Podcast

Richard Charpentier | Dreamstime.com

Olivier Garrett: Buying Gold & Silver

Precious metals and the Hard Assets Alliance
Sunday, July 12, 2015, 11:34 AM

With financial markets becoming increasingly volatile (the Shanghai Composite's loss of over $2 trillion in the past month, for example), along with growing global economic instability and currency risks (Greece contagion, anyone?), we think it time to reiterate more loudly our core belief that everyone should own some precious metals.

As detailed out in our report The Screaming Fundamentals For Owning Gold & Silver, the primary reasons are:

  1. To protect purchasing power against monetary recklessness (e.g. central bank money printing)
  2. As insulation against fiscal foolishness (e.g., chronic deficit spending by governments)
  3. As insurance against the possibility of a major calamity in the banking/financial system
  4. For the embedded 'option value' that will pay out handsomely if gold is re-monetized

And while there are many ways to purchase precious metals, we continue to be impressed by the full-service set of solutions offered by the Hard Assets Alliance. Peak Prosperity joined the HAA as a founding member back in 2012, and since then, we've appreciated how well they've executed on their mission and continued to launch features targeted at what their customers value most.

In this week's podcast, Chris sits down with Olivier Garrett, the CEO of the Hard Assets Alliance to discuss the current state of the precious metals market, why the reasons for owning bullion make more sense than ever today, and what the HAA, specifically, is doing to make it as affordable, easy and secure as possible for people everywhere to own gold and silver.

The podcast gets into much more detail, but the main advantages of the Hard Assets Alliance is that it makes the same advantages enjoyed by institutions available to the retail bullion investor:

  • Excellent pricing - For every order, a least four suppliers provide a bid to meet it. The platform compares them and offers you the best one.
  • Quality of product - The HAA only offers sovereign coins and standard bullion bars, which hold their value more consistently than any other forms.  No numismatics or rare coins. You can buy gold, silver, platinum, or palladium through the HAA.
  • Delivery options - Take physical delivery immediately of your purchased bullion, or opt to have the HAA store it for you safely at low cost.
  • Allocated storage - All bullion (bars or coins) that you purchase and store through the HAA is held in your name at the vault location of your choosing. If you purchase bars, the serial numbers are provided to you. Bullion stored by the HAA is never pooled, margined, or otherwise leveraged.
  • Storage options - You can choose to have your bullion stored in vaults in the US (New York and Salt Lake City), the UK, Switzerland, Australia and/or Singapore. (Metals available at any location are subject to availability) 
  • Storage security - HAA bullion is stored in the same secure vaults as for the major global investment banks and governments that use the SmartMoney platform. These vaults have around-the-clock armed physical security, state-of-the-art electronic protection, and insurance for the full value of your deposit. Their precious metal holdings are audited every day and an audit report containing bar lists is sent to the Hard Assets Alliance daily. In addition, an internationally recognized Big Four auditing firm audits all of the precious metal holdings on a quarterly basis. Precious-metal bar holdings are confirmed with Hard Assets Alliance and reported on the Hard Assets Alliance website. 
  • Low storage fees - Between 0.5%-0.8% per year for gold and silver
  • At-will delivery - Any bullion you store with the HAA will be shipped to you, fully-insured, within 48 hours of your request.
  • Easy, anytime, instant transactions - Once your HAA account is funded, the online system lets you buy and sell bullion and/or request delivery with just a few mouse clicks. You can perform any of these transactions 24/7.
  • Reliability - Since the SmartMoney platform must meet the service requirements of the world's largest investment banks, you can have confidence that if worldwide bullion inventories become tight, the HAA will have the highest reliability that it can fulfill your order when you need to transact.
  • World-class support - In addition to the online system, live support via phone, email, and chat is available to help you 12 hours a day, 5 days a week.
  • IRS reporting - HAA accounts are considered US accounts, even if your bullion is stored in a vault overseas. Therefore you are not required to file IRS foreign-held asset reporting forms such as TD F 90-22.1.

Those interested in learning more about the Hard Assets Alliance and its solutions should click here.

Click the play button below to listen to Chris' interview with Olivier Garrett of the Hard Asset Alliance (41m:44s)

Transcript: 

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson. Now, at Peak Prosperity, we regular and consistently tell people to diversify away from purely financial assets—paper financial assets—because we think the paper markets are bubbly, we think they’re due for a massive correction and entirely too risky to entrust with all your wealth. For many people, a great diversification vehicle are precious metals, gold and silver being the main ones to consider. So, today, we’re going to welcome Olivier Garret of Hard Assets Alliance to the program. As a full disclosure, Peak Prosperity endorses Hard Assets Alliance as a platform for purchasing gold and silver, and we have a financial relationship with Hard Assets Alliance, or HAA, wherein we are compensated when people we direct their way do business with them.

Now, we’ve done interviews with HAA before, and so today’s podcast is to find out what’s changed since the last time we talked and to better understand how HAA has improved its offerings and matches up to today’s increasingly uncertain and complexly regulated world, especially for U.S. customers. Olivier, welcome.

Olivier Garrett: Hello, how are you, Chris?

Chris Martenson: Oh, I’m good, I’m good. Hey, why don’t you give us a quick summary of the mission behind HAA and why it was created?

Olivier Garrett: All right. Well, Chris, as you know, one of the major deterrents for people that are not yet gold buyers and customers is it’s a little bit overwhelming. One is if you want to buy physical gold and store it in your house, you have to go find a dealer, make sure that they’re reputable. Then you buy the gold. Hopefully, they sell you real bullion, not some collectible or things that are really not as valuable as what you want. So, you have to really learn a lot about gold and that’s the first thing.

