The Gold Market: Strategies for Investing and Reselling with Trey Benedict

Summary

Podcast Summary: The Gold Market: Strategies for Investing and Reselling with Trey Benedict

Episode Title: The Gold Market: Strategies for Investing and Reselling with Trey Benedict
Podcast: All the Hacks with Chris Hutchins
Host: Chris Hutchins
Guest: Trey Benedict, Founder of Pure
Release Date: December 18, 2024

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1. Introduction to the Gold Market

Chris Hutchins opens the episode by highlighting the enduring allure of gold, not just as a physical asset but also as a financial hedge. He introduces Trey Benedict, the founder of Pure, a leading online platform for buying and selling gold. The discussion promises to debunk myths, explore the intricacies of spot pricing, and provide strategies for profiting in the modern gold market.

Chris Hutchins [00:02]: “Gold has captivated people for centuries...the modern day gold market is so full of surprises.”

2. Understanding the Size and Segments of the Gold Market

Trey Benedict provides an overview of the gold market's vast scale, which spans trillions globally. He breaks down the market into three primary segments:

• Central Banks and Governments: Utilizing gold to hedge currencies and maintain reserves.
• Market Makers: Large financial entities like JP Morgan and hedge funds dealing in billions.
• Retail Sector: Individuals investing in physical gold, a market that has expanded significantly since gold became legal in the US in the 1970s.

Trey Benedict [02:24]: “The gold market's pretty large...the retail sector for gold bars is around 55 billion.”

3. Historical Context: Gold Legality and Retail Coin Evolution

Trey delves into the history of gold in the United States, noting its outlawing in 1933 when the US transitioned to Federal Reserve currency. The revival began in the 1970s, leading to the introduction of bullion coins like the South African Krugerrand and the US Mint's Gold Eagle in 1985. Trey highlights the success of these coins in the retail market and the introduction of the Buffalo, a 24-karat gold coin, positioning the US favorably in the global retail gold sector.

Trey Benedict [03:19]: “Gold was outlawed in 1933...the buffalo is the pure gold coin to compete with the Canadian Maple Leaf.”

4. Motivations Behind Buying Gold: Ownership, Collecting, and Speculation

The conversation shifts to why individuals invest in gold. Trey identifies various motivations:

• Hedging Against Currency Devaluation: Some fear government interference and currency decline.
• Investment Growth: Gold's appreciation over time makes it an attractive investment.
• Collectibility and Tangibility: Physical gold's aesthetic and tangible nature appeals to many.

Trey Benedict [04:56]: “Some people use gold as a tangible asset...it’s always cool to be like, oh, it's like a gold bar.”

5. Physical Gold vs. Gold ETFs: Differing Perspectives

Trey contrasts physical gold trading with gold ETFs (e.g., GLD). Physical traders focus on premiums over spot prices and create supply-demand dynamics based on coin scarcity. In contrast, ETF investors are concerned solely with spot prices, exposed to different market perceptions.

Trey Benedict [15:20]: “It's a little bit different than general investors perception... it's the spot price plus or minus the premium.”

6. Spot Price Dynamics and Market Operations

Spot price for gold operates on a weekly cycle, opening every Sunday at 3 PM EST and trading continuously until Friday. Larger players hedge their risks based on spot prices, while premiums on physical gold (e.g., Buffalo at 2-3%) offer margins for market makers. Traders need to be vigilant as spot prices can fluctuate significantly, even overnight.

Trey Benedict [13:47]: “Spot price is a little bit different than your general stock trading hours...full involvement in the market.”

7. Recent Developments: The US Mint's Flowing Hair Coin Release

Trey discusses the US Mint's release of the 230th-anniversary Flowing Hair coin. Despite being anticipated for its potential, it didn't perform as exceptionally as expected. However, limited drops and privy-marked coins (which saw a significant price increase) exemplify how limited releases can create substantial aftermarket value.

Trey Benedict [22:27]: “We knew that's going to be really good from the start...some people paid their rent with these coins.”

8. Selling Gold Through Pure: Enhancing Liquidity and Market Efficiency

Trey elaborates on Pure's role in improving liquidity for physical gold traders. Pure operates as a transparent marketplace where buyers and sellers can transact efficiently. By addressing premium issues and ensuring fair spreads, Pure facilitates smoother trading operations akin to platforms like StockX in the sneaker market.

Trey Benedict [29:16]: “When we originally started Pure...we have to make sure that buyer's whole.”

9. Costco's Entry into the Gold Market: Mainstream Accessibility

A significant focus is on Costco's retail gold bars, which sell rapidly due to competitive pricing. Trey explains how buying gold at Costco and selling it immediately on Pure can be profitable, especially when leveraging Costco's Executive Rewards program, which offers a 2% cashback that can offset potential losses.

Trey Benedict [31:27]: “Costco is selling gold bars at checkout...another chicken bake or hot dog situation.”

10. Shipping and Security Considerations for Selling Gold

Addressing concerns about shipping valuable gold, Trey assures listeners that Pure employs insured overnight shipping and maintains allocated storage. He emphasizes the importance of secure packaging and transparent transaction processes to mitigate risks associated with sending high-value items.

Trey Benedict [41:10]: “Everything's open under camera...using overnight or express mail to be able to make sure it's all good.”

11. Selling Legacy Gold and Jewelry: Best Practices

For those looking to monetize inherited gold or jewelry, Trey recommends visiting reputable local coin shops or Pure for assayed and marked gold. He cautions against "we buy gold" banners, likening them to high-interest payday loans in terms of unfavorable terms.

Trey Benedict [48:04]: “If you're not comfortable with going somewhere online, then go to your local coin shop.”

