Philip Diehl on the Booming Business of Gold Coins

Summary

Odd Lots Podcast Summary: Philip Deal on the Booming Business of Gold Coins

Release Date: May 12, 2025

Podcast Information:

• Title: Odd Lots
• Host/Author: Bloomberg
• Description: Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets, and economics. Join the conversation every Monday and Thursday.
• Episode: Philip Deal on the Booming Business of Gold Coins

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Introduction

In this episode of Odd Lots, hosts Joe Weisenthal and Tracy Alloway delve into the thriving market of gold coins with special guest Philip Deal, President of the US Money Reserve and the 35th Director of the US Mint. The discussion spans the resurgence of gold as a safe-haven asset, the intricacies of the gold coin market, and the evolving demographics of gold investors.

Guest Background

Philip Deal brings a wealth of experience to the conversation, having served as the Director of the US Mint where he was instrumental in launching iconic projects such as the Sacagawea Dollar and the 50 State Quarters program. As President of the US Money Reserve, he oversees the retail of gold, silver, and platinum coins, catering to both government-issued and international coins.

The Resurgence of Gold

[01:38] Tracy Alloway:
Tracy shares her personal connection to gold, mentioning her inherited collection of gold and silver coins from her father. She appreciates the tangible satisfaction of owning physical coins.

[03:05] Tracy Alloway:
Tracy highlights gold's recent performance, noting that gold reached a record high in mid-April, dipped, and is now nearing that peak again.

[03:18] Joe Weisenthal:
Joe comments on gold's resilience amidst market and economic chaos, stating, "Gold is up. So hats off. Yes."

Marketing and Cultural Significance of Gold Coins

[03:31] Tracy Alloway:
Tracy discusses the cultural values embedded in gold coin advertisements, such as the portrayal of gold coins as symbols of security amidst inflation and global instability.

[04:16] Joe Weisenthal:
Joe praises the design elements of coins, noting how they evoke heritage and cultural narratives.

Philip Deal on US Money Reserve and the Coin Market

[05:52] Joe Weisenthal:
Joe introduces Philip Deal, highlighting his accomplishments at the US Mint and his current role at the US Money Reserve.

[06:06] Philip Deal:
Philip explains that US Money Reserve is a retailer of gold, silver, and platinum coins, primarily focusing on US government-issued coins and international coins. He emphasizes their unique marketing approach and distinguishes between bullion and collectible coins.

Notable Quote:
[06:50] Philip Deal:
"Gold has performed extraordinarily well over the last 25 years in both good times and bad times."

Launching the Sacagawea Dollar

[08:13] Tracy Alloway:
Tracy inquires about the factors that contribute to a coin's popularity.

[08:45] Philip Deal:
Philip outlines the key elements: denomination, metal type, and design. He recounts the successful launch of the Sacagawea Dollar, attributing its success to a compelling design inspired by American history and strategic market research.

Notable Quote:
[11:05] Philip Deal:
"We produced over a billion Sacagawea dollars in the first year, distributed primarily through Walmart, which led to an enormous success."

Challenges in Coin Circulation

[15:28] Philip Deal:
Philip discusses the logistical challenges in introducing a new coin denomination, such as ensuring widespread acceptance and overcoming resistance from banks accustomed to handling bills instead of coins.

[17:11] Joe Weisenthal:
Joe appreciates the entrepreneurial spirit required to successfully launch a government-issued coin, comparing it to a commercial product launch.

Supply Chain and Pricing of Gold Coins

[18:13] Tracy Alloway:
Tracy questions the factors that determine a coin's value, distinguishing between precious metal content and collectible value.

[19:56] Philip Deal:
Philip clarifies the different categories of coins: bullion, collectible (numismatic), and commemorative. He explains that bullion coins are sold at premiums over spot prices due to their metal content, while collectible coins command higher prices based on their rarity and design.

Notable Quote:
[21:55] Tracy Alloway:
"Would an American Eagle count as a bullion coin or a finite collectible item?"

[22:04] Philip Deal:
"There are two versions of the American Eagle: the bullion coin, produced in large quantities, and the proof gold eagle, a collectible with a higher premium."

Retail Business and Market Dynamics

[28:20] Joe Weisenthal:
Joe transitions the conversation to the business side of selling gold coins, inquiring about the relationship between gold prices and consumer demand.

[28:48] Philip Deal:
Philip confirms a strong correlation, noting a significant increase in demand alongside rising gold prices.

[29:18] Philip Deal:
Philip discusses the shifting demographics, revealing that younger generations like Millennials and Gen Z are showing greater interest in gold than Boomers, contrary to previous trends.

Notable Quote:
[32:37] Philip Deal:
"Gold is the ultimate safe haven. It's been around for 5,000 years and has always had value worldwide."

