very wide spectrum. And that's not surprising given the
Speaker 3: amount of coverage news coverage gold has received over the
Speaker 3: last two years and these record prices, especially when the
Speaker 3: stock market is falling, people are looking for safe havens
Speaker 3: and gold is the ultimate save haven. It's been around
Speaker 3: for five thousand years, it's always had value, It's had
Speaker 3: value worldwide. It's the universal safe haven. And what we
Speaker 3: were beginning to see in some of the market research
Speaker 3: is a skewing of interest to younger audiences that includes
Speaker 3: millennials and Gen Z, and some of the research indicates
Speaker 3: that they have greater interest in gold than boomers do.
Speaker 3: That is really a surprise to me, but not too
Speaker 3: much of a surprise once I thought about it, because
Speaker 3: those of us who grew up in the sixties and seventies,
Speaker 3: we're less focused on money and protecting ourselves and than
Speaker 3: what our kids are. And so that you know, that's
Speaker 3: extraordinarily smart and forward looking for them to be thinking
Speaker 3: about their futures and thinking about the role gold with have.
Speaker 3: Now you know, the issue comes up whether you know
Speaker 3: what percentage of a portfolio should be in gold. I
Speaker 3: tell people never put all of your money in gold.
Speaker 3: Don't put in all your money into any asset. There
Speaker 3: needs to be diversification in any portfolio, and the right
Speaker 3: percentage depends on how old you are, your risk averseess,
Speaker 3: you know how large a portfolio is. There's no one
Speaker 3: size fits all recommendation. But one of the factors I
Speaker 3: do recommend people to consider is how optimistic or pessimistic
Speaker 3: you are about the state of the world, the state
Speaker 3: of your own finances, and considering the slave haven history
Speaker 3: of gold. The more pessimist you are, I do recommend
Speaker 3: a higher percentage of your portfolio and gold.
Speaker 2: Why should I buy a gold coin versus invest in
Speaker 2: a gold mining stock.
Speaker 3: Well, mining stocks have tended to underperform the price of
Speaker 3: gold itself. And there's a simple reason for this, and
Speaker 3: that is it's getting harder to find and more expensive
Speaker 3: to mine gold. The clear signal of this is if
Speaker 3: you look back over world gold production over the last
Speaker 3: ten or fifteen years, it hit a peak about ten
Speaker 3: years ago. And despite the fact that gold prices have
Speaker 3: skyrocketed since sin and the miners have tremendous incinners because
Speaker 3: of that, to increase production, they haven't been able to.
Speaker 3: And this is one of the forces that is driving
Speaker 3: gold prices upward today. And one of the reasons why
Speaker 3: I'm confident it will continue to go up is that
Speaker 3: you know, you talk about peak oil. I don't know
Speaker 3: that we've hit peak gold. But the miners have not
Speaker 3: really been able to take advantage of these higher prices
Speaker 3: by increasing production, and so the miners are weighted by
Speaker 3: those additional costs. And also gold is now mined more
Speaker 3: often and politically and economically unstable and corrupt countries, and
Speaker 3: that is adds a risk premvement of cost to doing
Speaker 3: business that the miners have to bear.
Speaker 1: It's so crazy to Tracey, I'm looking at a chart
Speaker 1: of GDX, the Vank Gold Mining ETF charting against GLD,
Speaker 1: the gold ETF. The miners are just a terribly relative
Speaker 1: to gold. It seems like a terrible business.
Speaker 2: Yeah, kind of like how.
Speaker 1: Bitcoin mining companies don't do as well as bitcoin. I
Speaker 1: want to talk about them. You also sell gold bars,
Speaker 1: and so oh right now, I could buy a one
Speaker 1: kilo gold bar on your website for one hundred and
Speaker 1: fifteen thousand, five hundred and forty seven dollars and ninety
Speaker 1: five cents. I could also buy a ten ounce gold
Speaker 1: bar for thirty seven, two hundred and seventeen dollars and
Speaker 1: seventy six cents. Where does that gold come from? What
Speaker 1: is the supply chain for just let's say I don't
Speaker 1: have any collectible interests. I just want a very space
Speaker 1: efficient way to store a lot of gold. Where did
Speaker 1: those bars come from? And how do they get to
Speaker 1: my mailbox?
Speaker 3: Well? I think we source them from several different sources,
Speaker 3: and again that's a highly competitive market. Yeah, and so
Speaker 3: you know, we probably shop like anybody else does. Those
Speaker 3: bars are typically coming from major refiners, some of them
Speaker 3: are in Switzerland, but we are not buying them directly
Speaker 3: from the refiners. We're typically buying them from some wholesale distributor,
Speaker 3: got it. I can't actually tell you who they are
Speaker 3: at this time. Sure, not because it's a secret, but
Speaker 3: because I don't know.
