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Jan. 26, 2023 - Health Ranger - Mike Adams
34:46
SCAM ALERT: You may be over-paying for gold and silver by a LOT...
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All right, welcome to this featured interview.
I'm Mike Adams, of course, the founder of Brighteon.com.
And one of the advantages of having a longtime sponsor in the precious metals space is that I get a lot of intel from people in the industry who are seeing what's happening with inventory levels and changes in premium and so on.
And earlier today, Chris Olson, who is the CEO of the Treasure Island Coins and Precious Metals Company, which is our sponsor, He contacted me with some very interesting intel about some inventory whiplash that's taking place.
And I thought, we've got to share this with you.
So I asked him to come on.
It's late at night.
But thank you, Chris Olson, for joining me so late to give us this update.
I appreciate your time.
Thanks, Mike.
My pleasure.
So, let's just jump right into it.
We've got a couple of things to pass along to customers.
Tell us, kind of as you told me earlier today, what's happening with inventory and premiums right now in gold and silver?
Well, to explain what's happening right now, we'd have to go to a bit of the backstory.
And as you and many of your listeners know, throughout 2020 and 21 and well into 2022, we've had record demand pretty much every year, year on year increases in demand.
For physical precious metal, bullion, gold and silver, coins and bars.
And really, it's been unprecedented.
And so, as that demand just never slackened and was always so tight, it caused the major players in the industry, such as ourselves, to go out and attempt to acquire as much product as we could to meet the demand.
And that meant that we were contacting refineries, mints, other suppliers, any sources we could find, and buying up all of their available production and all of their forecasted inventory for months out.
And that's the key here, is that you were buying future production quite a few months ahead, right?
Yeah, it was the only way to stay ahead.
Because if you didn't do that, you wouldn't get it.
Because the delivery timelines just kept getting pushed out.
There was only so much productive capacity in the industry to meet the unprecedented demand.
Right.
So everybody in the industry is basically doing that.
And that's part of what drives up the premium, which is the price of the coin or the bar above what's called the spot price.
So the spot price could stay the same while the premiums continue to increase due to the supply and demand pricing that's happening in the retail bullion market for the finished product.
Now, let me interrupt for a second.
What was the peak premium for silver that you saw over the last year or two?
Because at one point, it was insane.
It was almost half the cost of the silver.
Yeah, it depended on the product.
Products like the U.S. Silver Eagle were probably the highest due to just a severe supply shortage and inability of the U.S. to meet the demand.
There was a shortage of blanks.
We had blanks that were going to other mints because there's only one supplier right now of blanks to the U.S. mint.
And their supply was being divvied up amongst other mints as well.
So there was a lack of productive capacity there.
I think the premiums on Silver Eagles were probably well into near $15 over spot.
Wow.
Wow.
Yeah, and that's just reflective of just the popularity and the demand for that particular product.
Other products like the 90% silver, which, of course, there is no new mintage of the old coins, the silver quarters and dimes pre-1965.
There's only what exists now.
We'll ever be able to be bought or sold.
There's no new mintage of that.
So that's always the first product to have the premiums shoot up when there's an increase in demand.
And I think premiums for that were in the $10, $12 neighborhood above the spot price.
But everything was affected.
Every coin, every bar.
So then when did this flip?
Well, you started to see the demand slacken towards the end of summer a bit, but really it was kind of following the rate hikes from the Federal Reserve.
As they began to tighten monetary policy, raise rates, it began to tamper down inflation levels.
And inflation expectations.
They started contracting the money supply by hundreds of billions of dollars.
I think 400 and some billion dollars have come off of M1 at this point.
Maybe more.
Don't quote me on it.
But there's a lot of money coming out of the money supply.
And this happens right near holiday season starts kicking in.
November comes.
People are thinking about Thanksgiving, getting ready for Christmas, traveling for the holidays.
People don't want to worry about doom and gloom.
They need a break.
So that combined with higher interest rates and uncertainty, we just saw demand just kind of drop off a cliff right about the middle of November.
