Dan has long warned about the dangerous odds of short-term trading – yet in recognition of the fact that so many readers are still determined to do it, he offers some essential principles to anyone engaging in short-term trading – if they must.
The important, No. 1 principle is counter-intuitive, and we expect some of you to argue – but hear Dan out about how the most important thing is not how much you make, or even if you make any money at all.
And amid all the risk management tips out there, there’s one Dan reveals as the very best he’s ever heard – “the one that separates the heroes from the zeroes.”
After getting into some weekly events – including a shout-out to a man who’s given the best recap of Tesla’s current situation that Dan’s seen – he gets to this week’s guest.
Ken Lewis is a results-oriented professional with more than 20 years of leadership experience across a broad range of retail and technology organizations, many of which are in the Fortune 500. His strategic and operational changes have resulted in growing both the top and bottom lines of an organization. Ken recognizes the importance of taking care of our customers while showing a deep commitment to the development of employees. He joined APMEX in 2011 as EVP of Operations, followed by two years as Chief Operating Officer.
Ken’s firm likes to call itself “the Amazon for precious metals,” and once you hear about their cost-cutting innovations on behalf of customers, we think you’ll see why.
CEO of APMEX
Ken Lewis is a results-oriented professional with more than 20 years of leadership experience across a broad range of retail and technology organizations, many of which are in the Fortune 500. His strategic and operational changes have resulted in growing both the top and bottom lines of an organization. Mr. Lewis recognizes the importance of taking care of our customers while showing a deep commitment to the development of employees. Mr. Lewis joined APMEX in 2011 as EVP of Operations, followed by two years as Chief Operating Officer.
NOTES & LINKS
0:00:48: Dan acknowledges the enthusiasm so many listeners have for short-term trading with a warning: “I think many of you have no idea how badly the odds are stacked against you.”
02:27: Dan offers the essential principle for anyone engaging in short term trading. “If all your trading begins and ends with this principle, I believe you’re far less likely to blow up and much more likely to make at least some money.”
11:14: What should you actually do to help ensure survival in markets while doing short-term trading? Dan goes over three strategies.
14:03: Dan reveals the only time you should ever think about making BIGGER bets in the stock market (and it’s not when a bull market strikes).
18:45: Dan encourages all listeners to go to William Smith of Blaine Capital’s assessment of Tesla. “It’s the best recap of the Tesla situation, if you want it in a nutshell.”
20:33: Dan gets into Alphabet’s 6% slide this week, after reports the Justice Department is preparing a Google antitrust probe.
28:29: Dan introduces this week’s podcast guest, Ken Lewis. Ken is a results-oriented professional with more than 20 years of leadership experience across a broad range of retail and technology organizations, many of which are in the Fortune 500. His strategic and operational changes have resulted in growing both the top and bottom lines of an organization. Ken recognizes the importance of taking care of our customers while showing a deep commitment to the development of employees. He joined APMEX in 2011 as EVP of Operations, followed by two years as Chief Operating Officer.
29:34: Dan asks Ken how he got in the business of “trading gold and silver over the internet.” Ken tells him about how he jumped at the chance to join APMEX.
33:03: Ken explains how APMEX’s technology allows customers to automatically dollar-cost average as little as $5 into precious metal markets, each morning, for months at a time.
39:55: Ken explains how APMEX enables users to enjoy incredible safety and transparency in precious metals markets. “We write everything to a blockchain held on a third party system that you can access directly from our website.”
41:10: Dan reads aloud a question from a user who asks about an additional premium on one of the bars he bought. Ken clarifies that pooled ownership of the metal is what enables such low costs in the first place.
43:59: Dan asks about the process of redeeming his precious metals and getting them shipped to him. Ken says, believe it or not, shipments to the U.S. can come free freight.