Speaker 2: I imagine one of the downsides to owning physical gold
Speaker 2: is storage, right, and the idea that, all, right, you're
Speaker 2: putting all your money into this physical thing. But the
Speaker 2: risk is someone comes and finds it and steals it
Speaker 2: and you lose it all. How are people dealing with
Speaker 2: that storage risk?
Speaker 3: Well, you can own a lot of gold and hold
Speaker 3: it in a very small place, so I mean, and
Speaker 3: most people will put it into a safe deposit box,
Speaker 3: you know, in their bank, along with you know, the
Speaker 3: jewelry and other things, important documents, and they'll like And
Speaker 3: you can own hundreds of thousands of dollars, if not
Speaker 3: millions of dollars in a very small space. So I
Speaker 3: think the storage issue is a bit of a canard,
Speaker 3: and becoming even more so as gold prices have gone
Speaker 3: from one thousand dollars announced to thirty four hundred dollars
Speaker 3: an ounce.
Speaker 1: You know, it's funny. So I'm looking at the price
Speaker 1: of the gold bars and it's true, like you could
Speaker 1: store right now one hundred and fifteen thousand dollars worth
Speaker 1: of US dollar value, or roughly, that looks like a
Speaker 1: fairly small that one kilo of gold. What's funny, So
Speaker 1: silver is just so much cheaper, because so a ten
Speaker 1: ounce gold bar is thirty seven thousand, one hundred ounce
Speaker 1: silver bar is only three thousand, seven hundred. So you
Speaker 1: get something that's the same weight. No, you get something
Speaker 1: that's ten x the weight for one tenth the price.
Speaker 1: So for gold, the appeal is lots of dollar value
Speaker 1: in a small amount of physical space. For silver, it's
Speaker 1: almost the exact opposite, where you can spend not that
Speaker 1: many dollar and have something that fills up your entire team,
Speaker 1: something to stack, Yeah, something to stack and show off
Speaker 1: on your YouTube channel.
Speaker 3: Yeah, that's right, that's right. When you open that box
Speaker 3: of one hundred thousand dollars with silver, yeah, then don't
Speaker 3: feel like you've really gotten stuff.
Speaker 1: But is there a difference in the type of person
Speaker 1: who accumulates silver coins and bars versus gold coins and bars.
Speaker 3: There's an important difference between those two product lines, gold
Speaker 3: and silver and the market forces that move them. We
Speaker 3: think of them as both being precious metal, both of
Speaker 3: them being used in currency, both of them having this
Speaker 3: long history as a store value. But silver A much
Speaker 3: larger proportion of silver is used in commercial applications and
Speaker 3: industrial applications than gold is. So there's this cyclical component
Speaker 3: to silver that is largely absent in gold, and so
Speaker 3: gold has been considered a pure form of hedging against
Speaker 3: bad times, then silver has been because silver is influenced
Speaker 3: by the cyclical demand factor. When I became Director of
Speaker 3: the MEN, I really was not familiar with precious metals
Speaker 3: or or coinage. I hadn't collected coins. But one of
Speaker 3: my first jobs outside of going to the Mint, was
Speaker 3: going to one of the big annual coin shows. And
Speaker 3: when they announced that the Director of the Mint was present,
Speaker 3: people lined up, like one hundred people lined up to
Speaker 3: get my autograph. I'm just so shocked by that. And
Speaker 3: I like to talk to people, and especially I like
Speaker 3: to talk to my customers. And I was new with
Speaker 3: the MINT and we were going to be very customer focused.
Speaker 3: I was on a mission to demonstrate how government can
Speaker 3: meet the highest standards of business, and the Mint was
Speaker 3: very far from that when I came in. So I
Speaker 3: talked to customers and I spent a lot of time
Speaker 3: with them, and you know, they loved American history. That's
Speaker 3: one thing that's very clear. That loved the art and
Speaker 3: the stories behind coins. And they were good red blood
Speaker 3: of Americans, and they were like the people I grew
Speaker 3: up with in West Texas, and so you know, they
Speaker 3: seemed very level headed to me.
Speaker 2: I would be curious to get your thoughts on this.
Speaker 2: So what was it like actually writing the bill that
Speaker 2: allowed for the possibility of the trillion dollar coin?
Speaker 3: No, it was, it was just it was a nothing.
