Pod Insights Odd Lots Philip Diehl on the Booming Business of Gold Coins About this episode Gold prices have been booming and are near record highs. And seeing the line go up — especially during a period of so much uncertainty — makes people want to buy more. That includes acquiring actual gold coins. But where do gold coins come from? Why do people want coins, as opposed to just bullion? And who is buying them? On this episode, we speak with Philip Diehl, the president of gold vendor US Money Reserve. Earlier in his career, he was the 35th director of the US Mint, where he was instrumental in such endeavors as the 50 States quarter project, the Sacagawea dollar coin, and also the language that allows for the creation of the trillion-dollar platinum coin. We talk all about the business and supply chain of coinage, and who's buying these coins today. Watch on YouTubeRead more: Gold Advances as Market Weighs Upcoming US-China Trade Talks Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox -- now delivered every weekday -- plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.
0:16 Speaker 01 This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting
0:58 Speaker 01 and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.
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1:57 Joe Weisenthal? Hello and welcome to another episode of the Odd Lots Podcast. I'm Jill Watenthal.
2:02 Tracy Alloway? And I'm Tracy Alloway.
2:04 Joe Weisenthal? Tracy, you've actually benefited a little bit from this move up in gold lately, right? You're a bit of a bullion hoarder, right?
2:11 Tracy Alloway? I thought you were about to call me a gold bug.
2:13 Joe Weisenthal? I know you're not a full-on gold bug, but you're like gold bug adjacent or silver bug adjacent or something like that?
2:20 Tracy Alloway? Let me just be clear. I have inherited my long gold position, I guess, and silver as well. So for some reason, every year for my birthday and for Christmas, my dad gives me either a gold coin or a silver coin from his personal collection. He got it in his mind that like I really enjoy coins, I guess. And now I kind of do. There is something satisfying about having physical coins and sitting there. And I don't stack them on YouTube or anything, but I do like to check occasionally that they're still there. And I do get a little bit of satisfaction when I look at my little pile of gold and silver.
3:00 Joe Weisenthal? I have to say, you know, the one thing, I don't own any physical gold. I do like the idea of owning a bunch of silver and stacking it on a table and doing a YouTube video about that. Everyone should go look at the Silver Stackers on YouTube. It's great. I would be scared, you know, you could like bury them somewhere like out in the wilderness of Connecticut. I would be scared to hold a lot of bullion on my person. And then I would be scared to hold them in a bank because if everything goes bad, is the bank even going to be open? In a safe deposit box? So I like the idea in theory of having a lot of precious metal. Anyway, precious metal has been doing really well lately.
3:37 Tracy Alloway? It has. I was just looking at a chart of gold. So it hit another record high just at sort of mid-April. And then it came down quite a bit and now it's up again. Like we're almost back to that record.
3:51 Joe Weisenthal? It's pretty extraordinary. Gold is sort of living up to the hype because there's all this chaos and all everything in the markets and in the economy and politics and gold is up. So hats off.
4:02 Tracy Alloway? You know what I like about gold?
4:03 Joe Weisenthal? Tell me.
4:04 Tracy Alloway? I like the advertisements that you see on TV. And the interesting thing to me is like, obviously, the companies that are doing those ads are pitching an investment, but so much of the investment pitch is sort of mixed up with cultural values.
4:20 Joe Weisenthal? Totally.
4:20 Tracy Alloway? So for instance, I was watching one earlier in preparation for this episode, and they were talking about how when you're walking down Inflation Boulevard and Global Instability Avenue, you really need the safety of a gold coin, which not only represents security via gold, but also the security of the United States of America. Like, you get all these cultural references wrapped up in coins.
4:47 Joe Weisenthal? A to- 100%. And every coin has its design, and it evokes all this stuff about heritage and everything. Anyway, I'm really excited, because we actually do literally have the perfect guest, because it touches on many things that we're interested in. It's someone who I've actually known for a while, I've talked to before, someone who, we're going to talk about coins, but we're not going to talk about, well, let's just-
5:14 Tracy Alloway? My most hated coin.