1:03:54: Dan reaches into the mailbag with a question from Jerry F., who asks Dan about Mark Yusko’s views on what happens to Bitcoin when it’s no longer able to be mined. Dan shares the our resident crypto expert at InvestorPlace Media, Eric Wade, about what’s in store for Bitcoin then.
Announcer: Broadcasting from Baltimore, Maryland all around the world, you're listening to the Stansberry Investor Hour.
Tune in each Thursday on iTunes for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at InvestorHour.com. Here is your host, Dan Ferris.
Dan Ferris: Hello and welcome to another episode of the Stansberry Investor Hour where our mission is to help our listeners become better investors. How about that? I'm your host, Dan Ferris. I'm also the editor of Extreme Value, a value investing service published by Stansberry Research. All right. It's time for the rant. It's time for me to rant and roll.
Now, I know that many of you insist on doing short-term trading event though I've kind of tried to warn you away from it. And, frankly, I think a great many of you have absolutely no idea how badly the odds are stacked against you too. That's the thing that – it almost keeps me up at night about our readers and our listeners. My whole career's been spent trying to help people make money in the stock market and not lose it and not give it away in commissions and fees and things. But now I've got a lotta time and more than two decades of experience and age and wisdom and stuff in this business behind me and I'm just getting to this idea where I'm realizing that the stock market is simply outside the circle of competence of most people and will probably remain so for their entire lives. They should do something else with that time.
But I'm not gonna harp on that, okay? I'm just gonna say it now and then. And I realize there are just lots of people listening to the sound of my voice every week who insist on doing short-term trading, okay? You're sure you're gonna hit it big; you insist on buying options even though you have no idea how they're priced or what their many dimensions really are. So if you insist on doing this thing called trading where you're in and you're out in a day or an hour or a week or even a month sometimes – it's still really short term – today I offer you my biggest, most essential principle about engaging in the risky behavior known as trading.
If all of your trading begins and ends with this one principle, I believe you're far far less likely to blow up and much much more likely to make at least some money. This is not a recipe for getting rich, okay? This is not what that's about. This is not a system. We're not talking about signals and buying and selling or any of that. Frankly, all that stuff is worthless. It's worth a lot more to Wall Street than it is to you. They love it because most of those strategies are really just random number generators. They're random, when you get down to it. And so Wall Street loves you trading random strategies so they can generate commissions. That's their retirement plan [laughs]: for you to trade random strategies [laughing].
So last week I told you the odds were against you; the competition is huge, enormously well-financed, and they have this big advantage that you'll never have. As Carl Sagan might put it, your competition for trading profits has billions and billions of dollars that they can use to push the market where they want it to go. A lot of the time, enough of the time to matter. You can't do that. And in fact you're probably totally unaware of when and how much you're being pushed around by these folks.
Of course we being this rant towards this trading principle of mine – we define things negatively. We begin by defining negatively, like what you shouldn't do. And that's – frankly, negative action is like one of the great secrets of great traders, what you shouldn't do, what you don't do. And the one and only thing that matters really is not how much money you make, right? That's the negative definition I'm talking about. The important number-one principle is not about making money. In fact, you should never expect to make much as a trader. You should expect to lose most of the time. Even the best traders will tell you that.
So what's the one thing? What's the principle? What's he getting at? What is this one thing that separates great traders from the rest? Here it is. One word: survival. Survival, survival, survival. Real estate is about location, location, location. Trading, no matter what anyone on this earth anywhere ever tells you, is about survival, survival, survival. Survival is your absolutely number-one objective, your number-one consideration. Good traders survive. Great ones survive and hit a few home runs.
Comedian Woody Allen famously said, "Eighty percent of success is showing up." You can't show up if you don't survive. In a similar vein, trader and author Nassim Taleb, in his book, Skin in the Game, makes the point that – he was talking about doing science. He says, "To do science, you must survive." But he notes that the human race survived without science for a long time. So science isn't necessarily for survival. But you must survive to do science. You have to survive to do anything. Right?
