Episode 38: Investing in Physical Gold with Mark Yaxley

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor. Here’s your host ben Lakoff.

Hello and welcome to the altar asset allocation podcast. Today’s interview is with Mark Yaxley of strategic wealth preservation as a key alternative asset gold and other precious metals are mentioned a lot in this channel.

We have a lot of content on why it might make sense to own some gold in your investment portfolio. But in this conversation, we really. Dive into the different methods of owning gold. We touch on three main ways to have gold exposure, gold miners, or stocks, gold funds, or ETFs, and then physical bullion.

We’ve covered miners and gold in general a lot already. So in this episode, we really go deep into physical gold coins bars. What are the advantages, disadvantages and pitfalls you should look out for when investing in physical gold, what sort of minimums and costs are associated with this different tax and reporting characteristics?

We cover a lot in this really fun conversation. I’ve been on the fence for a long time about owning physical gold. Part of me always wanted the Scrooge McDuck pile of gold, but the actual practice of storing and dealing with your own gold, that’s really annoying if you’re interested at all. In, in investing in physical gold or like me, you’ve been on the fence.

You won’t want to miss this conversation on all things, investing in physical gold with Mark Yaxley before you listen, please don’t forget to like us subscribe to the podcast or even better leave a review. If you’re watching this on YouTube, please subscribe to the channel and like the video, it really helps.

And I really, really appreciate it. Okay. Physical gold for your portfolio. Let’s get into it with Mark. Enjoy

Mark excited. Have you on the show today? Welcome. Thanks Ben. Happy to be here. Awesome. we talked a little bit beforehand and I have a lot of questions. I wanted to start off with a bit of your background and a little bit more about what you do at strategic wealth preservation, SWP.

As I, I think that will provide a little better context where we go in this conversation.

Mark: [00:02:19] Sure. I’m Ben by, by trade. I’m a gold dealer. So I’ve been selling precious metals since 2006. I spend my days helping investors purchase cell transport you know, liquidate, reposition their precious metal portfolios.

So that brings up a lot of potential different scenarios, but SWP, the company that my partners and I founded in 2014 is basically a fully integrated, precious metals dealership and secure storage facility. So we allow people to buy and sell precious metals with us, but we also have added the storage aspect to the, to that relationship with the clients so that they can, they have a safe place to keep their golden silver.

And in case they don’t want to keep it at home.

Ben: [00:03:06] Yeah, that makes a lot of sense. I definitely want to get into a lot of physical gold ownership questions, different types of way of ways of owning gold as an investor. But I’m curious what brought you to gold and  what part of gold and silver and precious metals was most interesting to you and led you down this path

Mark: [00:03:27] Ben? You know, I wish I had a better answer to that question. That it’s actually the embarrassing story, how I got started in the business, but I like jewelry. What a naughty, not even, it wasn’t even, I was working in fashion. Actually. I was working for American apparel, which was a fairly large fashion company back then in my early twenties.

My girlfriend at the time came home with her. She was working for our precious metals dealership in Montreal, Canada, where I grew up Kitco metals, which is very well-known precious metals dealership. And she came home with her Christmas bonus and I came home with mine. She pulled out an envelope of $4,000 cash, and I pulled out a a hundred dollars gift certificate to the movie theater.

So I knew at that point in time, I had to make a change in my life. I ended up working for Kitco as of 2006, I learned the ropes there. It was a, it was a great company. You know, it was one of the most successful, precious metal dealers. So great place to kind of learn the industry, but there’s no, you know, there’s no I, I didn’t grow up wanting to be a gold dealer.

It’s kind of something that I fell into, but I’ve been in love with it for the last 15 years. And I still learn new things about the industry in our investors every day. So I continue to do it.

Ben: [00:04:26] That’s awesome. How humbling was that comparing your a hundred dollar movie? Take it to her. An envelope of cash, wrong industry time for a pivot

Mark: [00:04:36] lesson learned.

Yeah.

Ben: [00:04:37] Yeah. what do you see right now? I mean, you’re dealing with gold people buying, selling gold constantly. what’s happening with mainstream institutions. kind of paint me the picture of the broader gold market right now. Yeah.

Mark: [00:04:50] So at a high level, I mean, ever since COVID became, you know, it’s not even a buzzword.

It is, it is an almost every second sentence that we talk about it. Unfortunately, these days ever since COVID struck in late kind of late February, we started to really see the effects and shutdown, shutdowns and things like that. It was really like throwing fuel on a fire that was already burning.

You can look back to 2019, sometime around the summertime. You started to see gold. Gained some pretty serious momentum and breakout of a range that it had been stuck in for a number of years. So you can argue that the golden bull market really started back in about mid 2019. And then when COVID started to have its effects, it was just an accelerant on an already and a market that was primed to do well already.

So what we saw is basically I was mentioned to you earlier, the volume in our industry just picked up dramatically. The initial pickup when precious metals price started to recover after the initial decline in March was really about 300% of increase in the number of new accounts. Number of trades and metals moving all around the world.

It put a huge strain on our industry. You saw massive delays in product in order fulfillments, obviously the price was increasing rapidly and in which eventually led to a new record high. In, in us dollars for the price of gold. But to break it down to go one level further, what we actually are seeing within those day to day kind of transactions and trends is we are seeing not only the goldbugs who are loyal to precious metals, people like you and I who have been buying and investing in precious metals for a number of years, we’re seeing a lot of new investors, which is a big indicator that you’ve really kind of entrenched yourself in a bull market.

Mainstream investors, people that don’t usually are not usually loyal to precious metals, all of a sudden are entering the market. What’s more interesting is that because SWP is actually a company that operates off shore and all of our transactions are processed off shore and our storage is offered offshore.

These are first time investors coming to us. So not only are they first time buyers and gold and silver, they’re so worried about. You know, whether in most cases are Americans are so worried about what’s happening in the United States and they have all these fears and doubts about, you know, whether it be government confiscation or simply violence in their own cities where they’re living, or just, you know, lack of stability in the stock market and unpredictability in the stock market.

They’re actually trying to reposition funds offshore, which is another interesting trend that we noticed. And beyond that you also have the central banks and the institutional buyers who continue to buy, you know, on massive levels and continue to add to those positions. There’s a net inflow of precious metals for the institutions and the central bank.

