Gold Prices Strong As Some Investors Prepare For Whats Next: The Economic Ninja

You. Hey, everybody. Economic ninja here. I hope you are doing great. Want to talk about gold? The gold markets. There’s been a lot happening in 2023. And I brought on a sponsor of the channel with a company that I actually use and I really do enjoy. And this is something I like to introduce to you because the company I’m bringing on and the representative, his name is Levi Gunter.

From one gold. One gold is one of the companies that I use to store my precious metals. And I use multiple companies because I’m diversified in everything. I’m really happy with one gold. And I want to thank them for everything they do and for sponsoring the channel. Levi, how are you doing? I’m doing great. Thanks for having me on ninja. Good. I’m just learning this new program, so I got to switch you over.

So there you are. Yeah, I want to talk about what happened in 2023. And I’ve got a story I want to share real quick, if you don’t mind. It’s out of CNBC. It just came out, um, today, actually. It says gold demand hit record highs in 2023 amid geopolitical risks, china weakness and things like that. And it said that the demand in 2023 hitting record highs on the back of persistent geopolitical tensions, continued weakness in the chinese economy.

This comes from the World Gold Council. And gold purchases from central banks led to last year’s surge, which purchases exceeded 1000 tons for two consecutive years. Now, before we started this interview, I told you I was going to share a story and I asked what you wanted to talk about. And this is actually what you wanted to talk about. Do you mind sharing a little bit about this, what happened with your company? And.

Oh, real quick, sorry, I’m jumping everywhere. One gold is a wholly owned subsidiary through Atmex. But it was started between Atmex and Eric Sprott. And now you guys are just out there just crushing it right now. And I just wanted to give that little blurb just to sort of say what your company does and who you’re from. Yeah. Hey, I appreciate it. But certainly looking back at 2023, a lot of interesting trends emerged at that time on Atmex and one gold as well.

And just for a little context. So Atmex is the largest physical precious metals retailer here in the US. They’ve been in business for over 23 years now. I think they have like 2 million registered customers. And that’s just to say that on some level, what’s going on at Atmex is a little bit reflective of what’s going on, like, in the broader space so certainly a lot of trends throughout the course of last year.

Like you mentioned, demand was strong, supported a lot by central banks. And just looking at the same World Gold Council data that you referenced, I think in 2022, central banks bought an all time high in terms of gold purchases. They didn’t quite do that in 2023, but it was very close, and that accounts for about a quarter of overall gold demand. So gold really enjoys a lot of demand from central banks, which is interesting.

And you wonder why they’re buying gold. And frequently they cite the same reasons that individual investors do. They want to hedge against inflation. They have concerns about the economy and certain currencies. So I don’t think that trend is going away really anytime soon. And again, just looking back at 2023, like you had mentioned, geopolitical events were some of the biggest drivers. So obviously in March you had SVB go under.

And that was a remarkable month here at Atmex. And one gold. I think in terms of sales, it was Atmex’s best sales month in the company’s 23 year history. One gold had a similar month, but price wise for gold, it was primarily driven by geopolitical events. So obviously the war in Ukraine was won and then in the fourth quarter, you had the attack on Israel. Gold soon hit new all time highs after that.

So yeah, a lot happened over the course of last year. I think a lot of these things are still going to be present, if not, maybe even worse, next year or this year rather, in 2024. So it’ll certainly be interesting. One thing that comes to mind, when you say worse, it’s great for gold buyers or investors. One thing that’s blowing me away is that gold traders have been running that price up because of their anticipation of the Fed lowering rates.

Now, I do not believe they’re going to lower rates right now, but with gold sitting above 2000, pretty solid now for a while, it’s interesting. Compared to 2007, when banks were starting to fail and gold was going down, we’re now seeing a time where gold is actually up at its all time highs or near them because of something we didn’t have back then. Sure, we had bank failures, but we’ve got inflation on top of that.

So it seems like it’s a pretty good launch point for gold, right? Yeah, I agree. And if you look at last year, gold had its best year since 2020. I think it gained over 13%. And mind you, that was while the Fed was actively raising interest rates. And so like I said a moment ago, I think a lot of the tailwinds for gold will still be there in 2024 without the sort of headwinds that have been interest rate hikes.