Taleb criticizes certain regulators and researchers who he says – they, quote, "Have no clue about probability and try to disrupt our efficient organic paranoias." Efficient organic paranoia. I love that. That's your fear of losing money, your fear of not surviving. Use it in your favor.
And what do all the greats say? Warren Buffett, Ray Dalio, George Soros, whoever it is. Like the market wizards. You read those books, Market Wizards? It's all the same message. Warren Buffett says, "Rule number one, don't lose money. Rule number two, see rule number one." Right? It's a negative definition focused on survival. Charlie Munger says, "We just try to not be stupid." Right? "Because we don't wanna end up in the Darwin awards." Survival. Ray Dalio says, "Most people need to know when not to take a bet." Negative definition focused on survival. George Soros says, "I'm wrong all the time but I always correct myself." He's wrong. He's defining things negatively, right? "This is not it. This is not it." Except he does it with real money and then he finds it by correcting himself because he wants to survive and not do the wrong thing.
And what do the market wizards say? They all say the same thing. If I were standing in front of you in a crowd you could probably all recite it to me. It's five words: "Cut losses, let winners run." Right? That's what all those Market Wizards books say. They all say the same thing. And in that order. It's always that order: "Cut losses, let winners run." You know why it's in that order? Because you have to cut losses to survive before you're gonna have a winner that you can let run. And cutting losses and letting winners run, by the way, is the exact same thing. It's just a systematic way of exiting.
"Oh, we're down" – whatever your stop is. If your stop is 9.5 percent, "Oh, we're down 9.5 percent. We're out. We're up, we're up, we're up, we're up, we're up, we're up, we're staying in. We're letting our winners run. Oh, then we're down 9.5 percent from the top. We're out." It's all the same thing. And it's all based on survival. Survival is your absolute number-one rock-bottom, non-negotiable, essential prerequisite for even calling yourself a trader as far as I'm concerned. Because if you don't survive, you won't be a trader anymore.
Now, survival is a frequent topic of conversation where I live here in the great Northwestern United States because every year somebody dies climbing one of these mountains around here. There's a wonderful book called Deep Survival: Who Lives, Who Dies, and Why by Laurence Gonzales. And Laurence Gonzales tells the story, in fact, of the terrible May 30th 2002 disaster that occurred on Mt. Hood, which is – I can't see it out my window here but if you drive up the road a little ways and get outta the way of the trees, it's out on a sunny day today all the time. Anyway, on May 30th 2002 nine climbers fell. Three of 'em died, including one guy who'd never climbed a mountain before. Ugh. It was horrible.
And what happened was these rope systems where everybody's kinda tethered together – the one thing that can't happen is: the top guy, the guy at the top cannot fall. Period, the end. It cannot happen. If he's got 30 or – I think it was like 35 feet of slack on this one, 35 or 40 feet. So if he's got 35 feet of slack, just say, he's gotta fall 70 feet – a 200-pound man falling 70 feet. Is he gonna rip the other three, four, five people off the mountain with him? He sure will. And that's exactly what happened. The one thing that must not happen. So people didn't survive.
Shortly after the accident the head of the Mt. Hood Ski Patrol told Laurence Gonzales, the guy who wrote this book – he said, quote, "This mountain is just not taken seriously. Fat people go up there." End quote. Wow. About 10,000 people a year climb Mt. Hood. On average one of 'em dies every year. Sometimes referred to as a beginner's mountain. But there's no such thing as a beginner's mountain. It's a technical climb. You need ice axes and crampons and all the right stuff, and ropes and everything. You have to do these things to survive. And there's no beginner's mountain. There's no beginner's market. You know? It's life or death every second you're in it as long as you're in it. You must know how to survive. And knowing how to survive's a funny thing, isn't it? You can't have the experience of dying a few times. You must survive. Period.