Gold vs. Silver: Investment Considerations

[34:38] Tracy Alloway:
Tracy asks whether one should invest in gold coins versus gold mining stocks.

[34:43] Philip Deal:
Philip explains that mining stocks often underperform gold due to increasing mining costs and geopolitical risks, making gold a more reliable hedge.

[39:35] Philip Deal:
Philip differentiates between gold and silver investments, highlighting gold's role as a pure hedge against economic downturns and silver's susceptibility to industrial demand.

Storage and Security of Physical Gold

[36:57] Joe Weisenthal:
Joe inquires about the supply chain for selling large gold bars and their secure delivery to customers.

[37:22] Philip Deal:
Philip outlines the sourcing process from major refiners and wholesalers, emphasizing the competitive nature of the market.

[37:48] Tracy Alloway:
Tracy raises concerns about the storage risks of physical gold.

[37:55] Philip Deal:
Philip addresses storage solutions, suggesting safe deposit boxes as space-efficient and secure options for holding substantial gold values.

Designing Coins and Legislative Considerations

[24:45] Tracy Alloway:
Tracy probes into the balance between profitability and design in coin production, referencing debates about the penny's existence.

[25:30] Philip Deal:
Philip discusses the constraints imposed by legislation on coin specifications and the economic implications of producing coins like the penny, advocating for its elimination due to negative seigniorage.

[41:53] Philip Deal:
Philip shares his experience in writing legislation that allowed for the creation of a platinum coin, inadvertently leading to discussions about the trillion-dollar coin.

Notable Quote:
[43:27] Joe Weisenthal:
"Philip Deal, you know, I consider you a hero because I never really worry about the debt ceiling being breached because I know that ability to mint a trillion-dollar coin could come up and that will save us in the end."

Conclusion

The episode concludes with hosts and Philip Deal reflecting on the timeless value of gold, the importance of thoughtful coin design, and the evolving landscape of gold investment. The conversation underscores gold's enduring appeal as both a physical asset and a cultural symbol.

[45:14] Tracy Alloway:
Tracy encapsulates the discussion by likening coins to "physical memes" that transmit cultural values and ideas.

[45:22] Final Remarks:
Joe and Tracy wrap up the conversation, highlighting key takeaways and inviting listeners to explore more about the gold coin market through their platforms.

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Key Takeaways

• Gold as a Safe Haven: Consistently performs well in both stable and turbulent economic times, making it a reliable investment.

• Design and Cultural Significance: The success of gold coins like the Sacagawea Dollar hinges on appealing designs that resonate with cultural and historical narratives.

• Evolving Demographics: Younger generations are increasingly interested in gold, challenging previous trends dominated by older investors.

• Market Dynamics: Rising gold prices correlate with increased demand, while mining stocks may underperform due to higher operational costs and geopolitical risks.

• Investment Diversity: While physical gold offers security and tangible value, diversification remains crucial in any investment portfolio.

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Notable Quotes with Timestamps

• Philip Deal [06:50]:
  "Gold has performed extraordinarily well over the last 25 years in both good times and bad times."

• Philip Deal [11:05]:
  "We produced over a billion Sacagawea dollars in the first year, distributed primarily through Walmart, which led to an enormous success."

• Philip Deal [21:55]:
  "Gold is the ultimate safe haven. It's been around for 5,000 years and has always had value worldwide."

• Joe Weisenthal [43:27]:
  "Philip Deal, you know, I consider you a hero because I never really worry about the debt ceiling being breached because I know that ability to mint a trillion-dollar coin could come up and that will save us in the end."

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Conclusion

This episode of Odd Lots offers an insightful exploration into the booming business of gold coins, enriched by Philip Deal's extensive expertise and firsthand experiences. From the strategic design of coins to understanding the nuances of the gold market, listeners gain a comprehensive understanding of why gold coins remain a coveted investment asset.

For more discussions like this, visit Bloomberg Odd Lots and join the conversation in their Discord community.

Transcript

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[Joe Weisenthal]

News hello and welcome to another episode of the Odd Lots Podcast. I'm Jill Weisenthal.

[Tracy Alloway]

And I'm Tracy Alloway.

[Joe Weisenthal]

Tracy, you've actually benefited a little bit from this move up in gold lately, right? You're a bit of a bullion hoarder, right?

[Tracy Alloway]

I thought you were about to call me a gold bug.

[Joe Weisenthal]

I know you're not. I know you're not a full on gold bug, but you're like gold bug adjacent or silver bug adjacent or something like that.