So overall big volumes, they have steadied a little bit in the last month or two we’ve seen things returned to, I wouldn’t say pre COVID, but more normal levels of new account openings, new trades volume of trading. But it’s certainly, there’s still a lot of energy in our space right now. And we’re kind of primed for that next leg of this bull market.

Ben: [00:07:48] Awesome. Well, exciting times, indeed. that’s a really interesting comment of like gold as the almost gateway drug to like this flag theory and offshore accounts and like geographic diversification, not having all of your assets tied to one country. I love that people are use that as a way to kind of, Hey, maybe it doesn’t make sense that, you know, I’m living in the U S all my savings are denominated in dollars.

All my assets are, US-based like, that’s a lot of risk in one country. If God forbid something happens with that one country. And we never, you know, the Titanic floated until it didn’t right. highly doubtful, but you never know. I’m curious, physical what you’re seeing in the physical gold markets or with SWP new account openings openings and things like this.

Is this normally a leading indicator or lagging with the actual spot gold price that you know, people are seeing on a Yahoo finance.

Mark: [00:08:43] That’s a really good question, actually. I would say the, there is definitely a lag by the time the average investor kind of digest the news and, and the price action.

There’s probably a lag, you know, for some individuals it’s three days for others it’s months. And I think the people that we’ve seen so far step into the precious metals market are still, I don’t want to call them the, the, the, the cream of the crop or the, the upper tier of investors. But these are definitely people that are much more in tune and are spending and investing time in their day to, to read the financial news and try to interpret what’s happening in the markets, because the rest of mainstream, like the mom and pop investors, people that don’t.

Pay as close attention to what’s happening in, in, in finance in general, have not yet arrived to the party. So although these investors that we’re seeing right now, or we’ve seen over the last six months are first time, precious metal investors. They are more sophisticated investors than, you know, your average mom and pop investor and people, like I say this all the time, my interviews, people like my mom and dad who tend to be more traditional, they tend to watch mainstream media and they tend to listen to their banker about what products the bank is offering them.

And that would not include precious metals. So I think that means that there’s still a lot of growth potential for precious metals. I think there’s still, I was telling you earlier, you know, Over 95% of investors do not own physical Boone yet. And the reason is because they lack an education and an understanding of a physical, precious metals and how they can invest in it.

And coupled with the fact that gold and silver have not been front page news or second page news for that long, you know, when we saw the all time record high in us dollars, that really drove a new group of people into the market. But now with the COVID vaccine being discovered, you know, some people are stepping away and, and it’s, it’s kind of normalizing.

So yeah, a long answer to say that we are seeing, you know, a certain type of person stepping in the market for the first time, but there’s still a lot of other people that aren’t aware yet and, and, and, and need to be educated and, and comfortable with the idea of investing in gold and silver before they enter.

Ben: [00:10:49] Yeah, absolutely. And I think that’s a great segue. like you said, so 95% of investors don’t own gold or gold bullion,

Mark: [00:10:58] like physical well, gold Boolean. Yeah. I mean, a lot of people, when they think about gold, they think about mining stocks. They think about ETFs. There might be a fund that their bank offers them, which are all good entryways.

If you don’t have any exposure in precious metals, having exposure through one of those means is definitely better than having none at all. Right. But yeah, I think physical precious metals, although historically it was really the only way up until, you know, until some of these, the, the, the more digitalized versions of precious metals became available.

You know, it has unfortunately lost some of its. It’s popularity. And again, it’s just because people aren’t aware of how easy it, it really is to own.

Ben: [00:11:38] Yeah. And hopefully we’ll debunk that by the end of this chat that’s for sure. gold. Even with these financial instruments that represent gold exposure in portfolios is dramatically under, under owned across the board.

And part of this is the relative valuation, right? Stocks, real estate, and all of these other things were at all times high highs, but you, you touched on a very interesting stat, which is 70% of these investors claim that they don’t, they don’t understand gold or why they would all own gold. gold has been a store value for 3000 years.

Why do you think this is that there’s such a majority of investors that don’t understand or lack the education to make a gold investment?

Mark: [00:12:25] I think it boils down to fundamentally the people that we listen to and we are influenced by because, you know, we all like to think that we make our own decisions, but chances are a lot of our decisions in life are based on beliefs that we read or have been told by other people, people that we, we, we trust, whether it be a mentor or a grandparent or in a lot of cases, it’s whichever newsletters we read or whichever whatever information we receive from financial advisors or personal bankers.

And in a lot of cases, the people that are giving this investment advice are not telling the story about gold. It either is not part of the conversation at all because they’re not comfortable with it. They’re not well-educated on the subject. So therefore they don’t want to introduce it into the, into the conversation or if they do, they stick to a number, you hear this number all the time.

Well, if you’re going to own precious metals, make sure it’s not more than 5% of your portfolio. That number is based on statistics derive from the 1970s. And somehow it is stuck with us until today. Unfortunately, when you look at the data we, there’s actually a group called the CPM group out in New York that does a lot of like analysis on portfolio performance, precious metals performance, and they rerun the same the same data.

But instead of, you know, taking data from only the 1970s, they took it from that point I’ve been through to more recently, I think it was 2017 when they conducted the study. And what they found is that the optimal portfolio actually contained about 20% precious metals and not only five. So again, it’s just a, you know, it’s lack of of good information available to the general public.

And part of that is, you know, the fault of our industry, precious metal dealers do not tend to provide investors. With a very clear message. We’re kind of all out there on our own RA acting independently. We all have our own messaging to investors. And I think collectively we could do a better job as an industry to really have one core message to investors and really help them be more educated.

So that’s one of the reasons that we created a series on YouTube called inside the vault. It’s 16 episodes of the one-on-ones, the precious metal so that people could understand how it works. And hopefully we’ve helped a few people you know, debunk their lack of understanding for gold and silver.

Ben: [00:14:38] Awesome. And I’ll definitely link those in the show notes because they’re very educational and helpful. you know, setting the record straight, I don’t want to go too deep into why old own gold. I have a ton of videos and content on this, and hopefully my listeners at this point are convinced, and there are more gold thugs themselves, starting at the beginning of.

Yeah. Okay. I’m an investor. I’ve, I’m convinced that I should have some gold in my portfolio, whether it’s 1%, all the way up to 20 plus or whatever. What are my options to own gold for my portfolio, for the average investor, I’m talking about somebody that, you know, say, wants to put under, under a hundred grand or something into gold, what are my options and what are kind of the pros and cons of each?