The second thing is there’s just a—it’s not a very transparent business. I think one of the—several years ago there was a huge innovation called GLD, which is the gold ETF. And, it sounded like a great idea. It basically made gold accessible to a broad public by providing a security that was backed by gold. And so it became very quickly the largest non-governmental gold holder in the world. The problem with GLD is they buy gold, it’s basically—there is counterparty risk. You really are buying a security. So, if you’re trying to buy gold to protect yourself from a potential financial collapse, you really are no better off than if you bought any other securities out there.

When I set myself up at looking at a better solution, that was one of the things. We wanted to find a replacement to GLD, a way for people to buy gold and silver, platinum, palladium in an easy way, where they could not only buy it almost as easily as they could log on to their e-brokerage account and get what they wanted where they wanted, have it stored safely. And then the day they need to liquidate their position or part of their position, they can just go online and do the same. That was our goal and that’s—I am glad to say that the Hard Assets Alliances has delivered all of that. And, one important thing, which I think is—the Hard Assets Alliance is not allowing you to just buy gold that is comingled with other people’s gold. It is your gold. So, if you buy some silver eagles or gold eagles or 10-ounce bars or whatever, that’s what is stored for you at the Hard Assets Alliance. When you want to sell it, that’s exactly what you sell. If you don’t want to sell it, but you decide now it is time to take delivery and have it shipped to your home or somewhere else, that’s what you’re getting; you’re getting your gold, not a portion of a 100-ounce bar.

Chris Martenson: So, gold or silver or palladium and platinum have been purchased on behalf of a customer, presumably it’s—you have the certainty that it’s real gold, silver, platinum, palladium and—give us an overview then of Hard Assets Alliance. Where is this gold stored?

Olivier Garrett: So, basically, the Hard Assets Alliance has agreements with some of the largest non-banking vaults in the world. In New York, Salt Lake City, and Sydney, it is with Brinks. And, then we have Yemak [PH], which is the international competitor in Zurich and London. And, in Singapore, same thing. We basically are dealing with vaults that are storing gold for financial institutions, for governments. These are not fly-by-night companies. In addition to that is that gold is audited. The Hard Assets Alliance holdings of the customers are audited quarterly by an accounting firm. We reconcile everything and make sure that everything is there according to what our records indicate.

Chris Martenson: You said non-bank; why is that important?

Olivier Garrett: Well, I mean, it’s important for a lot of reasons. One is banks tend to follow the direction of governments. The second one is if there is a problem like there is right now in Greece, and banks are shut down, who knows whether you’re going to be able to get into your vault. It’s basically tied up to the financial system, and our view is that you want something that’s completely separate. Why do we, why do governments, why do large institutions, including banks, store their gold outside of the banking system? I mean, you’d think they would sort of store their own gold. Because it’s safer.

Chris Martenson: Absolutely. Well, that certainly touches on something I’ve been very, very concerned about, the banking system in general, particularly after the final G20 meeting in Brisbane, where they formalized the bail-in procedures and those rule sets are being established across the system. It’s clear the banking system is not—it’s becoming less trustworthy over time. The LIBOR scandals and other things just tell us just exactly what those guys and girls are up to there. So, that’s been something I’ve been concerned about a long time. And, it’s one of the reasons I liked HAA from the beginning, was setting it up so you’ve got fully allocated accounts that are insured, they’re audited, they’re out of the bank system. Did I miss anything?

Olivier Garrett: Well, I mean, the other thing that you may have missed is that one of the nice things about the Hard Assets Alliance platform is that you are not really buying from one dealer. The platform really allows you to—when you go on and you try to buy some bullion, you see real-time prices, which are the result of the competitive bids of up to 15 different wholesalers and mints. So, you have the largest suppliers of gold and silver bidding for the customer’s business. As a result of that, I would say the Hard Assets Alliance offers what I would call an everyday low price. It’s a little bit like the Walmart saying. Basically, in the gold and silver business, you can always find somebody that will sell to you at a loss to then try to upsell you to some other products that are higher margins. What you know for sure with the Hard Assets Alliance, your customers, our customers always have a very competitive cost, time after time, and they never sold anything else but real bullion that is uncirculated, and that’s also very important.

One of things that people forget when they buy gold or silver and store it personally is once you take your bullion out of the system, if you take a bar out of the system and you break the chain of custody, whether there’s tracking from the time it was minted to the time you want to sell it, you are likely to have the bullion buyer wanting to re-assay your gold. And, to say the gold is—you may find out that the gold is not perfect or if it’s a buyer’s market, maybe the buyer will say, “Well, you know, I need to get a bigger cut, because, you know, there’s some scratch on your coins,” and things like that. One of the nice things about if you buy and store in a Hard Assets Alliance, you basically have a totally standardized product that has never been touched by anybody. And, when you go to sell it, you just go on, you click on, there’s no assaying, no checking. It’s done automatically. It’s exactly the same as selling a share of stock.

Chris Martenson: Olivier, our listeners really care about pricing, and so there’s a couple of elements to this, 1) the purchase side, are you getting a good price there, 2) storing it, 3) on the sell side. Can you just walk us through what your pricing is?