12. Recommendations and Common Pitfalls

Trey advises newcomers to:

• Avoid Fear-Mongering: Steer clear of sellers promoting gold as a "safe haven."
• Use Reputable Platforms: Opt for trusted marketplaces like Pure or established coin shops.
• Stay Informed: Utilize resources like PCGS CoinFacts and attend coin shows for education.

Trey Benedict [52:28]: “Avoid anyone who says the words tangible wealth or I hate the word safe haven. That's like a red flag to me.”

13. Conclusion and Final Thoughts

Chris thanks Trey for his insights, encouraging listeners to explore Pure via the provided link. Trey reiterates the importance of transparency and legal compliance in gold trading, emphasizing Pure's commitment to trustworthy operations.

Trey Benedict [53:05]: “Thank you.”

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Notable Quotes with Timestamps

• Trey Benedict [04:56]: “Some people use gold as a tangible asset...it’s always cool to be like, oh, it's like a gold bar.”
• Trey Benedict [13:47]: “Spot price is a little bit different than your general stock trading hours...full involvement in the market.”
• Trey Benedict [22:27]: “We knew that's going to be really good from the start...some people paid their rent with these coins.”
• Trey Benedict [31:27]: “Costco is selling gold bars at checkout...another chicken bake or hot dog situation.”
• Trey Benedict [52:28]: “Avoid anyone who says the words tangible wealth or I hate the word safe haven. That's like a red flag to me.”

Useful Resources Mentioned

• Pure Website: collectpure.com
• US Mint: Offers on commemorative coins.
• PCGS CoinFacts: Comprehensive coin database.
• Professional Numismatic Guild (PNG): pngdealers.org
• American Numismatic Association (ANA): money.org

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This episode provides a comprehensive overview of the gold market, blending historical context with modern trading strategies. Trey Benedict's expertise offers valuable guidance for both novice and seasoned investors aiming to navigate the complexities of gold investing and reselling.

Transcript

[Chris Hutchins]

Gold has captivated people for centuries, whether as a hedge against inflation, a shiny keepsake, or a means to turn a quick profit. But there is more to gold than meets the eye. From Costco selling gold bars that fly off the shelves to people who score massive profits on limited US Mint drops, the modern day gold market is so full of surprises. In today's episode I'm joined by Trey Benedict, who knows the ins and outs of this market and is the founder of Pure, one of the biggest places to buy and sell gold online. We're going to break down the myths and realities of gold investing, the dynamics of spot pricing and how you can navigate and profit in this market. I'm Chris Hutchins and if you enjoy this episode, please share with a friend or leave a comment or review. And if you want to keep upgrading your life, money and travel, click follow or subscribe now. Let's get into it right after this. This episode is brought to you by Gelt. When it comes to building wealth, taxes are such a big part of the strategy. And as the year comes to an end, being proactive now to lower your future liability is so important. And now that I'm working with ghelt, I finally feel like I have a partner I can trust to handle everything for my personal and business taxes. Think of Gelt as the ultimate modern cpa. Of course they have an in house team of expert CPAs to work with who help you determine the most effective tax strategies to minimize risk and grow your wealth. But they also have an amazing tech platform that gives you personalized guidance to maximize deductions, tax credits and savings. It also has an amazing document vault where you can upload all your tax related files, tag them with the relevant years, and even see when your tax team has reviewed each file. Beyond that, the tax library you get access to as a client has dozens of in depth guides on things like choosing retirement plans, tax taxes for new parents, qualified business income, or qbi. And so much more. So if you're ready for a more premium proactive tax strategy to optimize and file your taxes, you have to check out ghelt. And as an all the hacks listener, you can skip the wait list. Just head to allthehacks.com GELT G E L T Again, that's allthehacks.com G E L T to stop overpaying on taxes.

[Trey Benedict]

Trey, thanks for being here in person early in the morning.

Yeah, thanks for having me and glad to be here before everything gets crazy.

Yeah, we're doing this early because of gold markets. But I guess let's start with the gold market. How big is the gold market?

The gold market's pretty large. You've got your larger central banks, which is obviously governments trading around gold to hedge their currencies as well as reserves. Then you've got the market makers, which is your JP Morgan's and hedge funds of the world. And then you've got more of this retail segment as well that's really adapted in this last 30 to 40 years since they've actually made gold legal to own in the US since the 70s. So there's this expanded market. But if I had to put like an actual number on the large markets in the trillions, it's quite a lot. There's a lot of gold in just the overall market. And then the market makers obviously are in the billions area. And then our retail sector for gold bars is around 55 billion. So it depends on which segment you're looking at it.

Okay, so gold was not legal before the 70s.

Yeah. So gold was outlawed in 1933 when the currency of the US changed from actual gold coins to what we now have as Federal reserve currency. So treasury notes replaced what used to be a gold backed currency. And then the first bullion coins were the Krugerrand and the Krugerrand's from South Africa. So I know a lot of people used to buy those and you still see them nowadays. But then the started wanting to play a little bit more in that market and they realized how much money South Africa was making. So they produced the Gold Eagle and production started in 1985. But the first actual US gold coin since the 30s was these things called an arts medal. You'd send the post office 30 bucks in the mail and they'd send you back an ounce of gold. And so that was the first adaptation to retail investors getting involved in the United States. But the Gold Eagles seemed to be like quite a hit. And it's still kind of like the top coin around the world for people who are buying retail investments. And then they also introduced the buffalo as well, which is a 24 karat gold coin. So the buffalo is the pure gold coin is to compete with the Canadian Maple Leaf and it's pretty successful. The US has done quite a good job of getting into the retail sector market.