That’s a big question. I know. Yeah. It’s

Mark: [00:15:24] no, it’s a good question. And it’s an important question because it’s it’s, if you do make that leap of faith and say, I’m going to invest in precious metals you’re you’re then presented with all these different options, right? So traditionally you’ve kind of got the, the three main options I’d say are where most people end up is one in mining stocks, two in ETFs and three in physical metals.

So if you go with the mining stocks, A lot of potential upside. Obviously you can be paid dividends. You know, when when a mine is performing very well and couple that with a bull market, like we’re in now, if you own the correct mining stocks, you’ll do very well. You’ll see excellent returns. And those returns will outpace the returns that you’ll see in an ETF or in physical metals.

But there’s a flip side to that. And I know from experience that if you pick the wrong minors you are going to, you are going to see either negative returns that you may never recover. And or you will see those minors underperformed compared to the spot price of gold. So the knowledge required to pick the right mining stocks is, can be quite difficult to come by.

And I know having worked with guys who, who pitched mining companies to investors over a number of years, I used to go to the Vancouver investment conference a lot. It was a big one you know, eight out of 10, nine out of 10 of these junior mining companies are dogs, unfortunately. And if you have a new invest in them, you know you could lose your shirt.

Ben: [00:16:42] There’s a gold rush out there, you know, but I, I mean a good a good argument. There would be just by like, GDX like the, yeah, the junior, the, the more traditional new mountain or Newport, like these sort of bigger mining and as like a higher beta way of playing the gold because of the gold narrative plays out, these will do well.

Their margins will expand. There’ll be good investments. And you, you,

Mark: [00:17:06] I completely agree with you. Yeah, I do exactly that. And so I do have some of my, my, my wealth is in physical precious metals, but some of it is invested in minors and in funds. And, and that’s what I do. I buy the RBC, precious metals fund.

Someone else manages it for me. The returns aren’t as aggressive. I’m not going to hit one out of the park necessarily, but you know, the returns are steady and I know that it’s been managed professionally. So that puts my mind at ease. When it comes to the ETFs, I mean, it’s a very cost-effective way.

So that’s one of the reasons that a lot of people invest in ETFs is it’s very simple. It’s a lot like what basically it’s like buying a share. So you, you understand how it works. You can go online and you can buy it very quickly. It’s very efficient in that sense. One thing that a lot of people don’t understand about ETF.

So is the fine print. There is a management fee involved. So a lot of them think, well, I’m literally buying spot gold and it’s costing me nothing in terms of premiums, but they do pay a management fee. If you read the fine print, it’s ranges between 1% to 2% of management fees there. So there, there is somebody actually charging you for your time and your holdings or their time in your holdings.

And then obviously if you do want to take physical delivery of precious metals from an ETF, that can be very complicated. So if your end goal is to one day, have the physical precious metals, either at your home or in a storage facility, Trying to achieve that through an ETF is probably not the right way to go.

You might as well skip right to option three, which is to do business with A well-respected well-established physical, precious metals dealer. And then you can buy and sell a variety of different formats starting at one ounce all the way up to 1000 ounces, which are those big bars you see in movies when they’re always trying to steal the big bars.

So you can buy different formats or different price points effectively of gold, silver, platinum, palladium, and even rhodium. So you can own all five precious metals in physical format. And the nice thing about physical precious metals is that it eliminates all counterparty risk when you own them.

So you actually are taking possession of personal property under the law. When you own physical, precious metals, you own personal property, and it’s personal property that you can easily audit. It’s tangible. It’s either in your home. Well, that’s great, but it might not be insured. Or if you put it in a vault, it’s something that’s very easy to trace and establish ownership of.

Whereas with some of the other methods, in a worst case scenario, establishing ownership can be very tricky. Conducting audits correctly can be very tricky. Obviously there’s some theories out there that not all funds are backed correctly and things like that. So if you want to eliminate all that noise, you can just buy physical, precious metals.

Ben: [00:19:38] Okay, that makes a lot of sense.  just before we go into more detail on physical, cause I want to spend more time on that, the cost. I was just looking on Yahoo finance, like GLD, which is a popular ETF. It has an expense ratio of 0.4%. so the benefits of something like that be more like tactical moves, low costs.

Like I can, I can buy and sell large amounts because it’s very liquid. But I’m curious more on the costs of bullion and how that compares so all in, and if that compares by type, then like we can go into more detail probably by amount. Right. if I have a thousand gold bars, it’s probably going to be a little bit more expensive than like a few coins, but yeah.

What, what kind of. Price range. Are you looking at all in per year as a percentage for physical gold ownership?

Mark: [00:20:30] Yeah. So it, it’s the first question you have to ask yourself when you’re investing is obviously how much am I going to be purchasing and which products am I going to? You know, whatever amount that is, is, how am I going to break that down?

And there are certainly some products that are more cost-effective than others. The general rule in precious metals a is if you’re buying bars, they’re more cost-effective than coins. So you can save in terms of premium, immediately by switching from coins to bars. So a lot of people who are buying in large amounts are only investing in bars.

And then the larger, the bar that you buy the lower your premium is going to be. So for example, if you’re buying a one ounce. Royal Canadian mint gold bar today. It might cost you somewhere around 3% over the spot price to purchase that physical product. And then if you were to buy a kilo gold bar from the Royal Canadian men, so same producers, same purity, all the specs of the bar are the same, except for the size.

You know, you might only be paying half a percent to 1% for that CULA gold bar. So. There are cost savings in terms of volume. Now, when you talk about cost per year, it’s, it’s a little bit complicated because when you buy a physical item, you do have a fairly high comparatively high premium that you’re going to pay for that physical product.

Like I said, you might pay three or 4% for a one ounce gold bar, but that’s a one-time cost. So if you’re going to own that bar over a 20, 20 year period, you’ve really only dished out that three, 4% at one time, you don’t have to ever pay that premium again,

Ben: [00:22:00] it’d be like an upfront front end load. Like, you know, you pay it once and then you’re kind of done, right?

Mark: [00:22:07] Exactly. Exactly. Now, if you store that at home, obviously you don’t have any additional costs except any type of insurance that you try to purchase your homeowners, insurance, whatever that might be.

