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- [00:11]
A
Hello.
- [00:13]
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Welcome to the Gold edition of Slate Money Swag, your guide to all things that don't cash flow and yet might also be considered investments. I am Felix Salmon of Axios. I am joined this week by Justina Vasquez of Bloomberg.
- [00:31]
A
How's it going? Thanks for having me.
- [00:32]
B
It's great to have you here in Brooklyn. What is your job at Bloomberg?
- [00:37]
A
I cover gold markets for Bloomberg. Gold Markets, silver and kind of all of the precious metals.
- [00:43]
B
All things precious, indeed. Is it fun?
- [00:45]
A
It's fun. It's a lot of watching the macro economy and the incremental parts that make people really afraid or really excited.
- [00:54]
B
So we are going to talk about gold as an investment, whether it makes sense as an investment, how long it has been an investment, whether it is a money laundering tool, whether you should buy physical gold itself, whether you should buy ETFs, which are a way of turning gold into stocks, basically, and all manner of other sexy things. The main thing I learned in this episode is that the most popular gold coin in Europe is called the Philharmonic.
- [01:23]
A
What an amazing name.
- [01:24]
B
Philharmonic. How awesome is that? If you want to buy a European coin, you can buy a Philharmonic coin. I mean, who can resist that? All coming up on Sleep Money Swag. This is the bit which I've been waiting for because I feel like everything else we're talking about on this season, whether it's art or bitcoin or wine, is this kind of new fangled like, oh, wow, this can be worth money and I can collect it, but gold is like millennia old. This has been an investment for way longer than, you know, any country you can think of has even existed.
- [02:02]
A
Totally.
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B
So this is the one. And I was talking to Nat Popper at the New York Times about this when we did the bitcoin episode. This is the one that actually has, in some sense, withstood the test of time.
- [02:14]
A
Yes.
- [02:15]
B
So humans have been using gold as a form of wealth for how long?
- [02:20]
A
So, yeah, it's been, like you said, millennia. The number one pitch I think I get is just about folks saying, you know, hey, the dollar does this. Currencies do that. But gold is the one that has really withstood the test of time as a investment. You put it under your mattress, you know, you get physical gold, whatever you want to do with it, and typically you're going to see that increase in value over time. It's just going to be a little bit slower than, you know, other assets, which is why folks typically use it when times are not going as well for those other Assets that return more.
- [02:53]
B
So without getting too philosophical about this, what does increase in value mean in this context?
- [03:00]
A
Yeah, I guess it means that whatever you pay for it today, it's going to be worth more in dollars. In dollars? In any currency.
- [03:08]
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In any currency, yeah.
- [03:10]
A
Ideally it would be worth more tomorrow, in 10 years, in however long.
- [03:14]
B
So obviously gold has been an investment or a store of value for millennia. How much data do we have on the value of gold in fiat currency? How many centuries does that go back?
- [03:29]
A
Wow. I think in dollar terms the last time I've checked, at least on our Bloomberg terminal.
- [03:35]
B
There you go.
- [03:37]
A
We have data that goes back to the early 1900s. That's what I'm able to see.
- [03:42]
B
So over the past century or so, is this true, has gold broadly increased in value in dollar terms over time?
- [03:51]
A
Yeah, it definitely has. I spend more time looking at day to day markets. And so even just in the last year I pay attention to a lot of gold's been up, I think about 16 or so percent, kind of in the low mid teens. That's just in the past year. The value of gold will go down when economies are doing a little bit better because people want to invest in things that increase in value quicker than gold. But yeah, generally over the last hundred years, gold's definitely been up.
- [04:20]
B
Is there any reason why someone who wants a small proportion of their net worth to be invested in precious metals, is there any reason for them to invest in anything other than gold, as.
