Charged Up! podcast: Striking gold in the precious metals market
Episode 31 with precious metals trading expert Chris Blasi
By Jenny Hoff | Published: August 2, 2017
All your questions about investing in gold are answered by precious metals trading professional and chairman of precious metals provider Neptune Global Holdings, Chris Blasi. In this episode, we talk about gold and other precious metals as an option for a diversified portfolio, how you should view them as an investment, and where to buy them and store them. For many, gold is a hedge against a stock market crash, for others it’s a tangible investment to have in the event of an emergency. For others, it’s the only kind of “safe” investment they would consider.
Let’s get Charged Up! about learning how to get into the gold game!
Jenny Hoff: Chris, thanks so much for joining us today.
Chris Blasi: Thank you, Jenny. It’s a pleasure to speak with you.
Hoff: So today, we’re going to talk about investing in metals, like gold, silver and platinum, and that is your area of expertise. You even patented that PMC Ounce which we’ll get into. First though, let’s talk about your background in metals, and how did you become an advocate for this type of investment?
Blasi: Sure. I’ve actually been in the investment world going back to 1991. Now, at that time, I started with one of the very well-known major broker dealers, and I always enjoyed studying and following macroeconomics and trends. I really believe for investing, I don’t subscribe to the ability to trade in and out short-term. I think, for individuals, the best thing is to see a trend and then invest with the rising tide that will lift all the ships. So what I saw was, through economic history, that we’re going to go through a long-term in the, what we call, a secular bull market which is basically an uptrend with a duration of 20 to 25 years, beginning in 2000 and 2001 for the precious metal. And, that has commenced. I mean, gold, we’ll use that as the representative for all the precious metals, was around $200 an ounce, $225 an ounce in 2001 when we came into this market, when I got involved in the precious metals, and it’s at $1,200 today. Now, granted, it was higher a few years ago but within these long-term, the term is a ‘secular bull market,’ these long 20, 25 years, you do get periods of pullback and consolidation. And we’ve kind of gone through that already, and that occurred in 2012, ’13 and ’14. And beginning in 2016, we’ve resumed the uptrend. So that’s why I got involved. I felt it was going to be so monumental when it’s ultimately done that I wanted to focus on this asset class of this part of the investment world.
Hoff: OK, great. And there are a lot of misconceptions, I feel, about investing in things like gold, and it could be kind of hard to wrap your mind around owning gold or precious metals. Probably, the most common question I hear is, “Why gold? Why not diamonds or any other kind of rock or metal?” Or, “Why not property?” Or “Why not oil?” Etc., etc. Clearly, a limited supply of something that people consider valuable can retain its value, and I once heard an example, if you had a gold coin 100 years ago, it would have been worth about $20 and at that time, it would have bought you a beautiful top-of-the-line designer suit. Well, that same coin today, as you mentioned, is now worth about $1,200 and it would buy you, again, a beautiful top-of-the-line designer suit, so where that $20 bill obviously lost a lot of its value over the last 100 years, now, it will only buy you a pair of socks, almost, that gold coin has kept its value. Is that the way we need to think about investing in gold? Do you consider it similar to owning land and real estate? Or how should we be thinking about it?
Blasi: Sure. So these are great questions and there’s so much that we could go in. I’m going to try to at least give a good overview, so to get a sense of our perspective. Gold has been money since the beginning of time and it doesn’t change. Now, regardless of what gets said in real life, a lot of folks who will be not recommending gold because there is a vested interest to steer the investor somewhere else because it’s not an asset they transact in. The other important thing to really protect investors is that there is a lot of misinformation and there’s a lot of, we’ll say dealers that steer people in not the best direction, and what I mean by that is, they’ll confuse things with what they call numismatic coins. So those are coins that are rare. They may have gold or silver in them but their pricing is really calibrated on supposed rarity. And for individuals who are buying gold and silver because of the properties and what they do, they really need to buy coins that are being trading in their bullion content, not numismatic or a rarity.