5:15 Joe Weisenthal? Yeah, see, there's one coin that Tracy hates. So we are going to talk to Philip Deal. He is the president of the US Money Reserve, which sells gold. He was also, I think, one of the great Mint directors in US history. He was the 35th director of the US Mint, where he, among other things, had numerous accomplishments. He was instrumental in the Sacagawea Dollar, a dollar coin that was very successfully sold to collectors. He was behind the 50-state Quarters Project, which, if you remember the 90s, they made a quarter for each of the states. Turns out our producer, Dash, has all of the 50-state quarters, which I didn't know. And we're not going to talk about this, although maybe
5:58 Joe Weisenthal? relevant, again, with the debt ceiling come up. He was also the one that got the language in the law that, in theory, allows for the creation of a platinum coin of a high denomination, which could be used to circumvent the debt ceiling. We're not going to talk about the trillion-dollar coin on this episode. We are going to talk about gold coins. Philip Deal, thrilled to have you on to talk now. Appreciate you coming on Odd Lots.
6:22 Speaker 04 It's great to be on. I've looked forward to this.
6:25 Joe Weisenthal? I'm so excited. Tell us about, where to start even? Just tell us what the US Money Reserve is, so people understand where you're coming from. What is the business of the US Money Reserve?
6:39 Speaker 04 We're a retailer of gold, silver, and platinum coins to the US market. We sell mostly US government coins, issued coins, but also coins of other nations. We are probably in the upper mid level of the marketplace. And I'd say that we're different from our competitors because we market very differently. I have a very different approach from what is typical in the industry. This is something that I've really focused on for the last several years. For example, all of those advertisements that really harp on the end of the world
7:21 Speaker 04 and how gold is your go-to investment for really hard times. A lot of that is meth. When you look at the record, gold has performed extraordinarily well over the last 25 years in good times and bad times. And a great example of that is, right now, of course, this has been a hard year for stocks. And stocks are down, probably the last time I checked, of course, this changes daily, but down about 7%. And gold is up 27% this year. But last year was a great year for stocks. And stocks were up 23%, but gold beat it, it's 28%.
8:04 Speaker 04 And when you look back over the last 10 years, five out of 10-year gold has beat the S and P 500.
8:12 Tracy Alloway? To this point, my mom asked me last year if she should invest in gold. And I hate it when family members ask you these kind of questions because I'm not in the business of providing investment advice. But I told her, you know, sure, why not just don't put all of your money in gold. And now, fast forward like eight months, she's mad at me for not recommending that she buy even more gold. She took apparently a conservative position and should have bought more. But maybe I'll start with my most, my biggest question, which is, what makes a coin popular?
8:46 Speaker 04 Well, a number of factors go into it. One is the denomination, for obvious reasons, the bigger, the better. Also, the metallic matters. Gold more popular than silver. And design also is hugely important. And this is something that we really played on with the Sacagawea Golden Dollar. It's important that a coin be distinguishable, that it not be confused with another coin. The Susan B. Anthony had that reputation with confusion with the quarter. Also, the design was not a popular design. Susan B. Anthony was not
9:28 Speaker 04 attractive on that design. So one of the things we wanted to do when we introduced the new dollar coin was to find a topic that the topic itself would be hugely popular. And the book Undaunted Courage had come out probably about a year before we'd launched that coin. And of course, a part of that story was the story of Sacagawea and her role in leading the Lewis and Clark expedition across the Rocky Mountains. And that had really captured the imagination of Americans. And especially the story of Sacagawea carrying
10:12 Speaker 04 her infant son, John Batiste, on her back through that entire journey.
10:19 Speaker 04 And we ended up having the design competition for a design that fit that theme. And we ended up with a beautiful design done by our Dr. Goodacre. And as a result, also, we we did a lot of market research on what would be necessary to make this coin successful. And when we launched it through Walmart, they had people standing in lines around blocks all over the country. We had something like 150 million of them distributed within the first month. And it was an enormous success. But one of the
11:00 Speaker 04 things that is always a challenge for a dollar coin in the United States is you've really got to withdraw the dollar bill when you introduce the dollar coin. And that's been the case all through the Western economies, where the high denomination bill has to, or low denomination bill has to be eliminated when this high denomination coin comes in.
11:38 Speaker 00 What's next for virtual assets? I'm Jacob Rees, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.
11:54 Speaker 05 We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders, and that sort of thing, and folks who service institutional clients.