- [04:36]
A
In silver or palladium or platinum? Sure, I think yeah, there's always a good base case. I'm no analyst or anything, but I talk to a lot of them and I guess each metal kind of has its own reason why one is attractive. Gold is kind of the standard whenever it comes to precious metals. It's has the most investors already, so other investors just kind of follow suit. Silver's cheaper. So they say that investors will go into silver just because the price of it is cheaper. A lot of people apply that to coins as well. It costs $1,450 or about that much to buy a gold coin. It might cost $15 or $20 to.
- [05:13]
B
Buy a silver coin if each coin is one ounce.
- [05:16]
A
Yes, exactly. Yes.
- [05:18]
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And the price of a coin is basically just the value of the metal in that coin. There's no sort of premium you get for like getting a pretty coin.
- [05:27]
A
Sometimes there are premiums whenever they're sold by the government. It's one kind of standard. One is the American Eagle coin. That one's priced a Little bit higher than what's called like the, like the spot price or the standard price for gold or for silver.
- [05:41]
B
When I was growing up, it was always the Krugerrand.
- [05:44]
A
Oh really?
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B
Yeah.
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A
That sounds intense.
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B
Has that has, has the Krugerrand been replaced by the American Eagle coin?
- [05:51]
A
I don't know a whole lot about.
- [05:52]
B
The Krugerrand you've never heard. I guess it has been. If you've never heard of it, possibly the Krugerrand was the South African gold coin.
- [06:03]
A
Okay.
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I guess a lot of gold comes from South Africa. So they were like, let's turn it into coins.
- [06:08]
A
Yeah, sure. I look mostly at US markets, so that's probably why I'm biased to the American Eagle gold coin.
- [06:16]
B
So walk me through the mechanism here. On a very broad level. Gold has a bunch of uses out there in the world. It is a very good conductor. You find it in electronics. It obviously is used in jewelry. To what degree does the price of gold represent real world supply and demand for actual industrial use? A bunch of people need to use gold because, you know, I don't know, Rolex has seen an uptick in demand or something like that. And therefore the price goes up or. And yeah, and on the flip side, to what degree is the price of gold a function of supply side? Like, you know, there's a bunch of gold mines in the world, someone hits a new seam, a bunch of new gold is discovered and therefore the price goes down.
- [07:07]
A
So I guess it's, it might be easier to start with the mine side. So when it comes to that, a lot of times the price of gold is not as much affected by how much supply there is in the world. It's considered a rare metal, which is why people value it so high. But despite being rare, there's always a lot of ways to produce gold despite the fact that it's a rare metal. Does that make sense?
- [07:30]
B
So as someone who I vaguely understand basic economics, I'm a little bit rusty sometimes, but I have this basic idea that if there's always ways to mine gold and gold is worth fourteen hundred dollars an ounce, then everyone's just going to go out and mine a bunch of gold and sell it for $1,400 an ounce. And that's like free money and it's a perpetual motion machine. And why don't people do that? And wouldn't the price come down to the marginal cost of mining it?
- [08:00]
A
It's a good question. There are people, kind of individuals who go panning for gold, you know, lots of different places and then you have these big Institutional mining, you know, who mine for gold in much larger quantities. Somehow the price of gold tends to really shift more on what's going on in the macro economy, what's going on with whether or not people want to invest in safer assets or riskier assets. It's largely driven by the investment profile and less so by kind of how much supply is out there. On the flip side of that, though, whenever you start to see the price of gold rising, you do kind of start to hear rumblings within the mining community of, oh, well, maybe we should start thinking about when is a good time to start boosting production, to capitalize on the fact that gold can be sold for a higher price. So gold, for example, has been kind of up this year. And so you're starting to hear companies say, oh, maybe we'll pay higher dividends because we have more cash on hand now that gold is at a higher price.
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B
Historically speaking, what's been a better investment, gold or gold miners?