So that aside, it’s almost like a little disclaimer, why gold? Gold is a long-term store of wealth. It always has been, and when times become precarious and economies get stressed, and systems get challenged, or financial systems and such, gold performs, and the reality is, that’s why it turned in 2001. Through these years, we’ve heard about the debt ceilings and all the troubles that have been going on, right? The housing crisis of 2008, 2009, and that’s why gold has been chugging higher, because behind everything in the economy, there is a lot of areas that are under stress. There’s a lot of economic hardships and there’s a lot of money-printing, the paper over problems, and that’s why gold and silver goes up; they don’t go up on a straight line, but they are chugging higher. One interesting thing you said, because that’s a great question, a person says, “Why not diamonds? Why not oil? Why not real estate?” Those investments are good in their own right but they also have limitations. I mean, let’s take a common one: real estate. People say, “Well, gold doesn’t pay a dividend and it doesn’t pay rent.” Well, that’s correct and it’s not meant to, right? And you buy real estate if you want to get rent from a person, but it also doesn’t have all the headaches, the challenges with real estate. Gold, you can own directly, right? Real estate, a person says you can own directly. In the technical sense, you really don’t because you’re always on land that you have to pay taxes, and if you fail to pay those taxes, that land gets taken from you. Also, you have to deal with the risk of your renter, right? When your renter gets in trouble, he may not pay you rent and may take a while to get them out. You have a number of months of maybe uncollected rent plus there’s the overhead of maintenance on the property, and that also comes with work, right? Gold, you can hold by the side and just go about your business and you don’t have to do anything. Real estate tends to be something you need to either be involved in or does have costs, and it does have counterparty risks.
Diamonds, diamonds are, I think anyone who’s bought a diamond and walked away
feeling like, “They told me it was this quality, is it really?” It’s not a
clear-cut market, right? They’re all different cuts, they’re different clarity
levels. You cannot use a diamond as a universal instrument like gold. Gold is
extremely transparent; the pricing is all available, you could go on any
financial site. It’s found on all the TV shows that deal in finance, and an
ounce of the gold is an ounce of gold, and you know what it’s worth. You do
have transparency and liquidity with diamonds. And then oil, you really can’t
own oil directly, right? You’re not going to put a big silo in your backyard
and have all this oil shipped. So you’re forced to kind of buy a securitized
instrument like buying stock in Exxon or an ETF [exchange-traded fund]. So gold
and silver have this unique property. You can actually own the asset directly.
It’s portable, right? Real estate is not portable, right? You put your $300,000
in a piece of real estate, it is stuck there and if anything goes bad in that
area, there’s not much you can do except sell, and maybe at a loss. So this is
why gold has always been a store of wealth and has always been embraced by
those with a lot of money and a lot of resources, but it’s not limited to just
the wealthy. It comes in small enough units where anybody can take advantage of
it, and we think everyone should, to some degree.
Hoff: And you mentioned how it’s portable, so I do want to get into how we can actually buy gold. And there’s a story back from my youth when somebody in a family recommended I buy gold, I’d made a snarky remark, “Am I supposed to be a pirate carrying around a chest of gold with me everywhere?” And he got the last laugh--gold has since doubled. But that is a good question, which is how do I buy my gold, and how do I store gold? There’s a lot of different options and I kind of want to go through each of the options, and the pros and cons of each, and also what they mean. From what I understand, we can buy it in ETFs, closed-end funds, stocks, coins and jewelry. So can you talk about those different options, what they mean, and the pros and cons of each?
