What’s So Special About Gold?

Listen to this episode

S1: This ad free podcast is part of your Slate Plus membership.

S2: Hello. Welcome to the gold edition of sleep. Money.

S3: Swag your guide to all things that don’t. Cash flow and yet might also be considered investments. I am Felix Salmon of axioms. I’m joined this week by just you know Vasquez of Bloomberg. How’s it going. Thanks for having me. It’s great to have you here in Brooklyn. You what is your job at Bloomberg.

Advertisement

S4: I cover gold markets for a Bloomberg gold market silver and kind of all of the precious metals all things precious.

S5: DB Is it fun.

S4: It’s fun. It’s a lot of watching the macro economy and the incremental parts that make people really afraid or really excited.

S6: 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 or whether you should buy ETF s which has 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 the NL 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 Slate Money. Why. 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.

Advertisement
Advertisement
Advertisement
Advertisement

S5: This has been an investment for way longer than you know any country you can think of has even existed totally. So this is the one I was talking to that impoverished 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. Yes. So humans have been using gold as a form of wealth for how long.

S4: 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 so without getting too philosophical about this.

Advertisement

S7: What does increase in value mean in this context.

S4: 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 in any currency. Yeah. Ideally it would be worth more tomorrow in 10 years and however long.

S7: So obviously gold has been an investment or a store of value for it for millennia. How much data do we have on the value of gold in fiat currency. How many centuries does that go back.

S4: Well I think that in dollar terms the last time I’ve checked at least on our Bloomberg terminal we have to go. We have data that goes back to the early nineteen hundreds.

Advertisement
Advertisement
Advertisement

S8: That’s that’s what I’m able to sow over the past century or so. Is this true.

S7: Has his gold broadly increased in value in dollar terms over time.

S4: Yeah it definitely has. I spend more time looking at day to day markets and so even just in the last year I paid attention to a lot gold’s been up I think about 16 or so percent kind of in the low mid teens. So 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 bid up.

Advertisement

S5: Is there any reason why someone who wants a small proportion of the net worth to be invested in precious metals. Is there any reason for them to invest in anything other than gold as in silver or palladium or platinum.

S4: Sure. I think yeah there’s always a good base case. I’m no analyst or anything but I talked 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 the precious metals it has the most investors already so other investors just kind of follow suit. Silver is 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 fourteen hundred fifty dollars or about that much to buy a gold coin. It might cost 15 or 20 dollars to buy a silver coin if each coin is one ounce.

Advertisement
Advertisement
Advertisement
Advertisement

S1: Yes exactly yeah. 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.

S4: 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.

S9: When I was growing up it was always the Kruger brand really. Yeah that sounds intense.

S3: Has that has the crew grands been replaced by the American eagle going.

S4: I don’t know a whole lot about the crew Cougar and the crew.

Advertisement

S3: You don’t even you have never heard I guess I guess it has been if you’ve never heard of it possibly the Kruger brand was the South African gold coin. I guess a lot of gold comes from South Africa. So they were like yeah let’s turn it into coins.

S4: Yeah sure. I look mostly at U.S. markets so that’s probably why I’m biased to any American.

S5: Crowd crowd coin so walk me through the mechanism here. Like on a very broad level gold has a bunch of uses out there in the world it is a very good conductor.

S7: 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 like actual industrial use like you know a bunch of people need to use gold because you know the Rolex is seeing an uptick in demand or something like that and therefore the price goes up or.

Advertisement
Advertisement
Advertisement

S5: Yeah. And on the flip side to what degree is the price of gold a function of supply side. You know there’s a bunch of gold mines in the world someone hits and you seam a bunch of new gold is discovered and therefore the price goes down.

S4: So I guess it’s it might be easier to start with the mined 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 you know 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.

Advertisement

S5: So as someone who I vaguely understand basic economics and 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 fourteen hundred dollars now. 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.

S4: 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 companies who you know who mined for gold and 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 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 in so you’re starting to hear companies say Oh maybe you will pay higher dividends because we have more cash on hand.

Advertisement
Advertisement
Advertisement
Advertisement

S5: Now that gold is at a higher price historically speaking what’s been a better investment gold or gold miners.

S4: 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.

S3: So I mean presumably they have gold stocks which are rising in value and they also have a profit margin. They mined gold less than it costs to so less than the price until you get 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 some thing 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 like you know operating efficiencies I get to mine it below the market price. Why would I want to just buy gold itself instead.

S4: Yeah. So then you have other people who aren’t interested in you know 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.