For those on audio, we'll get into a little bit of my recent foray into gold. But I'm holding a buffalo and a few other coins here. Why do you think people are buying these? Is it to own gold? Is it collector's Items, Is it speculation?

I think there's a couple different types of people that buy them. I think first off is you're. I'm scared of the government taking away currency and the dollar going down, which is not something I personally subscribe to. But I can understand why people would be hesitant and why it could cause some anxiety for some people. So having some sort of tangible like asset, whether that be collectible or art or something to hold a store of value, I think that's one kind of area. And then I think the other thing is gold has gone a massive run the last like year and a half, ish or so. And I think general heightened tensions with the election and politics and just overall around the world, people have seen gold as like a place to park a little bit of extra investment cash. So I think people typically go for physical gold just because it has a premium over buying the regular etf. But you could obviously just go buy an ETF and get the same exposure. So I think it's just kind of choice there. But obviously there's some collectability and some coolness. So just holding some gold in your hand, I think it's always cool to be like, oh, it's like a gold bar. That's a fun thing.

For all that though, full disclosure for people listening in my idea, a 1 ounce gold bar that costs, you know, 2,500 plus dollars depending on where the price is when this comes out. Always seemed like it was gonna be a lot. And then I picked it up and it's like the size of 10 playing cards. And that's in the plastic case, out of the plastic case. It's two postage stamps wide and like a quarter of an inch high. So I just had this idea when I went to Costco the first time and bought a gold bar. And I thought, oh, I'm gonna have this big gold bar and bring it back home. My wife was like, well, make sure people don't see you carrying it around the parking lot. And I was like, it fit in my pocket. It's about the size of a credit card.

Yeah. And people often get confused of how dense gold is. It's quite a dense metal. Even when you compare it to something like silver or palladium or platinum, it is much, much smaller. Like an ounce of gold is heavy. You can feel it in your hand. And sadly, we don't have a kilo bar here, but you were to have a cell phone made out of gold. That's basically what a kilo would feel like. But it's quite Heavy. You feel it and you've got some heft to it.

So you mentioned you're 22. I imagine most people are thinking someone who loves gold and thinks about it a lot is closer to 75 or 80 than 22. How did you get into this?

I got into this basically because of my dad. He likes buying and collecting different stuff, and he introduced me to coins. I was a kid, I used to go to coin shows in North Carolina. That's where I was originally from. You go and there's a whole bunch of people you'd see from places you've never heard of, and they just have all these coins in front of you. So I would always look for Chinese coins, but he was interested in buying gold. This was a bit after the 2008 recession, so obviously, I think there was some fear and anxiety in his mind on, like, how to keep assets stable. He always wanted to include me in what he was doing. And so I was able to figure out very quickly that you can make a lot of money on coins. And so I would just start flipping Chinese coins back to China. And it was super fun and made a lot of money as a kid.

So, out of curiosity, making a lot of money as a kid, what is that, like, tens of dollars, Hundreds of dollars?

My biggest score as a K, I made like 10 grand off of a coin that I had bought for 400 bucks. And so I was probably in, like, seventh grade, and I had bought this Franklin half dollar, just like basically generic silver coin. And it was graded already. So it was in one of the holders that, you know, PCGS or NGC or like grading companies, same as sports cards. You can get them certified and have a specific number attached to it. And so I was able to get that number upgraded pretty quickly by using different techniques that restoration people would use. So I was pretty good at doing what they would call just coin restoring. So I'd be able to identify it, get it, regrade it, and then be able to sell it again. That's a specific path that a lot of people do in the coin industry to make a lot of money. So you can do that at higher volume or lower volume, depending on your budget.

So, yeah, and that's allowed. It's not like a gray area.

You don't go around telling people you're a coin doctor. You go around telling people, hey, I'm a coin dealer and I have nice coins, and here they are. Obviously you're not going to disclose all of this information of how you've done it to people. And so the trade secret, I guess to like why some coin dealers are better than other coin dealers. But that's particularly with rare coins. I think generally like the other stuff is more of bullion, which is boring to them. That's how they perceive bullion in this.

Realm, maybe cover the difference there. How does that market compare? What are the different aspects?

Most rare coin collectors would describe them as numismatists. Like they are the collectors of rare coins. And bullion sort of branches into numismatics and the fact that there are coins that are bullion that happen to become rare. A gold buffalo could become rare if the mintage is low. And that's happened. Some gold eagles are worth like two to three times their spot value just because they're rare and people collect them. But modern markets are a little bit different in the fact that a lot of them have to be graded. They have to have that stamp of approv. They're a 70. A 70 is the perfect grade. But for rare coins it's very rare that you would see anything above a 67. A 67 is like quite a nice rare coin. And rare coins are usually not traded upon their spot value. People really just don't care. You could have a $20 Saint Gaudens, which is essentially the equivalent to a gold eagle these days, but it could trade very differently than a gold eagle does just because appeal and the scarcity as well as just people may like it better than the other one, so they pay more. So I think it's more unique into that fact. So it's hard to quantify why someone would want to pay more for the gold value. But I think it's just as there is with art. People will pay more just because they like it.

Now when it comes to actual gold, similarly, there's no intrinsic value, right? This isn't an income producing asset, but it has a value. How is bullion and gold kind of more broadly than just rarity and coins valued and priced?

The first thing that people look at is is it denominated, is it an actual coin or is it a bar? So I think for a buffalo and an eagle, they're actual $50 coins. So they have a little bit more use case in people's mind.

Now obviously I paid way more than $50, but worst case for this buffalo, I can take it to the US government or a bank and get $50 from it.