12:02 Speaker 00 As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.
12:10 Speaker 06 A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80 year old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.
12:29 Speaker 00 Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.
12:39 Speaker 01 This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Millions of Americans are taking peptides, short strings of amino acids that can act as biological signals for cells. Peptides like insulin can occur naturally in the body, or they can be synthetically introduced to induce a biological process, as happens with semaglutide, the active ingredient in Ozempic. Now Bloomberg's Anika Inampudi reports peptides may be exploring their next frontier: the brain. People are taking peptides for mental clarity and cognitive benefits, as alternatives to psychiatric medications, and to gain a competitive edge or stave off the effects of aging. Both insulin and semaglutide
13:20 Speaker 01 are approved by the U.S. Food and Drug Administration. Because importing or selling unapproved peptides for human use is not legal in the U.S., many people turn to online forums for guidance and overseas vendors with questionable credentials to obtain them. Unapproved peptides, which are marketed as research chemicals, have been circulating in what's become a billion-dollar gray market amid the rise of do-it-yourself medicine, as people increasingly turn to social media or artificial intelligence for medical help. Doctors warn against self-experimentation and advise talking to providers before trying any new therapies. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.
14:02 Tracy Alloway? How do you actually measure the success of a coin? Because if I think about something like the Sacagawea dollar, you're talking about, initially, there was a lot of interest in it, but I think, like, production didn't last for very long, and there are some people out there who would say, actually, it wasn't that popular with investors or Americans over the longer term.
14:24 Speaker 04 Yes, really, a circulating coin like the Sacagawea golden dollar is successful if it circulates, if Americans use it in commerce. And we saw, but one of the challenges you face is a priming of the pump. Unless you get a lot of coins in circulation immediately, then it doesn't really enter circulation. And one of the constraints that coins face is the change tray in a cash register. At least that was the case 25 years ago when we were launching the Golden Dollar.
15:03 Speaker 04 And there's not really a place for a new denomination coin unless that is made by the commercial entity, like by taking a quarter rolls out of one of the bins. And so that was the first big challenge that we faced. And you would think that it would be relatively straightforward because the Federal Reserve is our customer. The US Mint's customer for circulating coinage. The US Mint produces the coins. The Federal Reserve purchases them at a markup. And believe it or not, US Mint is a profit-making enterprise.
15:43 Speaker 04 And then they're distributed around the country and then banks purchase them from the Federal Reserve. But when we went to the Federal Reserve in part of our market research and talked to the banks, they still remembered sort of the disaster that the Susan B. Anthony launch had been 20 years, actually 40 years earlier. And they said, well, all you have to do is prove to us that this coin will be accepted by the American people and then we'll order it. Well, that was a catch 22 for us because of course unless they ordered it, we couldn't make it work. Right.
16:25 Speaker 04 And so I ended up going to Walmart and asking if they'd be interested in launching the coin in all Walmart and Sam's locations on the same day at the end of January 2000. And they caught the vision of what that would mean and it was a huge success for them. And we produced over a billion secondary of coins in that first year and distributed them.
16:54 Speaker 04 First through Walmart, we had a contract with them to provide 300 million Sacagawas and we had to go back to them after the first half had been delivered and say, uh, we need to be, we need to be let out of the second half of that because now the banks are calling. And, uh, they haven't ordered any and they're really unhappy that customers are coming to them. They don't have the Sacagawas and they're calling the, the Secretary of the Treasury and the head of the Federal Reserve and complaining. So we wanna, we wanna take care of them as fast as we can. So it was an enormous success and not just because people collected
17:36 Speaker 04 it, but because they were also using it. But banks don't like coins.
17:42 Joe Weisenthal? Yeah.
17:43 Speaker 04 They like barrels. They don't like coins because coins are more expensive for them to handle, to ship. And we expected that. There was a natural, uh, resistance to it. My term expired in early 2000. So Sacagawas lost a champion at the top of the mint at that time and it, and the momentum was lost over the next several years.