So I think it’s largely understood that the Fed will likely lower rates sometime this year. I think the biggest question is probably when. Last I checked the CME data, I think we’re at below a 40% chance of a rate cut in March, and then by May, we’re closer to like a 70% chance of a rate cut. So obviously that would be incredibly bullish for gold, too. Yeah. And you know what’s really funny, too, is everybody’s expecting the rate cuts, but they don’t understand that when rates get cut, it’s because things are really bad.

So that means people are losing their jobs, they have less work, they have less disposable income. Things are bad. Say lower rates, but yet it’s like the market just sort of pushed that away and they go, no, we just want lower rates. Yeah, but do the people understand what that’s like? Yeah, I don’t think so. No. I think that if you listen to the Fed, they’re telling you that they’re sort of forecasting a soft landing, quote, unquote.

Whether that’s true or not, I don’t know. I know that they’ve been wrong at least a couple of times in recent history. So, yeah, certainly time will tell. Yeah. Now I want to talk about something that most people don’t talk about and give and educate everyone right now on buybacks. Because I’m all for physical. I personally can’t do it. I have to store because of what I do for a living.

But I want to talk about physical compared to buybacks compared to storing metal and buybacks because my friend that’s a broker, she sees it a lot where people will go and invest in gold for hard times, like what’s coming up, we believe, and they’ll go buy physical. I’ll just use gold as an example today because I know you guys deal with silver and all that stuff, silver stored with you, and they go buy it and then it goes up a little bit and they want to sell it and they get hammered on the buybacks, whereas what one gold does is different.

And everyone, I don’t want this to sound like a commercial, but it’s going to because quite frankly, I use this service. Okay. So I want to educate you a little bit. And I think personally, if you wanted to do a little bit of both, if you were investing in gold for the short term and you wanted to resell it, it’s going to be a lot more beneficial to do it how you guys do it, because I don’t like gold etfs.

I’m just not a fan at all. This is physical, as opposed to going and buying physical coins. Sorry, you’re going to be better at this. Explain how much does it cost? Normally when somebody buys an ounce of gold, they store it. And then what happens if they want to sell it? Yeah, that’s a really good point, and especially on the ETF front as well. So while demand has been strong across the board for gold relative over the past few years, if you look at the past three years, major etfs have seen net outflows.

So people are still buying gold. They’re just picky on how they want to actually invest in it. They want to actually own the metal. And a lot of people will land in sort of the traditional product realm where you’re buying metal and having it delivered to you, which I’m certainly a proponent of to some degree. The biggest obstacle, like you had mentioned, though, is probably the buyback, the spread, and that’s largely due to elevated premiums right now.

So the 15 years or so preceding 2020, you largely knew what to expect in terms of premiums. You mentioned gold eagles. Those were going to be around $50 an ounce, industry average. Right? Obviously that depends on where and when you buy, but that was sort of the average. And what we had in 2020 was premiums increased due to supply and demand divergence. So there was a massive uptick in demand when spot price plummeted in March, and you had supply chain disruptions and mints operating at a lower capacity.

So at that point, for the first time in a long time, premiums jumped up and they jumped up significantly and they’ve tried to normalize to some degree since then. But there have always been these kind of catalyzing events, like afterwards, a silver squeeze. We had recession concerns in 2022 and then the bank concerns last year. Each one of those events have resulted in higher retail premiums. While sort of supply tries to catch up with demand, if you know what I mean.

So if you want exposure to metals during that time, those are great products, but you’ve got to look at the premiums. That’s an important conversation to have. Like I said, I’m a proponent of physical. Absolutely. But sort of an advantage to a platform like one gold is that you can kind of get in the product at a much lower premium and ultimately a thinner spread. So to answer your question on cost, right now you’re paying, again, industry average for the most popular silver product for silver american eagles anywhere from.

So that’s going to get you silver american eagles, where if you go onto a platform like one gold, you’re going to pay anywhere from depending on what you buy and where spot price is and out. So that just gets you more metal for the money. Right. And then there’s sort of the other concerns in terms of insuring the metal. So a lot of folks don’t know that if you hold physical metal in your home, it’s typically not insured.

Same at the bank safe deposit box, believe it or not. And so that’s a big risk. Especially a lot of folks have six, seven figures in the investment, and even if it’s less, it’s valuable to you. So you want to make sure it’s insured, which it is, on one gold, and probably similar platforms as well. And then there’s sort of the liquidation aspect as well. I like silver as well as gold, but I know that when I try to sell it, it’s not going to be instantaneous.