And into December, it really kind of bogged down.
It was a great time for everybody to take a break.
Yeah, good point.
But then from what you said earlier, this was also the time when a lot of the pre-orders were arriving.
So physical inventory was showing up at a lot of silver wholesalers and retailers at the same time that demand was really plummeting.
Absolutely.
Exactly.
So we were invested well into months of production ahead of this, just trying to keep up demand and forecast it.
And many others are in the same situation.
And so demand has picked back up a little bit, but not enough to deal with the supply issue.
So for the last two and a half years, it's been nothing but a supply crunch.
And now we have an overabundance of Physical product live in the warehouse and in the vault.
And I want to be clear, you're not talking about just your company.
You're saying industry-wide, there is a glut of supply that is in the hands of the wholesalers across the board.
And so this is why premiums are plummeting.
Exactly.
And so, yes, premiums are plummeting as a result.
Interest rates are higher so the cost to carry the inventory is also higher.
You have some guys where they go and tap into their lines of credits with their banks to maintain that supply.
And if you don't have the demand to back up the sales, Right.
So not only do they have more inventory than they need and lower sales, now they're paying higher interest rates.
So they're incentivized to try to get rid of that inventory, which means you have to drop your premiums and everybody's doing a higher sale on bullion right now.
So then, yeah, right now across the board, there's all this downward pressure on premiums.
So the $15 per ounce premium that you mentioned on U.S. Mint Silver Eagles, what has that dropped to roughly just as an industry average?
Well, I'm not exactly sure what the average is.
Just off the top of my head, looking around, I'm seeing prices on, say, sovereign mid-silver, one-out silver coins ranging anywhere from $4 to $5.
Maybe upper threes, maybe mid-fives on some of the higher-end stuff.
And that's overspot, just to be clear to the audience.
Yeah, I'm sorry.
Yeah, overspot, over-the-spot price, of course.
So the premiums have in some cases fallen by, you could say, as much as two-thirds?
Oh yeah, definitely.
Silver Eagles are still high.
We still see those probably $9, $10, $12 over spot, depending on where you look.
They're still hard to come by, but we've got Silver listed right now on our website.
10-ounce bars, $2.50 over spot, which in the last two and a half years was really unheard of for that size of a bar.
Yeah, and actually that brings up an important point I want to mention.
The effective price to get silver in your hands right now for a consumer is in many cases cheaper than it was six months ago.
Even though spot prices have risen, premiums have fallen more than that.
To the point where a lot of these silver coins are more affordable today.
Am I correct in stating that?
Absolutely.
Yeah, there's a lot of products right now that if you bought it six months ago or even a year ago when the spot was lower than it is right now, you could get it cheaper today than back then.
And that's just reflective of the supply and demand situation, which has changed so rapidly.
And how long do you think this oversupply Glut, if I dare call it that, is going to last because obviously this is a temporary situation.
Yeah, it's an interesting phenomenon.
So it's kind of an overcorrection.
People were just getting as much as they could coming to them.
And so with interest rates being high and the need to replenish capital and get rid of inventory, I think the fire sale will continue for probably through February as people try to work through it, barring any unforeseen circumstances.
I mean, we know that this market and geopolitics can turn on a dime right now.
But I would expect, you know, probably through early March.
And at that point, I think premiums are going to start to come back up because, like I said, interest rates are higher.
The cost to carry the commodities are higher.
And just in general, costs are higher across the board.
Inflation is still a real issue, despite what the Biden administration seems to think.
They don't have it under control.
Right.
Well, and as I've also said in the podcast, gold and silver prices are just one Russian missile away from, you know, really exploding, at least in my mind.
I mean, folks, that's not a forward-looking investment statement or anything.
I'm just saying that, I mean, look what happened last year when Russia invaded Ukraine.
What happened to gold?
Didn't it go to 2050 or something?
Yep.
Yeah, something like that.
I don't know right off the top of my head.
Yeah, I'm pretty sure it was like, I'm pretty sure it was 2050.