18:07 Joe Weisenthal? Tracy, I could listen to like technical details. Coin stories. Public, yeah. And like, you know, the fact about change trays and the, you know, and how difficult that is. I could listen to that for a really long time. Also, what I appreciate about this story is the sort of the entrepreneurialism involved of like having to go out to the Walmart and the Sam's and stuff like that. It's like a product launch. Yeah. Which we don't normally associate with anything in the government for the most part, except, you know, the mint is unique. Also, of course, you're a policy entrepreneur, but we're not gonna, we're not gonna talk about, uh, that specific area of the trillion dollar coin. Okay. I'm on the US Money Reserve website and I see that you have a one, right
18:49 Joe Weisenthal? at today's prices, a one ounce gold American eagle type two coin for $3,809.71. A one ounce South African gold Krugerrand, something very sexy about holding Krugerrand specifically. I've always thought that's $3,806.31. Same price, uh, for the Austrian gold Philharmonic coin. Ooh, I have one of those. Really?
19:12 Tracy Alloway? And I have the Maria Teresa gold coins, too. I probably shouldn't say this on a podcast.
19:12 Joe Weisenthal? Yeah.
19:17 Joe Weisenthal? You have 100 of these coins.
19:18 Speaker 04 Don't give the location at home.
19:20 Joe Weisenthal? Yeah. And then also some silver coins that Depick Battles. But I want to just ask a little bit about the sort of basic supply chain here of some of these coins. So these are official government coins that the US Mint still produces and then sells them to some distributor at a markup and then you sell it at a further markup. Is that basically the gist of how these coins come into existence?
19:43 Speaker 04 Yes, just like any other product. And you're exactly right that we had treated a number of new products as typical commercial product launches. And so just like any other product, the manufacturer has a markup, the distributor has a markup, and then also the retailer has a markup. And that's true for all bullion coins that are produced by other nations as well. And it is a competitive market. In the US, you can purchase any number of bullion coins produced by other nations, and they market them in similar fashion
20:26 Speaker 04 and mark them up in a similar fashion. It's a very competitive market.
20:31 Tracy Alloway? So speaking of markups, one thing I've always struggled with when it comes to coins is how much of the value is derived from the actual precious metal content, whether it's gold or silver or platinum, versus how much of the value is derived from the collectability and the general design or availability of the coin?
20:53 Speaker 04 Okay, it's important here to distinguish two different kinds of coins, actually three different kinds. One is bullion coins, precious metal coins that are sold at a slight premium above the spot price of gold when they are sold. Then a second type is a collectible coin, like a newsmatic coin. US Mint produces annual sets, also precious metal commemorative coins, and then circulating coins. So the precious metal coins that are bullion coins and collectible coins are priced and marketed in very different ways. Commemorative coins are produced to much finer quality.
21:40 Speaker 04 And the strike is they're almost one offs. There are multiple strikes in order to get that fine design, raise the design and get the polished finish of those coins. And because the production process is much more detailed, there are fewer coins produced, many fewer coins produced. They are priced differently, they're marketed differently, they're sold directly by the United States Mint. And those coins, a substantial portion of the cost is reflected in those additional costs.
22:21 Speaker 04 And so, you know, very depending on which metal you're talking about, but maybe 10% of the price or so of a gold coin or a platinum coin is represented by those additional costs. Whereas for a bullion coin, as I was saying, those are highly competitive, they're produced in very large numbers, they're not produced as collectibles. Sometimes they are collected, but they're not produced for that reason.
22:52 Tracy Alloway? Would an American eagle count as a bullion coin or a sort of finite collectible item? Because I know they issue them by year.
22:59 Speaker 04 Yes, they do. There are two versions of it produced. The bullion coin is produced in very large quantities by law. They're supposed to be produced to meet public demand. The law states, although sometimes the mint runs into bottlenecks and cannot fully meet demand, but and they are produced in very rapid mass manufacturing processes. The eagle is also produced in a collectible and it's called the proof gold eagle.
23:39 Speaker 04 And it is produced according to those very high standards I was describing earlier and is sold at a significant premium above the
23:50 Speaker 04 Price of gold.
23:51 Joe Weisenthal? I'm looking again at the website and the other, one of the other things you sell is a Pearl Harbor gold coin, which is identified as exclusive to the US Money Reserve and features Queen Elizabeth II on the obverse, Navy ships and Japanese fighter planes on the reverse. Can you talk a little bit, is that a US government coin? Because there is also private stamping, right? Like someone can, you know, someone can get gold and stamp whatever they want on it and sell it.