In the novel, Tailor Tinker Soldier Spy by John le Carré, he writes, "Survival is an infinite capacity for suspicion." So maybe succeeding and surviving in financial markets is about maintaining a healthy level of suspicion about every position you put on. Because most of them are gonna be losers so you better be suspicious, right? You better be ready to cut and run. And if you're not suspicious enough, listen to last week's rant. That'll help [laughs] in the suspicion department.
So what should you actually do? What is this survival? I've said "survive" 50 million times and told you about this mountain and people dying and stuff. What should you actually do? Well, there's a bunch of practical techniques and tricks that traders use to help ensure their survival. Trailing stops is the popular one at Stansberry. Until recently I was the only Stansberry editor not to use them. Then I was shown some data a few years ago that indicated I'd've done better with them than without them and I eventually had to give in and start using them. There are other reasons why I do that, which I explain to people who read my newsletter. Not important here.
Position sizing is another one. That's when you decide you're only gonna risk one percent or two percent or some certain percentage of your capital on a given trade. I've used this one in Extreme Value from the very beginning. Value investors of course use the margin-of-safety technique to try to survive their trades, right? That's when you buy a stock for less than the intrinsic value of the business.
Another one is diversification. That's where – you're truly diversified only if portions of your portfolio maintain value or grow or maybe just shrink a tiny bit when other portions are getting hammered, right? Otherwise your assets are all said to be correlated, right? If they're all going up and down together. And it's hard to be diversified than most people think. That was a big lesson we all learned, wasn't it, in 2008? Everything fell. Except for Walmart. I was recommending Walmart at the time. The thing went up 21 percent [laughing] that year.
And other than those techniques, we've all heard various rules of thumb about this, right? "Don't put all your eggs in one basket." That's diversification. Another one says, "Put all your eggs in one basket and watch that basket carefully." Remember we talked about circle of competence. We quoted Andrew Carnegie and he said, "You should really kinda put all your eggs in the one basket of your career and focus all your capital on the business you really know that you do every day." That's a version of putting all your eggs in one basket and watching it carefully. So these are some techniques and tricks. But I don't wanna give you a list of these things. There's your list. If you need a list, there it is.
But that's not really what I'm gonna tell you. What I'm gonna tell you is: the very single best one of these tips and tricks I've ever heard, the one that separates the heroes from the zeros, the great traders from the rest, is this. This is what you can actually do with real money. It's not really specific. You'll have to work it out for yourself in the details. But here it is: only bet bigger when you're ahead. Never ever ever when you're behind. Right? If you've lost on your last ten trades, you have to keep just keeping your bets small, your initial bet size, right? It's only when you start winning that you have any business increasing the size of the bet.
And Nassim Taleb says that this has been practiced by every trader – he said probably ever trader who's ever survived. You can read about it towards the end of Skin in the Game, which I recommend you do read that book. Read all his stuff. It's incredible. He says this is like flipping a switch. You make a profit, you bet bigger; you lose money, you bet smaller. Or maybe not at all for a while.
Stanley Druckenmiller, a very famous successful trader who has more than survived, once said that at a certain point in his career things weren't going well; he didn't feel he had earned the right, he said, to bet big on a particular idea with his and his clients' money. That phrase resonated with me. It made sense. He also made the point that he tended to bet smaller when he felt he was what he called "out of step with the market," and bigger when he felt he was in step. And how did he know he was in step? 'Cause he was winning. He was up.
Obviously, like I said, it's subjective criteria. I've just given you a couple things. So it's up to you to try to figure out how to turn this into action. But those are the principles. Absolutely positively – I personally do engage in some of this small short-term trading stuff now and then. For that part of my portfolio, I follow these two ironclad rules, principles, whatever you wanna call 'em. Survive, survive, survive is number one. Survival, survival, survival. And number two is: bet big only when you're ahead, never when you're behind. Right? So when you trade, it's like: "I'd love to earn the right to bet bigger but I have to survive first and then I have to make money. Then I've earned the right to bet bigger." So there's really two things involved, right? Gotta survive, gotta make some money. Then you can bet bigger. Until then, you're betting small.