- [09:10]
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That's. I think it depends on who you ask. I've talked to folks who have definitely said that whenever the price of gold is going up, it's a great time to get into the equities, like the gold companies themselves, because there's usually a margin like a premium basically, that you get from investing in the gold companies, like as a stock, just because you get the price of gold that's rising in there, as well as the kind of operational, kind of all the things that make a mining company work well, that's added value on top of the price of gold itself. So some people say that, I mean.
- [09:44]
B
Presumably they have gold stocks which are rising in value, and they also have a profit margin. They mine gold at less than it costs to sell it, less than the price. And so you get to effectively buy gold at below the market price, which would be an attractive investment. So in that sense, it makes sense. If I'm. If I think of gold as something which is worth investing in, doesn't it always make sense to buy it in the form of gold miners? Because that way I get dividends, I get operating efficiencies, I get to mine it below the market price. Why would I want to just buy gold itself instead?
- [10:20]
A
Yeah, so then you have other people who aren't interested in the companies themselves. They're really just interested in being invested in physical gold. You have a lot of people talk about, I think mostly jokingly, you have people talk about, you know, the apocalypse scenario where you want to have gold on hand because it can help and, you know, it's a store of value, things like that. So there's kind of, there's the two sides of it. Some people have a strong preference for the physical metal itself and holding it. And some people don't care as much about having anything physical. They just want to reap the benefits of the price of the gold.
- [10:55]
B
Assume I am one of these people who buys ETFs which are not physical. I mean, there might be some physical gold somewhere. But if I buy an etf, I just have an entry on my brokerage account. I don't actually have any physical gold personally. You know, if the zombie apocalypse arrives, I'm not going to be able to trade my ETF for guns and butter. So if I'm choosing between a gold ETF and buying stocks of gold miners at that point, is there any reason to buy the gold ETF rather than the stock of gold miners?
- [11:29]
A
I think again, it depends on who you ask. Some people treat the ETFs similar to the physical metal just because they are tied to the physical, to those vaults. Some people do both. They're not mutually exclusive. So some people will invest in gold mining stocks. Some people invest in an ETF that's tied to gold mining stocks. And you can add on layers and layers of this stuff whenever it comes to investing. I think that's the case a lot of the time is that some people just have a preference for equities and stocks and the returns that those have. Some people just would rather not have to think about all the details that go into whether or not this company is performing well and would rather just get at the metal specifically.
- [12:13]
B
So historically speaking, what's done better, gold miners or gold?
- [12:18]
A
I will have to pull up a chart and then check on your Bloomberg. Yeah, let me do that. Yeah, let's see.
- [12:24]
B
Let's see. Let's go back to like this is. This is the wonderful thing about having, you know, a phone. I know you can pull up your Bloomberg on your phone. You can ask for a chart of gold miners versus gold over the past, what, 75 years or something like that? Sure, we can do that and just see which one has outperformed. It'll be like we can do a real world test right here in the Slate Money studios.
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A
It's amazing.
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It's amazing.
- [12:48]
A
Okay, so I have a chart. Let me date it back 75 years. That's what we're looking for.
- [12:53]
B
I pulled that number out of my ass. Whatever. How far?
- [12:55]
A
I'll see how far it goes back. Oh, wow. Okay. I don't Think this scale is going to stop. I'm currently in the 1400s.
- [13:02]
B
I feel like gold miners did not exist in the 1400s. Let's go back to the beginning of when you have gold miners.
- [13:08]
A
Okay. Okay. So I'm pulling up an index that Bloomberg tracks just because that's sounds good to me. Great. Okay. It goes back to 2006. This is when the index begins.
- [13:23]
B
I feel like 2006 isn't long enough to really be helpful.
- [13:26]
A
I agree. There was a period between 2009 and 12, roughly when all the gold miners were doing pretty bad. So you get kind of one whole market cycle in here, at least. So.
- [13:37]
B
Okay, and then. Well, let's talk about that. So between 2009 and 2012, the crisis was over. People started getting more bullish in terms of, you know, stocks and bonds and that kind of thing. Gold miners did badly. And gold itself did relatively badly too.