24:20 Speaker 04 Yes.
24:20 Joe Weisenthal? Can you talk? Yeah, talk a little bit about that.
24:23 Speaker 04 Yeah, those aren't really coins.
24:25 Joe Weisenthal? Okay.
24:25 Speaker 04 When they're produced, they have to be legal tender to be coins.
24:29 Joe Weisenthal? Okay.
24:29 Speaker 04 And you know, you, you see it football games and coin toss. Well, those aren't coins, those are metals, they're medallions because they're not legal tender. It's not a US coin. We usually don't put royalty, foreign royalty on our coins. And this is Queen Elizabeth in this case. These are coins by other nations that the US Mint does not do this. It does not produce bespoke coins according to order, but other nations do. And it's not unique to US Money Reserve. Other companies do this too, but we have been more aggressive in developing coins
25:12 Speaker 04 through other governments in limited quantities that are collectibles in precious metal and marketing those typically we are celebrating an anniversary. A percentage of these coins, the sale price of these coins typically goes to a charitable purpose. We have been very supportive of the US Navy Memorial. So that's one of the ones that we've really stayed behind.
25:42 Tracy Alloway? One thing I wanted to ask is when you're designing a coin, so when you were at the US Mint, and I'm not talking about precious metal coins here, but just your sort of standard coin, how much does profitability come into considerations for designing a coin? Because I know with the Trump administration talking about maybe getting rid of the penny, this seems to be even more of an issue than it used to be, although people have been debating the existence of the penny, or whether it should exist for decades now. But do you sit there and, you know, write on a napkin, it's going to cost me X to produce, and I'll be able to sell it to the Federal Reserve and the banks for Y amount?
26:26 Speaker 04 Yeah, it's a factor, no doubt about that. And to a certain degree, or to a great degree, the US Mint doesn't have discretion in the specifications of the coin. They are laid out in great detail in the legislation that authorized the coin. The lone exception to that is the Platinum Bullion Coin, in which Congress, I'd asked Congress for virtually total discretion on that coin, and they gave it to us, and the trillion dollar coin came as an unintended consequence of that.
26:59 Tracy Alloway? There's no escaping the trillion dollar coin.
27:02 Speaker 04 Well, you can't miss it. But, yes, all the details are in the legislation. But the Mint does attempt to produce those coins in the most efficient fashion possible within those constraints. And the penny has blown away our capacity to make profitable for over 30 years. I was the first Mint Director 30 years ago to recommend elimination of the penny, and you can see how much influence I had.
27:39 Speaker 04 But it's long overdue to be eliminated. There was a problem back in the seventies, I believe, where the penny had negative seniorage. And I can describe what seniorage is here in a minute, but it's basically profit. And so, and the coin was being, it was all copper at the time. The coin was being melted down because copper, the copper content was worth more than the penny was. And, um, and so the, the Congress stepped in and changed the, uh, composition of the penny. And we have a similar situation now with the nickel where it's a money loser. The production of the nickel is a money loser, but, um, it might be profitable if there were some changes,
28:23 Speaker 04 or at least, uh, the amount of money that is lost producing each coin would be decreased. Now, one of the things that came out of the Sacagawea coin and the fifty state quarters program, and those two huge projects, very entrepreneurial projects, as you were alluding to, Joe, those were launched within about a year of each other. And that took the US Mint's profits and our profits, the US Mint's profits go to the American taxpayer. They go into the general fund of the treasury. And we took profits from $700 million a year when I came into the
29:01 Speaker 04 Mint to $2.6 billion after five years. And I told my staff that, uh, they'd all be wealthy. We're a private enterprise, but we didn't get paid by the, by the coin.
29:16 Joe Weisenthal? Let's talk a little bit about your, the business more of selling these collectible coins and bullion coins and so forth, and gold coins to a retail customer base. I have a couple of questions. One is, is volume associated with price? Because you must see, uh, you know, when the line is, is there, when the line is going up in terms of the price of an ounce of gold, do you generally see a correlation in pick, a pickup in people wanting to buy gold coins?
