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Gold and Silver Investing with Patrick Yip

George Grombacher January 10, 2022

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Gold and Silver Investing with Patrick Yip

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Gold and Silver Investing with Patrick Yip

LifeBlood: We talked about gold and silver investing, how the industry has changed post financial collapse, the reasons people are attracted to precious metals, and how to think about them compared to crypto assets with Patrick Yip, Director or Online Marketplaces with APMEX, the leading e-retailer of gold and silver

Listen to learn how you can get started owning physical gold and silver!

You can learn more about Patrick at APMEX.com, OneGold.com, Twitter, Facebook and LinkedIn.

Thanks, as always for listening!  If you got some value and enjoyed the show, please leave us a review wherever you listen and subscribe as well. 

You can learn more about us at MoneyAlignmentAcademy.com, Twitter, LinkedIn, Instagram, Pinterest, YouTube and Facebook or you’d like to be a guest on the show, contact George at Contact@GeorgeGrombacher.com.

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About The Episode

GG Headshot 2021

George Grombacher

Patrick Yip

About The Transcript

Come on.

Wanderlei Blood This is George G. And the time is right welcome today’s guest strong a powerful Patrick Yep. Patrick, are you ready to do this?

Patrick Yip 0:19
I’m ready.

george grombacher 0:21
Let’s let’s let’s let’s go. Patrick is the director of online marketplaces with APMEX. They’re the leading e retailer of gold and silver. Patrick, tell us a little about your personal life more about your work and why you do what you do.

Patrick Yip 0:36
Sure. So it all started in 2008, I was heavily invested into stocks, I saw my portfolio got wiped out by over 50%. And I said, Well, something’s broken. So this led me to discover precious metals, gold and silver, eventually got into that started at APMEX. Around 2011. I’ve been here for over 10 years. And it’s been great.

george grombacher 0:56
Nice. Appreciate that. So certainly, since 2008, the world has changed dramatically. And it feels like the world is just continuing to change dramatically. In terms of gold, silver, other precious metals that y’all are focused on. Is there something that’s really top of mind or current trends that that that you’re most excited about? Or most focused on?

Patrick Yip 1:21
Yeah, I think in this current environment, it’s kind of interesting. As you mentioned, things are dramatically different. I think it’s important for investors to consider diversification. You look at it, it’s now been 13 years since the Oh, eight crash, all assets are booming, especially since COVID. You look at everything, you look at real estate, setting records, stocks at an all time high, even some Kryptos are blooming, despite some of the fundamentals of some of these meme coins. I think it’s important to remember that things are cyclical, nothing goes up and up forever without having at least one or two corrections throughout the process. So I would recommend if you do have some gains in some of these other sectors, it might not be a bad idea to take some of those gains, spread it to another sector, which you may think is undervalued. In fact, an interesting thing a couple of weeks ago, I was speaking at the New Orleans investment conference. And one interesting trend I saw was several real estate investors looking to get into gold and silver, which they view as another hard asset.

george grombacher 2:20
Nice. So it’s it’s a fascinating time, because we need precious metals, for all of our apply for all of our technology, right to to build our phones and our electric cars. And then we’re looking at Gold the way that I think we traditionally have, which are hedges against inflation, or safe havens. And it sounds like that there are are limits and we don’t have enough of these metals, and we need to start mining them. So from somebody on the outside looking in, I appreciate it. Yeah, I’m interested in diversifying. But which one or how?

Patrick Yip 3:05
Yeah, ultimately, it’s going to depend on your asset allocation. Obviously, there’s not a one size fit all fits all. For every investor. Obviously, if you have hard assets, maybe you you have a smaller position, if you don’t have any hard assets, maybe something a little heavier. One of the things I like to say on gold and silver is it’s a great portfolio diversification strategy. And gold is basically a negatively correlated asset with the stock market. And by that I mean that as the stocks go up, gold generally goes down. And then people might say, Well, why why would I want that? So typically, when you when you talk to a financial adviser don’t advise something like, Hey, do you want stocks or bonds, if you’re okay, with high volatility, and you want a higher return, you go heavier stocks, obviously, if you don’t like the volatility, and you’re okay with giving some of those returns away, you go heavy bonds, we did an analysis looking at the past 50 years of data, so quite a bit of data and the 10 year average for and so looking at returns over a 10 year period, average average year, it’s possible to almost have a return of 100% stock portfolio with a volatility of 100% bond portfolio by making an allocation of 80% and s&p 20% in gold, the numbers actually work out to about so if you look at stocks, they have an average real return this is inflation adjusted of around 7% A year bonds are 5%, this gold portfolio would be 6.7%. So a little lower than the stock portfolio, but you get a lot less volatility. You look at the volatility, it’s 5% of the stock portfolio at 3% in the bond portfolio and 2.7% in the in the goal that s&p portfolio. So that’s one one data point, obviously, like I mentioned, is really going to depend on your, your asset allocation if you want to do this at 20% mix or something else.