I’ve got to call somebody, typically, usually have to ship it to them. So there’s sort of the liquidity issue there as well, which I think, again, one goal to address is you can sell it immediately and have funds deposited into your account. Again, not a sales pitch or anything at all, more so just highlighting that metals are at sort of an all time high in terms of demand, there are just some obstacles and sort of considerations that you’ve got to look into before you make a sizable investment.

Yeah. Let me jump in and say it sounds funny because you’re like, totally does sound like a sales pitch, but I’m going to explain why I use the company. I’ve had physical before, and I also have money that I want to store in an investment vehicle that I believe is going to go up. So when I started the one gold account, I did it with the explicit purpose of, I’m not going to take hold of the physical.

I’m not going to call you and go, I need a delivery. I don’t need that. If I needed that, I’d go buy more physical. I go down to my local coin store. I love giving the local people business, right? But when I need the money, I call and I say sell it, which I haven’t done yet, because I believe personally, that it’s going to go higher. It’s not financial advice, but when I want to sell it, you guys sell it.

There’s a cost for that. And then it goes into my account in dollars. And a lot of people in the gold and silver community really blows me away. They don’t ever comprehend the day they’re going to want to sell it, because they say, I’m never selling it. And I’m like, so you’re going to die with a bunch of gold. They always go back to the barter system and all this kind of stuff.

And I go, no, see, gold and real estate ratios are inverse the gold and everything seems to be inverse. So at a certain point you’re going to want to liquidate. And I don’t think a lot of people think about that. Or if hard times come and all of a sudden they get hit with this massive. They go to sell it at a coin store, the gold coin, and it’s just this massive drain on the amount of wealth they thought they had.

So with one gold, I’m storing it there, it’s insured and all that stuff. But I’m like, one day I sell it and I go buy a house or I sell it and I go buy a car or something like that. Do you mind talking about that? How much would it cost? I’ll give you an example. Ask how much would it cost if I bought a gold coin today with one gold, let’s use gold eagles and bought it? How much would it cost over spot store it? And then how much, let’s say the next day I wanted to sell it.

Now I want to use those extremes because I have actually seen somebody, my broker, buy a bunch of gold and then six months later come under personal financial attack and have to sell some. And they had to sell at a loss because of where it was at. So do you mind if we just talk about that and we’ll just use the extremes the next day? Sure. Yeah, that’s easy to do.

So I’ll compare probably the most popular gold product on the retail side. Like you mentioned, the gold american eagle. Rough industry average. Right now, you’re probably going to pay somewhere around $80 over spot price for that coin today. So we’ll assume spot price hasn’t changed and you’ve liquidated it. And hopefully you get spot price. You typically will. Right around spot price, we’ll say. We’ll assume spot price, maybe a little above.

They’re not commanding a huge premium right now. So there’s that taken into consideration. On one gold, the Premium is about seven dollars to fourteen dollars an ounce. Again, it varies a little bit by location, so that’s 0. 3% over spot price. And then if you were to liquidate it, there’s a 0. 3% sell premium. So your total spread, again, just assuming the same spot price, though, the difference between your buy and your sell is under $30.

Whereas if you’re going to buy a gold american eagle right now, you’re going to pay $80 at least up front, just on the buy side. And it’s a little more extreme on the silver side, too. Obviously, physical silver premiums are much higher as a percentage than gold. And so that kind of spread is much wider there, especially when compared to one gold, for example. Okay, so let me ask you this then.

Why is if you buy the gold eagle through one gold and store it, why is the premium so much cheaper than if you were to go and buy it physical? It has to do with the product type. So basically, when you’re buying metal on one gold and storing it, you’re not really buying a gold american eagle necessarily. You’re buying, typically, a portion of like a wholesale position. So what we do is we source physical metal and a variety of vaults around the world.

So here in the US, Canada, Switzerland, United Kingdom. And typically that’s a kilo gold bar or a 400 ounce gold bar. And so we can source that product at an incredibly low premium, and then obviously just charge a lower premium to our customers than compared to if you’re buying more traditional products, like an eagle. Perfect. So I want to explain this to everyone because everyone gets hung up.

I know family members are like, eagles, eagles, eagles. And the reason why is because you can generally, when you go down to the pawn shop, you could sell them for spot, right? As opposed to if. But you paid more. I’ve shown this to so many people. If you buy bullion, you get it a lot less. You get more bullion in your hand when you go to sell it.