I mean theoretically you could go to Taco Bell and buy some tacos with that would cause some problems if you tried to do that. There's like random YouTube videos out there of people being provocative, trying to turn in their gold at some random fast food, and it just doesn't work out. But generally people start from who made the coin or bar. And so for bars, that's like the assayer versus the coins, the mint. So you just want to be able to make sure it's like a reputable assayer, a mint. And obviously the United States man and Pamph Suisse are like quite reputable and so their name brand. But people generally look for is it a government coin? And then if it's not, is it a reputable assayer?

An assayer is the person who creates the product.

An assayer is the person who refines and actually produces that bar. So for Pamp Suisse, they are the assayer and refiner. So on every bar you can see who is the actual assayer of that place. So on the back there'll be a signature of that assayer. Not exactly sure who it is, but there is a certified assay on there.

Alana.

Yeah, Elana. Shout out Alana. You can kind of generally see is it reputable based upon that. And then from there it's just choice of design. So people kind of look and they're like, what is the design that I like and what will hold the most value? That's the question I always get from people who are quote unquote investors in gold is what will always have the most resale value in the future. And generally the more premium products like amp fortunas and buffaloes and eagles have that extra added value. Like you're always going to be able to get a certain value pretty close to the spot value. If you hold one of those. Compared to OPM Metals, that's a random brand that's like unaccredited now. And you're not going to get very far over the spot value. Like essentially that's going to be melted down. But premium product like fortunas and buffaloes are always going to have the value of the gold plus maybe a little bit of premium value just because there is that inherent resell and the value of the gold.

Talk a little bit about spot price and how that market works.

Spot price is a little bit different than your general stock trading hours. So every Sunday at 3pm EST when the market opens. NRI said overseas there is gold trading starting then. So people who are very serious about the market and following it will be at their computers ready to go at 3pm on Sunday. And so you have 3pm on Sunday, 24 hour trading all the way until Friday at 3pm so it's quite some time that you have to be kind of involved in the market. So in the middle of the night the whole spot price could move up or down at 50 to $60 and you would never know until you'd wake up in the morning. Unless you're like trading overnight. I would say the larger physical traders are fully hedged. Like they have zero risk to the market or very little risk. So they're trading on what we call the premium. So the premium is just basically like our positive or negative markup on the actual physical items themselves. So like buffaloes are like between 2 to 3% premium right now and Fortunos are between 15 to $30 premium. Essentially. They're always trying to make a spread upon what that premium is rather than the spot price itself. I think this is a little bit different than general investors perception because the general investor perception is like what is my all out price that I'm going to get? And you would quantify that by the spot price plus or minus the premium that you would have. So it's a little bit different between the two.

So someone's actually making a bet that these gold buffalo coins are going to be worth more than spot price in the future and so they're kind of not worried about what the spot price of gold does. Whereas I'm imagining a retail investor buying gld. The ETF is solely concerned with spot.

Yes. Yeah, it's like literally the opposite mindset between someone who is like actually a trader of physical metals versus someone who's a retail investor of the gld. The physical traders, they're trying to create a supply and demand market based upon what the scarcity of that specific item is. There are some really interesting items that Costco could easily offer that actually fluctuate quite a bit. We quantify those as like proof gold. So it's like a buffalo, but it's in a collector strike version. And so the background of the buffalo is actually like a high polish versus we would call that like a burnish strike. So people would trade these collector coins at a higher premium and they'll fluctuate quite a bit. They'll go from $200 an ounce over to $500 an ounce over, depending on like how the spot price is moving.

For the average person who's like I want to invest in gold, I think it's a good hedge against inflation. So I'm buying gold ETF or even buying gold bars. What's causing that spot price to move.

Yeah, it's a little bit beyond my control of how I think about it, but I think generally it's economic data that comes out nearly every FOMC meeting. There's some movement, but I mean, that's the same in stocks. Some stuff will go up, some stuff will go down, and then geopolitical tensions. We'll kind of always have our eye on different stuff just to make sure that whatever hedge position is open is staying clear of different events. General market makers obviously are selling to like larger people. They always try and mitigate risk by understanding all of this data, but to a retail investor, I think it may be a little bit beyond our control.

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[Chris Hutchins]

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[Trey Benedict]

It's not too dissimilar to most speculative assets, right? Like bitcoin is priced at what it is mostly because of supply and demand. Yeah, but when you said a lot of the traders are trading these coins, do you mean coin traders or do you mean like the JP Morgans of the world?

There are a couple larger firms that trade physical metals. Not really as much as they used to. Scotiabank used to be a pretty large trader of metals and HSBC is still pretty big. But their access is very, very limited. Like they still run a physical trading desk, so you can call them up. They probably tell you, hey, you need some enterprise account trade with us, if you have the means to do it, you could possibly buy from them and maybe even sell to them. But it's very difficult now just because people running physical gold desks is a thing of the past. It used to be quite large in like the 80s and 90s, but nowadays like most of it's done on computers and warehouses that we would never know where they are.

And when I'm buying GLD or something from my computer on my brokerage platform, is there physical gold somewhere?

Yeah, so there's a couple different types of gld. There's allocated versus non allocated. So somewhere around the world in some Comex depository, there's probably 400 ounces worth of gold allocated to a contract. And so essentially you're buying the right to the exposure of that bar. People actually enacting physicals and converting contracts and waiting till expiry is a little bit rare. I have seen particular instances where contracts need to be backed. And so if you have an opportunity to play at a larger gold market, you can end up backing contracts. We call it like the EFP exchange or physical gets into a negative zone where the ETF price is actually higher than the physical price. There's a certain amount of arbitrage where if you have physical gold and you can back it in large quantity, you can back these contracts and help a retail investor be able to have that exposure. So generally most of them are semi allocated, so you're buying the right to potential future exposure. So it gets a little bit complicated. Do your own research on which GLD you're going to buy or like what specific ETF you want to play in.