Ben: [00:22:16] If you worry of having, you have a bunch of gold bars like buried under your floorboard some way.

Mark: [00:22:22] Yeah, exactly.

Actually the mental cost is a whole other thing and that’s why people end up. In storage generally, when you get into a storage program usually gold storage, the costs range between half a percent to three quarters of a percent per year. That includes the physical storage of the metal. It includes the insurance.

So it’s fully insured for its replacement value. And it usually also includes an audit by a third party. So somebody other than yourself can go down to the balls, count your stuff, and send you a statement saying that it is intact there. So that that half a percent is pretty comparable to the management costs associated to an ETF or to a fund.

But yeah, you do have to consider those, those premiums that you’re going to pay for physical upfront. But again, if you average that out over a 20 year period, it’s pretty minor. And especially if you’re factoring in that gold is going to appreciate and value, you know, the, the $60 announced that you paid as a premium in, in 2020, when you’re liquidated in 2040, that’s going to be long forgotten quite frankly, in the bigger picture, because their goal is probably going to be worth quite a bit more.

So when you’re comparing apples to apples, it can get a little bit tricky. And you have to remember again, the pros and cons of each one of those investments. And I agree with you. If I was going to be spot trading or kind of day trading or short-term trading gold or silver, I would definitely use an ETF.

I would not be using physical metal. Physical metal is not built for short term investments. It’s more comparable to real estate. You wouldn’t buy and sell it and flip a house within a week’s period. You’d lose money doing that. So instead you would buy it, hold it for a long period of time. Let it appreciate it.

It let it appreciate course serve. It’s its core purpose, which is really portfolio insurance or wealth insurance for, for the wealth that you’ve already created for yourself.

Ben: [00:24:00] okay. So that’s very clear. the premium that you pay, which is the one-time upfront depends on the size, obviously.

like one ounce, maybe up to 4% kind of thing. And then up to, you know, if you’re buying in bulk 50 base, like a 0.5% sort of thing. that’s kind of your one-time upfront cost and then storage costs are 0.5 to 0.7, 5% is there and that includes storage insurance audit, which is awesome. What sort of minimums?

I mean, could I buy a one ounce coin and like store it at. Point seven, 5%.

Mark: [00:24:36] Yeah. I mean, generally the way the storage facilities work is that they have a minimum annual cost. Our minimum annual cost is $200. So if you decided to store one ounce of gold, your cost would be $200 a year. That really, that starts, there’s a kind of a breaking point at about $20,000 where you would be charged more than the minimum amount, and it would be more cost-effective per ounce for you to store.

And then there’s usually a sliding scale. So the more that you own or store with us, the less you pay in terms of percentage like we have, you know, when you have wealthy clients or institutional clients, they’ll negotiate commercial rates, which could be significantly lower than a half a percent even.

So storage can be very competitive. Again, it’s a, it’s a volume driven business, really.

Ben: [00:25:19] Okay, that makes a lot of sense. that threshold of 20 K or whatever, you just have to do the math to make sure that it makes sense for you. And the other thing is like, why have the benefits of this secure score audited insureds as storage facility.

If you just have half an ounce, you know, just put it in your desk drawer and you can shave off Armageddon for chocolate or whatever. Right. You know?  I purchased gold, physical gold. choose whether I want coins or bars based on premiums and liquidity and all of this. And you guys helped me through that.

then I decide that I can sell it. I can sell it through U S WP or a lot of these volts will like assist you with that. But what if I want it? What if I want to take physical ownership of it? Would you ship it to me? Do I have to go down to the Cayman islands on a vacation and then travel back with gold buyers in my luggage?

How does that work?

Mark: [00:26:13] Yeah. So, first of all, just to comment to go take one step back. I think it is a good idea to have some precious metals at home. I, I do personally my threshold, my comfort level ends at around $10,000 of precious metals in my home because my personal homeowner’s insurance policy will not insure my golden silver.

So if someone happened to break into my house and they found where I hit my precious metals, then I would be out that 10 grand and there’s nothing I can do about it. So I think it’s all the bread at all. No most, not even after a small amount, most home insurance policies won’t cover physical booing. So if you are going to do that, definitely check with your insurance broker, see if you are covered.

Otherwise, you know, you’re, you, you have the benefit of how did they close at hand and if you needed an opin tree, you need to turn that into cash or barter it, which I’m not a big believer in, by the way. I don’t think silver is necessarily the ultimate bartering tool, but, you know, got it is an argument.

Ben: [00:27:04] That’s the ultimate binary tool hatching.

Mark: [00:27:08] Yeah. So there is an argument to be made to keep someone home, but beyond that threshold, whatever it is, whatever makes you uncomfortable when you’re starting to lose sleep, or you’re worried that your teenage son might find it and go, you know, spend it on something, whatever that number is in your mind, then you’re going to want to start thinking about offshore storage.

So there are two ways that you can retrieve your gold. Obviously you’re able to sell it either to SWP or other dealers that are active in our vault, or if you added in another storage location, there’s always going to be liquidity. You are, you absolutely want to make sure that you have liquidity in whatever vault or whatever secure storage facility that you do store it.

Now, if you want to retrieve it, you have the option of having it delivered. But if you live in a second or third world country, delivering your precious metals to you via FedEx or ups can be challenging. So. There are some constraints there. For example, SWP will only deliver to the United States to Canada or to one of the other vaulting facilities that we offer to our clients.

So there’s a total of eight in the moraled wide. So there might be a vault in your region like Zurich, mission Stein, Singapore, New Zealand, Toronto, the United States. We offer all these different jurisdictions, but we won’t necessarily drop ship to individual residences. And the reason is that that is it.

There’s tax implications. There’s import duty implications. There’s a lot of things that happen when precious metals travels through international borders. Obviously we can’t control all of those factors and there’s costs associated to it that the client would have to absorb. So there are constraints in place.

You can travel to the Cayman islands and come pick up your gold and silver, and you can bring personal property, precious metals through airports in any denomination, basically anywhere in the world. The only risk that you have have basically as the personal risk of carrying this high value item with you.

So we have a video dedicated to going through airports. What happens done in many, many times, myself, including in and out of the United States, which a lot of people dread that experience of going through, you know us customs or security in the airport with precious metals. It’s actually really easy.