Blasi: Sure. There’s two types of market, we’ll call the paper gold market and the physical gold market. The paper gold market is when you’re buying a financial instrument like an ETF or a fund of some type, and you’re getting a Wall Street traded security and supposedly, the underlying asset is gold or silver. Usually, a lot of these funds, they’re only partially filled with the precious metals or they use a lot of derivatives, and that’s why the prospectus will even say the purpose of the fund is to track the price of gold, not own the gold, right? Track. So you have to look at the little nuances from what they’re really saying. So those are expedient and if you’re working, you have an account with a typical broker dealer, it’s easy just to buy those but it doesn’t mean it’s what’s best. We mentioned before, gold is one of those rare assets, you could actually own the asset and we don’t believe a person should give that up because there’s so few assets that you can truly own directly. So that said, there’s the physical precious metals market, and that consists of when you own bars or coins, and with the coins, I just would say to people, “Do not get taken down the path of buying things they will call proof set coins or numismatic coins because that’s not really bullion investing.” But that said, work with the dealer like us, we make a market and all of these globally traded physical precious metals, bars, and coins, and then once you determine what’s right for you based on your horizon, your perspectives, your resources, you have the option to either take delivery which means it gets shipped to you and then you store it somewhere you feel it’s safe. But you can use the depository services that we offer with our partner depository. So you think of it, you would buy the gold, it gets delivered into your account. It’s all there until you to decide to either have it shipped to you for some reason, or it hits the price target that you want and you sell it. The advantage to being in the depository is it’s ready to sell at a moment’s notice. It’s just a phone call away. You pick up and you can sell. I mean, precious metals are liquid. A dealer like us buys and sells in real time. If you take deliveries of metals, some people enjoy having it, but realize when you want to sell, you do have to put it back and ship it back, and there’s a little cost to that. It’s not that one method is better than the other. Again, we work with our clients. What is their perspective? What are their time high-rises? What are they looking to achieve? Are they just looking to hold gold for the next couple of years in anticipation of substantial price rise because of geo-political events, and then maybe they want to keep them in depositories for quick sale? But those are basically your two options. The main thing is, I’ll just go back is, there’s paper gold, that’s Wall Street created funds and ETFs, and then there’s the actual physical market, and we deal in the physical where you own the underlying asset.
Hoff: And so clearly, you don’t recommend ETFs and closed-end funds, especially if you are somebody who, in a sense, doesn’t trust the markets right now and you feel like there could be some sort of a monetary collapse and gold is going to be your security against that?
Blasi: Sure. I will say, all ETFs are not created equal, some have maybe more derivatives or less allocated gold and others, but I will go back to this: the cost of precious metals are so unique that the investor can own the underlying asset and you’re not forced to buy a security to have a tenuous connection to an underlying asset. Why would you give that up, right? You can’t do that with anything else. Everything else is always securitized. When you have securities, stocks and bonds, there’s counterparty risk, right? The market can freeze up, right? Things don’t trade, and it’s happened. Why not extricate yourself, right? Being as you’re supposed to have a diversified portfolio, right? So a person has a certain amount of stocks, certain amount of bonds, I think part of that diversification is not only am I going to have precious metals? But I’m also going to hold it outside the system, right? Outside the banking system. Outside of Wall Street. That’s part of overall diversification. So my point is, I don’t think you should give that up. I think you should embrace it and take advantage of it, and own the asset directly.
Hoff: And if we decided to buy gold and keep it in a vault, how does somebody feel secure that that company who controls that vault isn’t going to go under or something’s going to happen where they then can’t access it anyway?
Blasi: That’s a great question. So I can speak to what we do to alleviate that and give a person that sense of security, and beyond the sense, to give them that security. We are a dealer and a market maker, but we know that you don’t want your dealer to be also your depository because there’s a conflict of interest, right? So we have a long-standing relationship with one of the major bullion depositories, nonbank depository, and that’s important, right? So they strictly provide insured depository services. So if a person buys and sells precious metals with us or through us and chooses not to take delivery, but take advantage of the security and the insurance of the depository, at the time of their purchase or sale, they get the transaction confirmation from us, the metals move into the depository, go into a special allocated account, get signed to the client, and then the depository or our depository reports directly to that individual, not through us but directly for that person to say, “We’ve received these metals. We’re now holding them in their name, in the customer’s name, on an insured basis,” so we have a dual reporting system. Our clients have online access to always see what’s in their account, and see the value of their account real-time, but all dealers do not have what we set up. We are very cognizant that people need to feel secure and want to have multiple reporting sources assuring them that their metals have been purchased, properly delivered, properly accounted for, and that they’re known as the owner, and those are what we have put in place. I can’t say everyone does it, but that’s what we have done.