Advertisement
Advertisement
Advertisement

S1: Assume I am one of the people who buys ETF s which are not physical. I mean there might be some physical gold somewhere. But if I buy an ETF I just have a entry on my brokerage account. I don’t actually have any physical gold presently. You know if the zombie apocalypse arrives I’m not going to be able to trade my ETF for guns and butter.

S5: 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.

S4: I think again it depends on who you ask. Some people treat the ETF similar to the physical metal just because they are tied to the physical to those vaults. Some people do both you know 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 you know and you can add on layers and layers of this stuff whenever it comes to investing. So I think that I think that’s the case a lot of the times that some people just have a preference for equities and stocks and the returns that those have in 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.

S1: So historically speaking what’s done better.

S10: Gold miners or gold I will have to pull up a chart on your bloomberg. Yeah let me do that. Let’s see.

S3: Let’s say 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 shot of gold miners vs. gold over the past what seventy five years or something I’m sure you 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 sleep money studios. It’s amazing. It’s amazing.

Advertisement
Advertisement
Advertisement

S11: OK so I have a chart. Let me date it back seventy five years. That’s what you’re looking for.

S3: I pulled that number out of my eyes. Whatever. How far. I know I can’t go back go back.

S11: Oh wow OK. I don’t think the scale is going to stop. I’m currently in the fourteen hundred.

S3: I feel like gold miners did not exist in the fall. Yeah. Let’s go back to the beginning of when you have gold miners.

S12: OK OK. So I’m putting up an index that Bloomberg tracks just because that sounds good to me. Great. OK.

S10: It goes back to 2006 when the index begins.

S3: But like 2006 isn’t long enough to really be helpful.

S11: I agree there is a period between 2009 and twelve roughly when the gold miners were doing pretty bad. So you get kind of one whole market cycle in here at least.

S5: So OK. 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 stocks and bonds and that kind of thing. So gold miners did badly and gold itself did relatively badly too.

S3: Right. Right. Right. So. All right. So let’s let’s talk about that. Let’s go. Let’s just talk about since you don’t have inflation going back to nineteen hundred. Let’s talk about inflation going back to 2006 in up markets. Which one outperforms in down markets. Which one outperforms.

S4: OK. 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 the same shape. The chart is roughly the same shape that the gold prices. 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.

Advertisement
Advertisement
Advertisement

S8: 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 I 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.

S4: 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 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 like you said is there a general price the miners that costs miners to mine an ounce of gold.

S5: Does that fluctuate over time. It fluctuates alongside the price the actual gold does so wait when gold becomes more expensive it also becomes more expensive to mine it.

S4: So whenever gold becomes more expensive miners want to mine more of it. So they’re going have to input more spending to mine more of it. Whether that’s you know more manpower or kind of looking for more mines things like that.

S5: So when gold falls in value there’s a bunch of like cheap easily accessible gold they can find. 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 when gold prices rise more.

Advertisement
Advertisement
Advertisement

S4: 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 you know purchase those companies or purchase those assets or do joint projects with those smaller companies just to kind of capitalize on on all the gold out there.

S1: 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. Yeah not as much as that kind of weirdly one of the few economic indicators which is not a function of supply and demand.

S4: 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 and the demand side.

S1: 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.

S4: It’s probably about half maybe a little bit less than half investment and the rest of it goes in to things like jewelry things like electronics and those are all kind of incrementally smaller smaller portions of demand that is one of the things that gold has always been good at is it’s been portable.

S1: 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 is I mean to put it politely. You get to avoid governments to put it less politely. You get to avoid taxes.

Advertisement
Advertisement
Advertisement

S4: 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.

S5: 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.

S4: 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 it basically I work with colleagues kind of around the globe and we all track the same price of gold.

S1: So whether it’s someone in Singapore or someone in London we all are looking at the same price of gold 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 in the U.S. for sure.

S4: I haven’t looked as closely at what the price of a coin is in South Africa or in London or in Singapore.

S7: So you don’t think that gold is is a 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 buy some metal and melted down and you know turn it into something else and transport it easily it would if I place myself in the minds of a criminal like this would be a very attractive asset.

S4: Sure totally.

Advertisement
Advertisement
Advertisement

S3: You’re right on that yes a lot of people compare it to crypto currencies for that reason because the two of them are both not related to any concept in crypto currencies 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.

S4: Yeah. Gold is completely anonymous unless you’re buying it from you know an actual vault or something like that. But I think that I think the argument with both of them is just that none of them are tied to any government so there’s no government you know raising or decreasing rates or going into quantitative easing you know and using gold or crypto currency but as justice 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. I think that I don’t wanna 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 and I don’t remember which country it was in Africa that was working with with gold miners and just you know 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 in that they can invest as a as a terrorist organization if I want to buy physical gold.