That was a spot or close to that.
But anyway, when there's uncertainty in the world, people obviously tend to want to go to safety.
It was about that in March.
March, about 2050.
March, exactly.
So folks, the website, I mean, The Treasure Island Coins and Precious Metals Company, they are a sponsor of ours.
So I want to give out the website where you can contact them.
And they have very honest pricing.
And in fact, I'm going to ask Chris here about that because there's some not so honest pricing in the industry.
But they have very honest pricing.
You can see the prices on their website.
You can get there if you wish by going to metalswithmike.com.
It doesn't pay me any affiliate thing.
The prices are exactly the same if you just go to the Treasure Island website directly.
It's just that Chris will know that you heard it through us if you go through metalswithmike.com.
But give them a call or look at the pricing on their website, see their inventory.
It's available right now and you'll have discreet secure delivery if that's something that you're interested in.
But Chris, one of my questions to you is I've received some alerts from some people who had bad experiences with some other gold retailers That are somewhat prominent out there.
People are getting hit with kind of bait-and-switch type of tactics.
They call in, they say they want gold and silver, and then they get sold something that's 200% premium over spot price.
And what's going on with that?
You've been in this industry a long time.
What's happening?
What you're describing there is a very old playbook that's been around for As long as I've been in the industry, and I've been doing this full-time for 22 years since coming to work with my dad, who's been in it since the mid-70s.
Wow.
And this has been going on really forever.
And the angle is that what some of these companies will try to do is sell people A gold coin or a silver coin that is semi-collectible or numismatic.
And there is an IRS rule which allows IRAs to include certain types of collectibles like the proof gold eagle and the proof American silver eagle.
Typically, in an IRA, you can't hold a collectible in a self-directed IRA, not that type of a collectible.
You can own gold and silver of a certain purity, but all of it is bullion except for these very few exceptions where...
Due to the way the law is worded, they can sell you a proof gold eagle, which means that the coin is struck twice as hard on a very highly polished die, and it comes inside a special case.
It's got a certificate of authenticity, and it looks really fancy.
It's a beautiful coin.
But those coins are typically marked up far above the comparable price.
Bullion coin version of the same coin.
And so if you're calling to invest in gold and you want to buy gold and silver, what these companies will do is try to steer you into these other types of gold and silver, which have much higher premiums.
And they tell you a lot of stories as to why you should do it.
But that's what we call the bait and switch.
And how much more premium does that involve?
Let's just say, let's take a round number.
If a one ounce gold coin, a regular one, is let's say $2,000, which I know it's not that expensive at the moment, but if it were $2,000, what would a proof semi-numismatic version be sold for?
They can go anywhere from...
$2,300 to $2,800.
It really depends on who you're talking to.
I'm sorry to interrupt, but just in the interest of time, if that customer takes that proof gold coin and then goes to a local gold dealer and tries to sell it back the next day, how much would they get for it?
It's going to depend.
It really fluctuates.
They could lose $300, $400, $500 on the coin if they tried to liquidate it right at that time.
Right now, I don't know exactly what they're selling it for.
That's typically not the kind of market that we're into.
But I can tell you that this type of gold coin, the proof gold eagle right now, Is trading in the wholesale realm at around $600 above the melt value.
Wow.
And that's for any of them.
That's $600.
So this premium, most of this is just pure profit for that retailer.
Yeah, it's hype.
Well, the premium, the $600 I'm talking about, that's in the wholesale market amongst the dealers that buy and sell amongst themselves.
So the retailers are using that as their base price.
And so they're probably selling it for $750, $800.
But that entire price, that entire $800, whatever it is at the end of the transaction, all of that is speculative.
That could all be wiped out.
Gold coin could go down to the melt value of gold.
So you could be out the $750 an ounce.
That premium is very, very volatile and speculative, and it's subject to hype.
So a person that, let's say, someone wants to really stack up on gold, and they call up one of these retailers and say, I have $100,000 to put into gold, and they get talked into buying these proof gold semi-numismatic coins, they will not end up with $100,000 worth of gold metal.