29:45 Speaker 04 Absolutely. It's been, it's been a tremendous 19 months since this, um, this rally, this bull market began. And over that period of time, we've seen prices go up $1,600 an ounce from 1,800 to 3,400, uh, this morning. And it's just, it's been one record after another being set. So we see a tremendous increase in demand. I think most people in the industry do.
30:15 Joe Weisenthal? What about the demographics? So obviously, you know, generally I speak, I think of the gold coin buyer who would buy from US Money Reserve is probably someone, you know, like Tracy's dad's age specifically. What have you seen demographics? Do younger generations, does Gen Z or millennials, do they care yet about holding collectible or bullion coins?
30:37 Speaker 04 When I was director of the Mint, uh, I was in my 40s and I would describe our, our buyers as being white male and over 50. And there's nothing wrong with that. I aspire to be one someday. But, but we worry about that demographic of, you know, fading out over, over a decade or two. That's not the case today. Gold is hugely popular across a very wide spectrum. And that's not surprising, given the amount of coverage, news coverage gold has received over the last two years. And the, uh, these record prices, especially when the stock market is falling.
31:19 Speaker 04 People are looking for safe havens and gold is the ultimate safe haven. It's been around for, for 5,000 years. It's always had value. It's had value worldwide. It's the universal, uh, safe haven. And what we're beginning to see in some of the market research is a skewing of interest to younger audiences. That includes, uh, millennials and Gen Z. And some of the research indicates that they have greater interest in gold than
31:54 Speaker 04 Boomers do. That was really a surprise to me, but not too much of a surprise once I thought about it because those of us who grew up in the sixties and seventies were less focused on on money and protecting ourselves and than what our kids are. And so that, you know, that's extraordinarily smart and forward looking for them to be thinking about their futures and thinking about the role gold would have. Now, you know, the issue comes up whether, you know, what percentage of a portfolio should be in gold. I tell people never put all of your money in gold. Don't put in all your
32:37 Speaker 04 money into any asset. There needs to be diversification in any portfolio and the right percentage depends on how old you are, your risk averse, you know, how large your portfolio is. There's no one size fits all recommendation. But one of the factors I do recommend people to consider is how optimistic or pessimistic you are about the state of the world, the state of your own finances, and considering the safe haven history of gold, the more pessimistic you are, I do recommend a higher percentage of your portfolio in gold.
33:35 Speaker 01 This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Millions of Americans are taking peptides, short strings of amino acids that can act as biological signals for cells. Peptides like insulin can occur naturally in the body, or they can be synthetically introduced to induce a biological process, as happens with semaglutide, the active ingredient in Ozempic. Now Bloomberg's Anika Inampudi reports peptides may be exploring their next frontier, the brain. are taking peptides for mental clarity and cognitive benefits as alternatives to psychiatric medications and to gain a competitive edge or stave off the effects of aging. Both insulin and semaglutide are approved by the U.S. Food and Drug Administration.
34:19 Speaker 01 Because importing or selling unapproved peptides for human use is not legal in the U.S., many people turn to online forums for guidance and overseas vendors with questionable credentials to obtain them. Unapproved peptides, which are marketed as research chemicals, have been circulating in what's become a billion-dollar gray market amid the rise of do-it-yourself medicine, as people increasingly turn to social media or artificial intelligence for medical help. Doctors warn against self-experimentation and advise talking to providers before trying any new therapies. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.
34:57 Tracy Alloway? Why should I buy a gold coin versus invest in a gold mining stock?
35:03 Speaker 04 Well, mining stocks have tended to underperform the price of gold itself, and there's a simple reason for this, and that is it's getting harder to find and more expensive to mine gold. The clear signal of this is if you look back over world gold production over the last 10 or 15 years, it hit a peak about 10 years ago. And despite the fact that gold prices have skyrocketed since then, and the miners had tremendous incentives because of that to increase production, they haven't been able to. And this is one of the forces that is driving gold prices upward today, and one of the reasons
35:47 Speaker 04 why I'm confident it will continue to go up is that, you know, you talk about peak oil. I don't know that we've hit peak gold, but the miners have not really been able to take advantage of these higher prices by increasing production. And so the miners are weighted by those additional costs. And also, gold is now mined more often in politically and economically unstable and corrupt countries. And that is adds a risk premium and a cost to do in business that the miners have to bear.