S6: What’s the best way of doing that.

S13: That I don’t get ripped off either in terms of price or in terms of the purity of the metal by buying physical gold as an investment. Yeah let’s say that I’m just a normal person who is like I am 35 years old and I am going to want an asset in 50 years time that is going to hold its values. I’m going to buy a physical piece of gold because God knows what’s going to happen to my Robin Hood dot com account in 50 years for at least a gold coin there’s going to be a gold coin. What is the most efficient way for me to buy that physical ounce of gold.

Advertisement
Advertisement
Advertisement

S4: The most common way people do that is either kind of shopping online which allows people who are 35 to put down their credit card there are gold websites where you can go and buy you know physical coins are they are they trustworthy. A lot of them are trustworthy a lot of them.

S1: How do I how do I test. How do I know whether a gold website is trustworthy.

S4: Sure. So there are if you various 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 kind of I think about it the same way I think about investing in non-profit companies.

S3: So I feel like investing in the nonprofit company is a way to guarantee that you lose all of your money. So that’s not a really great investment.

S4: I’ll explain. Okay. So there are websites that kind of give rankings of nonprofit companies and which ones are worth your time and they have different metrics. There are the gold coin companies that kind of the websites where you can buy some of the coins from the kind of detail certain standards and you can read up on you know 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 like the purity might be like ninety nine point five gold or ninety nine point nine gold.

S6: Those are some of the common purity of gold that you can buy like the more pure purity is the softer it becomes right and the more light bits can sort of fall off by mistake and I wind up losing them.

Advertisement
Advertisement
Advertisement

S5: That’s that’s a good point yeah a reason why I wouldn’t want 100 percent pure gold.

S4: Yes. I also don’t think anyone makes 100 percent pure gold. I think that’s like a scientific improbability.

S3: OK. Because something a little always get mixed in. Right. But in general for investment what’s the what’s the standard for investment.

S4: Yeah. So again it’s the ninety nine point five ninety nine point nine. Those are kind of the standard purity is a lot of times the markup. I’ve seen some websites say you know the gold price it shouldn’t be the coin shouldn’t be any more than I think it’s I’ve seen like 5 percent more than like the spot price of gold. It’s like a very small percentage.

S1: The larger percentages of course reason seems like quite a lot to me. I mean again there’s an investment if I’m paying a 5 percent load upfront to buy an asset class I need that thing needs to appreciate by 5 percent before I even make any money. Right. Yeah yeah. So it doesn’t seem like I mean one of the ways I think about investments is to say what’s the round trip cost.

S5: If I go to one of these Web sites and I buy a thousand dollars 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.

S9: So do you mind if I look up one of these websites. Go ahead. Let’s see.

S13: So we had this 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’s actually turns out to be much harder than you think. Presumably there’s a pretty efficient market out there for people looking to sell gold just as much as there is for people to buy it.

Advertisement
Advertisement
Advertisement

S4: Right yeah yeah definitely. All right.

S5: So let’s let’s look it up and see if I have a gold coin. How much it will cost me to sell it.

S11: OK. 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. She would do a fun thing where we call up the 1 800 number and can you do that just mean like do the calling thing.

S14: Thank you for choosing. This is done. How can I help you.

S6: Hi there. My name is Felix Salmon. I’m recording a podcast with Justin Vasquez of Bloomberg News and we’re talking about gold as an investment. You think you’d be able to help us out with some information on how much it costs to buy and sell gold coins.

S15: Sure. What was your name. Sure.

S1: My name is Felix and we’re with Slate Money swag Slate Money swag OK silver wine gold we’re interested in all manner of things that you can buy as an investment.

S5: 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.

S15: Sure. Felix as of right now we send those out for delivery our current price on those is one thousand five hundred and seventeen dollars. It’s about to see here.

S16: Okay that’s good. I want 127 dollars over spot. Yeah.

S3: One thousand five hundred and seventeen dollars and you will send that to me and there’ll be a little bit of like shipping involved maybe.

S17: Yeah. There’s a little bit of a shipping it’s 30 dollars for your first ten coins and then ten dollars for each additional ten Felix and then we also do store those as well and you get a little bit lower price if you store the product and then do I need to pay sales tax as well.

Advertisement
Advertisement
Advertisement

S1: No sales tax no sales tax. Okay. So I buy a coin for fifteen hundred and seventeen dollars plus thirty dollars to shipping and now I own my American Eagle coin.