george grombacher 4:48
Yeah, I think that that’s a cool way to look at it and always appreciate doing a little bit of research and and looking at what’s actually happened. So in terms of You mentioned cryptocurrency and crypto assets and the lack of for lack of a better term fundamentals. Then, you know, it’s Kryptos is is is unique and it’s one thing gold is unique. And it’s one thing silver is unique. And it’s its own thing. I think that people want to or have a tendency to sort of say, Well, why would I do crypto over gold? What are your thoughts on that?

Patrick Yip 5:29
Yeah, I think there are different asset classes. It was interesting. I mentioned the New Orleans investment conference, I was actually talking to us fraud advisor over there. Actually, I know the guy personally, but Sprott for those of you guys who don’t know, it’s one of the largest asset managers, alternative asset managers in the world. And what the conversation with this guy was, was just, it couldn’t hurt to have a little bit invested in every single sector. I unfortunately, no one knows what gold is going to do over the next year or the next 10 years. No one knows what bitcoins going to do in the next year, 10 years. But I think it would be it would be really bad. I guess, if you missed out on some of those upside, I’ll see Bitcoin went from pennies to $60,000. You can look at what gold did in the 70s. It went from $35 to $800. And basically a 10 years. I don’t know if either asset class we’re gonna have that performance, but it couldn’t hurt just to get a little bit in a little bit could go a long way if this thing becomes a 1020 30 bagger.

george grombacher 6:26
Yeah. So at max do, like you are actually selling hard, like, like the physical assets.

Patrick Yip 6:36
That’s correct. So APMEX is one of the largest online retailers of precious metals we sell gold, silver, platinum and palladium bars, rounds and coins. We estimate that we have about a 40% share of the US market and actually on this year, we’re on track to sell about $2 billion in physical gold and silver to retail investors.

george grombacher 6:56
And is that more than usual?

Patrick Yip 6:59
It’s much more than usual. Couple trends do I mean we’re just seeing demand at at record levels, you look at transacting customers we hit an all time high in 2020 2021 set an all time record you look down to sold we’re seeing demands at multiples at what we see in previous year. An interesting thing that we’re also seeing is inventory supply is getting stressed. So you have record demand you also have COVID shut down so limited production facilities that meant that wholesalers and so on like this so you basically have the the perfect storm which is creating limited supply and and you know higher demand which is pushing some of the premiums even higher on on the physical side.

george grombacher 7:42
So y’all are are you are are the marketplace to match up buyers and sellers

Patrick Yip 7:53
Yes, that’s correct. Many of the men’s actually don’t like selling or don’t and can’t sell directly to the public. They don’t have the facilities or the operation staff that to handle little or I guess little is relative but like they are average order size a couple $1,000 But a lot of the meds are not set up to do this. So what we do is we buy we have relationships directly with a men’s we buy directly from the bins and then we we list the products on our on the website on APMEX COMM And then we sell it to individual retail investors.

george grombacher 8:24
How many myths are there

Patrick Yip 8:29
you have some of the larger men such as, let’s say the the US Mint, the Royal Canadian Mint, the Perth Mint, the Royal Mint in the UK, then you also have smaller men’s that and there’s there’s several of these, we actually have our own men parent to what’s called Nine fine mint where we actually meant gold and silver products too. So terms of all of them. It’s several.

george grombacher 8:50
And so in I don’t even know if these are appropriate questions to ask because I’ve never asked them before. So let’s just use Perth as an example. Because you you mentioned it or we can make one up if if if that’s better, does XYZ mint actually have possession of gold and then when you buy it from them, they give it to you or how does that actually work?

Patrick Yip 9:17
Yeah, so a lot of times these minutes source metals from from different refineries, mining companies, whatever the various sources, they then take this this metal they refine it to a certain purity to a certain standard so that they can start minting coins. Obviously if you buy a coin, you want to know that every coin is the same you don’t want to say well this one’s pure gold and this one’s less here and so on. So they refined them at all day that meant it so in the Perth Mint they make like gold and silver kangaroos, which is their most popular coin. They then charge us a small premium over the the metal price. We then buy that it gets shipped over here to the US from Australia. And then we then listen on our website and get people to I’m

george grombacher 10:00
fascinating. And I have to imagine it is more expensive and more dangerous to be shipping gold than it is shipping coffee grounds, for example.