Olivier Garrett: Sure. So, I mean, obviously, whenever you buy bullion—and we offer anything from 10th-ounce coins to kilo-bars. So you basically have a variety of product that have different markup. 10th-ounce coins, it’s not uncommon to have a 10-plus percent markup, and that’s because of the minting cost that is integrated in the cost of the coin. If you buy a kilo-bar, I mean, that’s a very high price, it’s a very low mark-up, that is now under 3%. So, there is a range. But, what I can say is the Hard Assets Alliance, because of the—well, first, we are dealing with multiple bids all the time. The buying price is extremely competitive. Since the whole selling process, the whole transferring process is done electronically all the way, directly from the wholesalers to the vaults, or to you if you take delivery, it’s a very efficient process. So, it allows us to stay with very tight margin. Same thing for the storage cost. We usually have between 50 basis points or .5% to .8%, depending on the product, silver being more expensive than gold and, obviously, if you buy, you store a little bit versus a lot, the rates go down.

But, basically, you’re talking about costs, .5 to .8% of cost—it is a little bit more than what your ETF will charge you on a yearly basis as fees. So, it’s actually quite competitive. I mean, is it exactly the same? No, it’s a little bit more expensive than holding it in ETF. But, if you went to ask GLD to get your 10 ounces of gold, it’s just not going to happen. You basically hold paper gold, which is, in my opinion, of very low value to protect yourself in the case of—if you buy gold as insurance in case of a financial collapse, which is why I recommend to people that they should always have a fair amount of their assets allocated in physical precious metal.

Chris Martenson: Right. So, we’ve got 10th-ounce gold coins with the biggest markup, of course, we’re all familiar with that. That happens no matter where you’ve purchased those, and as you buy increasingly larger units of gold, the actual premium that you pay over spot goes down, obviously. And, the storage cost is 50 to 80 basis points. Obviously, there’s some number of basis points even just to have the management of the GLD thing. But, good luck, that’s just a trust where you own an interest in a basket. You don’t actually own any physical at all, according to the prospectus as I read it.

So, you can move in, you can move out. I’m interested now in, just really quickly, take us through the formation and funding of a typical customer. How does that work?

Olivier Garrett: First of all, I want to say I was the first one to open an account at the Hard Assets Alliance, so I personally have gone through the process several times. I have an IRA account also, IRA account with Hard Assets Alliance. Basically, for most individuals, it’s actually very simple. You go online, you basically answer a few questions. Now, what you’re doing at the Hard Assets Alliance, you’re opening an account, you’re not just buying gold. You’re opening a financial account, so you do have to provide information like your address and you have to go through the know-your-client rules and disclose a certain number of things to the U.S. government. The reality is, no matter where you do, you’re going to have that issue. It takes probably five to ten minutes to complete everything, and in my case, within three minutes of completing the application, my application was accepted. I would say for most individuals that have had a fairly stable financial history, have not moved in the last months, not changed everything in the last couple of months, basically, the verification process is seamless and usually within a few hours you know that your account is open. If it is somebody that has—we’ve seen a few cases where somebody has just moved and the financial information does not quite correspond to what’s in their database and things like that. So, there’s additional questions—it’s fairly rare. If you’re trying to buy to open an account for a trust or an LLC or something like that, then usually there is more documentation required and the Hard Assets Alliance then follows up with you and asks you for those documents. It takes, usually, a matter of a couple of days if you have access to those documents right away. So, it’s still fairly seamless.

Once you’ve opened your account, you usually—I mean, most people fund using ACHs with their bank, basically. So, what you need to do then is enter your bank information. There is a verification where the bank sends a fake or one little transfer, and then you have to verify that you received it and things like that. So, that’s a process that usually takes one to two days maximum. You can of course send a wire to fund your account, and that’s just the time of sending a wire, or you could send a check. It takes a little bit of time for the check to be received and to clear before you can buy your gold or your precious metal. So, it’s very seamless. It’s actually, in my opinion, it’s a lot easier than opening a bank account at your neighborhood bank, and faster, and a lot less questions.

But, once you’ve gone through that and you’ve funded your account, then you go online and you can buy and sell, and that is just about as easy as you would do anything on your e-Trade or Scott Trade, Fidelity accounts.

Chris Martenson: Now, what about credit cards or bitcoin or anything like that? Does that tie in at all yet?

Olivier Garrett: It is not—these are things that we are actually looking at doing. We’re still working on some of the details. It will be available in the next few months, but at this point, that’s not an option.

Chris Martenson: Okay. So, somebody’s opened an account. They’ve bought—they get to choose which vault they want it in, whether it’s in Singapore or New York or in Switzerland?

Olivier Garrett: Actually, yes. When you get on the Hard Assets Alliance and let’s say you’re looking at buying one-ounce eagles, gold eagle, gold coins, you will see the price in New York, you will see the price in Singapore, in Zurich, real time. And, you’ll see that there’s usually a little bit of a difference. We’re talking very small difference in prices, maybe sometimes on the gold coins, it may be a difference as much of a dollar more in certain locations than others. The reason is because different dealers are bidding for your business in different places. So, what you’re seeing is a market in real time. If you want to store your gold in Singapore, you buy it in Singapore, in the Singapore marketplace and it’s delivered directly to the vault. And, same thing if it’s in Zurich. So, usually, the cheapest of all the locations, because of liquidity, is New York. It’s not always the case, but almost always the case. And, then the others are very, very competitively priced a little bit above that, but very close. And, you see that, so as you choose—let’s say if you’re ambivalent of having it stored between Zurich or Singapore, you can choose the one that has the best price.