Hoff: OK, and you mentioned that having it in a vault, in a sense, allows you to sell it more easily; you don’t have to package it up, send it through the mail, worry about that kind of security or those kinds of costs, and I want to talk now briefly about how we should consider gold as investment, whether it’s a long-term investment or if it’s something that we would sell if we just wanted a little bit of the profit in it or we thought that it was going to go down. So, I want to talk about a couple of things here: stock market volatility, potential negative interest rates and how that can affect market investors, and then a lot of my guests recommend investing in index funds, essentially low-cost funds that allow you to own a tiny piece of all the major corporations. I want to ask, do you think, you mentioned gold is a diversification, do you think that gold should just be one part of your portfolio? How should it be as an investment? Is it a long-term view that you think you’re never going to touch that unless there’s a real emergency, or do you think the stock market should be something that people should stay out of altogether if they’re worried that there could be some sort of monetary collapse?
Blasi: OK, so there’s a lot there. The stock market is a bit up high but it’s been that way for a while, so I would not be someone who’s trying to advocate market timing of when to extricate someone from the market, but it is bid up pretty high. And if you look at a lot of what has bidded up through the years, through the last several years, especially, it’s not individual investors. There’s been a lot of companies buying their own stock, right? Taking huge loans from banks from buying their own stocks, or to some degree, that’s a form of manipulation. It’s not the quaint notion of the regular individual sitting around the kitchen table saying, “We’re going to buy 100 shares of General Motors.” There’s a lot of, like I said, stock buying accent in investing, and that’s kind of an artificial way of coughing up the market, so the market is poised for a pullback. Gold, and when I say gold, it’s really all the precious metals but gold should be a part of a portfolio as a hedge against a lot your dollar-denominated assets, like stocks and bonds, and the big question is, how much gold should I own, right? I think the real answer to that is, it needs to be enough that it’s significant so that if your portfolio, if your stocks and bonds, and your other assets gets hit, and gold rallies, well, if 1 percent of your portfolio is in gold, it can’t do that much help, right? I mean, there’s only so much a rallying 1 percent can do to offset a falling 99 percent. So that’s something we could discuss with an individual 101 but just to keep that in mind, right? It needs at least to be reasonable enough representation so if it’s called on to help balance your portfolio, there’s enough there. So ideally, the precious metals are usually looked at, are generally looked at as more of a longer-term hold because you would want that hedge for your personal portfolio for over the long term. It’s not like you just want to protect your portfolio for a week or two, or a month, or even one year, and if you look at this market that started in 2001, gold, even though it’s had its down years, gold has gone from $250 an ounce to $1,200. So, it’s not just sitting there as financial insurance, it has been appreciating. It doesn’t go up on a straight line but it has been appreciating. Gold is actually a form of financial insurance, right? When you think of insurance as something you have, you hold, and it’s there for when an event happens but unlike insurance, gold does go up in the interim but it’s really major thing is, if we get a market pullback or a break in the market, where the dollar starts to go down a lot, decline significantly where the stock market starts to get hit, gold will step up and move up at a much more aggressive pace. But you need to be in it. I mean, a lot of people say, “Well, when things look really bad, I’ll get in,” right? They’re going to wait for the last minute and that they can market time, right? Like they know when the stock market’s going to actually pullback and gold takes off, and my experience is, market timing is a fruitless endeavor that usually never works for an individual. You just need to position yourself--I’ll go back to what I said originally--trend. The trend is still up and in our opinion for gold. We’re still in that secular bull market where that long-term uptrend so you just need to take your position. People wait until that time when the markets kind of break and what’s going to happen is individual investors will have a very difficult time getting physical gold because it is a small market, there really isn’t that much out there, or they will be buying it at a much higher price. Gold is like financial insurance; you need to have it before the event happens. It doesn’t do you any good after the event happens.