That's my rant. Survive, bet big only when you're ahead, never when you're behind. See, I could've just said that from the very beginning. That would've been the whole rant. We could've saved a lotta time [laughing]. And I thought about that. I thought about that in doing this. But we humans are funny. I've seen market research and we've talked about this internally in some meetings. People just have to spend a certain amount of money on certain things before they feel like they've done it enough. Which is kinda silly.
And that's how they price all kinds of things. Like exercise equipment and cars and various things. Well, maybe not cars so much. But I know they do it for exercise equipment. People have to spend a certain amount of money – especially on these sorta extracurricular activities and hobbies and things like that. And they need to hear a certain amount of a story told about something before they'll sort of think it's worth ingesting and making a part of their thinking. So [laughs] that's why I didn't tell you those two things right off the bat, okay? I made you go through all that rigamarole. That's the rant. Let me know what you think by e-mailing us at [email protected]
So, let's see what's new right now. And, you know, I gotta tell you: I tried to take over the "What's new" but my producer, Justin Mattas, does such a fine, fine job of it. I'm like, "You know what? I'm gonna let him do it." Because even when I said I was gonna do it, he said, "Okay, well, I'll just send it to you anyway." And it's really good.
First off the bat here – actually, I do wanna start with a couple things before I get to these news items. First thing is: we have this thing called Stansberry News Wire. You can go to StansberryNewsWire.com, put in your e-mail, and it's like this fee news wire run by Stansberry, by Scott Garliss, Greg Diamond, John Gillin. And you can read all of their bios at StansberryNewsWire.com. They've been there and done that and managed billions of dollars and all kinds of stuff. And they're doing this every day. And it's awesome because I didn't realize: it's free. Anybody can get it. So there's that: StansberryNewsWire.com.
Second, we talk a lot about Tesla. And I see – let's see. Justin has not given me a Tesla news item today so I will tell you: go onto CNBC.com and search for a guy named William Smith from Blaine Capital. Willian Smith from Blaine Capital. And there's a video – it's like not even two minutes. And it's the best sort of quick summing up of the Tesla situation if you wanna kinda get up to speed with it and get Tesla in a nutshell. William Smith, Blaine Capital, CNBC.com. All right. Here's the news.
First of all, we have this odd situation. This is gonna be a weird lunch. Okay, Warren Buffett does this thing every year where he auctions off lunch with himself. 'Cause everybody wants to have lunch with the richest guy around. And it goes for millions of dollars. This year the winner paid $4.57 million to have lunch with Warren Buffett. And the winner – he was anonymous at first, but then they told us who it is. His name is Justin Sun, and he's the 28-year-old founder of two companies called Tronix and Peiwo. He's a cryptocurrency pioneer, okay? And he's gonna have lunch with Warren Buffett.
Why is that funny? 'Cause Warren Buffett – when he was asked about bitcoin, he said, "It's probably rat poison squared." It's like, "Hi, Justin, thank you for your $4.6-million donation to the Glide Foundation. You've spent your whole career on something that's rat poison squared." As Bloomberg said in their article, "Oh, to be a fly on the wall when these two get together." It's gonna be awkward [laughs]. Anyway.
So, Alphabet shares fell six percent earlier this week when the Justice Department – it was reported the Justice Department is preparing a Google antitrust probe. Google's been hit with these billion-dollar fines in the European Union – billion-euro fines, I should say, in the European Union, paying multi billions of dollars of fines. And now the Justice Department says they're gonna do an antitrust probe. What do we think of this? Let me tell you how to think about this. I think I know how to think about this. First of all, do not waste time – unless you really are that kinda person – with thinking about whether or not it ought to be broken up. You know, people have all these political views about these things. Just think about what you would do as an investor if it is broken up. So if it is broken up, is that good? Or if it's not broken up, is that good?