- [13:53]
A
Right, right, right.
- [13:55]
B
So. All right, so let's talk about that. Let's go. Let's just talk about. Since you don't have information going back to 1900, let's talk about information going back to 2006. In up markets, which one outperforms? And in down markets, which one outperforms?
- [14:08]
A
Okay. So whenever you look at them, and I suspected this was the case, when you look at them, the gold mining companies go down at the same pace, roughly like the same shape. The chart is roughly the same shape that the gold price is. So when economies are doing well, both of them kind of start to tank a little bit just because the asset that the gold companies are producing has less value.
- [14:34]
B
So if that's the case, I would always choose the gold miners over the gold, because if the price of the stock more or less mirrors the value of gold, then buying the stock is equivalent to owning the gold plus all of the dividends. So I would be better off pretty much always just owning the stock rather than owning the gold.
- [14:55]
A
I think maybe now you might be onto something. I think back then, just knowing the history of some of the mining companies, the price of the metal was injected in there. But a lot of the companies also were going through kind of serious challenges with cost discipline. So while you had that margin, it probably wasn't as good then as it would be now. Now that gold is rising at this point, they've kind of gotten a lot of flack from investors and things like that. They've tightened up a lot of their spending. So I think at this point, the margin would probably be a lot better than it was back. Back the Last time that gold had a significant rally. And even whenever gold prices were falling.
- [15:36]
B
Like you said, is there a general price that miners, that it costs miners to mine an ounce of gold, does that fluctuate over time?
- [15:46]
A
It fluctuates alongside the price that actual gold does.
- [15:51]
B
So wait, when gold becomes more expensive, it also becomes more expensive to mine it.
- [15:56]
A
So whenever gold becomes more expensive, miners want to mine more of it. So they're going to have to input more spending to mine more of it, whether that's more manpower or kind of looking for more mines, things like that.
- [16:11]
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So when gold falls in value, there's a bunch of cheap, easily accessible gold they can find, but there's not a lot of it, and they won't produce very much. And then when gold rises in value, they'll be like, oh, we'll burrow deeper into the mountain and it'll cost more, but it's worth it because gold is expensive.
- [16:31]
A
When gold prices rise more, it's either, either what you said, burrow deep, deeper into the mountain. They also tend to. Some of the larger companies may tend to just look for smaller companies that already have burrowed into mountains and decide to just purchase those companies or purchase those assets or do joint projects with those smaller companies just to kind of capitalize on all the gold out there.
- [16:54]
B
But to go back to the original question, what you're saying is that ultimately these supply considerations don't really affect the price of gold?
- [17:02]
A
Yeah, not as much as kind of.
- [17:04]
B
Weirdly, one of the few economic indicators which is not a function of supply and demand.
- [17:10]
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I think so. I think there's always that function in there. But yeah, I think you're right. Compared to kind of cyclical companies like the tech industry or something like that, it's not nearly as reliant on what supply looks like.
- [17:22]
B
And the demand side, if I, if I look at the demand for gold in the world, how much of it, what proportion of it is actual real world functional uses, and what proportion of it is just financial investing?
- [17:36]
A
It's probably about half, maybe a little bit less than half investment. And the rest of it goes into things like jewelry, things like electronics, and those are all kind of incrementally smaller, smaller portions of demand.
- [17:50]
B
That is one of the things that gold has always been good at is it's been portable. It's been a great way of like, if I want to move wealth out of a country and I don't want it to be confiscated by the financial authorities, then just owning a bunch of gold coins and putting them in my shoe is a time honored way of doing that. Is that still a large part of the reason why people like gold? I mean, to put it politely, you get to avoid governments. To put it less politely, you get to avoid, you know, taxes.
- [18:26]
A
There's some of that in there. I think that's kind of still a stereotypical, maybe portion of, of what some of that gold demand looks like. I haven't, honestly, in my time covering gold markets, I don't think I've met anyone like that.