The reason we got connected is that in the last few weeks I've been just exploring this after going to a conference and listening to a talk about Costco Gold. I think the thing that for me kicked it off was the US Mint had this release of a 230th anniversary flowing hair coin. But I picked up a couple. It was almost like everyone knew in advance that if you could just go on the US Mint website and buy this at 9am Pacific, you would make money. And sure enough, that was the case. Talk a little bit about that and how there are opportunities for regular consumers to invest and make money in gold.

Yeah, we've been planting seeds for quite some time on this flowing hair gold coin, like probably a year in advance. This is something that we knew was going to be good from the start. And it ended up being not as good as I thought, but still quite well for the people I think got involved. But essentially the US Mint makes commemorative coins and so they try to commemorate some event in US history which happened to be the flowing hair silver dollar, which is our first silver dollar in the us and they actually did a really good job on the rendition of it. The original silver dollar is like a little bit larger of a size. You know, it has like edge lettering. But the $1794 is one of the most expensive US coins that you could possibly have. I think one recently sold for like $10 million. So it's a very esteemed coin in the coin industry. Everyone knows that's a really great coin. So when the US Mint decided that they were going to put that on the product schedule, we immediately knew that's going to be really good. And it kind of started with the silver medal. I don't know if you bought the silver medal prior to.

I didn't.

Yeah. So they silver counterpart, which they had basically created this lottery out of. And the Mint's been doing a great job on making consumer coin releases like limited drops. They've basically taken the supreme model and made it for the US Mint, which is amazing. Old boomer collector people hate the Mint doing that. But I think that it's the best way to get people into coins because obviously now we're talking about it, it makes no sense that we would be talking about a limited coin release unless it was sold out and there was a resale market and there was all this like hype gener around it. But the silver medal had this privy mark, which is something that the Mint has done in the past. And they basically randomly put in 1794 of these privy marked coins into the 50,000 that they sold. Those privy marked coins are worth four grand now. The retail was $100, so some people instantly could pay their rent, could pay groceries for like a year. They had all this excess consumer surplus from buying this coin for $100. So I think people got really excited about the gold one. The sad part is they didn't do a privy for the gold. They're actually auction and they're going for ridiculous prices right now. But the gold ended up doing very well because the design is just good. Like it's just hands down, like a very nice design. A lot of coins we see come through the platform and when we got the first one in, that was kind of the reaction that we had. And I think it's been a while since I've actually liked a coin that the Mint has put out. Maybe some other people that are more familiar with coin releases, they would call this one a dud in comparison to the other ones. Because in 2020, which was like what I would consider peak coin market, they had released a privy gold eagle proof gold eagle and the retail was $2,000. And that coin sells for like 20 grand in a perfect 70. Now they're very, very hard to come by.

But if you were relatively tech savvy, sitting at your computer the day it launched, would it have been easy to get one?

Yeah, if you can buy like Amazon in two clicks, you're fine. Like, your competition is very low. And a lot of numismatists that are interested in modern coins are likely not your most tech savvy people. So it's a little bit difficult to have them go on and buy a coin. So I think that's why they're probably upset that they had to buy them on the aftermarket. Generally the process is making an account, putting your credit card Info in, waiting until the drop time and then just going to hit buy and then hope that the order goes through. So I think it's pretty easy to be able to do it.

How often does the US Mint release something that exciting?

Generally once a year, and it's kind of at the end of the year. Some years you may get really lucky. And like for instance, 2020, every single product that came out was good. Every single one for like eight releases in a row.

And so they do multiple releases a year. But the hyped one that's exciting is towards the end of the year they.

Have their continuing series and they'll release those every year. And sometimes the continuing series can be very good. Like I said before, like proof gold can end up being a very good release. And generally that's because supply and demand dealers want more supply to sell to their retail customers, and so they want to create a market for buying these. But yeah, at the end of the year, around November, there's always one coin that catches everyone's eye and they didn't do it in 2022, which was kind of sad. So there's like a lull period. 20, 20, 2021 were good. 2023 had a release that was not as popular, but still did well. And then 2024, obviously the flowing Hair coin. So we don't really know what's going to come in next year until maybe about a month from now. And then I can tell you that one might be okay. And then we need to wait for a little bit more info. But I mean, I had been writing about the Flowing Hair coin since June and I had mockups done and everything. And then everyone started using that. So I think it was really good for us to be able to be. And then we also got a little bit of insider stuff just because we're a bulk supplier of the Mint. So we can see a little bit before the public sees what the mintage is going to be and what that coin might actually look like. And so I think it's always good to share that info as it comes out so people can see what are they actually going to buy. And I think they didn't release the product images until two days before or something. So it was very strange release for this one.

I don't think I got into this release until about two days before, so I missed the whole backstory.

There's quite a backstory. And obviously our drive is that we have to create a supply and demand for that specific item and obviously people can sell it on eBay or locally or all this other stuff. But I think we were trying to take a StockX approach to it. And the fact that StockX would promote releases prior to when they come out ended up working quite well. I mean, on par with ebay sales and hopefully trying to continue that. So I think just having more outlets is also good.

So what you've done with Pure, my experience, I don't hold any shares, I have no equity here. But you started basically, as I would describe it, as a marketplace for buying and selling gold that operates a bit more like an investment marketplace where there's a bid and an ask and you can see the order book. But if I remember right, I could actually sell my Flowing Hair coin before I even got it.