Not even close.
Not the melt failure.
If it were to be melted down, you're going to be missing out on a very large percentage of that, which right now, the way it's priced, it's about 25% Okay, just in the wholesale.
Because I noticed that there are some players out there that are doing this, and they seem to be rolling in all kinds of money.
And it's obvious to me they're taking that money from customers who don't have the knowledge to know that they're engaging in a transaction that is not in their own best interest.
Yeah, and that's something that's plagued the industry for a long time.
And one of the red flags to look out for is if you're dealing with a company, see if they publish their pricing somewhere publicly.
Ah, good point.
Take a look at their website.
Do they have their prices up?
Is it fully transparent?
And that's what I love about your company and your service.
People can go to your website, again, metalswithmike.com.
They can see real-time pricing on the inventory that you have right there.
You can see the numbers.
Whereas I notice that a lot of these other sites, they say, call us.
Just call this number.
Contact us.
Get them on the phone.
And then on the phone...
talk people into things.
And I'm sorry to say that there are a lot of sort of wealthy, slightly older individuals, shall we say, who are perhaps a little more easily talked into things when they don't have a full understanding that they're kind of being ripped off.
Well, it's, it's, it's a situation right now more than ever where the majority of the people that we've spoken to over the last two and a half years are new to precious They've never bought it before, but suddenly they see the value in it.
They want to get into it while they still can.
But they don't really know exactly what they're doing.
So they're looking for someone to trust.
They're looking for someone to explain it to them.
And in that type of a situation, it's easy for a person to get taken advantage of if they just don't understand how the market actually functions and how pricing functions.
And so we try to be very transparent about all of that with our customers.
Yeah, and I'll go ahead and share this publicly.
I'm not going to name any names, but folks, I was contacted by one of these companies that wanted to pay me crazy, insane amounts of money to switch to them, and I found out they were doing this bait-and-switch thing, and of course, I rejected that.
No thanks.
You can't pay me to promote something that's going to rip people off.
There's no...
That's just insane.
And that's why I love working with you, Chris, because your company, you're solid, you have high integrity, you're honest with people.
But tell us, so if someone's buying gold or silver right now, and they just want the most ounces, but in a one-ounce coin format, because they like the one-ounce format, what's the best deal?
I mean, I don't mean super sale or whatever, but the best value right now that you can offer.
So one ounce minted coins, sovereign coins, like a sovereign government.
The best deal we have right now is from the Perth Mint in Australia, the Silver Kangaroo.
We have those at $3.49 over the spot price.
Did you say $3?
I actually didn't hear the number.
Was it $2 or $3.49?
$3.49 over the spot price.
Okay.
That still sounds really amazing because I remember that being much, much higher a few months ago.
Okay.
So $3.49 over spot.
What about gold?
With gold, there's a couple different things that we have going on right now.
And this is a perfect example as well of the difference in pricing.
So we were talking about those proof gold eagles that people are often being recommended by their advisors that they get on the phone.
And right now, The wholesale rate on those is actually, I was just checking it, it's about 30% over melt.
And the retailer, they're going to add, who knows, another 5%, maybe 10%.
I don't know what these guys do these days.
But we can sell, as an example, we have one ounce gold maples right now, which are in varied condition where they might have slight marks or nicks on the coins.
And they're at $45 per coin over melt, which basically...
Wow.
That's about 2.3%.
So compare 2.3%.
You could acquire gold for a 2.3% over melt premium versus what some of these other guys are recommending all the time to their customers at 30% and higher premiums.
Like, why would you even recommend?
Well, so there you go, folks.
I mean, that's the main point I wanted to get to.
You could be acquiring gold at 2.3 or maybe 2.5% over spot price or silver at some also, what, $3.50 over spot instead of paying 30 to 40% premiums.
Yeah.
And with silver, the comparable on silver in these IRA bait-and-switch tactics is the proof Silver Eagle, which right now in the wholesale market, those are trading at $78 to $80 a piece.