- [18:40]
B
Is it true to say that the price of gold is pretty much constant across countries? That if gold is worth fourteen hundred dollars an ounce in America, it'll be worth fourteen hundred dollars an ounce in India and in China and in Japan and everywhere else?
- [18:54]
A
Yeah, I think that's pretty typical. There's one metric that we use to measure the price of gold. It's called the spot price. And basically I work with colleagues kind of around the globe and we all track the same price of gold. So whether it's someone in Singapore or someone in London, we all are looking at the same price of gold.
- [19:11]
B
And does that spot price reflect pretty closely the amount of money that it would cost to buy a gold coin in each of those countries?
- [19:21]
A
In the US for sure. I haven't looked as closely at what the price of a coin is in, in South Africa or in London or in Singapore.
- [19:29]
B
So you don't think that gold is, is major sort of money laundering avenue? I mean, it seems obvious to me that if I wanted something anonymous and untraceable, like being able to get buy some metal and melt it down and, you know, turn it into something else and transport it easily, if I place myself in the minds of a criminal, like, this would be a very attractive asset.
- [19:56]
A
Sure, totally. You're right on that. Yes. A lot of people compare it to cryptocurrencies for that reason, because the two of them are both not related to any government.
- [20:04]
B
Except cryptocurrencies are much more traceable. Like there's a public ledger which shows you where all of the coins which have ever been minted are. Gold is completely anonymous, right?
- [20:14]
A
Yeah, gold is completely anonymous unless you're buying it from, you know, an actual vault or something like that. But I think the argument with both of them is just that none of them are tied to any government. So there's no government raising or decreasing rates or going into quantitative easing and using gold or cryptos as that currency.
- [20:35]
B
But just as a facilitator of criminal activity. If I'm a drug lord, And I want to launder my ill gotten gains then gold is still very attractive to me.
- [20:47]
A
I think that I don't want to encourage any criminal activity, but I think that I can definitely understand that argument. I was reading an article yesterday about a jihadist group in, I don't remember which country it was in Africa that was working with gold miners. And just kind of individual, they're called artisan gold miners. Just folks who go panning for gold kind of in local areas basically. And that's just one way that they can make money. That's kind of one way that they can invest as a terrorist organization.
- [21:21]
B
If I want to buy physical gold, what's the best way of doing that? That I don't get ripped off either in terms of price or in terms of the purity of the metal.
- [21:33]
A
That I'm buying physical gold as an investment?
- [21:35]
B
Yeah, let's say that I'm just a normal person who's like, I am 35 years old and I am going to want an asset in 50 years time that is going to hold its value. So I'm going to buy a physical piece of gold because God knows what's going to happen to my Robinhood.com account in 50 years. But at least a gold coin is going to be a gold coin. What is the most efficient way for me to buy that physical ounce of gold?
- [22:01]
A
The most common way people do that is either kind of shopping online, which a lot of people who are $35.
- [22:08]
B
Like they put down a credit card.
- [22:10]
A
There are gold websites where you can go and buy, you know, physical coins.
- [22:15]
B
Are they trustworthy?
- [22:16]
A
A lot of them are trustworthy. A lot of them.
- [22:19]
B
How do I test, how do I know whether a gold website is trustworthy or not?
- [22:22]
A
Sure. So there are, if you, there's fine print. And a lot of these companies kind of spell out their fine print whenever you read through. Kind of just the different, what's the, what's the markup that they have on the coin? And you can kind of go to third party websites and it's, it's kind of. I think about it the same way I think about investing in nonprofit companies.
- [22:44]
B
So I feel like investing in a nonprofit company is a way to guarantee that you lose all of your money. But so that's not a really great.