[Tracy Alloway]

Let me just be clear. I have inherited my long gold position, I guess, and silver as well. So for some reason every year for my birthday and for Christmas, my dad gives me either a gold coin or a silver coin from personal collection. I he got it in his mind that like I, I really enjoy coins, I guess and now I kind of do it. There is something satisfying about having physical coins and sitting there and I don't stack them on YouTube or anything, but I do like to check occasionally that they're still there. And I do get a little bit of satisfaction when, when I look at my little, my little pile of gold and silver.

[Joe Weisenthal]

I have to say, you know the one thing I I don't own any physical gold. I do like the idea of owning a bunch of silver and stacking it on a table and doing a YouTube video about that. Everyone should go look at the silver stackers on YouTube, which are great. I would be scared. You know, you could like bury them somewhere like out in the wilderness of Connecticut, I would be scared to hold a lot of bullion on my person, and then I would be scared to hold them in a bank, because if everything goes bad, is the bank even going to be open in a safe deposit box? So I like the idea, in theory, of having a lot of precious metal. Anyway. Precious metal has been doing really well lately.

[Tracy Alloway]

It has. I was just looking at a chart of gold. So it hit another record high just at sort of mid April, and then it came down quite a bit and now it's up again. Like, we're almost back to that record.

[Joe Weisenthal]

It's pretty extraordinary. Gold is sort of living up to the hype because there's all this chaos and everything in the markets and the economy and politics and gold is up. So hats off. Yes.

[Tracy Alloway]

You know what I like about gold?

[Joe Weisenthal]

Tell me.

[Tracy Alloway]

I like the advertisements that you see on tv. And the interesting thing to me is, like, obviously the companies that are doing those ads are pitching an investment, but so much of the investment pitch is sort of mixed up with cultural values.

[Joe Weisenthal]

Totally.

[Tracy Alloway]

So, for instance, I was watching one earlier in preparation for this episode, and they were talking about how when you're walking down inflation boulevard and global instability avenue, you really need the safety of a gold coin, which not only represents security via gold, but also the security of the United States of America. Like, you get all these cultural references wrapped up in coins.

[Joe Weisenthal]

100%. And every coin has its design and it evokes all this stuff about heritage and everything. Anyway, I'm really excited because we actually do literally have the perfect guest because it touches on many things that we're interested in. It's someone who I've actually known for a while, I've talked to before, someone who we're going to talk about coins, but we're not going to talk about. Well, let's just.

[Tracy Alloway]

My most hated coin.

[Joe Weisenthal]

Yeah, See, there's one coin that Tracy hates. So we are going to talk to Philip Deal. He is the president of the US Money Reserve, which sells gold. He was also, I think, one of the great mint directors in US history. He was the 35th director of the US Mint who, where he, among other things, had numerous accomplishments. He was instrumental in the Sacagawea dollar a dollar coin that was very successfully sold to collectors. He was behind the 50 state quarters project, which, if you remember the 90s, they made a quarter for each of the states. Turns out our producer Dash, has all of the 50 state quarters, which I didn't know. And we're not going to talk about this although maybe relevant again with the debt ceiling come up. He was also the one that got the language in the law that in theory allows for the creation of a platinum coin of high denomination which could be used to circumvent the debt ceiling. We're not going to talk about the trillion dollar coin on this episode. We are going to talk about gold coins. Philip Deal, Thrilled to have you on to talk now. Appreciate you coming on odd lots.

[Philip Deal]

It's great to be on. I've looked forward to this.

[Joe Weisenthal]

I'm so excited. Tell us about where to start even just tell us what the US Money reserve is so people understand where you're what is the business of the US Money reserve?

[Philip Deal]

We're a retailer of gold, silver and platinum coins to the US market. We sell mostly US government coins issued coins but also coins of other nations. We are probably in the upper mid level of the marketplace and I'd say that we're different from our competitors because we market very differently. I have a very different approach from the what is typical in the industry. This is something that I've really focused on for the last several years. For example, all of those advertisements that really harp on the end of the world and how gold is your go to investment for really hard times. A lot of that is meth. And when you look at the record, gold has performed extraordinarily well over the last 25 years in good times and bad times. And a great example of that is right now. Of course this has been a hard year for stocks and stocks are down probably the last time I checked. Course this changes daily, but down about 7%. And gold is up 27% this year. But last year was a great year for stocks and stocks were up 23%. But gold beat it. It's 28%. And when you look back over the last 10 years, 5 out of 10 year gold has been beat the S&P.

[Tracy Alloway]

500 to this point. My mom asked me last year if she should invest in gold and I hate, I hate it when family members ask you these kind of questions because I'm not in the business of providing investment advice. But I told her, you know, sure, why not? Just don't put all of your money in gold. And now fast forward like eight months. She's mad at me for not recommending that she buy even more gold. She took apparently a conservative position and should have bought more. But maybe I'll start with my most, my biggest question which is what makes a coin popular?