Look if it's not broken up, Google's still gonna gush cash flow. It's just gonna gush free cash flow. It's an amazing business. Between them and Facebook, it's like 90 percent of all the money going into online advertising. If they are broken up, that could be really good too. Right? When Standard Oil was broken up, I think it was broken up into like 34 companies. And if you had held onto 'em all, you would've done pretty well. And of course then they recombined after a while too. But what happens is – when they break something up and then you essentially are given all the spinoffs of the breakup as a shareholder of Alphabet. So you'll get Google and YouTube and what's the other thing? Waymo. And maybe a few other things.
But what'll happen is the market will put a valuation on those other pieces. And right now they're inside so you can't really know. They don't break out a whole separate set of reports for those businesses. And I would bet YouTube is worth a lot. Right? You can go on there – there's so much video it's like the Library of Congress being uploaded every ten seconds or something like that [laughs]. I don't know what the time frame is. It could be ten minutes. But it's a huge amount of video being loaded onto that thing all the time. And they have YouTube – I forget what they call it, YouTube Prime or something. You can pay to get a really good version of it that doesn't have ads I think. So it's really cool. And that could get – very likely, I believe, would get a higher valuation if it were spun off as a separate company.
And who knows? Another thing that happens in spinoff is that you unlock some kind of pent-up entrepreneurial umph that was kinda locked inside this bigger company. The guy running YouTube has to do what Larry and Serge tell him to, right? Has to do what the folks running the thing tell him to. But if he's a separate company he doesn't have to do that. So his entrepreneurial tendencies will be kind of unleashed in a greater way. And that could be very good. I suspect for a platform like YouTube, you could probably get a monkey running the thing and it would be the most wonderful thing in the world, right? That was the old Peter Lynch thing, right? You want a business so great that a monkey could run it and it'd still be a great business.
All right. Next we have something which doesn't surprise me at all. And I hope I said this before. If I didn't, shame on me. I should've said it. Nestlé is gearing up to launch its own plant-based burger in the United States. It's called the Sweet Earth brand. It'll launch this fall. World's largest food company, right? They know what they're doing when it comes to food. That's how they got to be the largest. And they already sell a soy-based vegan burger in Europe. But the Sweet Earth version will be based on pea proteins. Just like the new company that went public recently, Beyond Meat. And it went public and soared. I don't even know – I should've checked this. Darn it. But it's trading for tens and tens and tens of times revenues.
And that's all you need to know. Because if it's more than ten times, it's already crazy. But I think it's up to like 50 or 60 times. And it loses money. And obviously this is a highly competitive thing. Obviously if Nestlé can just get right into the business, what's the Beyond Meat IP, the intellectual property really worth if somebody can just go create a pea-protein-based burger to compete with them? Well, maybe there's nothing really going on there Beyond Meat. It's just another IPO that's got a kind of a neat idea, maybe one who's time has come. The stock has soared beyond all reason.
But what is it? It's a highly competitive low-margin thing with no competitive advantage whatsoever. How's that gonna turn out for a brand-new company? Not well. It's a similar complaint that I've expressed about Tesla, right? Capital-intensive, low-margin, highly competitive, no pricing power, brand-new company with new technology. People who've never made cars before competing with people who have made cars and know how not to send a product to market before it's ready, which Tesla has clearly done. Right? Anyway, Beyond Meat. The competition is coming outta the woodwork. And the competition is well financed and large and doesn't need that product to succeed. Right? Beyond Meat needs its pea protein product to succeed 'cause that's all they got.
What else do we got? We got Bank of America says: here comes the recession panic. And we just look at what the market has done kind of recently, and stocks fell like five or six percent or whatever it was in the month of May. The yield for the 10-year treasury hit a new 20-month low. And all three recessions we note – or Bank of America notes in their recent report – all three recessions took place within three months of the first rate cut after a hiking cycle. And we've been talking about this at Stansberry for some time. We've been saying the recession is on its way. You know, for no other reason: just because that's the way it works. Cycles matter. Cycles happen. And you better learn how to prepare for 'em.