- [22:51]
A
If I'm an investor, I'll explain. Okay, so there are websites that kind of give rankings of nonprofit companies and which ones are, you know, worth your time. And they have different metrics. There are the gold coin companies, the websites where you can Buy some of the coins from. They kind of detail certain standards and you can read up on the markup should be no more than this percent above the spot price of gold. The purity should be no more than this percentage. So a lot of times the purity might be like 99.5 gold or 99.9 gold. Those are some of the common purities of gold that you can buy.
- [23:30]
B
Like the more pure it is, the softer it becomes. Right. And the more like bits can sort of fall off by mistake and I wind up losing them.
- [23:37]
A
That's a good point. Yeah.
- [23:39]
B
So is that a reason why I wouldn't want 100% pure gold?
- [23:42]
A
Yes. I also don't think anyone makes 100% pure gold. I think that's like a scientific improbability.
- [23:48]
B
Okay. Because something will always get mixed in.
- [23:51]
A
Right.
- [23:52]
B
But in general, for investment, what's the standard? For investment?
- [23:57]
A
Yeah. So Again, it's the 99.5, 99.9. Those are kind of the standard purities. A lot of times the markup. I've seen some websites say the gold price, the coin shouldn't be any more than I think it's. I've seen like 5% more than the spot price of gold. It's like a very small percentage. The larger the percentage is, of course.
- [24:18]
B
The more you're 5%. Seems like quite a lot to me. I mean, again, as an investment, if I'm paying a 5% load up front to buy an asset class I need, that thing needs to appreciate by 5% before I even make any money. Right?
- [24:31]
A
Yeah, yeah.
- [24:32]
B
So it doesn't seem like. I mean, one of the ways I think about investments is to say, like, what's the round trip cost? If I go to one of these websites and I buy $1,000 worth of gold and then I turn around and sell that thousand dollars worth of gold back to them, like the following day, assuming that the gold price hasn't changed in that day, like, how much money do I lose?
- [25:00]
A
So do you mind if I look up one of these websites?
- [25:03]
B
Sure, go ahead.
- [25:04]
A
Let's see.
- [25:05]
B
So we had a whole discussion previously in this series about art. And one of the things we talked about with respect to art was that it's much easier to buy than it is to sell. Anyone can go into an art gallery and buy a work of art, but then if you own a work of art and you try and sell it, it actually turns out to be much harder than you. Presumably, there's a pretty efficient market out there for people looking to Sell gold just as much as there is for people looking to buy it, right?
- [25:33]
A
Yeah, yeah, definitely.
- [25:34]
B
All right, so let's look it up and see if I have a gold coin, how much it will cost me to sell it.
- [25:40]
A
Okay, so here is one gold coin. Dang. I'm not seeing on here kind of exactly, like, how much their fees are or anything like that.
- [25:50]
B
Should we do a fun thing where we call up the 1-800-number and can you do that, Jasmine? Like, do the calling thing?
- [25:59]
C
Thank you for choosing. This is Don. How can I help you?
- [26:01]
B
Hi, there. My name is Felix Salmon. I'm recording a podcast with Justina Vasquez of Bloomberg News, and we're talking about gold as an investment. Do you think you'd be able to help us out with some information on how much it costs to buy and sell gold coins?
- [26:16]
A
Sure.
- [26:17]
C
What was your name, sir?
- [26:18]
B
My name is Felix, and we're with Slate Money Swag.
- [26:23]
C
Slate Money Swag. Okay.
- [26:25]
B
Silver, Wine, Art Gold. We're interested in all manner of things that you can buy as an investment, and the thing that specifically we're interested in right now is an American Eagle gold coin. If I wanted to buy one of those from you guys, how much would it cost me?
- [26:42]
C
Sure, Felix. As of right now, we send those out for delivery. Our current price on those is $1,517. That's about. Let's see here.
- [26:55]
B
Okay, but that's good.
- [26:57]
C
$47 over spot.
- [26:59]
B
Yeah, $1,517. And you will send that to me, and there'll be a little bit of, like, shipping involved, maybe?