You're probably going to see another $5 markup from the typical retailer that's into that kind of thing.
And then you're going to see these trade, you know, $85 for an ounce of silver.
That's crazy.
Yeah.
Whereas, you know, you could buy a perfectly good silver coin for an investment from us for $27, $50, $28.
So that's the problem that people run into is they're not being steered in the right direction when it comes to their precious metal investments.
And I've heard people say, oh, you know, I just got $25,000 worth of silver.
And I ask them, well, okay, what'd you get?
Tell me.
And they tell me what they got.
And I'm like, that's not $25,000 worth of silver.
That's not even 20,000 worth of silver.
Where did you get that?
I'm hearing these stories.
There's always a premium.
Like I said, it's been very high here for the last two and a half years, but it all represents supply and demand.
You have to educate yourself and look at what is the value proposition?
What is the worst case scenario for what I'm buying?
The worst case scenario for any gold or silver product is melt.
You melt it down.
That type of scenario happens sometimes if Oh, that's a really good point.
Yeah.
But it would be a good problem to have, too.
If you bought silver at $24 for $3.50 over spot, and now silver's $75 and you have to sell it for spot, well, you didn't lose.
You won.
Yeah, exactly.
But that's how premiums work.
I'm really glad you covered all of this.
And I really want to thank you for taking time, even a little extra time here in the evening.
But since our audience, they want...
The primary reason people are stacking gold or silver is because they have assets.
They want those assets simply preserved.
They're not buying for speculation.
They're not even considering this, quote, investments.
They just want to hit the pause button.
on their assets and still have something of value, hopefully close to 100% of value after a currency collapse or a global war or a cyber wipeout of the financial institutions, whatever.
And so they want to get as close to the actual melt value as possible, as close as you can, but also maybe not in 100-ounce bars, right?
They want something like one ounce that they can still trade with if they have to.
So the information that you just gave us, I think, is really vital for people to get the maximum amount of ounces out of every dollar that you're putting into this.
That's exactly right.
And one thing I just want to leave you with before we end here, with the smart money.
The smart money is going into gold right now.
And I was just doing a little research.
This is from the World Gold Council.
So in 2021, central banks accumulated 463 tons, metric tons of gold.
Look up how much a metric ton is.
You'll be surprised by how many ounces of gold that is.
They accumulated 463 tons in 2021, which was 82% more than 2020.
And at that point, they said this is a 30-year high.
The report just came out a couple months ago that in the third quarter of 2022, central banks bought nearly 400 tons in a single quarter.
Nearly the same amount they bought in the entirety of 2021, and this was a record purchase by central banks.
I remember that report because wasn't something like 300 of those tons just purchased by China alone?
I don't recall.
I don't recall.
I think that was the case.
And I remember being really blown away by China's accumulation.
But you make a really important point, and that was one quarter.
Any idea what the total purchases for 2022 are going to look like by central banks?
Well, the total in 2022, I don't know.
I don't have the number right in front of me.
But it's certainly going to be well over double what they bought in 2021.
And I doubt they're going to slow down in 2023.
And this was despite a strong dollar.
And so that's part of the reason that gold has performed so well right now in the face of high interest rates, in the face of a strong dollar.
Because the BRICS countries, OPEC+, the Global South, which we've got nations with alliances now representing over half the global population, they've decided that they don't want to trade their natural resources for a currency where they're going to lose a real rate they've decided that they don't want to trade their natural resources for a currency where they're going They'd rather keep their oil in the ground, or maybe they're going to take it and convert it into gold or some other kind of hard assets.
- Right. - That's the situation.
Okay, that's really excellent intel, Chris.
And just the takeaways from this are, number one, a lot of excess inventory right now in silver and gold at retailers.
Premiums have plunged, which means that right now is actually a very good time to acquire this, frankly, at a temporarily good deal because premiums are so low.
And then the other takeaway is, Do your homework, folks.