When we originally started Pure, we were actually trying to tackle this mint problem just because we had bought and sold a lot of coins on the mint prior and there really isn't a lot of liquidity. Like without Pure as it exists right now, you go on ebay and sell it. But then there's obviously complications with what you're going to do on ebay and a lot of people do well there. But we've started listing the Costco Skus as like a haha funny sort of thing. And it ended up working quite well because obviously people need liquidity for specific bars. And I think the other thing was that we were able to tackle the premium problem really well because most people would define the gold bars as generic, but the difference between a Fortuna and a Koi is actually like 15, 20 bucks. And I think that kind of makes a difference to a lot of people considering that spot premium is literally that. And then we had gotten back to our original roots when we started doing the Flowing Hair coin. It was really cool to see how the market opened. And we just let people trade from the beginning. Obviously, like some people canceled. So on the back end of things, we had a couple coins live to be able to make sure buyers were whole just so we could like play around with the market. But generally most people are pretty nice and happen to follow through on their things. I obviously think our onboarding makes people like, hey, I need to be able to fulfill this. We let people trade as they would, just to see how it would go. I know a lot of people started reselling and so we didn't allow any resales. But right after the release, if you had a confirmed order, we were like, hey, that's fine. So some people got canceled, but we made the buyers.

Also, when it comes to Costco, since you mentioned it. This is kind of where I got into this a little bit. Basically, Costco is selling gold bars at checkout.

Yeah.

More so on certain days of the week than others. And there's a pretty active market for selling them. So if you walk into a Costco, you could buy a gold bar and you could probably go on pure and sell it before you even get to your car.

Yeah, there is quite a lot of liquidity for Costco items, I think to the fact that Costco may be selling more than they originally anticipated. So they've in turn created this after market where people want to buy these bars. And whether that be at Costco or not at Costco, people need them for different sales activities or investment activities. They've really put gold in this mainstream. I think obviously news outlets have covered this. Like Costco gold is selling out in 10 seconds. But generally you could just walk into a Costco. I think they have a product limit or something, so you can't go in and buy all of them, but you could get five. And the prices are quite good. Like, I'm pretty sure they're selling them at a loss. We get pretty similar distribution from pamp and the cost per bar is quite high. So I'm sure that they have whatever special deal that they're running. But it seems like it's another chicken bake or hot dog situation. But Instead it's a $2800 gold bar that they're able to push. But I think generally for our community, it's been good because prior to this, you would have shady investment quote, unquote gold firms call you up and be like, hey, do you want to liquidate your retirement account into this? And people are like, oh, that's horrible. So in Costco created a really good entry market for people who are curious. And it's a familiar store.

And I think if you look at the price you're going to pay in Costco and you look at the price you can sell on pure. And this is something I've been monitoring closely. Just to be clear, if you go buy your Costco gold bar with US dollar cash, you're not putting on a credit card. You're not a Costco executive rewards member getting 2% back. You're just looking at what's the retail price for Costco gold, which in most states is not subject to sales tax. And then you look at the pure price that you can sell it at and let's net out the fee. You guys charge a fee that's very reasonable. I think For a Costco gold bar, it's like 0.75%. And if you did a lot of volume, it would come down. And you're not going to make money, right. On most days.

Yeah.

But Costco's executive rewards program, if you have the $130 membership instead of the $65 membership, you get 2% back on all your spending at Costco. From watching the prices the last, I don't know, month or two, Just personally, the delta is usually within that 2% band.

Yeah.

And so if you buy a gold bar at Costco and you turned around and sold it right away, that 2% Costco executive rewards that you pay $130 a year for will close the gap on any amount that you might lose selling it. And then an added bonus, Costco will let you pay with cash, with a debit card or a credit card, and so you get those rewards as well. But I think if you just forget the credit card rewards for a second, there's actually a profitable buying and selling gold, and then the credit card rewards would be a bonus.

We've created a lot of tools in our passing time to be able to help people understand where the price point lies compared to what the active market is. And there are opportunities where it's just mispriced. Like, you go in and it's a hundred dollars below where it should be.

And that's the. With these gold buffaloes, I was looking on Costco's website, I joined a couple slacks, then discords where there were Costco gold notifications, and one popped up and said, these buffaloes are available. And I went in and I ordered five of them. And then I looked at pure at the same time. And the price I paid at Costco was less than the price I could sell them for. In a moment. Not factoring in executive rewards, not factoring in credit card rewards. I actually made money buying this coin from Costco and selling it.

Yeah. It's created a drop ability to these releases. Like, people are waiting and waiting for restocks. And it just reminds me of the sneaker era, where people are buying yeezys and things like that. I think it's cool to see that came alive in, like, a different market. And obviously Costco makes a lot of money in other sectors. And I think that their kind of play is just volume. Like, how much can they sell? Being able to do hundreds of millions worth of gold a month, they've got to be like, top three in the industry now for how much sales they're doing. It's a lot and they've came onto the scene in a different and larger way than most other people. But there are some people breaking into Walmart now.

Yeah, I have seen that Walmart also sells gold, but not as competitive as a price as Costco.

Definitely not as competitive. But Walmart's model is a little different than Costco's model. Obviously Walmart doesn't sell gold in store and Walmart's more of online marketplace than anything. Taking cards on gold is incredibly risky area. You know, you have one person charge back and it's the whole nightmare. So I think from our perspective we tend to stay away from that area because a lot of people have asked us why don't you just open pure to add cards? And I'm just like I don't want to deal with that headache right now. And larger scale like Costco, Walmart, they kind of have that figured out already and so they're able to offer that rewards to having it in when it.