Hoff: Right. OK. It’s interesting. So it is a long-term investment, it shouldn’t be looked at as something that you’re going to just buy and sell, and make a little bit of money here, a little bit of money there. It’s something that you hold for the long term as an insurance policy against whatever other stocks and bonds, and money is in your investment portfolio. So you don’t recommend against getting stocks and bonds. You just say, gold is a very nice security against a crash in that?
Blasi: Well, it’s not just nice; it’s logical and it’s always been a part of, we’ll say portfolios of people who really understand markets and understand what it means to diversify, right? I mean, I’ve worked at Wall Street firms and there’s self-interest with what they promote and will say, “You’re diversified. We have large cap stocks and small cap stocks.” That’s a little sarcastic but it’s true. But the point is, when the market does pull back, everything goes down: large cap, small cap, they all become stocks, right? Very few are going to buck that trend. So just diversify between foreign equities, domestic equities, large cap, small cap, that’s not really diversification. Diversification is being in totally different asset classes. Now, it doesn’t mean gold only works for the long haul. As I said, it has been appreciating and we have plenty of clients who bought gold 10 years ago, 12 years ago and then, as they need it, they sold for more. I mean, that’s the beauty of it too; it’s very divisible. Let’s use an example. A person buys a piece of property. Let’s say they spend $300,000 on a rental property. That’s one big unit that moves in units of either you bought it for $300,000, you have to basically sell it for $300,000. You can’t sell it pieced off. You can buy $300,000 in silver and all these units that break down to literally $16 a unit. So that’s something also to consider because we have people that are maybe in retirement and they take a quarterly to liquidate a little piece every quarter where they don’t have to sell the whole investment. So there’s a great degree of flexibility with that divisibility in the precious metals that really serves investors well.
Hoff: OK, and let’s talk about your patented, the PMC Ounce. What is that and how is it different from just buying gold or silver by itself?
Blasi: So the PMC Ounce, that stands for the Precious Metals Composite and there’s actually four precious metals: gold, silver, platinum and palladium. Now, they don’t move in a lock-step. There’s days when gold may be up and silver down, and platinum up, and palladium down, and like any portfolio, you want to diversify your overall portfolio. But even with an asset class, diversification within that asset class is important. Meaning, a good example is, if you said, “I’m going to put 50 percent of my money in stocks.” Well, you don’t want to take all those dollars and put it in one issue of stock, right? You want multiple issues of stock. So even in precious metals, you use that same logic. Now, we always believe in you want to own physical precious metals, so what we did is, we created a product called the PMC Ounce. It trades like the same E’s. It trades in real-time pricing, like you’re buying or selling in ETF. But for each PMC Ounce, you get a fixed fractional amount of gold, silver, platinum, palladium, that gets allocated and goes into the client’s name. So it’s not just putting money into gold but it’s putting into gold, silver, platinum, palladium. Turnkey, unified. Trades in real time, and we don’t put the same amount of money into platinum, palladium that we would gold; it’s logically weighted but you can see, if a person wants to visit our website, when you look at our home page, we show the price chart, how the PMC Ounce can perform versus gold and silver and it’s not about out-performing them because it’s not a managed fund. It’s not. You will just own the metals, but that diversified turnkey portfolio has a smoother ride than gold and silver. You will see, like silver spikes up and down, and no investor, really, you don’t want to be in something that spikes up and down because if you had to sell to raise some money and that investment has spiked down aggressively, that’s not an opportune time. So yes, the PMC Ounce moves with the metals, but because it’s diversified and has a blended return, it has a smoother, smoother price movement. And that’s an important part of managing a portfolio. It’s not just chasing returns, right? Or getting a return, but it’s also managing risks and volatility’s risk, and that’s what the PMC Ounce does, and it’s not a security. The client owns the underlying metal. So because it’s so unique like that, it’s diversified, it’s turnkey, it’s owning the physical metal but not a paper product, it’s got a patent, and it does extremely well as investors of all stripes, from institutional investors down to just regular individuals see the logic of it and they go on our website and use tools like the PMC Calculator which let’s them experience a trade. Their logic basically says, “This makes sense.” The way we look at it, Jenny, we took an antiquated, what they call like an archaic market that people see as the physical precious metals market or buy and sell of bars and coins, and basically modernized it with never leaving the value of owning the physical metal but modernized it with diversification, ease of trade, liquidity and transparency. It’s its own unique asset and it’s growing rapidly, and has been for the last five years.