And at the end of the day, they usually think you’re a little bit of a rock star because you’re carrying this stuff. So it’s kind of a cool feeling. They kind of Pat you on the back on your way out the door, but Yeah. I mean, there, there are those possibilities, but most clients will end up liquidating the metal and then taking Fiat currency again, or, you know, a cryptocurrency as a form of payment for them.

Ben: [00:29:25] And you guys offer that you can convert gold into some sort of crypto crypto and then have you know, an easy transaction.

Mark: [00:29:33] We do. We do. We we, we do have one limit right now on when people are liquidating, precious, metals will only settle in crypto when it’s above a hundred thousand dollars. So obviously that does price some people out, but we are looking at ways to lowering that limit on the liquidation.

On the flip side of that, though, we do accept crypto for payments. So we’re very happy to accept crypto for payment for golden, there’s no minimums when you’re buying precious metals with crypto. So if you realize some nice gains in Bitcoin or you think you want to take some profits at a Bitcoin and turn it into gold, then you can do that quite easily with us and other dealers like us.

Ben: [00:30:09] Fascinating. it just helps solidify the digital golden heritage. The fact that you can swap crypto for gold and vice versa, and we’ll get there. I don’t know. I want to go there yet. I wanted to comment on the travel thing. typically when you travel, you have to declare any financial asset over $10,000 or you can’t.

And I think there’s a crypto travel rule actually on that topic that like, if you, if you have your ledger and it has more than $10,000, technically you have to report it. But with gold, you do not like if I have a duffel bag full of gold bars, you know, gold bars, almost $2 million I don’t have to declare that.

Mark: [00:30:48] No, you do have to declare it. So, sorry. Yes. No, you do have to declare it, but it’s perfectly legal. I think a lot of people get confused when they see that box on the form, you know, are you traveling with more than $10,000 in cash or cash equivalents, something like that. The verbiage to declare. Yeah. They think that it’s illegal.

They’re like, Oh my God, if I have more than $10,000, I’m going to get arrested. That’s not true at all. You’re allowed to carry a million dollars in cash, $2 million in gold, all in the same ship you can do that. You just have to declare it. And what happens when you declare it is you will generally be asked to fill out a secondary form, basically providing a backstory as to where did this money come from and why are you carrying it into our country?

So, again, perfectly legal. You just have to prepare yourself mentally to make that declaration. The problem is if you don’t declare dollars worth of gold, I I’m trying to picture that and trust me, that would be, that would be a site in the airport. If you try to drag it off the gold, it’d be quite heavy, but you can, you can do it perfectly legal again.

You just have to be prepared for that, that moment where they ask you a few more questions.

Ben: [00:31:52] Okay. I think a lot of people, myself included focus on gold acquisition. I wanted as a portfolio in my portfolio as a hedge, or I want to exposure because I’m worried about via monetary collapse or, or whatever reason you have to own gold.

Maybe you just like shiny things, if some of these thought is that this Armageddon is coming and I’ll have to actually use this gold for exchange at some point. And you kind of said that you’re not a big believer of that, but for the many people that get involved in gold, if not full on tinfoil Hattie, just in case like a store of value for 3000 years, like, I’ll, I’ll have some wealth.

If this doomsday scenario happens and somebody actually wants their physical gold and it’s stored at off shore and a different jurisdiction, what is the process? The most cost efficient way of obtaining that safest way. And then, you know, selling it for cigarettes or whatever, the new currency of choices in this post Armageddon world.

Mark: [00:33:01] I like the cigarettes that you can smoke those when you’re stressed as well. So it’s absolute. Yeah, I know again, you know, selling the precious metals, it’s really, really easy buying and selling it. It’s literally open-ended account. And then the purchase either happens online over the phone or by email, it’s a very quick transaction.

If you’ve ever used a currency exchange service or purchased, you know, stocks over the phone or over email or even online, it’s very, very similar. So account approval purchase the precious metals pay for them. When it comes time to liquidate, it’s the exact opposite. Pick up the phone, email or online liquidate the amount you want it.

And you’ll be paid generally by bank wire. We set a lot of our transactions in bank wire, or if you do the crypto thing, we can do that. And once, once you, if you want to keep them closer to home yeah. And you want to barter them. The, I think that the ideal metal there is silver. Like not even consider, unless you have a very large transaction, you want to sell that home.

I know in Vietnam, for example, you can still use gold bars to buy a house, but that’s not the case where we live. So generally you’d be looking at silver. A lot of people still. They buy like one bag of junk silver. So 90% a us currency pre 64 currency. And they’ll, they’ll, you know, those are old quarters, half dollars, dollars, and dimes that, that contain 90% silver.

So that’s kind of an effective way of doing it. It looks like currency yet. It has silver in it. It kind of makes sense, you know, to trade that for cigarettes or milk, but otherwise you’d probably be looking at like one ounce silver rounds or one ounce, silver coins sorry, rounds or bars as an effective means of barter.

And I said, like I said, if you want to keep $5,000 worth of those in your garage or somewhere in your home as a, as a last resort means of survival. Great. If not, you can always sell that silver in a pinch as well. You got a leaky roof, you need some cash, you can go down to the local dealer, you can sell that silver and you’ve got Fiat currency that you can use again, which is a more likely scenario than you actually having to barter it for reasons of survival to be on.

Ben: [00:35:01] I kind of want up just a bag of this silver sitting around my house. Like I’m not going to lie. It sounds pretty cool. But the doomsday scenario, I can use this for barter and swap it out for the new fee at currency, which could or could not be cigarettes and yeah, go from there. Is that something that you sell through SWP?

Mark: [00:35:21] Yeah, it is. It is a product that we sell. It’s not, I would say if you’re going to consider storage of precious metals, like long-term, you’re investing in precious metals, you’re going to store it for a long time. Junk silver is not the most ideal way to do that. It’s not the most liquid product.

There’s not a huge demand for it within the vaulting community within that network of volts. But if you’re going to hold it at home or you’re local to the U S it is something that’s very common. So again, that’s like an ideal product to kind of keep close to home. And when your friends come over for a dinner party, you can take out your bag of old us currency and give them a history lesson.

How money used to be silver, silver used to be money, and everyone will be thinking that you’re a pretty sophisticated guy. So a, another reason that maybe keeps them close to home.

Ben: [00:36:02] I like it. I decided to buy some physical gold. I decide to volt it, there are a number of different jurisdictions that offer.