[Chris Hutchins]

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[Trey Benedict]

And I haven't looked into this, but I want to do another episode on gift card reselling because I actually think there's an interesting market there to similarly buy gift cards that are on sale at a discount and then there are places to resell them online and that can also be a profitable business. But I often see Walmart gift cards at a pretty big discount. And by pretty big I mean 10, 12, 15%. And now it has me thinking, well, if you can buy Walmart gift cards at 15% off and use them to buy gold, could you get a discount on gold?

I think that's the loop. If I were to place a bet on why people would be buying gold at Walmart, I would say that's the reason why.

So yeah, and just to be clear, some of these things might sound like it's all about credit cards, but buying a lot of these discounted gift cards at scale is actually something where you have to pay a fee to use a credit card. So when I look at a lot of these things, things, this is not a credit card points play for buying Walmart gift cards. It's actually a Discounted gift card and gold price play that's independent of credit card rewards. That said, you know, I think for some people the credit card rewards would be a compelling thing. But I actually view both gift cards and gold and potentially some buying group stuff that I won't even get to now as opportunities to find mispriced items at programs where either their currency, that is gift card, is sold at a discount or their membership includes a 2% discount, which full disclosure for everyone is capped at $62,500 a year. So you can't go spend a million dollars on gold.

They figured out their loss for it.

Yeah. They have one thing for people who maybe go to Costco, maybe pick up a few bars and want to sell them and go to Pure, help alleviate some concern they might have with what happens next because presumably they've spent a ton of money. Right. If you bought five bars, you're over ten grand and you're probably going to say, here's a mailing label. Can you send it in the mail?

Yeah.

How do people think about that aspect?

I can understand that. And I think the biggest thing that we've been able to do is obviously everything's open under camera, so like we'll have reports of everything as it comes in. We keep allocated storage of people's orders, which I think is another big thing. People always ask if a package was tampered or lost, is it insured? And we have insurance on all packages. We're using overnight or express mail to be able to make sure it's all good. A lot of people could probably take a packing lesson. So we may produce some videos on that and be able to say this is the way to properly pack your items. Most people think about Amazon returns as like their only other comparison to like when they actually go out to ship stuff. And sending $13,000 in an Amazon box or like a chewy box or like some Huggies diaper box is like a probably a bad idea. So I think we've gotten down that route of how scary can someone package their like really expensive items? One thing is being able to lock the price of the item. I think that's like a big win for the service that we offer, is being able to give you the peace of mind that when you actually sell those items, that price is frozen. I think sometimes people get confused. If it goes down, then they are making money. But either a positive or negative loss, you're on the hook if you don't fulfill those items.

Does that mean that, let's say I sold my flowing hair coin at $4,200 and, you know, two days later, before I even shipped it out or maybe a day later, it's at 4300 and I cancel. Am I on the hook for that spread?

Yeah, you would be on the hook for the spread at that point. Because there's a buyer on the other end. We have to make sure that buyer's whole. We would call that the market loss. If you sell your flowing hair and it goes up to 10,000 and you decide to cancel, like, that spread's gonna be quite large. Obviously we determine, like, fair market value on, like a fair spread. We're not gonna just like pump the prices up to make it look like there's a larger market loss. Generally, I think, you know, the biggest concerns come with shipping, receipt and payment. And one thing that we're trying not to be able to do is be people's bank. That's something that I think pure is trying to actively avoid. And I think some people are trying to use pure as like a way to cash in gold in large quantity to be able to like, turn credit card points. Obviously, some people do high volume, but we kind of moderate accounts as they go. So if you're selling here and there, it's a good activity, but we keep a lot of close eyes on how people's activity are trading over time. Do they have a business set up at the end of the year? Like, what coins have they sold? Are those coins falling under 1099? There's a lot of different aspects that go on behind the scenes. So I think obviously people should be aware of all of these when they're buying them and understand all the different tax implications that have it. Call your CPA make sure that what you're doing is fine. If you're selling it for a loss, make sure you're taking that loss at the end of the year to be able to write it off. So there's a lot of different things that you should probably consider before entering this market. And then obviously there's definitely a lot of money laundering and fraud risk within the gold market. And so from our perspective, we treat everyone as if we give them the blank slate to begin with. You go through identity, you go through a bank account check, and if you don't pass that, then too bad we're not going to be able to take them as a customer.

Yeah, I've seen everything from a guy on WhatsApp that you can message and sell gold to that says, I don't do 1099, I don't do ID verification to a reputable person who runs a company, but maybe doesn't have as big of an operation as you and maybe does do an ID check, but might not do. 1099 all the way to. You are trying to do this as by the book as possible. And so I think there are a lot of options out there. If I could just hand these to you, I would save you some shipping, but I'm gonna ship them off because I want the experience of packing them up and shipping them off. But there are all the degrees of places that you can buy and sell from and everyone has to choose what's right for them. But I did an episode on taxes with a woman who after that episode released as a follow up a video about taxation of credit card rewards and stuff. And I'm trying to do things legally. Right. I'm not trying to skirt any corners. I'm trying to do all the things correctly. And so the fact that you guys are trying to do as much of that as possible feels like a good place for me. Yeah, might not be a good place for everyone else, but I like to do things by the book.