[Philip Deal]

Well, a number of factors go into it One is the denomination for obvious reasons, the bigger the better. Also the metallic matters, gold more popular than silver. And design also is hugely important. And this is something that we really played on with the Sacagawea Golden Dollar. It's important that a coin be distinguishable, that it not be confused with another coin. The Susan B. Anthony had that reputation with confusion with a quarter. Also, the design was not a popular design. Susan B. Anthony was not attractive on that design. So one of the things we wanted to do when we introduced the new dollar coin was to find a topic that the topic itself would be hugely popular. And the book Undaunted Courage had come out probably about a year before we launched that coin. And of course a part of that story was the story of Sacagawea and her role on leading the Lewis and Clark expedition across the Rocky Mountains. And that had really captured the imagination of Americans and especially the story of Sacawea carrying her infant son John Baptiste on her back through that entire journey. And we ended up having the design competition for a design that fit that theme. And we ended up with a beautiful design done by Goodacre. And as a result also we, we did a lot, a lot of market research on what would be necessary to make this coin successful. And when we launched it through Walmart, they, they had people standing in lines around blocks all over the country. We had something like 150 million of them distributed within the first month. And it was an enormous success. But one of the things that is always a challenge for a dollar coin in the United States is you've really got to withdraw the dollar bill when you introduce the dollar coin. And that's been the case all through the western economies where the high denomination bill has to low denomination bill has to be eliminated. When this high denomination coin comes in.

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[Tracy Alloway]

Do you actually measure the success of a coin? Because if I think about something like the Sacagawea dollar you're talking about initially there was a lot of interest in it, but I think like production didn't last for very long and there are some people out there who would say actually it wasn't that popular with investors or Americans over the longer term, yes, really.

[Philip Deal]

A circulating coin like the Sacagulia Golden Dollar is successful if it circulates. If Americans in in commerce. And we saw but one of the challenges you face is a timing of the pump. Unless you get a lot of coins in circulation immediately, then it doesn't really enter circulation. And one of the constraints that coins face is the change tray in a cash register. At least that was the case 25 years ago when we were launching the Golden Dollar. And there's not really place for a new denomination coin unless that is made by the commercial entity, like by taking a quarter rolls out of one of the bins. And so that was the first big challenge that we faced. And you would think that it would be relatively straightforward because the Federal Reserve is our customer, the US Mint customer for circulating coinage. The US Mint produces the coins, the Federal Reserve purchases them at a markup. Believe it or not. US Mint is a profit making enterprise and then they are distributed around the country and then banks purchase them from the Federal Reserve. But when we went to the Federal Reserve in part of our market research and talked to the banks, they still remembered sort of the disaster that the Susan B. Anthony launch had been 20 years, actually 40 years earlier. And they said, well, all you have to do is prove to us that this coin will be accepted by the American people and then we'll order it. Well, that was a catch 22 for us because of course unless they ordered it, we couldn't make it work.

[Joe Weisenthal]

Right.

[Philip Deal]

And so I ended up going to Walmart and asking if they'd be interested in launching the coin in all Walmart and Sam's locations on the same day at the end of January 2000. And they caught the vision of what that would mean and was a huge success for them. And we produced over a billion secondary coins in that first year and distributed them first through Walmart. We had a contract with them to provide 300 million Sacagaweas and we had to go back to them after the first half had been delivered and say we need to be, we need to be let out of the second half of that because now the banks are calling and they haven't ordered any and they're really unhappy that customers have come to them. They don't have the Sacagoya and they're calling the, the Secretary of the treasury and the head of the Federal Reserve and complaining. So we want to, we want to take care of them as fast as we can. So it was an enormous success and not just because people collected it, but because they were also using it. But banks don't like coins. Yeah, they like bills. They don't like coins because coins are more expensive for them to handle, to ship. And we expected that there was a natural resistance to it. My term expired in early 2000, so psychedelia lost a champion at the top of the Mint at that time. And it, and the momentum was lost over the next several years.

[Joe Weisenthal]

Tracy. I could listen to like technical detail stories. Public. Yeah, and like, you know, the fact about change trays and the, you know, and how difficult that is. I could listen to that for a really long time. Also what I appreciate about this story is the sort of the entrepreneurial ism involved of like having to go out to the Walmart and the Sam's and.

[Tracy Alloway]

It'S like a product launch.

[Joe Weisenthal]

Yeah. Which we don't normally associate with anything in the government for the most part except you know, the Mint is unique. Also, of course, you're a policy entrepreneur. But we're not going to. We're not going to talk about that specific area of the trillion dollar coin. Okay. I'm on the US Money Reserve website, and I see that you have a one right, at today's price is a 1 ounce gold American Eagle type 2 coin for $3,809.71. A 1 ounce South African gold Krugerrand. Something very sexy about holding Krugerrand specifically. I've always thought that's $3,806.31. Same price for the Austrian gold Philharmonic coin.