Chris Martenson: Okay. And, if I do choose it, wherever I’ve chosen to store it, talk to me about like if I want to actually take delivery of this and how that works. Does it change the delivery cost if it’s in Zurich versus Singapore?

Olivier Garrett: When you take the delivery of your gold—if you buy to store it and then two or three years down the road you want to take delivery, all you have to do is you online and you ask to take delivery. And, basically, you will get a quote for shipping, which will depend. Obviously, if you’re based in the U.S., if your gold is stored in New York, it’s going to be a little cheaper to ship that than if it is in Zurich. We are basically using some of the, I mean, Via Mat is one of the largest shippers of gold anywhere in the world, and they are very competitive. It’s, usually, we’re talking a little bit more than FedEx packages for an insurance shipment. So, it’s not very expensive, and you just get it, it’s usually shipped within two days of you actually asking for delivery on the website. And, if there’s any problem, you’re a 1-800 number away from getting a real person to help you through that process.

Chris Martenson: Okay. So, that all sounds very clear. Now, one of the things as a U.S. person that’s really a big problem in my life is all of the reporting requirements that have come up. We’ve got all these FATCA reporting requirements, we’ve got the FBARs, which is your foreign bank report that you have to file if you have any foreign accounts. So, if I open an account, Olivier, and I store my gold in Singapore, do I now have to be aware of all the FATCA and FBAR filing requirements?

Olivier Garrett: No. One of the benefits—and I actually can touch base on both the benefits and potential disadvantage of having a Hard Assets Alliance account. One of the benefits is it is a U.S. account, so your gold is stored elsewhere, but your account is actually a U.S. account. So, for the purpose of the U.S. government, there is no reporting of your gold at your level. Obviously, the Hard Assets Alliance has to report the overall gold that is stored over there, but that’s not—the customer, it’s very seamless. And, I know I have multiple accounts and just by fact my reporting is almost like a booklet every year. And, it is—people don’t realize that the U.S. government, theoretically, in the U.S., we don’t have exchange controls and supposedly you’re able to do anything you want with your money and export it out of the country. What the U.S. government’s done is it’s established exchange control by having a very burdensome requirement, and the Hard Assets Alliance goes all around that.

Now, the slight disadvantage of the Hard Assets Alliance is that because it’s a U.S. account, technically a U.S. agency, the IRS or anything, could take an action or _____ [00:21:13] U.S. court, could take an action and actually confiscate your, or freeze your account. The reality is, is it really that different? Even if you have an account offshore, if the account is in your name, if you have not set up a complex foreign trust and everything, the U.S. can force you to repatriate, and if you don’t do it, you’re in contempt of court. The nice thing is having your gold or silver stored outside of the country is, in the past, whenever there’s been restrictions like in 1933 when Roosevelt made ownership of gold illegal for individuals, it was all focused on the gold that was stored and available domestically. So, there’s an advantage.

The other thing is if you know something is coming, you can take delivery outside of the country. So, in this case, it gets completely out of the account and then if the U.S. wants to freeze or ask you to repatriate the account there’s nothing left in the account.

Chris Martenson: So, if you were in Singapore, you could take delivery in Singapore.

Olivier Garrett: Yeah. It’s a little more complicated than taking delivery at your home or at your address of record. It takes a little more time, and the reason is we have to make sure that who is taking delivery is the actual owner of the gold and silver. We can’t just ship gold and find out after the fact that this went to the wrong address. So, there are multiple levels of verification if you’re not shipping to the address of record, but it is possible.

Chris Martenson: Okay. So, you mentioned some magic words to me before, because a lot of people are interested in this, which is IRA and, I guess, 401k. So, talk to us about how HAA and those savings vehicles line up.

Olivier Garrett: One of the things that we started a few years ago is an option to open directly through the Hard Assets Alliance an IRA account. Basically, you can open an account as easily as you open a personal account. At the same time as you open your account, you actually apply to open a custodial account, and that’s also all done online. The beauty of the Hard Assets Alliance account right now is—or IRA account—is that you actually can store your gold outside of the country in your IRA. As far as I know, this is truly unique to the Hard Assets Alliance. People can have their gold stored—right now it’s in Zurich, it’s only available in Zurich. But, you can basically store eagles in your IRA in Zurich outside of the country.

Chris Martenson: Ooh, that is very attractive. I don’t know of any other option like that right now. All right. Does that apply to all the different IRA vehicles, like a SEP IRA or whatever? I mean, they’re all…

Olivier Garrett: You can do SEP IRAs, 401ks—I mean, as you know, 401ks, if it is an individual 401k, it would work. Obviously, if it’s your employer’s 401k, it has to go through your employer until you decide to leave your employer and then you can roll into an IRA of your own choice that you set up.

Chris Martenson: Great.

Olivier Garrett: So, if someone were to leave an employer, had a big 401k or account and decided they wanted to roll it over into an IRA, a personal IRA, then they could open an IRA with the Hard Assets Alliance and have that roll over.

Chris Martenson: Got it. Okay. So, you know what I’m interested in is—so, you guys are kind of at the front lines of the physical market and a lot of our listeners (and myself included) are very frustrated with what’s going on in the paper gold, paper silver markets. They’re obviously just trading vehicles for people with a lot of leverage, who are speculating. You watch gold and it trades in lockstep with the yen or with the dollar or with a variety of other cross-correlated assets. It’s not trading on its own. What’s interesting, I guess, is to get your views, whatever you’ve got from the physical side. Because, you know, we’ve been over here tracking the flow of gold from West to East. We see the withdrawals from the Shanghai Gold Exchange. It just seems extraordinary to us to hear about refineries in Switzerland running three shifts just to come up with kilo-bars that are going to go somewhere.