We're still figuring out a lot of the logistics of how to handle a lot of operations as well as the financial operations of stuff. Our company is a little bit over a year old and we've been working on our own playbook for this market because no one has really experienced the growth that we've had in this short amount of time. And obviously this has been propelled by Costco. We just built out a new vault. There's another whole aspect to the operations side of things. And so the biggest thing for me is I like to be able to slow things down, go through them methodically, understand how to do everything in the right way. And we error on the side of caution. If there's an issue with a bank account getting disconnected, we're going to reach out to that person. If there's an issue with something getting tampered, we're going to reach out to that person. We're going to provide as much information as we can. We understand the perspective of what people are trying to do. But generally the Costco segment of customers is one part of our business and we're happy to serve those. But we also have a whole other side of the coin. People, the dealers, the shops and all this other stuff. And the way that that the two sectors do business is very, very different. The expectations are much different, the ability to reconcile transactions is much different. So I think being able to cater to both markets is something that we're learning to be able to do. But I have to keep my mind in two different areas when talking to different types of customers.

Let's jump to the other side. But first, real quick, I'll put a link in the show notes to Pure. Is there anything if we put that link in that someone might get?

We have like a referral program, so hopefully we can set something up.

Yeah, so whatever you come up with, I'll put it in the show notes. But one of the things that I've been thinking about is that other side of the market, people whose family has gold, whether those are old coins or even jewelry, where's the market for that? And I know that might not be something on the jewelry side that you guys participate in, but what advice would you give to someone who finds out that their grandparents or their parents have various kinds of gold and don't want to get taken advantage of?

I always tell people that if they're not comfortable with going somewhere online, then go to your local coin shop. And I'm going to shout out all the local coin shops here because I'm still a big fan of the in person business. I think if you find a collection or you have a collection that's passed down generally on the off chance that there's something quite valuable, a local coin shop could tell you very quickly. The general stance is that doing research on Google is probably going to lead you in the bad way. So I think the quickest and easiest search is just local coin shop and then just go to whatever one has the best reviews. If you're able to decipher what items are what then I think that Pure is probably a great place to go because then you can find your items very quickly. We're happy to help you if you send us photos. There's a network of really good coin dealers and shops out there that are a part of the PNG that's essentially the Professional Numismatic Guild. And they're all very reputable. They have a code of honor. It's very difficult to get in. It's something that should be very prestigious to someone who's around that. And even in the Bay Area there's multiple P and G dealers and most of the shops we work with on a certain level. So I'm happy to point someone to a shop if they're not comfortable with doing online experience. And I do think there is something tangible going in and being able to actually gear someone out and look at other items. And understand the pricing. I think it's a very good educational experience.

I was walking downtown the other day and I saw this giant we buy gold banner. Is that a thing that should deter people?

I think that's the worst possible place to go. I would compare the we buy gold to like the check cashing places. They'll give you your payday two weeks in advance at a thousand percent interest. Yeah, you're going to get pretty raked going through that.

So a lot of these coin stores in the PNG group, you probably can't show up there with a bunch of gold jewelry. Right. They're dealing in coins.

I've worked in shops before and generally most shops also act as a jewelry shop and they probably have a pawnbroker license and they will buy scrap gold. But I think people expect a lot out of scrap gold. Obviously this isn't something you can sell on pure. Like we only take assayed and marked gold. We're not going to take jewelry. There's way, way too much risk and where it's from, what it's going on. So I think the protocols in a shop are probably the best place to go for jewelry. And generally they're fairly good about being on payment and as well as giving you a fair price and giving you an assay for them and stuff. So. And they may even pay you more for stones. If you have nice stones within the jewelry, I think that's also a win. They kind of act as a jewelry store as well and that keeps them in business when the coin industry is not super hot like it is now. So.

Well, I wouldn't have thought that. So I'm glad you said it because I know that there are going to be some people over the holidays find out their family has collections of gold or coins. And with prices the way they've been the last year, I feel like people are probably going to want to figure out what that's worth. And so going to a reputable coin shop. Great suggestion. Where online would you send people to learn more about all of this?

One of them is pcgs, coinfacts. It's a massive database of every US and world coin possible. For pricing, I always look at auctions. So like heritage auctions, stacks, Bowers galleries, those are the big ones. And then just for general information about how to become a numismatist is the ana is money.org and that's kind of an organization that all numismatists should support at some point. And I'm a lifetime member. A lot of other people are lifetime members and there's not a lot of new members coming in, but I always think that's good. And then obviously like go to a coin show, go to a local coin shop, or go to your local coin club. You'll learn a lot. It may be boring for some people, but other people might find it to be very cool and you might meet a lot of of interesting people from the bullion sector that have crossed over into this coin world and maybe you'll be able to make money in the coin world too.

Do you think like garage sales and estate sales are places to.

I think that those have already been fairly picked over, but I think that generally the best place to find coins is just a coin show.

All right, this has been awesome. Any parting words for someone trying to get into the gold thing, things to avoid and common mistakes?

I would just avoid anyone who says the words tangible wealth or I hate the word safe haven. That's like a red flag to me. If someone calls it a safe haven, you should probably look the other way.

Awesome.

Anyone who's fear mongering, bad idea. You want to be able to figure out who's being transparent about their activities and telling you what they're going to make as well as you. So people get taken advantage a lot. So just keep your flags up and just keep it going.

Perfect. All right, thank you so much for being here and I'll Send Everyone Links collectpure.com Awesome.

Thank you.

[Chris Hutchins]

Such a great episode. Thank you so much for listening. I really hope you enjoyed it and if you did, please consider clicking that Follow or Subscribe button if you haven't already. It really helps us out and there's no better way to support us than doing that. Or sharing the show with a friend, colleague or family member or even a.

[Trey Benedict]

Random stranger is totally appreciated.

[Chris Hutchins]

Also, links to everything in this and all other episodes are at allthehacks.com where you can also find all the deals we find as well as links to the top credit card bonuses. Finally, if you have any feedback, want to get in touch or share a question you have for a future Mailbag episode? You can email [e-mail] that's it for this week week.

[Trey Benedict]

I'll see you next week.