Don't get taken, don't get talked into proof coins with crazy premiums where you're not getting the value for the dollars or whatever currency you're using to buy this, but get the most ounces that you can for the money that you're putting into this.
Is that anything to add to that, Chris, or is that pretty much the summary?
That's pretty much it.
And just make sure whatever product you're looking at, that it has liquidity, that it's popular, that there's a good two-way market.
Some products are very cheap, but they're also garbage and you don't want to hold on to those.
So you want to stick to the standard popular products.
So, I'm sorry, one more question, but let's say the silver coins that you were talking about today, the kangaroos, $3.50 over or $3.49 over spot right now.
What is your spread today on that coin?
What are you buying those back for right now if someone were to sell them to you today?
Yeah, right now, I'm going to have to pull it up.
I didn't have that number in front of me.
Oh, sorry.
I kind of sprung it on you there.
No, that's okay.
I can look it up real quick.
Right now on those, I'm buying those at $1.50 over a spot.
So the spread on that is about $2.
Okay.
All right.
So that spreads about $2.
And then between buy and sell, which is very reasonable, especially in this industry, what about a gold coin spread right now?
What's that look like?
The gold coin spread is going to be...
In the realm of 2% to 3%, depending on the particular product that you're looking for.
That's kind of the average.
Wow.
Okay.
That number can change also depending on the size of the deal, depending on the product.
You know, the larger the deal, the more room we have to work with that.
Okay.
So 2% to 3%, that's less than a typical credit card merchant transaction fee, by the way.
So that's a really good, from my point of view, that's a really reasonable spread for something that's just going to hold value, at least historically.
And that's also an indication of where premiums are right now.
Spreads widen as the premiums become more volatile.
As premiums get higher, spreads will get wider because there's a lot more uncertainty.
And so when you're a market maker, you have to widen your spreads.
Otherwise, you could get stuck with a lot of inventory that you can't hedge the premium.
You can hedge the volatility of the gold or the silver component, but you can't hedge that premium.
That's factored in there.
So right now spreads are tight because the volumes are low and the premiums are in a normal range where there's a lot of risk is no longer wrapped up into that price.
So it is a very good time to buy or even to sell if you had to, but I wouldn't recommend selling because I think premiums will go back up.
Yeah.
I don't think I've ever sold any silver or gold.
From time to time, I buy some, never sold it, but there might be a day where that makes sense, and I'm certainly willing to do that when it does make sense, but we'll see where it goes.
I want to thank you, and also just in terms of disclosure, I want to remind the audience that Chris Olson's company here, Treasure Island, is a regular sponsor of my podcast.
They do not pay me a commission.
They pay me a flat compensation for mentioning them in the podcast, but I have not received any payment for this particular interview.
This is simply kind of an extra intel analysis of the industry, but I am compensated for plugging them in the podcast.
But I hope you agree with me that I'm very careful about who I recommend.
I don't want myself or my reputation to ever get burned by anybody engaging in shenanigans or overcharging people or generating complaints.
And that's why I stick with Treasure Island.
And Chris Olson runs his business with super high integrity.
Along with David and others there, you can call them up.
You can talk to them.
They will answer your questions.
And they will not try to push crazy inflated products onto you.
They will give you the most value for your dollar or whatever currency you're using.
So I just want to disclose all that.
And thank you, Chris, for spending time with me.
I really appreciate it.
Yeah, happy to be here, Mike.
Thanks again.
Final note to everybody listening, feel free to repost this interview.
I always say that, but feel free to if you wish.
And just give credit to Chris Olson there at Treasure Island.
And once again, if you choose to check their prices or contact them, You can reach it at metalswithmike.com.
Just easy to remember.
But again, I don't receive any compensation for purchases.
No affiliate compensation of any kind.
So I just want you to know that.
Thank you for listening.
Everybody, stay informed.
Choose wisely.
Get good financial advice and make very sharp decisions about this because money is getting harder to come by each and every day.
So thank you for listening.
God bless you all.
Take care.
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