And I've talked about preparing in the newsletter and holding cash and every now and then shorting stocks and holding puts every now and then. But it's a good question at this point in the cycle. I'm not talking about short-term bounces in the market or anything. I'm talking about the long cycle. You know? We start with like March 2009, the last big bottom in this epic bull run. And so when – bull markets don't last forever. Eventually things turn the other way and we're kinda getting to that point. In fact, IPOs like Beyond Meat soaring beyond all reason is kinda one of the signs that things may be turning. And interest rates doing what the ten-year has done – it's a sign that things could be turning.
All right. It's time for our interview. And this week our interview subject is Mr. Ken Lewis. And Ken Lewis is a results-oriented professional with more than 20 years of leadership experience across a broad range of retail and technology organizations, many of which are in the Fortune 500. His strategic and operational changes have resulted in growing both the top and bottom lines of an organization. Mr. Lewis recognizes the importance of taking care of our customers while showing a deep commitment to the development of employees. Mr. Lewis joined APMEX in 2011 as EVP of operations, followed by two years as chief operating officer. Ken Lewis, welcome to the program, sir.
Ken Lewis: Hey, thank you for the time. Look forward to it.
Dan Ferris: You bet. Yeah. So, Ken, why don't you tell us how you got into the business of – how shall we say – trading gold and silver bullion on the internet?
Ken Lewis: It's funny. It's just by chance really. I was at Home Depot prior, Microsoft prior to that. Really been an operations executive running supply-chain-type operations and had a recruiting firm – they were looking to take APMEX public at the time and had a great opportunity to come in and play an important role in that process. And jumped at the opportunity. I've always been in really large companies and I love the entrepreneur's spirit that comes with small companies and the impacts you can make. And seemed like a fantastic opportunity. Unfortunately, as you probably know, the equities markets in '12 didn't perform as well as we'd liked. So we didn't go public. But has been a great ride ever since.
Dan Ferris: Why don't you tell us what APMEX is? I'm betting that most of our listeners aren't familiar with APMEX.
Ken Lewis: You know, we're a 19-year-old company. Started by a gentleman named Scott Thomas back in the day. He really was a coin shop top operation, and he had the idea of taking this thing online. And we pretty much doubled revenues for many years and hit a peak of about a $1.2 billion in volume. What we do is we like to call ourselves the Amazon for precious metals. We take orders online. We have a really broad assortment online for consumers. We're fairly priced. We try to ship same-day to our customers and just provide a great customer experience. And we ship via FedEx, UPS, US Postal Service. So you're getting a product delivered to your home that just happens to be gold and silver.
Dan Ferris: Okay. Cool. The Amazon for precious metals. That's pretty simple, right?
Ken Lewis: [Laughs]. I think so, yeah.
Dan Ferris: So, you guys have a – what is it? A joint venture with Sprott called OneGold.com?
Ken Lewis: Yeah. It's funny. Our business has always been physical. And we were working with a company called Tradewind. I believe you talked to Fraser before. And then Sprott. Peter, the CEO of there. And we kinda got together and the three of us said, "We think there's a great opportunity for a digital product for the marketplace that deals with gold and silver." Our goals going into it is: we really wanna make gold and silver available to the masses. And when you look at how crypto and some of those constants were performing with the digital platforms, we felt we could do it better without the regulatory risk that comes with a crypto product.
And so, yeah, we've partnered with – we've formed a new company called OneGold who's basically a sister company of APMEX. And Sprott's an investor into that operation. We're using Tradewind blockchain technology for one of the products we're selling. And, yeah, we build a beautiful front end that I think consumers, once they use it, are gonna find that it's a very straightforward, very simple, very transparent, and we hope that will grow the demand for precious metals over time.
Dan Ferris: Yeah. So you can just – what's the minimum that I could open a OneGold account with?