Patrick Yip 10:09
Yeah, I mean, everything’s all insured when it when it ships, a lot of times it’s through secure carriers, such as like a Brinks or a loom. So it’s all insured to get here safely.

george grombacher 10:21
Fascinating. Okay. All right. So in 2020, y’all are setting breaking records, 2021 breaking records. So that is evidence, at least I would imagine that people are concerned is that so what this is, or just wanting diversification away from traditional fiat currency or stocks? All that?

Patrick Yip 10:45
Yeah, I think a lot of people are concerned, you look at some of the current environments right now, in terms of what we’re seeing out there. Example, you have quantitative easing, which is I mean, the government is printing and printing, with with no end in sight. You have debt and deficits, the US national debt is approaching $30 trillion. And many are thinking that that attempts to solve this is not going to end well. And then you have negative real interest rates too. You look at some of the nominal nominal rates are going down and inflation is going up, you go to the store and everything is higher, you go to restaurants, everything is higher. I think people are looking towards something else. Just in case some of this does not end well.

george grombacher 11:31
Yeah. So. So do you view actually owning and taking possession of physical gold as one more diversification above and beyond just buying a gold ETF or buying the shares of some kind of a gold stock?

Patrick Yip 11:50
Yeah, so at FX, we’d like to offer solutions for everyone. If you like physical gold, we’ll gladly sell you the physical gold, the physical silver for your at home for your so that you can have it in your hands. There’s obviously no counterparty risk, it can’t be hacked away, you could pass it to generations to generations and so on like that, we’ll gladly sell you that on at max calm. But I’ve always said that there comes a point when a little bit of physical is is maybe a lot of physicals is not the greatest idea, you might feel comfortable holding 10,000 100,000. But at some point, you may not want to have $1,000,000.02 million dollars of gold in your house, depending on your net worth. Because obviously that opens other security risks for you. You’d hate to get robbed in the middle of the night when you’re sleeping, and someone’s trying to take your gold. That’s why we offer another solution called one gold, which is another platform that allows customers to own vaulted positions of gold, silver, and platinum stored at various vaults around the world, such as the US, Canada, Switzerland, and the UK. So this is all fully insured, fully audited, you have title to your metal, just another way to own gold. And maybe maybe you want you want that you want physical I like both I own some physical. I also like one gold too, because it allows me to sleep at night and not knowing that I might get robbed for my gold at some point.

george grombacher 13:09
I think that that’s that that certainly intellectually makes sense to me. And probably emotionally as well. Interesting. What, what is if if I did buy the key mentioned, bars, coins? And what’s the third one round rounds? Yeah. What is that?

Patrick Yip 13:30
So a coin is a term that is basically minted by a government. So it’s minted by the Canadian government is minted by the US government, the UK Government, and it has a face value. So when I say $50 $100, whatever is on it around as minted by a private mint, so like, let’s say nine, fine Mint is our private mint, we can’t legally put $50 on it. Because we can’t make money, we can make currency. So that basically a round is a circular object that looks like a coin that does not have a face value. And a bar is obviously like a rectangular piece.

george grombacher 14:02
Got it? Okay. So I’ve got, let’s just say I’ve got gold coins that are worth or round that are worth $10,000. And that’s, that’s what I bought it for. And now the value is $20,000. Because the price of gold has has has essentially doubled. What is my market for that? And how does that work?

Patrick Yip 14:23
What do you do in terms of how to sell it? Or

george grombacher 14:26
if I wanted to redeem it for currency?

Patrick Yip 14:29
Yeah. So we actually offer a two way transaction so if you want to buy from us, we’ll sell you the gold. If you want to sell to us we give you prices to to sell your gold back to us. It was actually interesting a couple years ago before COVID to I was in Belgium, and I was looking at one of these currency exchange places. And obviously they take euros over there in Belgium. And then I saw it said that they had a US dollar exchange rate of British Pound and then it said gold Eagle Gold program and they actually gave you euros over there. If you had Certain coins. It’s the nice thing about gold. It’s a global market. Gold has a demand everywhere, whether you’re in Europe, whether you’re Asia, you’re in Middle East, people want gold.

george grombacher 15:12
That’s interesting is, is there a way to know which which countries or which places will exchange currency for gold?

Patrick Yip 15:23
I can’t think of it off the top of my head. But a lot of times most, most countries will value the gold based on its metal content. Some countries might have a little bit more of a preference for certain coins, for example, that the gold American Eagle is the most popular here in the US. Obviously, it’s the kind of the home country coin Krugerrands are popular in Europe, as well as a British sovereign too. So it just it depends really where you are. But everywhere I’ve been there’s always been demand for gold.

george grombacher 15:53
Interesting. How is how is his is one gold? Is this a relatively How long has it been around? And how is that trending? Versus just actually taking possession?