Vaulting services. You know, Swiss came in Singapore, there’s loads of them these days.  how does an investor think through the decision making process of where I should put this gold and why?

Mark: [00:36:25] That’s a really good question and you’re right. There are more and more international locations that are popping up as storage facilities.

Historically, our storage jurisdiction, historically Zurich was the big name, you know, Swiss gold, Swiss storage. If you were a sophisticated investor, you had a safe deposit box in Zurich, you had a private banker and that’s where I would go. But these days you have all kinds of options, you know, ranging from in the, in the Western hemisphere, you’ve kind of got, came in, you’ve got the States, you’ve got Canada, which a lot of Americans perceive to be a safer place than the United States, even though.

I don’t really see it that way as a Canadian, it’s pretty similar in my mind. But then you, you still have the more traditional Zurich you’ve got Lish and Stein, which is a great jurisdiction, a very small country where a lot of Germans than a lot of Swiss people, believe it or not, the Swiss actually moved their metals out of the country.

They’ll put it in Legion, Stein next door. And then Singapore is becoming the major hub in Asia, kind of took over from Hong Kong when Hong Kong started to go through all these political issues recently. And New Zealand is like that. The place where you put your precious metals, which is the furthest away from America as possible kind of storage solution.

But how do you pick from those first of all, you don’t necessarily have to pick one. So if your one of your strategies and managing your risk and your, your portfolio risk is to diversify and go off shore, you can also consider storing in more than one offshore jurisdiction. So that kind of, again, diversifies, and de-risks you from.

Something going potentially wrong in one single jurisdiction other than your home jurisdiction. So in that case, we have clients, for example, they might store some of their metal and Cayman, some of their metal, English and Stein, and some of their metal in Singapore. So they’re actually in like three different continents and three totally different governments, different laws, you know, ruling those countries and regulations.

So they’ve kind of de-risk themselves that way, but the basic things that you’re going to look at and what it boils down in reality, I could give you the marketing pitch, but the reality is a lot of people look at, I want it off shore about a one to close to home. So I want to get it out of the U S but I also want access to it within call it half a days, travel.

That’s why I came into very popular choice for Americans because they can fly from New York in three hours, Texas in two and a half hours Toronto, Canada, and four and a half hours. So there’s, there’s immediate access if they need to get their hands on it. Other practical things like do they speak the same language as me.

Do they accept you as currency for payment of their storage services? Is there a tax on the storage there? Because in Europe there’s like high taxes on sales taxes on storage and on silver. So you have to factor in kind of those local tax laws and things like that into your so you’re going to be looking for obviously stability, proximity, no taxes, if possible, you don’t want to pay additional taxes on your services.

You’re going to want to look for liquidity. I know a lot of investors, Americans particular use Panama. Panama has been like this place, that Americans being putting money for a long time. But the problem with Panama is overall the liquidity in the market there for precious metals. Isn’t that? Not as good as it is in other markets, other more major markets or other markets where more than, than one volt might exist.

So. You have to consider the liquidity in the equation as well, or otherwise you’ve got an asset that’s in a foreign country that, that, that really can’t be turned into anything else. Right? So a number of things to look at, but I think the proximity is a big one for a lot of investors because it makes them comfortable.

Obviously you take a look at the history of the country. Is it a stable country? You know, has there been a history of confiscation and things like that? That’s what makes a lot of Americans nervous about storing at home actually is the possibility of government overreach. Once again.

Ben: [00:40:03] So in the thirties, gold ownership was banned and it was banned for a number of years until it was re legalized again in 1974.

is this a main concern of gold investors when they’re thinking about. Buying gold. They, compensation risk is top of mind.

Mark: [00:40:23] I wouldn’t say it’s necessarily top of mind. It doesn’t necessarily come up as a point of concern for the majority of people that we speak to. Maybe it’s not something they raised with us, but I think it certainly influences some American investors.

You know, it comes up often enough. I’m still surprised because you know, this happened a really long time ago. The world is a much different place. Gold represents such a small part of the, the net worth or the, the net economy, the global economy. It used to be such an important piece because it was backing the currencies of countries where it’s been decoupled at this point.

So it’s really a much smaller, smaller value in the global economy than it used to be. But it’s still something that does come up and I think. You know, there is a, there’s a, certainly a possibility that government could be desperate enough at one point to, to try to, to overreach or, or to make a cash grab.

But I usually tell investors that bring that up with me and say, look, if the government needed money in the United States, they’re going to look at pension funds. They’re going to look at retirement. You know, pension funds, retirement savings, checking accounts, savings accounts. They have access to all of that information already.

They know exactly where it is. I know how much is available and it’s all digital, which makes it more vulnerable in my mind than a physical commodity. Anyways, if you’re going to start kicking down doors and confiscating gold, that’s a tough undertaking for the government. But if you do believe that’s a possibility, even if it’s a very distinct possibility and it, it, it prevents you from sleeping at night, then just buy your gold in a foreign jurisdiction that you think is more stable than your own.

It’s going to cost you about the same thing as if you buy it locally and then you just have to pay a storage fee. No of half a 0.3 quarters of a point a year. And you’ve given yourself that peace of mind. And really sometimes I think that’s the business we’re in. We’re just selling peace of mind. Really?

Ben: [00:42:06] Absolutely. Unless of course, that other jurisdiction you’re storing your golden puts a ban on it before your own country then, you know, so I’m curious, like if I’m at an American investor and I’m holding my, my gold in a place like Cayman and gold is banned in the U S how does that affect me? If my gold is held in another jurisdiction, is this and all of these things that we were talking about just for my listeners, we’re not legal experts, we’re not tax experts, please consult specific tax advice.

It’s personalized to you. And this don’t invest based on what you hear on the podcast. with that little disclaimer, you can go,

Mark: [00:42:46] yeah, it’s a, it’s an interesting, that question probably comes up more often actually than the compensation piece is, you know, w. What information is being provided to my government.

What happens if my government asks for more information? So what I can tell you is that Cayman islands is governed by a completely different set of laws than the United States. It is a self it’s, a protector of the United Kingdom, but it has its own government. It has its own laws in place. And those laws dictate how a business like SWP operates.

Obviously we fall under those laws and regulations in the Cayman islands. And what they say is that we do not have to share any of our client’s wealth information, any information related to their wealth or their personal information with either our local government or any foreign governments in less a court order asks us to do that.