- [27:06]
C
Yeah, there's a little bit of shipping. It's $30 for your first 10 coins, and then $10 for each additional 10 fel do store those as well. And you get a little bit lower price if you store the product.
- [27:18]
B
And then do I need to pay sales tax as well?
- [27:20]
C
No sales tax on that.
- [27:21]
B
No sales tax. Okay. So I buy a coin for fifteen seventeen dollars plus thirty dollars shipping, and now I own my American Eagle coin. Now I suddenly find myself in need of some liquidity. So I go back to you, and I say, I have an American Eagle coin. I want to sell it back. How does that work?
- [27:39]
C
Sure. It's straightforward. We will mail you a box, Felix. We'll pay, cover the cost for postage and the shipping back to us. We'll send that out to you. You drop your goods inside, send it back to us, it's processed, and then as soon as we have the goods received and processed, I'd call You up and say, felix, your goods are ready for sale. Do you want to sell them back to us now or would you rather wait for a little while? You can do either one. And as of right now on a buyback, that's one of the nice things about working with us. We're giving a really good rate. We're buying those back at 1471. That's only about 3% less than what we sell them for.
- [28:15]
B
So. And then again, is there shipping costs and stuff on top of that that I need to pay?
- [28:20]
C
No, we've covered the shipping for you to return it to us.
- [28:24]
B
Okay, so if I was a completely crazy person and I bought a coin and you sent it to me, and then I just turned around and sent it straight back again and the price of gold didn't move, it would cost me a total of about 75 bucks. I.
- [28:40]
C
Let's see here. Yeah, right around that. Except we can't sell you one coin. We don't sell them individually. Yeah, we don't sell them one at a time.
- [28:49]
B
What's the minimum purchase for that particular product?
- [28:52]
C
The 1 ounce coin, Felix? It's 10 coins. And we do have some that we will sell individually. Unfortunately, that's not one that we sell one at a time.
- [29:02]
B
But realistically then if I'm buying gold from you guys, most people will be spending at least $15,000 or so when they.
- [29:11]
C
When they're buying gold for that particular product. But we do have products in gold where you can start with as little as 2 or $3,000. But that's not one that we sell in that small of a quantity, dollar wise.
- [29:22]
B
Got it. What's the most popular product that you sell?
- [29:26]
C
Well, I would think it's probably the Gold Maple Leaf or the Gold Eagle. You've picked on the most popular one here in the United States worldwide. It is the Gold Maple Leaf from.
- [29:35]
B
Canada, the Canadian one. Okay. And. And the. Is there any real price differential between maple leaves and eagles and Krugerrands and all the rest of it?
- [29:46]
C
It's slight. Yeah, it's very slight. It just has to do with the fact that there's a little more active market for the. The Gold eagles here in the United States. Therefore, the US Mint doesn't give us as good a volume discount. So we have to pass on a little bit higher price to our customers. And the Canadian mint as well as the South African mint, they give us a little bit better volume pricing, Felix. So then we can pass on a little lower price. But then you also get less on the Back end. So you're going to end up with about a 3% differential between the buy and the sell either way. It's just a matter of where that is set relative one to another.
- [30:23]
A
I'm curious. Hi, this is Justina with Bloomberg News. I'm also on the line.
- [30:27]
C
Justina.
- [30:27]
A
Okay, Justina, good to meet you.
- [30:29]
C
Good to meet you too.
- [30:30]
A
I'm curious what the volumes are. Like you said the Canadian coin was more popular globally. How does that compare to some place with like the Australian Mint, the Perth Mint, which also has a lot of gold production around it.
- [30:45]
C
You know, I would have to get data for you on that, Justina. I know just by, by ranking, but I don't know in terms of dollar value, of number of units, but I have been told consistently by not only management here, but by other sources that the Maple Leaf is the best selling gold coin in the world. And then number two after that is the one from Europe, the gold VNFL harmonic. They kind of oftentimes go back and forth and then our U.S. products are probably third nationwide. And then I think Perth Mint is probably right in there in terms of sales volume with the United States Mint.