Hoff: So if you were to buy a PMC Ounce, is that something you could have delivered to you? Is that something that you could then sell? Or is it something that is just kept in the vault because it’s kind of this unique combination?
Blasi: Sure. So the underlying metal is all deliverable and it’s all in bar form of all different size. The spirit of it is, you can liquidate and take delivery of the underlying metal, but that’s the full option because all the metal is there. But that’s not the spirit of it, right? If that’s what you want us to do from the get-go, we would just sit down and say, “OK, you want gold and silver, and platinum, and palladium. Do you want to buy and we’ll ship it today?” The spirit of it is, their cross-efficiency and such is in the depository, it’s all the same, they call that dual reporting from the depository, and therefore, a person can, when they want to sell, they can just sell part of it or all of it. If the world seems to be so precarious that a person says, “Oh, at this point, I’d like to take the delivery of the metal,” they can just look at their options and we have all that listed of what metals are going to be delivered to them. It’s most effective being in the depository, being there, ready to buy or sell at any time and getting the insurance and the protection that the depository offers.
Hoff: OK, and I wanted to ask you also about cryptocurrency and as a comparison precious metal owning, and I know that cryptocurrency is gaining a lot of steam, especially as we move into a more cashless society. Do you see it as something kind of similar to owning a precious metal against hedging against our currency at we use right now possibly collapsing? Or totally different because one is tangible and you can have it and the other one is totally digital and at any time can maybe disappear?
Blasi: Sure. That’s a very interesting conversation that I’ve been having a lot of recently. I think there’s a lot of misconceptions. The idea that because there’s been so much focus on cryptocurrency like bitcoin, that is the new gold, is completely misplaced. They couldn’t be further from each other. I’ll give you a good example. Bitcoin, right? There’s this perception that bitcoin is something that got created a number of years ago and it has this, what they call a distributed database and the block chain technology and somehow it’s just out there, and just functions on its own. Well, if you’re seeing, bitcoin has a problem right now, it’s not scaling. So it has developers who are trying to fix that. Well, think about that. I mean, that means it’s just software, right? That’s what it always has been, right? But there’s been this misconception about what it is. Then people got very excited because it went up in price. But the end of the day, it’s a digital asset that it’s got a lot of the same drawbacks of software, it’s still dependent on the internet, there’s a lot of questions about what it really is and where it’s going, therefore, it’s not gold. Even though people have mistakenly thought it’s like the new gold, it really couldn’t be the furthest, and I’ll take an example of what you brought up earlier. The coin that was made 3,000 years ago, 2,000 years ago during the Roman Empire was made of gold and silver. That could have sat on the ground for 2,000 years. You dig it up, you take it, and it’s still worth whatever that gold is worth. Nothing had to be done. The fact that cryptocurrency are created, they need to be updated. Like I said, bitcoin isn’t scaling right now. They can’t do enough transactions per minute so they have to basically, like any piece of software, update it. Just those two reasons right there, those are examples, show they’re not the same thing. It is a digital asset, I think people are just enamored by technology. I think unfortunately, a lot of younger people get caught up. I will hear people who are, almost a religious thing with these cryptocurrencies and they’ll say, “You don’t understand the technology,” and my answer to that is, “Oh, I understand the technology. Do you really want to just put your store of wealth and your money in something that is a technology?” Because that’s what it is, it’s technology, and now, it’s not going away, and not to go too far down with what you said, but cryptocurrencies or we’ll call it digital money, isn’t going away. It’s going to probably evolve as what’s being used by governments and central banks in the future because there’s a lot of thing they like about it which I don’t think is in the best interest of us as individuals, but I think people will be wowed by the so-called convenience of digital, but there’s also a lot of loss of freedom that goes with that.