Patrick Yip 16:08
Yeah, so one gold has been around since 2018. It was actually an original partnership between APMEX and Sprott. So we looked at the marketplace and said, Okay, let’s create a better solution for customers to own gold kind of like a modern way. Some people don’t feel comfortable holding gold in their hand. How one gold works at first, we start with various agreements with different bolting companies around the world, such as brain explode in this world Canadian Mint, CNT, and APMEX. We then source larger bars. So these are the 400 ounce gold bars, 1000 ounce silver bars. We then move this into the various vaults around the world, the metals, and listed on one gold, which is an online platform for sale, I think it’s important to note that one gold is only going to sell the metal that it has. So like if we have a certain number of ounces, and you want to buy something greater than those ounces, will actually pause metal sales until we could acquire more inventory. And that guarantees a one for one backing. We don’t want to sell one of these unbag promises where you think you own gold, but you don’t own gold. When you purchase gold, it’s 100% owned by you, it doesn’t appear on one gold’s balance sheet. Premiums are attractive to since you generally owned a portion of one of the larger bars instead of an individual corner bar, we’re able to sell gold at point 8% or 80 basis points over spot. One and 2% over spot. As I previously mentioned, everything is audited insured. And then we also offer a redemption option with for your Divi is let’s say you decide to do one gold. And then you said well, I really want to take gold and silver, you could actually swap your positions at one gold for any of the 20,000 products available that at maximum the next

george grombacher 17:46
day. Cool. So you use the term spot. Is that just what the price of it is?

Patrick Yip 17:51
Yes, Spot Price refers to the current price that a gold or silver house could be bought on the market.

george grombacher 17:57
Got it? Nice. I think that that is that is pretty interesting. I think I imagined that that’s pretty compelling. As as an industry, the gold industry, the silver industry, are there more entities such as one gold that that that are coming online?

Patrick Yip 18:16
Yeah, there’s a few. I think the biggest competitor to a platform like one gold is the ETF, such as the GLD. And SLV. Kind of an interesting thought on there is you have platforms like obviously APMEX, we’re seeing record demand one gold, we’re setting new records to, we have like 90,000 customers, over 750,000 transactions, certainly blooming on the one bull tide. The interesting thing about the GLD and SLV is they’re actually shedding metal. So people are leaving the GLD and SLV, despite record record demand on the APMEX and one gold side. And so we looked into this and we said well, why is that because it seems a little odd that one one is going one way and the other is going the other way. If you look at the GLD, for example, you look at where they say the gold is stored, they said it could be stored on a custodian, a sub custodian or a sub custodian of sub custodian. That’s like if I gave you my gold coin, then you lent it to your friend and your friend lent it to your friend of a friend. And at some point, you lose control of it. But one of the biggest things about the GLD is they say the metals not insured, which is a big con to me, because you’d hate to make an investment in gold. You see your gold double and you’re like, hey, great, you’re right. And then one of these sub custodians of sub custodian gets broken into and they said, You know what, that gold investment that you made? It’s actually gone. So you have nothing. So I think that’s one of the concerns with the GLD and SLV. But that’s by far the biggest competitor of of some a platform like mine gold.

george grombacher 19:43
Yeah, that certainly makes sense. And yeah, I think that if people actually read the fine print, and they saw that about, you know, it’d been housed here there the other place and then it’s not sure that that would give people probably a lot of reticence, so appreciate that. Well, Patrick, the people already for your different speaking tip, what do you have for them?

Patrick Yip 20:03
Yeah, I would say, definitely check out precious metals. Even if it’s just a small allocation. It couldn’t hurt. No one knows what the future of golden silver is going to do. Maybe Maybe it stays flat. Maybe it quadruples. Who knows, I would recommend at least getting some type of ownership and golden sort of where if you’d like to physical, we’ll gladly sell you physical calm, if you are involved in options. COMM we also have apps for both companies. Check us out on the Google Play Store or the Apple App Store. Both have apps. We also have an exciting new app in the app next time that allows you to actually buy transact and manage your account through your mobile phone.

george grombacher 20:41
Nice cool well, Patrick, I appreciate you coming on where can people learn more about you you just give us the websites give it us give us them again please?

Patrick Yip 20:51
Yeah, that’s that’s where I’m at COMM And the one hold website is one bold concept. Oh NEG aol.com And if you have any questions, feel free to email me directly it’s Patrick at RIC k.ip y IP at APMEX calm Perfect.

george grombacher 21:09
Well if you enjoyed this as much as I did show Patrick your appreciation and share today’s show with a friend who also appreciates good ideas go to one gold calm go to app Max AP me x.com Shoot Patrick an email Patrick Yep, X calm and figure out if this makes sense for you. Thanks. Good, Patrick. Great, thank you. And until next time, keep fighting the good fight. It’s we’re all in this together.

Transcribed by https://otter.ai

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