- [31:22]
B
Wait, this I love. The name of the European coin is the Vienna Philharmonic.
- [31:28]
C
That's correct, yes.
- [31:29]
B
They've named it after a symphony orchestra.
- [31:32]
C
That's about, I mean the Austrian Mint is the oldest mint, major mint in existence. So yes, they are the official gold producing body for the EU because they were the most prestigious in Europe and they have a great tradition and a very high quality control. And so just about, you know, one of the most famous things in Austria is their Philharmonic orchestra. So they decided to, to brand it that way. It really doesn't matter too much. But that's what they chose to brand their coin and the EU just decided to adopt it when they brought the Austrian Min in to be the official gold coin of that economic trading bloc.
- [32:12]
B
That's amazing. In general, I would say the amount that the value of gold would need to rise in order for me to break even on buying and then selling back a coin, no matter which coin it is, it's going to be about 5%.
- [32:28]
C
Yes, I would pick that as a very good round number figure. Felix, to say, look, unless it moves at least 5%, I'm not going to be able to make a profit. Everything beyond that is money in your pocket. But you need about a 5% move in the gold price. And that's in essence how we keep the lights on and keep everybody paid is you have a spread of about 3%. You have a little for shipping, so on and so forth. So 5% is a good rule of thumb. Many dealers, it is higher than that. There may be a couple out there that are just barely lower, but it's marginal. Most are higher than that, but that's a good rule of thumb.
- [33:04]
B
Thank you very much.
- [33:06]
C
Very good. And are they viewed at all interested potentially in investing in gold?
- [33:11]
B
Personally, Justine is trying to persuade me. I'm not sure I'm persuaded. I think I've come to the conclusion that I get a little bit of dividends if I buy gold mining stocks instead of gold. But Justina is more. I think, Justina, you're more into the idea of buying gold, right?
- [33:26]
A
I am a gold reporter who chooses to reduce any conflicts of interest.
- [33:33]
B
Yeah. Justina would be interested if she wasn't literally barred from doing that by the terms of her employment.
- [33:39]
C
Okay, Well, I think, Felix, there is a case for both. I own some mining shares myself, but I also do own some physical gold. The investment stool is basically three broad asset classes. Commodities, real estate, and then businesses, that is stock and mutual funds. And you own some gold companies, but you don't own any of the actual physical commodity itself. And I think that there is a good case to be made for owning some of that as part of a portfolio for both the wealth protection aspect and for kind of the worst case scenario like a crisis fund. So if everything as far as the dollar vis a vis the dollar really goes wrong, to have some gold which is very convertible into goods and services in any economy, in any place in the world, I think that it does make sense to have at least a small portion of one's portfolio in actual physical gold. And you know, it doesn't have to be large, but to have some. I do agree with you. You probably do in some cases get more leverage with the mining shares, but you don't get the wealth protection aspect, which I think is of value as well, does that make sense?
- [34:41]
B
It does indeed. Thank you so much. This has been super helpful.
- [34:45]
C
You have a wonderful day.
- [34:47]
A
All right, Bye.
- [34:47]
C
Bye, bye.
- [34:48]
B
Okay, so there you have it. ETFs are obviously a lot cheaper. If you want a round trip cost, it costs much less than 5% to buy and sell an ETF. But presumably, as in all investments, these things are long term rather than short term. Right? I mean, you wouldn't recommend people day trade gold ETFs.
- [35:07]
A
Yeah, there are. There's at least one ETF that I know of that people do tend to kind of day trade and get in and out of. But for the most part, people like to buy the gold ETFs and just kind of hold them for a while while and watch the economy play out.
- [35:20]
B
Justina Vasquez of Bloomberg News, thank you very much for joining us on Slate. Money Swag, thank you.