[Tracy Alloway]

Ooh, I have one of those.

[Joe Weisenthal]

Really?

[Tracy Alloway]

Yeah. And I have the Maria Theresa gold coins, too. I probably shouldn't say this on a podcast.

[Joe Weisenthal]

You have 100 of these coins.

[Philip Deal]

Don't give the location at home.

[Joe Weisenthal]

Yeah. And then also some silver coins that depict battles. But I want to just ask a little bit about the sort of basic supply chain here of some of these coins. So these are official government coins that the US Mint still produces and then sells them to some distributor at a markup, and then you sell it at a further markup. Is that basically the gist of how these coins come into existence?

[Philip Deal]

Yes, just like any other product. And you're exactly right that we, we had treated a number of new products as typical commercial product launches. And so just like any other product, the manufacturer has a markup, the distributor has a markup, and then also the retailer has a markup. And that's true for all bullion coins that are produced by other nations as well. And it is a competitive market. In the US you can purchase any number of bullion coins produced by other nations, and they market them in similar fashion and mark them up in a similar fashion. It's a very competitive market.

[Tracy Alloway]

So speaking of markups, one thing I've always struggled with when it comes to coins is how much of the value is derived from the actual precious metal content, whether it's gold or silver or platinum, versus how much of the value is derived from the collectibility and the general design or availability of the coin.

[Philip Deal]

Okay, it's important here to distinguish two different kinds of coins, Actually three different kinds. One is bullion coins, precious metal coins that are sold at a slight premium above the spot price of gold when they are sold. Then a second time is a collectible coin, like a numismatic coin. US Mint produces annual sets, also precious metal commemorative coins, and then circulating coins. So the precious metal coins that are buoyant coins and collectible coins are priced and Marketed in very different ways. Commemorative coins are produced to much finer quality. And the strike is. There are almost one offs. There are multiple strikes in order to get that fine design, raise the design, and get the polished finish of those coins. And because the production process is much more detailed, there are fewer coins produced, Many fewer coins produced. They are priced differently, they're marketed differently. They're sold directly by the United States mint. And those coins, a substantial portion of the cost is reflected in those additional costs. And so no. Vary depending on which metal you're talking about. But maybe 10% of the price or so of a gold coin or a platinum coin is represented by those additional costs. Whereas for a bullion coin, as I was saying, those are highly competitive. There are. They're produced in very large numbers. They're not produced as collectibles. Sometimes they are collected, but they're not produced for that reason.

[Tracy Alloway]

Would an American eagle count as a bullion coin or a sort of finite collectible item? Because I know they issue them by year.

[Philip Deal]

Yes, they do. There are two versions of it produced. The bullion coin is produced in very large quantities by law. They're supposed to be produced to meet public demand. The law states, although sometimes the mint runs into bottlenecks and cannot fully meet demand. But. And they are produced in very rapid mass manufacturing processes. The eagle is also produced in a collectible, and it's called the proof gold eagle. And it is produced according to those very high standards I was describing earlier and is sold at a significant premium above the spot price of gold.

[Joe Weisenthal]

I'm looking again at the website. And the other. One of the other things you sell is a Pearl harbor gold coin, which is identified as exclusive to the U.S. money Reserve and features Queen Elizabeth II on the obverse, Navy ships and Japanese fighter planes on the reverse. Can you talk a little bit? Is that a U.S. government coin? Because there is also private stamping. Right. Like someone can, you know, someone could get gold and stamp whatever they want on it and sell it.

[Philip Deal]

Yes.

[Joe Weisenthal]

Can you talk. Yeah. Talk a little bit about that.

[Philip Deal]

Yeah. Those aren't really coins.

[Joe Weisenthal]

Okay.

[Philip Deal]

When they're produced, they had to be legal tender to be coins.

[Joe Weisenthal]

Okay.

[Philip Deal]

And, you know, you. You see it, football games and coin toss. Well, those aren't coins. Those are metals. They're medallions because they're not legal tender. It's not a U. S. Coin. We usually don't put royalty, foreign royalty, on our coins. And this is Queen Elizabeth in this case. These are coins by other nations that. The US Mint does not do. This it does not produce bespoke coins according to order, but other nations do, and it's not unique to US Money reserve. Other companies do this too, but we have been more aggressive in developing coins through other governments in limited quantities that are collectibles, in precious metal and marketing those. Typically, we are celebrating an anniversary, a percentage of these coins. The sale price of these coins typically goes to a charitable purpose. We have been very supportive of the U.S. navy Memorial. So that's one of the ones that we really stood behind.