Yeah, you pay a little bit under spot, but you’ve got more bullion. And the math just always pencils out. Now, there’s people in the world that are like, if you don’t hold it, you don’t own it. I agree with that. I’m sorry. I totally agree with that. Where’s your money in your bank going? It’s like, do you own it? I mean, look at all the bank accounts that get seized or there’s issues, glitches, whatever.

So that’s why I talk about diversification, even in your precious metals. If you think you’re going to need to liquidate in the near future, you don’t want to take that massive hit on the premium side when you go to sell does that make sense, Levi? Or do you get the same thing from people? Oh, all the time. Yeah, we were really big on engaging with our customers, and a lot of questions center around like, hey, how did you find us? What got you into the market? Et cetera? And a lot of our customers are physical owners and what they’re doing is they’re simply diversifying within gold or within silver.

So maybe they already have enough or what they want at home or what have you, and they want additional exposure, and so they’re doing so with one gold or again, similar platforms, again, just to kind of diversify there. So, yeah, definitely hear that all the time. Totally. And no offense, Levi, but I tell everyone, even if you’re going to vault, don’t vault with just one company. Vault with multiple companies because of different policies and things like that.

Yeah, you bet. Yeah. So I really hope people pay attention to the interview because it’s very important. People ask me all the time and I don’t want to give financial advice, but this is something that I’ve been working with you guys. You’ve been storing my precious metals for quite some time, and I’ve been very happy with it. Now, one last thing I’d like to add. The onboarding process is super easy.

Can you talk about how easy it is to onboard with one gold? But then there gets a little difficult. Not difficult, but you need some information because of KYC. Can we talk about that? Because I’ve seen people buy some and they go, oh, super easy. They go to sell and they go, they need all this information. Can you explain how that works? Yeah, happy to give some insight there.

So the sign up process, like you said, super easy, looks like your normal online account where you just provide your name, email address, phone number. Because we use two factor authentication for security, most of our customers from there just link their checking account or use a bank wire or check or what have you to buy and then many will eventually sell their metal and just withdraw their cash back to maybe their linked checking account.

But you do also have the option of converting your vaulted metal into a physical product. So that’s going to be fulfilled by Atmex at that point. And during those times, what we would request, like you had mentioned, is KYC. And it’s pretty standard across the board. If you want physical delivery from a company like this, it’s just more. So a security measure, right. We want to ensure that we’re sending metal to the right person.

So pretty simple process even then. It’s just you’re going to submit your name, your address, and like an image of your id or passport, for example. And again, just sort of a measure of security. And once that’s done, we’ll fulfill the shipment, which takes typically one to two business days. So pretty frictionless onboarding. And then if you want physical delivery, pretty quick there, too. Yeah, it’s funny because people get super offended when you start asking.

And I don’t like giving up all my information either. I’m going to be honest with you. But in this world, I just opened a bank account the other day, a corporate checking account. It took 3 hours, and so I was handing them tons of information. It was taking forever. So this is the world we live in. But the reason why you’re talking about also it’s not only KYC regulation or rules, but also you’re about to ship gold out or silver somewhere.

You want to make sure it’s the person that bought. Yeah, definitely. I mean, like I said, it’s sort of an unregulated industry. Gold and silver is. And that can be good, it can be bad in some ways. And ultimately, if there’s pushback on that, we’ll talk to customers and say, hey, really just a measure of account security. And really what happens is you end up kind of appreciating that, hey, we’re just taking the sort of extra measure to make sure your account and your funds are secure.

Totally. Well, thank you so much, Levi. I really appreciate you coming on. Is there anything you want to close with? No, not really. Yeah, I appreciate you having me on. Ninja. If you’re interested in gold and silver, even if you’re just interested in the information, check out onegold, onegold. com, or even Atmex. I think both are really a good source to market, even if you’re just looking for news and updates there.

But yeah, thanks for having me on. Yeah, I’m going to throw a link down on the top line of the description for you guys. So again, everyone, I use this company, it’s exciting. Not only I thank one gold because they reached out to me to sponsor channel. Thank you so much. But it is a product that I’ve used before this whole thing started. So I really appreciate it.

Thanks again, Levi. Yeah, my pleasure. Thanks for having me on. Ninja. All right, well, with that being said, everyone, the economic ninja is out. I got to hit the button. .

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