36:27 Joe Weisenthal? It's so crazy, Tracy, I'm looking at a chart of GDX, the VanEck Gold Mining ETF, charting against GLD, the Gold ETF. The miners have just done terribly relative to gold. It seems like a terrible business. Kind of like how Bitcoin mining companies don't do as well as Bitcoin. I want to talk about, you also sell gold bars. And so, oh, right now, I could buy a one kilo gold bar on your website for $115,547.95. I could also buy a 10-ounce gold bar for $37,217.76. Where does that gold come from? What is the supply chain for just, let's say, I don't have any collectible interest, I just want a very space-efficient way to store
37:10 Joe Weisenthal? a lot of gold. Where do those bars come from? And how do they get to my mailbox?
37:16 Speaker 04 Well, I think we source them from several different sources. And again, it's a highly competitive market. And so, you know, we price shop like anybody else does. Those bars are typically coming from major refiners. Some of them are in Switzerland, but we are not buying them directly from the refiners. We're typically buying them from some wholesale distributor.
37:41 Joe Weisenthal? Got it.
37:42 Speaker 04 I can't actually tell you who they are at this time. Not because it's a secret, but because I don't know.
37:49 Tracy Alloway? I imagine one of the downsides to owning physical gold is storage, right? And the idea that, all right, you're putting all your money into this physical thing, but the risk is someone comes and finds it and steals it and you lose it all. How are people dealing with that storage risk?
38:07 Speaker 04 Well, you can own a lot of gold and hold it in a very small place. So, I mean, and most people will put it into a safe deposit box in their bank, along with the jewelry and other things, important documents and the like. And you can own hundreds of thousands of dollars, if not millions of dollars, in a very small space. So I think the storage... Issue is a bit of a canard and becoming even more so as gold prices have gone from $1,000 an ounce to $3,400 an ounce.
38:48 Joe Weisenthal? You know, it's funny. So I'm looking at the price of the gold bars and it's true. Like you could store right now $115,000 worth of US dollar value or roughly that. Looks like a fairly small, that one kilo of gold. What's funny, so silver is just so much cheaper because so a 10 ounce gold bar is 37,000. A 100 ounce silver bar is only 3,700. So you get something that's the same weight. No, you get something that's 10x the weight for one tenth the price. So for gold, the appeal is lots of dollar value in a small amount of physical space. For silver, it's almost the exact opposite where you can spend not that many dollars and have something that fills up your entire table.
39:30 Tracy Alloway? Something to stack.
39:31 Joe Weisenthal? Yeah, something to stack and show off on your YouTube channel.
39:34 Speaker 04 Yeah, that's right. That's right. When you open that box of $100,000 with silver.
39:41 Joe Weisenthal? Yeah.
39:42 Speaker 04 Then you'll feel like you've really gotten something.
39:46 Joe Weisenthal? But is there a difference in the type of person who accumulates silver coins and bars versus gold coins and bars?
39:55 Speaker 04 There's an important difference between those two product lines, gold and silver, and the market forces that move them. We think of them as both being precious metal, both of them being used in currency, both of them having this long history as a store value. But silver, a much larger proportion of silver is used in commercial applications and industrial applications than gold is. So there's this cyclical component to silver that is largely absent in gold. And so gold is a, has been considered a pure form of hedging against bad times.
40:39 Speaker 04 Then silver has been because silver is influenced by this cyclical Right. Demand factor. When I became director of the mint, I really was not familiar with precious metals or or coinage. I hadn't collected coins and but one of my first jobs outside of going to the mint was going to one of the big annual coin shows. And when they announced that the director of the mint was present, people lined up, like 100 people lined up to get my autograph. I was just so shocked by that. And I like to talk to people and especially I like to talk to my customers and I was new at the mint and we were going to be very customer focused. I
41:23 Speaker 04 I was on a mission to demonstrate how government can meet the highest standards of business. And the mint was very far from that when I came in. So I talked to customers and I spent a lot of time with them. And, you know, they were they loved American history. That's one thing that's very clear. They loved the art and the stories behind coins. And they were red blooded Americans and they were like the people I grew up with in West Texas. And so, you know, they seemed very level headed to me.
42:03 Tracy Alloway? I would be curious to get your thoughts on this. So what was it like actually writing the bill that allowed for the possibility of the trillion dollar coin?