Olivier Garrett: Exactly. Again, I think your subscribers are very well aware that the paper gold market is multiple size bigger than the physical market. And, what it means is that the prices that are being set up right now in the world gold market are not set up by the reality of the physical gold market. What is amazing to me is you look at yesterday, I mean, on a day where there was a major financial crisis in Greece, and the markets got hit and everything, the dollar went up and as a result of the dollar went up, I mean, the precious metal markets were actually somewhat soft. To me, it is a huge opportunity for people that have not yet bought their precious metal, you have a window before the markets finally recognize the real value of physical gold and silver. You have a window to buy a commodity at ten cents on the dollar. And, that won’t last forever, and I think it is really—when you look at the amount of gold and silver that the Chinese, the Russians, the Indians are buying, it is staggering.

I think we were discussing at some point earlier the fact that while the Chinese are reporting officially somewhere around 4,000 tons of gold, in my opinion, based on flows and things like that, what we’ve looked at, they have to own at least, at this point, it’s two or three times that much, which places them ahead of the United States, if you believe the United States still owns gold in Fort Knox. I think, actually, all that gold is long-gone to China.

Chris Martenson: Well, it would be great if we could get an audit. It seems like a very simple request and I can’t think of any legitimate reason not to provide an audit, if only to get people to quiet down, and yet none have happened. People send me stuff saying, “Oh, no, we did audit.” But, when you actually look at what that audit was and how it was conducted, it was very, very thin. They basically cracked a couple of vaults, peeked in and didn’t count anything, and said, “Yeah, it looks like gold.” So, not very rigorous. We don’t know—and that uncertainty alone, Olivier, I would’ve thought would’ve added some speculative value to the price of gold. But, the traders seem to be fully locked into this idea that the paper value is all that matters at this point in time. I know that that’s going to change at some point.

Olivier Garrett: And, my view is it’s going to actually change in the Shanghai market. One of these days, the Shanghai market will take a life of its own and the paper gold prices in the U.S. won’t matter anymore.

Chris Martenson: Interesting. Well, this gets us to the point of liquidity, and I’m really interested in how HAA can help solve this. So, a couple of points in time when gold and silver have taken real hits. I remember one time I was actually at the offices of Mike Maloney at GoldSilver.com when we broke through that 1500 floor in gold and silver took this big shellacking, and their phones were ringing off the hook. It was almost all people buying, and in the six weeks after that, it was almost impossible for people to source silver, just because the number of people who already owned silver—us silver bugs out here— decided to go out and purchase a little more and it completely rinsed the supply chain for what we would call retail silver. And then people were waiting six, eight weeks for delivery and all of that, which introduces a lot of risk to the purchaser.

So, first, do you have experience with, during one of those crises in terms of whether that impacted your ability to source and stock stuff on the fly, or not?

Olivier Garrett: No, we’ve never had that problem to source. And, again, we are dealing with, literally, the largest suppliers of gold and silver in the world, not just in New York, but in New York, in Singapore, in Zurich and London. But that said, I can’t say that there won’t be a day where physical gold and silver will be very hard to buy. What I can tell you is if we can’t get it, nobody will be able to get it.

I remember in 2008, I was at that time running Casey Research and we had, obviously, affiliate relationship with all kinds of bullion dealers. And, there was a period in the Fall of 2008 where, no matter what site—APMEX, KITCO—everybody was out of gold coins. The only thing that you could still sometimes acquire were semi-precious metal coins, and those are not a good deal, you don’t want to buy those if you can. You really want to buy your standard bullion coins, issued by a government, even in, I would say—if I have a good piece advice for your listeners or for our listeners, it's don’t even buy special coins minted by the United States government or the Canadian government. I know the Canadian government’s done a—and, the Australian’s governments—have done all kinds of special run mints. You want to buy the absolute standard gold eagle, buffalo, the maple coins. You want to buy something totally standard. The day you need to sell, if you have anything that is a semi-precious metal coin, especially if it’s a tough market to sell, the buyers of gold coins will actually pay you the melt value minus a percentage as opposed to an eagle, where you are still going to get a couple of percent above spot when you sell that.

Chris Martenson: Yeah, thinking, it is confusing, because there’s a lot of products out there, and when I first buying silver, I got all kinds of stuff, a lot of junk silver, which I still love. But, I’ve since discovered in talking with somebody who is running a shop in 1980 when silver went then to nearly—it went over $40 an ounce—that they had a huge backlog of all these people bringing their junk silver in and they couldn’t accept it, except at extraordinary discount. Because, it has to go a refiner, and the refineries—there’s only so many, and the refineries had a six-to-eight week backlog, and nobody would accept—silver was moving so rapidly in price then that nobody was willing to accept giving you anything close to spot for it because of the risk.

Olivier Garrett: Exactly. Again, you’re buying gold and silver as I am buying it for insurance; you want the best policy. The best policy is getting the most in-demand, most liquid type of gold/silver product. To me, that is the most important thing. You get an eagle, everybody around the world knows what an eagle is. If you need to redeem that eagle in South Africa or in Bangkok, in Shanghai, anywhere, it’s still a gold eagle. You don’t want to buy some kind of coin minted by the Mexican government that people may or may not know.