Hoff: Are you talking about moving into a cashless society in that sense where no longer do you have control over any of your money?
Blasi: Well, yeah. I mean, it all depends on what people, what they value, right? Like where you pull independence or freedom. Some people may say, “No, I love the surprise where I can walk around with my smartphone and walk into a store and walk out and not even have to see a cashier, and it just debits my account.” And other people say, “Well, I don’t like that idea. It’s not that hard for me to reach into my wallet and pull out a credit card or cash.” Some people, I guess, are overly caught up in things like convenience that 12, 15 years ago, they were, what they call fed minutes and you know what they are, Jenny, right? They sat at and they talk about ideas for the long term and they talk about time-stamping money in the future, and time-stamping means that you will be paid and that if you didn’t spend that money in a certain period of time, it would be basically devalued, and it’s a way to force you to be a consumer. And for a lot of us, we don’t think that’s great. If I want to be a saver and accumulate, and build wealth, I’d like to do that. I don’t want my money automatically devalued because I didn’t go out and consume like they want me to, and realize, that concept of time-stamping money is only doable when it becomes digital, right? You can’t do that with bills, so this is where all this is leading, and believe me, these thoughts about what will happen to the digital currency, things like the federal reserve and the central banks have been thinking about this for decades, and it’s kind of all coming together. So cryptocurrency, digital currency isn’t going away. It’s going to probably evolve as the national money at some point. We can debate whether that’s good or bad, but it’s not gold and gold should always be a part of portfolio, and no matter what you may hear or what your subscribers may hear from the mainstream media, that gold is maybe passé, realize that the Chinese government, the Russian government continue to acquire it, European Union holds onto it and doesn’t let go of it, the U.S. has their stockpile, no one’s letting go. Even the central banks and the governments in the world are still acquiring it and holding onto it, so I would always say, “Don’t do what they say. Do what they do,” and the fact that, again, China and Russia are rapidly acquiring gold, that should be a tip well-fed that it’s still viable and it’s still important of the future.
Hoff: All right, so what are three things that listeners could do right now to get started in investing in precious metals?
Blasi: I think one thing is education, right? I think a good place to start is our website because we are a full service dealer, we do give descriptions under the products of the different types of products, the PMC Ounce with regular bars and coins of gold, silver, platinum, palladium. We post all the pricing live so people can see what the markets are trading at in their live price, we have all the stock prices, plus what the different items transact at, buy and sell, and we also have individuals that can answer questions for anyone who wants to follow up with either an email through our contact tab, or call us and just speak with a specialist. We enjoy talking about these metals, we know they’re important, we hope more and more people get involved and safeguard their assets and their wealth, and take a position. We’re here to help and hopefully, we can get all people and dispel some misinformation they may have or answer some questions to the point that they feel comfortable and can take a smart position in the metals.
Hoff: And what should people avoid when it comes to buying metals? Are there websites that people shouldn’t go to or how can they ensure they’re not getting gipped a little bit?
Blasi: Sure. So I can’t name names or anything. We’ve been around a long time. Like I said, you can speak with someone who tries to take you down the path of numismatic coins or proof set coins, that would raise a red flag to me. A numismatic coin, again, it’s a coin that’s selling based on its rarity. If you want to get a rare coin because you enjoy looking at it, like a collector, like a stamp, well, that’s fine. I’m not saying that’s wrong, but that’s not the same as the person who says, “I need to take a position in the bullion because I think gold will go up if the dollar goes down.” Well, rare coins are a different market, a totally different market, and unfortunately, almost every store I have heard, when people go to sell back these numismatic coins, that big premium they paid on the spot price somehow magically disappears, and there’s always a reason why. So if someone starts to steer you down that path, I would kind of like end the conversation and move on because that’s not bullion investing.