42:12 Speaker 04 No, it was it was just it was a nothing. We had the very first entrepreneurial project that I took on was I wanted to launch the nation's first platinum bullion coin or platinum coin of any type. And I wanted to demonstrate that we could go after the Japanese market. Besides North America, the Japanese market was the hot, the big hot market for platinum coins. And our colleagues north of the border, who I love and continue to love, even though there's some tension in the relationship now, they own that market. And I wanted to demonstrate that we can go and take that market away from them.
42:56 Speaker 04 Because I had bigger fish to fry in the 50 state quarters and new dollar coin. And I just knew I wanted to demonstrate that. So I wrote a bill and I asked for complete discretion so that I could go over there and talk to the senior, probably in his 80s, Japanese distributor and sit down with him and say, I'd like to talk to you about designing a coin that will be successful in Japan. And I knew that we would go through the motions of him expressing an opinion, but it was
43:34 Speaker 04 just the honor of being asked to participate in that process that would make the difference. And sure enough, when we launched the coin, within six or eight months, we owned that market.
43:47 Joe Weisenthal? Philip Deel, you know, I consider you a hero because I never really worry about the debt ceiling being breached because I know that ability to mint a trillion dollar coin could come up and that will save us in the end. Thank you so much for coming on Odd Lots. A really delight to chat with you.
44:05 Speaker 04 It's been a lot of fun. Thank you.
44:20 Joe Weisenthal? Tracy, by the way, for those that don't know, they can go back. I've written a ton about it, the trillion dollar coin. Just look up trillion dollar coin debt ceiling. For new listeners who aren't familiar with all the lore, just search for it. We don't need to repeat it. But I could really, like, all the sort of technical aspects of like, what does it make for a coin to be successful? Like I said, I could just sort of listen to details on that for a long time and all the market research and like, oh, we thought it could be big in Japan. We thought we could like beat out the Canadian seller. To my mind, really interesting stuff.
44:50 Tracy Alloway? Japanese coin collectors are indirectly responsible
44:53 Joe Weisenthal? That's right.
44:54 Tracy Alloway? For the trillion dollar platinum coin. Very interesting. Um, you know what I was reminded of? I read a book, I guess, a few years ago about numismatics. And I think it was called When Money Talks. And I remember the author described coins as sort of physical memes.
45:13 Joe Weisenthal? Yeah, totally.
45:14 Tracy Alloway? Like memeplexes. And each coin contains like a set of ideas and a set of values that then gets transmitted. And I think that really came through in, in the conversation with Philip. Like, it is not just about the precious metal content. It is also about all these sort of social things that are embedded in that coin as well.
45:33 Joe Weisenthal? Yeah, and I don't know like what it is, but like, I really want a Krugerrand specifically. You know what I'm saying?
45:39 Tracy Alloway? Oh, wait, wait, I have a question for you.
45:40 Joe Weisenthal? Yeah.
45:41 Tracy Alloway? Okay, if you were offered a Krugerrand versus the same amount worth of a tungsten cube, what, what would you choose?
45:50 Joe Weisenthal? Uh, well, I have my, well, the same.
45:54 Tracy Alloway? The same value.
45:55 Joe Weisenthal? The same, oh, so I need a, I might just get a Krugerrand. I don't know. I'm really tempted. I have my tungsten cube. I think I need to divers.
46:04 Tracy Alloway? That's true. You need the novelty value of a Krugerrand.
46:07 Joe Weisenthal? I need a Krugerrand. I really think I do.
46:09 Tracy Alloway? Okay, shall we leave it there?
46:11 Joe Weisenthal? Let's leave it there.
46:11 Tracy Alloway? This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.
46:17 Joe Weisenthal? And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest, Philip Deal. He's at Philip and Deal. Follow our producers, Carmen Rodriguez at Carmen Arment, Dashell Bennett at Dashbot, and Kale Brooks at KaleBrooks. For more Odd Lots content, go to Bloomberg.com/oddlots. We have all of our episodes and a daily newsletter. And you can chat about these topics 24/7 in our Discord, discord.gg/oddlots.
46:41 Tracy Alloway? And if you enjoy Odd Lots, if you like it when we talk about the allure of physical coins, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.
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