Speaker 3: We had. The very first entrepreneurial project that I took
Speaker 3: on was I wanted to launch the nation's first platinum
Speaker 3: bullying coin, or a platinum coin of any type, and
Speaker 3: I wanted to demonstrate that we could go after the
Speaker 3: Japanese market. Besides North America, the Japanese market was the hot,
Speaker 3: the big hot market for platinum coins. And are Tarlean's
Speaker 3: north of the border, who I love and continue to love,
Speaker 3: even there is some tension in the relationship. Now they
Speaker 3: own that market and I want won straight that we
Speaker 3: could go and take that market away from them, because
Speaker 3: I've had bigger fish to fry in the fifty state
Speaker 3: quarters and a new dollar coin, and I just knew
Speaker 3: I wanted to demonstrate that, so I wrote a bell
Speaker 3: and I asked for complete discretion so that I could
Speaker 3: go over there and talk to the senior probably in
Speaker 3: his eighty eighties Japanese distributor, and sit down with him
Speaker 3: and say, I'd like to talk to you about designing
Speaker 3: a coin that will be successful Japan. And I knew
Speaker 3: that we would go through the emotions of him expressing
Speaker 3: your opining, but it was just the honor of being
Speaker 3: asked participate in that process that would make the difference.
Speaker 3: And sure enough, when we launch the coin within six
Speaker 3: or eight months, we own that market.
Speaker 1: Philip Deal, you know, I consider you a hero because
Speaker 1: I never really worry about the dead ceiling being briefed
Speaker 1: because I know that ability to mint a trillion dollar
Speaker 1: coin could come up and that will save us in
Speaker 1: the end. Thank you so much for coming on odd LATS.
Speaker 1: Really delight to chat with you.
Speaker 3: It's been a lot of fun.
Speaker 1: Thank you, Tracy. By the way, for those that don't know,
Speaker 1: they could go back. I've written a ton about it,
Speaker 1: the trillion dollar coin. Just look up trillion dollar coin
Speaker 1: debt ceiling. For new listeners who aren't familiar with all
Speaker 1: the lore, just search for it. We don't need to
Speaker 1: repeat it. But I could really like all the sort
Speaker 1: of technical aspects of like what does it make to
Speaker 1: for a coin to be successful? Like I said, I
Speaker 1: could just sort of listen to details on that for
Speaker 1: a long time and all the market research and like, oh,
Speaker 1: we thought it could be big in Japan. We felt
Speaker 1: we could like feat out the Canadian sellers. To my mind,
Speaker 1: really interesting stuff.
Speaker 2: Japanese coin collectors are indirectly responsible for the trillion dollar
Speaker 2: platform coin. Very interesting. You know what I was reminded of.
Speaker 2: I read a book, I guess a few years ago
Speaker 2: about numismatics, and I think it was called When Money Talks,
Speaker 2: And I remember the author described coins as sort of
Speaker 2: physical memes.
Speaker 1: Yeah, like totally.
Speaker 2: Meme plexes, and each coin contains like a set of
Speaker 2: ideas and a set of values that then gets transmitted.
Speaker 2: And I think that really came through in the conversation
Speaker 2: with Philip, like it is not just about the pressure
Speaker 2: metal content, It is also about all these sort of
Speaker 2: social things that are embedded in that coin as well.
Speaker 1: Yeah, and I don't know like what it is, but
Speaker 1: like I really want a Kruegerrand specifically, you know what
Speaker 1: I mean.
Speaker 2: Wait, wait, I have a question for you. Yeah, okay.
Speaker 2: If you were offered a krue Grand versus the same
Speaker 2: amount worth of a tungsten cube, what would you choose?
Speaker 3: Uh?
Speaker 1: Well, I have my well the same uh the same value,
Speaker 1: the same? Oh so I need to I might just
Speaker 1: get a kruwe Grand.
Speaker 3: I don't know.
Speaker 1: I'm really tempted. I have my tungsten cube. I think
Speaker 1: I need to do.
Speaker 2: That's I think the novelty value of a Krugerrand.
Speaker 1: I need a Kruegerrand. I really think I do.
Speaker 2: Okay, shall we leave it there?
Speaker 1: Let's leave it there.
Speaker 2: This has been another episode of the All Thoughts podcast.
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 1: And I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 1: Follow our guest Philip Deal. He's at Philip and Deal.
Speaker 1: Follow our producers Carman Rodriguez at Kerman armand Dash Ill
Speaker 1: Bennett at Dash, Kilbrooks at Kilbrooks. For more Odd Loots content,
Speaker 1: go to Bloomberg dot com slash odd Lots. We have
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