So in order to obtain a court order for that, that type of information sharing, there’s a process that has to take place. And, and, and we would receive that, that request. And we’d have to turn it over to the documents. We have no choice by law. Otherwise we risk and prison men ourselves. If we do not collaborate, it’s happened once in the five years that we’ve been open in the Cayman islands.

The government will not tell you why they’re requesting the information. Only that it came from a foreign source. But the important thing to remember here is that the request for information is not a blanket request. It’s a single individual request for one specific client and odds are that person did something in their home country that justified that request for information.

So it’s not like in the banking system where the banks are openly, you know, their, their books are basically open and they are willing to share information and are obligated to share information with the authorities. That is not the case with precious metals dealers in offshore Baltz we are not obligated to open our books.

We’re not obligated to share that information unless a particular request is made that comes through the courts in the Cayman islands. Yeah. That’s,

Ben: [00:44:43] That’s very helpful. And I can see that coming up a lot. I mean, I, I was kind of thinking that there would be a blanket one, you know, tell us all the, all your customers.

Right. that’s, that’s very good information to have. on your website it says, Hmm. And not financial advice. It is our understanding, the precious metals held directly outside the United States do not have to be reported by us. Taxport paper to us taxpayers on form eight, nine, three eight, which is the statement of specified specific specified foreign financial assets, nor on FinCEN form one, one for which the report of foreign bank and financial accounts.

what about it is one of those, the F bar foreign bank account re I forget the acronym, but do you still have to report an F bar for these assets held over seas?

Mark: [00:45:33] Not that I’m aware. So the, you can actually go to the IRS website. I think there’s a link there directly to the IRS website. So again, not giving you advice, but can point you in the right direction.

When you go to the IRS website, it clears it state. It clearly States that precious metals held directly by American citizens are a non-reportable asset class. So it’s one of the only remaining asset classes. And there’s a lot of theories as to why that is that Americans do not have to declare as part of their tax reporting, as sorry as part of their assets that they’re there, they own offshore.

Now important to, to remember though, that does not excuse you from paying capital gains on on the gains that you’ve realized from the sale of precious metals. So if you invested a hundred thousand dollars in precious metals, whether it be in Singapore came in Zurich, that the value doubles and you realize the capital gain of a hundred thousand dollars, you asked you do have an obligation to report that as part of your personal income taxes.

The thing to remember is there’s that it’s not going to be the vault or the precious metals dealer. That’s going to be sharing that information with your government. It’s basically it’s voluntary in a sense, because you’re the party that’s obligated to do that. So. Yeah, that obligation falls on your shoulders.

But as far as we’re aware, yeah, there’s no reporting required by Americans, which makes it a true active. But like I said, there’s some theories as to why that is most notably, that a lot of wealthy Americans, politicians, business owners have precious metals stored off shore. So they they’d like to leave a little, I guess, loophole, you could say in the system where they can still have some privacy as well.

Ben: [00:47:04] Interesting. the link on your website and I’ll, I’ll link this in the show notes is to the IRS website on foreign account tax compliance act or factor. And it goes into more detail on why precious metal, not wide, but that precious metals are excluded from that, which is very interesting.

And you touched on a very, very important part. So this just means that if I put a million dollars in gold, I don’t have to report that anywhere on my taxes, but if that million dollars goes to $10 million, well, I have a $9 million gain that I have to pay taxes on, and I definitely have to report that. But it’s interesting to know that these gold dealers because of that the, the agreements that they have intra governments, aren’t reporting that for me.

So it’s on me, the person that got the tax the taxable gain to report it. really, really good information.

Mark: [00:47:54] You already know more than most tax attorneys do about gold. See, this is one of those things, again, it’s the specialist, the tax attorneys just aren’t familiar with are for gold ownership. So they’re like, ah, we don’t want to, we kind of defer, like we don’t want to give an opinion.

So again, it it’s a little bit, I guess it becomes like a gray area, but one thing is clear that you have to be the direct owner of the precious metals. So if you’re, you’re holding those precious metals through a third party or as part of a fund, for example, that would be declared bubble. But if you’re holding it as a, as a physical asset that you own, or you’re the owner of your name is associated to that metal in the offshore account, then you don’t, you have to declare it.

Ben: [00:48:28] Yeah. Yeah. Really good stuff. Awesome. And sorry for going way deep on taxes and these things. I know not tax legal advice, but it is an important aspect for a lot of people because if I just buy GLD in my bank account or in my brokerage account, obviously that’s, that’s all very visible how much I own.

It can be confiscated all of these things. this, in my opinion, is a key differentiator for something like physical gold and storing it off shore. wanted to go down that path a little bit. I want to pivot a bit. I think I’ve got a great, understood a much better understanding on physical gold ownership.

You’re incredibly knowledgeable about this and it really appreciate it. We talked a bit about like pulling back a bit. on macro, we talked a bit about gold miners. Like GDX, you know, binding on ETF has a way of a higher beta play on gold. this gold narrative inflation’s coming gold will go up.

It will do well. there’s a couple more like higher beta, a little bit more juice on the trades. And these would be trades, not physical gold, obviously, but you know, you can own own something like GDX gold miners. You can own own silver, which is a like re propellant versus gold, but then a quote by Stanley Druckenmiller that just came out a couple of days ago.

this is being recorded mid November and he said, If the gold bet works works, the Bitcoin bet will probably work better because it’s thinner and more liquid and it has a lot more beta to it. I’m curious. It’s so he had added Bitcoin to his portfolio in addition to his gold golden investment. your thoughts on Bitcoin along the lines of this store of value investment thesis.

Mark: [00:50:15] Yeah, look, I’m going to start by saying that I own Bitcoin. I like Bitcoin. And I, I I’ve seen this argument where it’s like, it’s become gold versus Bitcoin where it used to be gold versus the stock market. Now it’s like gold versus Bitcoin. All of a sudden I do. I do find it very curious that Bitcoin represents itself with a gold coin.

I always found that. Very curious. So like, they’re, they’re like, Oh, we’re so much better than gold. And yet their symbol is like a gold coin. It’s funny. They’ve kind of tried to legitimize the investment through the, this visual, but that’s neither here nor there. Listen, I think Bitcoin’s future is, you know, is bright.