S3: 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.

S17: Sure it is straightforward We will mail you a box. Felix will pay.

S15: Cover the costs for postage and the shipping back to us will 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. You wanted 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 14 71. That’s only about 3 percent less than what we sell them for.

S8: And then again is the shipping costs and stuff on top of that they need to pay.

S17: No we’ve covered the shipping for you to return it to us.

S1: OK. 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.

S17: Let’s see here. Yeah right right around that except we can’t sell you one coin. We will sell them individually. Yeah. We don’t sell them one at a time.

Advertisement
Advertisement
Advertisement

S15: What’s the minimum purchase though for that particular product or one in Litecoin Felix. It’s ten coins and we do have some that we will sell individually unfortunately that’s not one that we sell one at a time.

S1: But realistically then if I’m buying gold from you guys most people will be spending at least fifteen thousand dollars or so when they when they’re buying gold for that particular product.

S17: But we do have products in gold where you can start with as little as the two or three thousand dollars but that’s not one that we sell in that small of a quantity dollar wise guy.

S8: What’s that what’s the most popular product you sell.

S14: 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 Canada.

S5: The Canadian one. Okay. And yes and the. Is there any real price differential between maple leaves and eagles and crew grands and all the rest of it.

S17: That’s right. Yeah. It’s very slight. It just has to do with the fact that there’s a little more active market for though the gold Eagles here in the United States. Therefore the U.S. Mint doesn’t give us as good a volume discount. So we have to pass on a little bit higher price to our customers.

S15: 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 percent differential between the buyer and the seller. Either way it’s just a matter of where that is set relative one to another.

Advertisement
Advertisement
Advertisement

S18: I’m curious. Hi this is Justine with Bloomberg News. I’m also on the line Justine. OK. Yeah. Good to meet you. Good to meet you too.

S4: I’m curious what the volumes are like you said the Canadian coin was more popular globally. How does that compare to some place where like the Australian market the Perth Mint which also has a lot of gold production around it.

S17: You know I would have to get data for you on that Christine. 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 Matt here but by other sources that the Canadian may believe is the best selling gold coin in the world. And then number two after that is the one from Europe. The Gold V NFL harmonic though they kind of oftentimes go back and forth and then our U.S. products are probably third nationwide and then I think Perth man is probably right in there in terms of sales volume with the United States Mint.

S3: Well this I love the name of the European coin is the Vienna Philharmonic.

S16: That’s correct. Yes. They’ve named after a symphony orchestra.

S17: That’s about I mean the Austrian Mint is the oldest mint major mint in existence. So yes they 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 harmonic orchestra so they decided to to brand it that way it really doesn’t matter too much but they that’s what they chose to brand their coin in the EU just decided to adopt it when they brought the Austrian man in to be the official gold coin of that economic trading bloc.

Advertisement
Advertisement
Advertisement

S1: 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 to kill a coin no matter which coin is is going to be about 5 percent yes I would I would pick that as a very good round number figure.

S17: Felix to say look unless it moves at least 5 percent 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 percent move in the gold price and that’s in essence how we keep the lights on and keep everybody paid as you have a spread of about 3 percent. You have a little for shipping so on and so forth. So 5 percent is a good rule of thumb many dealers it is higher than that. There are maybe 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.

S19: Thank you very much.

S17: Very good. And are they view at all interested potentially in investing in gold personally.

S6: Justin is trying to persuade me. I’m not sure I am 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. Justin is more I think Justin a year more into the idea of buying gold right.

S4: I am a gold reporter who chooses to reduce any conflicts.

S3: Justin It would be interesting if she wasn’t literally barred from doing that by the terms of her employment.

S17: OK. Well I think Felix there is a case for both. I own some mining shares myself but I also do own some physical gold. You know the investment store is basically three broad asset classes commodities real estate and then businesses i.e. stocks 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 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 that 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 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 a value as well. Does that make sense.

Advertisement
Advertisement
Advertisement

S3: It does indeed. Thank you so much. This has been super helpful.

S19: You have a wonderful day. All right bye bye bye.

S1: OK. So there you have it ETF. Obviously a lot cheaper if you own a roundtrip gossip cost much less than 5 percent 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 Goldie’s yes.

S4: Yeah there are. There’s at least one ETF that I know of that people do tend to kind of trade and get in and out. But for the most part people like to buy at the Goldie taps and just can hold them for a while and watch the economy play out just in the Vasquez of Bloomberg News.

S2: Thank you very much for joining us on sleep. Money swag.

S20: Thank you.