[Tracy Alloway]

One thing I wanted to ask is when you're designing a coin, so when you were at the US Mint, and I'm not talking about precious metal coins here, but just your sort of standard coin, how much does profitability come into considerations for designing a coin? Because I know with the Trump administration talking about maybe getting rid of the penny, this seems to be even more of an issue than it used to be, although people have been debating the existence of the penny or whether it should exist for decades now. But do you sit there and write on a napkin, it's going to cost me X to produce and I'll be able to sell it to the Federal Reserve and the banks for Y amount?

[Philip Deal]

Yeah, it's a factor, no doubt about that. And to a certain degree, or to a great degree, the US Mint doesn't have discretion in the specifications of the coin. They laid out in great detail in the legislation that authorized the coin. The lone exception to that is the platinum bullion coin in which Congress. I'd asked Congress for virtually total discretion on that coin, and they gave it to us. And the trillion dollar coin came as an unintended consequence of that.

[Tracy Alloway]

There's no escaping the trillion dollar coin.

[Philip Deal]

Yeah, you can't miss it. But, but yes, all the details are in the legislation, but the Mint does attempt to produce those coins in the most efficient fashion possible within those constraints. And the penny has blown away our capacity to make pos. To make profitable for over 30 years. I was the first Mint director 30 years ago to recommend elimination of the penny. And you can see how much influence I have. But it's long overdue to be eliminated. There was a problem back in the 70s, I believe, where the penny had negative seigniorage. And I can describe what seigniorage is here in a minute, but it's basically profit. And so, and the coin was being, it was all copper at the time the coin was being melted down because copper, the copper content was worth more than the penny was. And, and so the, the Congress stepped in and changed the composition of the penny. And we have a similar situation now with a nickel where it's a money loser. The production of the nickel is a money loser. But it might be profitable if there were some changes or at least the amount of money that is lost producing each coin would be decreased. Now one of the things that came out of the SACAGAWEACORN and the 50 State Quarters program and those two huge projects, very entrepreneurial projects, as you were alluding to, Joe, those were launched within about a year of each other. And that took the u. S. Mint's profits and our profits, the u. S. Mint profits go to the American taxpayer that go into the general fund of the treasury. And we took profits from $700 million a year when I came into the mint to $2.6 billion after five years. And I told my staff that they'd all be wealthy if we were a private enterprise, but we didn't get paid by the coin.

[Joe Weisenthal]

Let's talk a little bit about the business, more of selling these collectible coins and bullion coins and so forth and gold coins to a retail customer base. I have a couple of questions. One is, is volume associated with price? Because you must see, you know, when the line is, is there when the line is going up. In terms of the price of an ounce of gold, do you generally see a correlation in pick a pickup in people wanting to buy gold coins?

[Philip Deal]

Absolutely. It's been, it's been a tremendous 19 months since this, this rally, this bull market began. And over that period of time, we've seen prices go up $1600 an ounce from 1800 to 3, 400 this morning. And it's just, it's been one record after another being set. So we see a tremendous increase in demand. I think most people in the industry do.

[Joe Weisenthal]

What about the demographics so obvious? You know, generally I speak, I think of the gold coin buyer who would buy from us. Money reserve is probably someone, you know, like Tracy's dad's age specifically. What have you seen demographics do younger generations, does gen z or millennials, do they care yet about holding collectible or bullion coins?

[Philip Deal]

When I was director of the mint, I was in my 40s and I would describe our, our buyers as being white, male and over 50. And there's nothing wrong with that. I aspire to be one some, but worry about that demographic was fading out over over a decade or two. That's not the case today. Gold is hugely popular across a very wide spectrum. And that's not surprising given the amount of coverage, news coverage, gold has received over the last two years and these record prices, especially when the stock market is falling, people are looking for safe havens. And gold is the ultimate safe haven. It's been around for, for 5,000 years. It's always had value. It's had value worldwide. It's the universal safe haven. And what we're beginning to see in some of the market research is a skewing of interest to younger audiences. That includes millennials and Gen Z. And some of the research indicates that they have greater interest in gold than boomers do. That was really a surprise to me, but not too much of a surprise once I thought about it because those of us who grew up in the 60s and 70s were less focused on on money and protecting ourselves and then what our kids are. And so that you know, that's extraordinarily smart and forward looking for them to be thinking about their futures and thinking about the role gold would have. Now you know, the issue comes up whether you know what percentage of a portfolio should be in gold. I tell people, never put all of your money in gold. Don't put on in all your money into any asset. There needs to be diversification in any portfolio and the right percentage depends on how old you are, your risk averseness, you know, how large your portfolio is. There's no one size fits all recommendation. But one of the factors I do recommend people to consider is how optimistic or pessimistic you are about the state of the world, the state of your own finances and and considering the safe haven history of gold, the more pessimistic you are. I do recommend a higher percentage of your portfolio in gold.