Chris Martenson: Yeah, it’s an insurance policy. You want a Lloyd’s insurance policy, you don’t want an Acme 123 policy out of Omaha. You want something a little better, you want that thing recognized. But this liquidity is very important, because I’m convinced—could be wrong—but, I’m convinced that when these markets start to move, liquidity’s going to be a very, very big issue. Both on the buy and the sell side. So people are going to want to be able to move in, move out. So, that’s one of the big things I like about HAA is being tied into that platform that has just, it just feels as liquid as I, a retail person, could have access to unless I want to become a large bullion bank.

Olivier Garrett: Absolutely. And, you know, one other thing I’d just like to maybe—because, I know and I’ve had a lot of conversations with a lot of Casey Research subscribers who wanted to take ownership of their gold and silver. I think it’s a great idea, by the way, to have some, a certain amount of coins that you have on hand somewhere that you know where and you make sure you don’t know anybody. But, having a very large amount of assets, either buried in your backyard or in your house, is really asking for trouble. And, in addition to that, as I mentioned before, once you take those coins, those bullions out of the chain of custody, you are at the mercy of the bullion buyer and whether or not they will—you know, if the market is a little bit illiquid—whether they will buy them at face value. If you keep everything in custody for the bulk of your insurance investment and only keep some precious metal on hand, I think you’re in actually a much better shape. Because, you can take that inventory that you have at the Hard Assets Alliance, and sell part of it if you have a need for cash. You can do things immediately, much faster than you can run to a dealer, especially if that dealer for some reason doesn’t want to buy. Like, there was a case in ’81 where all of a sudden the market dried out and nobody wanted to buy gold coins.

Chris Martenson: Right, yeah. It was a very fluid moment then, but I think it’s going to be fluid. That’s what I’m learning again, relearning from the Greece situation, is that—Olivier, it’s just astonishing to me to look at these pictures, open up the paper—well, I actually have to go online to see this. My papers are doing any reporting of this here in the U.S. But, what I’m seeing is images of 50, 60, 100 people in line for an ATM. I’m confused how they find themselves in that line, because where were they for the past three years as this thing was clearly heading to this sort of an outcome? But, yet that tells me that this is how people are, that when the time comes, people are going to start lining up. The shortages I saw in silver in 2008 and in 2011 and in, I think we had another one in ’13, those happen just because the few percent of people who already own silver decided to up their holdings a little bit. I can’t even—I’ll make this prediction. When just 5% of the people in the United States decide they want to get into precious metals, I think the supply chains just dry up for a while.

Olivier Garrett: Absolutely, absolutely. And, by the way, I thought your article that you sent yesterday, your alert that you sent yesterday was fantastic. I mean, look, the Greek—we had the events in Cyprus, now in Greece. Look, the markets have been artificially stabilized by central banks, the risks are increasing worldwide, whether it’s a crisis in China, whether it’s extension of a crisis in Europe—hopefully, it won’t happen for a long time. But, what you were saying, Greek people that should’ve been prepared, especially since they have cousins in Cyprus that are also Greeks that had the issue a few years ago, were not prepared. I mean, if you care about your family and everything, I think that people should definitely review their entire financial disaster plan and make sure they are prepared. And, then they can live on and hope that life will continue and to be as good as it’s been for many more years. But, I think it’s just very, very shortsighted not to be planning for a potential banking collapse.

Chris Martenson: And, even if it isn’t banking collapse, it’s just going to be outright seizure of your funds, because the governments have been—they haven’t even tried to hide this, Olivier. They’ve said, “Listen, we would like to have a better ability to put capital controls into place. We’re going to start waging this subtle war on cash. If we can get that out of the system, then we could tag you with negative interest rates in your savings accounts. We would love to be able to do that.”

Olivier Garrett: Absolutely.

Chris Martenson: They’re telling you all the ways they want to take your money from you and gold has been, historically, I guess—past performance is no predictor of future success—but historically, has been a great way to protect yourself from paper shenanigans, currency mismanagement and just regulatory weirdness as governments get desperate.

Olivier Garrett: Well, yeah, and by the way, these controls from governments, I mean, are all over already. I mean, if anybody—I’m sure a lot of your readers and listeners have not had to open foreign financial bank accounts—but, I will tell you it has become virtually impossible to do so. I happen to do a lot of banking outside of the country. I am a Swiss citizen and the Swiss banks have basically kicked me out of my own country because I live in the U.S. So, it’s basically, less and less—it’s really becoming almost impossible to take money outside of the U.S. from financial institutions. It’s going to get only worse, and I think in that respect also having an account at the Hard Assets Alliance with some money that is outside of the country is a good idea.

Chris Martenson: Absolutely, couldn’t agree more. And, by the way, I ran into trouble trying to open a Canadian account six years ago. So, it was already tough then, it’s gotten worse since. So, yeah.

Olivier Garrett: And Canada is one of the easiest places for Americans to have a foreign bank account.

Chris Martenson: Yeah, yeah. It was an RBS branch and they just pushed the application right back across the desk at me when they found out I was U.S. "No, no, we’re not going to do this with you." So those soft controls are in place, harder ones to be expected coming to a theater near you, of course they are.

So, we’ve been talking with Olivier Garrett of the Hard Assets Alliance. Obviously, Peak Prosperity loves these guys. We do promote them, we think they’ve got a great product, and we do have a financial relationship with them. We believe in them, and people have been very happy so far with everything that we’ve gotten back from our end from people who have opened accounts. So, I’d invite any listeners—you want to find out more, you want the details about Hard Assets Alliance, you can go to PeakProsperity.com, you scroll to the bottom of the main page to the Resources section, click on the link that says “Where to buy gold and silver.” There, you’ll be directed to a page where the HAA benefits are described. Or, you could go to their website, which is HardAssetsAlliance.com and note that assets is plural in that: HardAssetsAlliance.com.