I invest in it. I hold a portion of it in my portfolio. I think there’s a lot of potential upside. Some of the people I respect the most in the world guy named Ralph pal. He said, if I could, he goes, I love gold, but if I could only own one thing for the next 10 years, it would be Bitcoin. And when a guy like Ralph says something like that, I listen.

So I’m not, I’m definitely not going to try to knock Bitcoin. What the argument I would make is you should own both that there is enough room in your portfolio to own. Bitcoin and gold, they do serve different roles. I think that it’s hard to call Bitcoin a store of wealth only because it’s only been in existence for less than 20 years.

Gold has played that role for 6,000 years. So there’s a historical, you can’t really say at this point in time, because we don’t have enough data or historical data to say, you know, Bitcoin could replace gold. Gold is completely useless because central banks aren’t hoarding Bitcoin. At this point, central banks are still hoarding gold when a war breaks out, the first thing to move out of that country is gold or move into that country depending on who’s in invading.

And who’s defending it’s not yet Bitcoin. So I think the, the, the role for Bitcoin hasn’t as clearly been established as it has for gold. And the second thing I would say is that. When you look at gold, the thing that is so beautiful about it as an investment or, or, or a tool in your investment toolbox in your portfolio is that, you know exactly how it’s going to perform and when it’s going to perform those actions.

So when there’s a financial crisis, you do not have to guess what gold is going to do. You look at the 2008 financial crisis, gold went up 140% in three years, the market crashed gold, went up the market crash about 30, 40% gold went up 140%. We know that that behavior is what it does during financial crisis.

It’s doing the same thing right now in the COVID crisis. You know, the, the, the market initially crashed about 30%, 25%. It’s it’s actually, you know, the, the market has recovered really nicely, but gold immediately went up and set new highs. So owning gold in your portfolio gives you the assurance that you’re going to be well hedged in a crisis period.

I’m not saying that Bitcoin. Can’t do that. I’m not saying that it, it hasn’t happened, but we haven’t, we don’t have enough historical data at this point in time to know exactly what Bitcoin is going to do, whereas I know exactly what gold is going to do. And that’s why I think there’s room for both of these things in your portfolio.

And by owning both, Hey, again, you’re more diversified. You can’t go wrong. If you had to pick one or the other. Well, then like we could argue all day long, but you don’t. The beauty is you can own both. So why not? On both?

Ben: [00:53:26] Yeah, well, 6,000 years of story value. I got to update what I’m saying, because I think I’ve been saying 3000 years, but I have no idea where I got that.

So 6,000 devil, which isn’t,

Mark: [00:53:37] I wouldn’t hold it against you by now, I’ve read 6,000 years that that man has been, that it’s been a part of our culture, culture, part of our communities that Wars have been fought over it, that men have looked for it. They’ve dug it out of the ground. The, the, the number I heard is 6,000, but when did it become a store of value?

Maybe 3000 years ago. I didn’t know. I wasn’t there,

Ben: [00:53:56] man. That’s awesome. Well, and now we’re going to mess up that whole supply demand, you know, just with the asteroid mining, that’s just right around the corner. I’m just kidding. We’re not going down there.

Mark: [00:54:09] Yeah.

Ben: [00:54:10] Well, on Bitcoin and again, I don’t want to go down this path too much, but I think that the stakes have gotten too high for investors not to own any Bitcoin at all.

It’s like these, especially with these larger tech companies starting to put in some of their operating capital into cash or into Bitcoin, a lot of these more macro investors allocating a little bit. And I think it’s just, like you said, when Wars break breakout and things start breaking down, people retreat to gold and it’s like, well, this is a digital equivalent.

I don’t have to worry about walking across the border with a bag full of gold bars. You know, I can just memorize 12 words, walk across. They can strip me down, they can beat me or whatever. And as soon as I can I access a computer on the other side, wherever that is, then assuming that there’s someone in the world that will buy that Bitcoin from me, I have this liquid market and I have access to some sort of, some sort of wealth despite going through that.

So I think I think the stakes are getting a little, little too high at this point to have zero exposure in your portfolio.

Mark: [00:55:17] Oh, absolutely. I would, I would feel like I’m doing a disservice to my family by not having some I’m very glad that I was a fairly early investor in Bitcoin and it held up to today, even though there was points in time where it was very volatile.

And I said, man, like, Yeah, the narrative on Bitcoin, you know, it was the hottest thing in the world. And then, you know, you saw all these startups and all of these, these other coins, utility coins, and you know, a lot of fraud that took place in the industry. And I witnessed a lot of it because the gold industry and the crypto industry a lot, there’s a lot of crossover there.

We, we, you know, we accept crypto crypto’s payment. We offered cold storage for crypto storage devices. So we know people that work in this space and there was some pretty dark days, like after the initial hype, there was some pretty dark days and some pretty shady characters that, that walked into the crypto space, you know?

And after participating in that space for a little while, I was like, Nope, not interested, but if there’s a revival happening right now, and I’m really happy that I didn’t sell all my Bitcoin, because like Ralph said, and the gentleman you quoted earlier, I think it’s a must have in your portfolio, but I don’t think of it again as.

Well, I can only have one or the other that never crosses my mind, right?

Ben: [00:56:24] I love it. Mark. I could talk for hours about these things with you. You’ve been incredibly knowledgeable and thank you so much for sharing all of this. really thanks to you coming on today. Really, really appreciate it.  I’ll link a lot of these things that we’ve chatted about in the show notes.

for the listeners, you can always find all of these there because they think, I think there’s a lot of really good information that you’ve shared and links that will add a lot of additional value for people as they think through how to buy these things and what are the options. But before we go, just you know, give you the stage where, where can people find out more about you about SWP?

Where, where do you want to send my listeners?

Mark: [00:57:00] Sure. So if you want to learn more about SWP, you can go to SWP, came in.com. That’s our homepage. It’s a great website. It has a lot of information, not only about our services, but about precious metals in general. I do have a Twitter account. You can follow me at Yaxley yaks.

If you want to follow me on Twitter, I’m not as active as some people. I’m busy running this business, unfortunately, but Ben, I had a great time chatting with you. You’re a real pleasure to talk to you. I hope to speak to you again and we’ll definitely put this out across our platforms as well.

Ben: [00:57:29] Absolutely. Thanks a lot, Mark. Have a great day

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