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[Tracy Alloway]

Should I buy a gold coin versus invest in a Gold mining Stock?

[Philip Deal]

Well, mining stocks have tended to underperform the price of gold itself, and there's a simple reason for this, and that is it's getting harder to find and more expensive to mine gold. The clear signal of this is if you look back over world gold production over the last 10 or 15 years, it hit a peak about 10 years ago. And despite the fact that gold prices have skyrocketed since then, and the miners had tremendous incentives because of that to increase production, they haven't been able to. And this is one of the forces that is driving gold prices upward today. And one of the reasons why I'm confident it will continue to go up is that, you know, you talk about peak oil, I don't know that we've hit peak gold. But the miners have not really been able to take advantage of these higher prices by increasing production. And so the miners are weighted by those additional costs. And also gold is now mined more often in politically and economically unstable and corrupt countries. And that adds a risk premium and a cost to doing business that the miners have to bear.

[Joe Weisenthal]

It's so crazy. Tracy, I'm looking at a chart of GDX, the VanEck Gold Mining ETF, charting against GLD, the gold ETF the miners have just done terribly relative to gold. It seems like a terrible business. Oh yeah, kind of like How Bitcoin mining companies don't do as well as bitcoin. I want to talk about. You also sell gold bars and so. Oh, right now I could buy a 1 kilo gold bar on your website for $115,547.95. I could also buy a 10 ounce gold bar for $37,217.76. Where does that gold come from? What is the supp chain for? Just let's say I don't have any collectible interests. I just want a very space efficient way to store a lot of gold. Where did those bars come from and how do they get to my mailbox?

[Philip Deal]

Well, I think we sourced them from several different sources. And again it's a highly competitive market.

[Joe Weisenthal]

Yeah.

[Philip Deal]

And so, you know, we price shop like anybody else does. Those bars are typically coming from major refiners. Some of them are in Switzerland. But we are not buying them directly for from the refiners. We're typically buying them from some wholesale distributor.

[Joe Weisenthal]

Got it.

[Philip Deal]

I can't actually tell you who they are at this time.

[Joe Weisenthal]

Sure.

[Philip Deal]

Not because it's a secret, but because I don't know.

[Tracy Alloway]

I imagine one of the downsides to owning physical gold is storage. Right. And the idea that, all right, you're putting all your money into this physical thing, but the risk is someone comes and finds it and steals it and you lose it all. How are people dealing with that storage risk?

[Philip Deal]

Well, you can own a lot of gold and hold it in a very small place. So I mean, and most people will put it into a safe deposit box in their bank along with, you know, the jewelry and other things, important documents and the like. And you can own hundreds of thousands of dollars, if not millions of dollars in a very small space. So I think the storage issue is a bit of a canard and becoming even more so as gold prices have gone from $1,000 an ounce to $3,400 an ounce.

[Joe Weisenthal]

You know, it's funny, so I'm looking at the price of the gold bars and it's true, like you could store right now $115,000 worth of US dollar value or roughly that looks like a fairly small that one kilo of gold. What's funny? So silver is just so much cheaper because. So a 10 ounce gold bar is 37,100 ounce silver bar is only 3,700. So you get something that's the same weight. No, you get something that's 10x the weight for 1 10th the price. So for gold the appeal is lots of dollar value in a small amount of physical space. For silver, it's almost the exact opposite where you can spend not that many dollars and have something that fills up your entire table.

[Tracy Alloway]

Something to stack.

[Joe Weisenthal]

Yeah. Something to stack and show off on your YouTube channel.

[Philip Deal]

Yeah, that's right. That's right. When you open that box of $100,000 worth of silver.

[Joe Weisenthal]

Yeah.

[Philip Deal]

Then you feel like you've really gotten some.

[Joe Weisenthal]

But is there a difference in the type of person who accumulates silver coins and bars versus gold coins and bars?

[Philip Deal]

There's an important difference between those two product lines, gold and silver, and the market forces that move them. We think of them as both being precious metal, both of them being used in currency, both of them having this long history as a store value. But silver, a much larger proportion of silver is used in commercial applications and industrial applications than gold is. So there's this cyclical component to silver that is largely absent in gold. And so gold is a, has been considered a pure form of hedging against bad times than silver has been because silver is influenced by this cyclical. Right. Demand factor. When I became director of the man, I really was not familiar with precious metals or, or coinage. I hadn't collected coins and. But one of my first jobs outside of going to the Mint was going to one of the big annual coin shows. And when they announced that the director of the mint was present, people lined up, like a hundred people lined up to get my autograph. I was just so shocked by that. And I like to talk to people and especially I like to talk to my customers. And I was new at the mint and we were going to be very customer focused. I, I was on a mission to demonstrate how government can meet the highest standards of business. And the mint was very far from that when I came in. So I talked to customers and I spent a lot of time with them. And you know, they were, they loved American history. That's one thing that's very clear. They love the art and the stories behind coins. And they were good red blooded Americans. And they're like the people I grew up with in west Texas. And so, you know, they seem very level headed to me.