Olivier, thank you so much for your time today.

Olivier Garrett: You’re welcome. I will also mention, as people link from your site, they will get to the Hard Assets Alliance website, and there they can find our SmartMetals Action Kit that will give them a lot more details. And, obviously, they can—our customer service people will be happy to help them if there’s any further questions they have.

Chris Martenson: Oh, real quick, what’s in that kit?

Olivier Garrett: Well, it basically tells you—this kit basically summarize all the benefits and all the process, and it has a lot of question and answers that goes beyond some of the items that we talked to.

Chris Martenson: Oh, I’ve got to look that up.

Olivier Garrett: So, yeah, it’s very comprehensive, and it does a lot of comparison, and it reminds you of some of the features that we may not have covered and that might be of value to your customers.

Chris Martenson: Excellent.

Olivier Garrett: Or, to your subscribers.

Chris Martenson: Well, I’m going to look that up and I, unfortunately, see gold languishing again, because the Greek thing wasn’t big enough.

Olivier Garrett: That’s the opportunity.

Chris Martenson: That’s the opportunity, I love it. So, take advantage of this opportunity, everybody. I certainly have been. I’ve been a net buyer again this year, and it’s been a few years since I’ve done that. So, with that, Olivier, best of luck and we’ll be in touch soon.

Olivier Garrett: Yes. Thank you for having me.

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12 Comments

CES's picture
CES
Status: Member (Offline)
Joined: Jul 12 2015
Posts: 2
Junk Silver

Hi,

Good program.   One comment about Olivier's mention of the difficulty of selling junk silver when the price of silver is moving quickly --  many people hold junk silver on the possibility that pre-'65 coins will again be used in face-to-face transactions, so Olivier's pov is moot in that view.  (Not that using real silver coins won't potentially have its own problems, but unfortunately all alternative monies have problems).

Sleepdoc's picture
Sleepdoc
Status: Member (Offline)
Joined: Oct 2 2008
Posts: 23
?BullionVault

Can you explain the differences between the HAA and BullionVault. 

From my glance, they seem similar.  Does anyone have a feel of one being better than the other?

 

 

bonavista's picture
bonavista
Status: Member (Offline)
Joined: Jul 13 2011
Posts: 2
Hi Danroot,  I think with

Hi Danroot, 

I think with both systems you have ownership of physical bullion, the difference here is that with HAA you you can have the physical bullion extracted from the vault and sent to you to keep in your own possession. With Bullionvault, I think you can't do that - you can only sell the bullion back again on their internal market, and not take physical possession of it.

Rgds, Chris

RPSTemple's picture
RPSTemple
Status: Member (Offline)
Joined: Jan 24 2012
Posts: 9
Withdrawal From Bullionvault

I have not listened to the podcast - waiting for the transcript.  However I am a user of Bullionvault. Yes, you can withdraw bullion if you wish not that I have. If I recall correctly you use to be only able whole "Good Delivery" bars about 12kg in weight not very practical for most people.  However you can can now also arrange for withdrawal of your holding in 100g bars if you wish. see link

https://www.bullionvault.com/help/withdraw_gold_bars_q.html

Bullionvault is UK based. Looking at the members of HAA, I believe it is US based.  With both organizations, you can store your allocated gold in locations other than the USA and UK.

Otherwise I cannot comment on the differences between HAA and Bullionvault.

Rgds, Richard

bonavista's picture
bonavista
Status: Member (Offline)
Joined: Jul 13 2011
Posts: 2
Richard, thanks for the

Richard, thanks for the correction

Rgds, Chris

jimtw's picture
jimtw
Status: Member (Offline)
Joined: Mar 26 2015
Posts: 3
Dear Chris - As a personal

Dear Chris -

As a personal matter and based on my experience , I prefer doing business with a fee for service rather than commission based advisor. Even better, is the help of knowledgeable friends who freely share information to benefit each other.

I subscribe to your news letter, and pay for it,  because I value your point of view and the often helpful input of other Peak Prosperity subscribers.

However, using Peak Prosperity to promote a vendor, such as HAA which compensates you, causes me  concern for your independence . Many "news" sites give financial reports, then end with a sales pitch for their product(s). Often the "news" or analysis is slanted in a manner which benefits the writer's business interests. I have always felt that financial advisors who receive a commission have an inherent conflict of interest. Many business reports  and many financial advisors, from Schwab to Goldman Sachs, often have such a bias, whether it is subconscious or intentional.

 I appreciate you disclosing that you receive compensation from HAA for promoting their services,but am uncomfortable with the business model. I would rather that the subscription fee be sufficient to assure independence from promotional platforms.

gemel's picture
gemel
Status: Bronze Member (Offline)
Joined: Jan 12 2010
Posts: 56
PeakProsperity = Zerohedge (not good)

This website does send mixed signals. I get mixed messages : These range from the stock market will not exist in 10 years time (this was said in a podcast a few years ago) to you should not have your allocation 100% in the stock market like it was said in this conversation another interesting line was, I have not dipped my toe in PM purchases for the last two year! Which was a surprise, considering the high emphasis on gold and silver. 

I feel that PP, has been down the path of ZeroHedge and the like, SCARE SCARE SCARE = increase page views and increase subscriptions. If PP is ringing only the negative bell, than what is the difference with CNBC ringing only the positive one ?