Hoff: OK, so you want to invest in that pure thing. You don’t want to be investing in kind of the rarity of something, but what’s the straight up value of that ounce that you can read anywhere that is the same no matter what?
Blasi: Exactly, right? So I mean, what’s the best way? You say, “Here’s an ounce of gold, the spot price is this,” and people get confused because there’s bullion coins and then there’s coins that are rare, right? Or semi rare, and that’s where a lot of confusion is. But you have your regular bullion coins: your Eagles, your Maple Leaf, your Philharmonics and your Krugerrands, and they just sell for a small premium over spot because it is an actual physical product, right? You have the gold and the gold had to be fabricated into a coin, so you pay that small amount over spot, and that’s a very transparent market. That’s what a person should stick with. They could stick with bars, larger investors can use bars and stuff with the small bars, like the one-ounce bars of gold, I wouldn’t suggest taking delivery of larger bars. If they get shipped back, they’re going to need to be tested properly because there can always be fraud or counterfeits. Work with a dealer who’s been around a while who gets recommended by some people that you may respect, maybe if the person isn’t real familiar with the precious metals yet, they may not know some of the well-respected analysts. Like anything else, do your diligence, stick to the well-known products and the globally traded bars and coins, and with that simple formula and place, your investor should do OK.
Hoff: All right. Also, real quickly, I want to know, people should not or they should keep this in a safety deposit box? So if somebody does decide they want to hold the physical gold themselves, they want to be able to look at it as often as possible, you did mention that it was important that the vaults that you guys deal with is not part of the bank. Now, a lot of people have safety deposit boxes at a bank, should people be putting that there or no?
Blasi: Sure. That’s a personal question. I’ll just give my opinion. When the depression came, there was a time when there was a bank holiday and the boxes were frozen, like access to your box was frozen. Things in a the safety deposit box are not insured. Granted, the person says, “Well, the bank’s not going to get robbed so I’m not concerned.” There is a rationale that a safety deposit box may not be the best place and that’s my take. We all know that many, many people use their safety deposit boxes for that. But again, I think it’s part of that diversification, right? So if you get a bank holiday, a breakdown in the regular financial markets, and the banks are part of the financial markets, everything could be locked down and frozen, including safety deposit boxes, like during the depression where outside of the banking system, you’re not part of it. So again, it’s spreading your risk, right? It’s moving your assets and putting them in not only different forms, like stocks and bonds, and precious metals, and even in different locations, some are all tied up in the stock exchange or are exchange traded, so why not outside of that system, as far as possible? It’s just my opinion and again, if it’s in the safety deposit box and gold and silver spike up, and you decide to sell it, you still have to get it out the safety deposit box, package it up, insure it, and ship it back, and that could be a week to 10 days. So, there’s an advantage to being in the depository. Basically, it’s ready to buy and sell or even ship out at any time.
Hoff: All right, and finally, our podcast is called “Charged Up.” What gets you charged up about metals as a way to protect yourself against the potentially volatile economy?
Blasi: I’m charged up about it because despite volatility of these markets, it has been trending as we expected since 2001. So the research that I did and we did prior has proven to be right. It’s in a long-term uptrend. We think we’re going to the next big leg up. We didn’t get a lot of triggers right now in the global economy, but from a macroeconomic and geo-political that at any time, you can see the gold and silver, and the precious metals spike up. But the thing is, you need to be in it before it happens. After the fact, either A, you’re not going to get the metal because it is truly limited in supply and cannot be created like a paper asset. Or, if it’s available, it will be a much higher price and you potentially could have lost a lot of good upside. So I’m charged up because we came out of that multiyear pullback which ended about two years ago and we’ve been grinding higher for the last two years but I think we’re getting poised to the next aggressive move up, and that’s our opinion, and we’re pretty charged up about it.
Hoff: Awesome. Chris, thank you so much. This was a very enlightening conversation. I know I had a lot of questions and thank you so much for taking the time to answer them.
Blasi: Oh, Jenny, thank you. It was great chatting with you, and hopefully, we’ll talk again.
Hoff: Absolutely. Bye-bye.
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