[Tracy Alloway]

I would be curious to get your thoughts on this. So what was it like actually writing the bill that allowed for the possibility of the trillion dollar coin?

[Philip Deal]

No, it was, it was just, it was a nothing. We had. The very first entrepreneurial project that I took on was I, I wanted to launch the nation's first platinum bullion coin or a platinum coin of any type. And I wanted to demonstrate that we could go after the Japanese market. Besides North America, the Japanese market was the hot, the big hot market for platinum coins. And our colleagues north of the border, who I love and continue to love even though there is some tension in the relationship now they own that market. And I wanted to demonstrate that we can go and take that market away from them because I had bigger fish to fry in the 50 state quarters and new dollar coin. And I just knew I wanted to demonstrate that. That. So I wrote a bill and I asked for complete discretion so that I can go over there and talk to the senior, probably in his 80 80s Japanese distributor, and sit down with him and say, I'd like to talk to you about designing a coin that will be successful in Japan. And I knew that we would go through the motions of him expressing an opinion, but it was just the honor of being asked to participate in that process that would make the difference. And sure enough, when we launch the coin, within six or eight months, we own that market.

[Joe Weisenthal]

Philip Deal, you know, I consider you a hero because I never really worry about the debt ceiling being breached because I know that ability to mint a trillion dollar coin could, could come up and that will save us in the end. Thank you so much for coming on. Odd lot. Really delight to chat with you.

[Philip Deal]

It's been a lot of fun. Thank you.

[Joe Weisenthal]

Tracy. By the way, for those that don't know they can go back. I've written a ton about it. The trillion dollar coin. Just look up trillion dollar coin debt ceiling. For new listeners who aren't familiar with all the lore, just search for it. We don't need to repeat it. But I could really like all the sort of technical aspects of like what does it make to. For a coin to be successful. Like I said, I could just sort of listen to details on that for a long time and all the market research and like, oh, we thought it could be big in Japan. We felt we could like beat out the Canadian seller. To my mind, really interesting stuff.

[Tracy Alloway]

Japanese coin collectors are indirectly responsible. That's right, the trillion dollar platinum coin. Very interesting. You know what I was reminded of? I read a book, I guess a few years ago about numismatics and I think it was called When Money Talks. And I remember the author described coins as sort of physical memes. Yeah, like totally memeplexes. And each coin contains like a set of ideas and a set of values that then gets transmitted. And I think that really came through in the conversation with Philip. Like it is not just about the precious metal content. It is also about all these sort of social things that are embedded in that coin as well.

[Joe Weisenthal]

Yeah. And I don't know, like what it is, but like, I really want a Krugerrand specifically. You know what I'm saying?

[Tracy Alloway]

Wait, I have a question for you.

[Joe Weisenthal]

Yeah.

[Tracy Alloway]

Okay. If you were offered a Krugerrand versus the same amount worth of a tungsten cube, what would you choose?

[Joe Weisenthal]

Well, I have my. Well, the same.

[Tracy Alloway]

The same value.

[Joe Weisenthal]

Oh, so I need a. I might just get a Krugerrand. I don't know. I'm really tempted. I have my tungsten cube. I think I need to divert the.

[Tracy Alloway]

Novelty value of a Krugerrand.

[Joe Weisenthal]

I need a Krugerrand. I really think I do.

[Tracy Alloway]

Okay. Shall we leave it there?

[Joe Weisenthal]

Let's leave it there.

[Tracy Alloway]

This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

[Joe Weisenthal]

And I'm Joe Washington. You can follow me at the Stalwart. Follow our guest Philip Deal. He's philipndeal. Follow our producers Kerman Rodriguez, Ermenarman, Dashiell Bennett at Dashbot Albrooksailbrooks. For more Odd Lots content, go to bloomberg.com oddlots we have all of our episodes and a daily newsletter and you can chat about these topics 24. 7 in our Discord Discord GG oddlots.

[Tracy Alloway]

And if you enjoy Odd Lots, if you like it when we talk about the allure of physical coins, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening. Hiscock Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online'@hiscox.com that's his c o x.com there's no business like small business. Hiscox Small Business Insurance Thrivent can help you plan your finances for the people, causes and community you love. What makes Thrivent different financial services and generosity programs are combined to help you build a financial roadmap for the future while also creating opportunities to give back along the way. Visit thrivent.com to learn more. Thrivent, where Money Means more.

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