The effect of this is I am sure some readers have not been in the market for five years, missed the spike up and now are wondering what steps to take next. What I mean to say, is that the vision on PP has been focus on " we are .00001 second from midnight", which is not the case. No tomorrow will be another beautiful morning and the super market will still have food. I am not saying a threat is not present, but danger is not imminent. Act accordingly.

Maybe I am not the only one with this opinion : https://www.quantcast.com/peakprosperity.com?qcLocale=en_US

A recent positive report on how things could be getting better really struck a cord with me 

"Nature Rebounds" by John Mauldin: http://www.mauldineconomics.com/outsidethebox/nature-rebounds

Maybe such info has a home on PP as well, readers are looking both for opportunities to grow and for threats to protect against. 

My 2c

G

Wildlife Tracker's picture
Wildlife Tracker
Status: Gold Member (Offline)
Joined: Jan 14 2012
Posts: 403
Zerohedge has a lot of really

Zerohedge has a lot of really bad articles, but at the same time they have had some very impactful articles with deep research and insight that make that blog the favorite of most people with alternative finance interests. Also, the blog is often very witty and has good humor about some relatively depressing topics. I love that about Zerohedge

 It's good that you recognize the bias of both blogs, and the reality is that you are right, they are both selling a story/scenario. As a result, they must keep re-enforcing and producing evidence to the story, and argue that  A) the story has not changed and B) the time to take action is now because tomorrow is unpredictable. Yes, tomorrow will probably be fine, but it also may not be.

People lose interest in stories/hobbies pretty quickly, so the work that both blogs do is an uphill battle. Keeping that interest is critical in order to accomplish their mission of creating a population both informed and actionable when dealing with the future.

 

gemel's picture
gemel
Status: Bronze Member (Offline)
Joined: Jan 12 2010
Posts: 56
The right balanced narrative is essential

"People lose interest in stories/hobbies pretty quickly, so the work that both blogs do is an uphill battle. Keeping that interest is critical in order to accomplish their mission of creating a population both informed and actionable when dealing with the future."

Journalism is about a balanced story. As you confirm that this blog has a bias, and the output is a narrative which does not match with what is happening in the real world. There is not enough disclaimers in the main articles saying something to the effect of .. 

This is our narrative we think A,B and Z are bound to happen. However we have been wrong the last 8 years (me included) so take this narrative (which although based on fact) might or might not hit the tarmac. It is a disservice to sell a Maserati and talk only about the second from 1 to 100 and explain nothing about it's breaking power.

Locked into fear is a marketing tactic that works for so many months or years.

How many 100 of readers have been out of the stock market since 08 because of influences from this site.

How many colleague titutions, marriage ceremonies and medical procedures have not taken place because of all the returns lost in the last 8 years .. ?

IMHO, there was never an honest approach, talking about diversification. I find Jim Rickards much more genuine and honest, he does talk about ATMs and banks being closed in Western Europe at some point and on a greater scale but he also advises heavily, hey do stay in the market, your preps should be 10% of your portfolio.

 

 

pgp's picture
pgp
Status: Silver Member (Offline)
Joined: Mar 2 2014
Posts: 219
Only 9 comments

Only 9 comments... did all the comments about the negative aspects of buying gold get deleted ??

For example the fact that negative effective interests rates mean it costs money to keep cash in the bank BUT that holding gold is worse.  Simply because the value of gold holdings declines due to storage costs and the decline in commodity markets - gold is only a store of wealth if you can 'swap' it for the same amount of tangible assets from one year to the next.   With all the bubbles that's just not the case right now.

Also as commented previously holding gold is great if you think the sky is going to fall but  as we have seen government autocrats are prepared to intervene to control those skies.  Gold therefore will continue to devalue while the financial system is still pegged to the USD which may never be allowed to sink - quickly.  This suggests that gold won't preserve wealth in the short term but require 10 to 30 years of patience to see it return the wealth we all think it should.  In the mean time storing it costs gold - so the gold over 30 years literally sublimes away.

On a positive note, gold does hold its value against many NON USD currencies - like YEN and AUD all be it only barely.  So as a store of wealth in those currencies it might make sense if you can avoid the storage costs which eat away at that wealth.

 

 

 

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
Did anyone say...

Go big in gold?  No.  Chris has been very levelheaded in balancing the realities of business with the analysis.   To complain about recommending 10-20 % in PM makes no sense to me.    For the stock lovers just make sure you make it out the door before it shuts.   

redcloud's picture
redcloud
Status: Bronze Member (Offline)
Joined: Mar 12 2009
Posts: 31
Good interview

I've been a customer of HAA for about a year.  I like the ease of buying and the fact that the PMs are in mint condition.  And the prices seem at least as good as my local coin shop.

Only one complaint so far.  Just to make sure the shipping worked I had a small amount of silver shipped to me.  It took nine days which I thought was a bit of a long time.  But my bigger complaint is that although the box it came in had no markings on it to indicate it contained PMs, the notice I received by email from UPS said it was being shipped by Gold Bullion International.  Perhaps I'm paranoid (I am) but I'd just as soon no one at the delivery company knows that I buy PMs (nor anyone who has hacked into my mail service or internet provider).  My bank doesn't have their name on the envelope when they send me a new bank card, nor does my credit card company.

Another place one might want to consider for PM purchase/storage is Perth Mint.  It's in Australia.  You can open an IRA with them if you to through a trustee in the US.  I haven't tried delivery yet.  I like the idea of having some PMs outside of the US.

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