Ken Lewis: Believe it or not – and this is important. I don't know if we'll talk about how the product works. But what's beautiful about it is you can buy to three decimal places. I mean, when you open an account with OneGold, we actually give you $5.00 to play with where you can go out and do trades, do buys, do sells, see how it is to use. And you can invest $1.00 and you can buy gold or silver. Believe it or not, it's that simple. Forty percent of our transactions, Dan, are actually people who are doing reoccurring transactions where they come and they say, "You know what? I want a dollar cost to average. I wanna buy $5.00 in gold a day for the next six month." And our system will execute the trade for you real-time every morning.
Dan Ferris: Wow. I didn't know that.
Ken Lewis: Yeah. It's pretty cool. You know, your brokerage accounts have kinda brought these concepts to the market. And, frankly, we felt it very important to make it simple. So when you have the security, two-factor authorization, e-mail conversation – you have security on the front end. But you also have the ability to do things like link your bank account. So that example I just gave you: you could take $5.00 out of your bank account daily; it will pull the funds directly from your bank account, once you link 'em. We're using a third-party software to do that. Once you link 'em, pulls the $5.00 over, executes the trade, and you're good to go. You never do anything but set the trade up on the beginning.
So we've made it very simple and very economical. You can buy silver at four cents over spot. You can buy gold at just over three dollars over spot. You can't really take a position in metal any cheaper than this digital product. And, more importantly, unlike some of the ETF products that're out there, it's 100-percent backed in gold at all times. It doesn't trade at a premium or discount to gold. It trades true up to what the spot's doing in the market. And you can actually redeem. So some people love the idea of investing digitally, and they say, "You know what? I'd like to buy a Gold Eagle now with my digital metal," and we will allow you to do that. And then we ship the product to your home as soon as you place the order.
Dan Ferris: Okay. Now, Ken, I think a good way to kind of get into the nuts and bolts of this might be to address the reader questions that I mentioned before we started talking. I think you'll be able to clear up a lot of concerns that – I say "readers." Listeners. Our listeners are our readers too [laughs]. So, let's see. Let's start with this fellow here. He's got a complaint that I've heard from other folks. He said, "I've opened an account with OneGold and my first transaction was charged an undisclosed fee, three percent for using a credit card." Then he said, "They've got transaction fees for selling product that were only identified by e-mail when I asked them directly." And then he kind of complains a little bit about OneGold support e-mails. And he said he couldn't make contact with an individual or sales representative. And he wanted to do that.
Tell me about this three-percent credit card fee. This is for people funding their accounts with credit cards, right?
Ken Lewis: Well, first and foremost, we give you multiple methods to fund your account. You can fund, actually, believe it or not, with a check. Amazing: people still use checks today. You can use an eCheck. You can use a bank wire. And then for credit card and bitcoin, both of them, we do charge a fee. Mainly because we pay a fee. As you can imagine, my margin on this product is very very very small. I mean, I'm charging four cents over spot for silver.
So when you look at what I'm charging, I can't absorb credit card fees. And actually in our industry, it's very common – if you go to an APMEX website or any of my competition, it's very common that we actually charge for credit card usage. Because my gross margins on an APMEX.com are running five to six percent. And I've gotta pay a credit card company 2.5 when you use one. So I just can't afford to absorb the cost of credit card. And then you add in the fraud and the issues that come with it, we tend to charge three percent on OneGold. We're actually charging four percent on APMEX. But for the consumers who don't wanna use the credit card, we recommend linking a bank account, no fees; doing a check, no fees; bank wire, no fees. Because we have no fees that come with that. So that's first and foremost.
In terms of the service, I'm shocked. We do a Shopper Approved. We're running a 4.8 right now. Anyone can go take a look at it. It's publicly visible. They're not filtered through. Service is very very very important to us and I'm very disappointed to hear anyone had a bad experience from a service standpoint. Because that's a core function of who we are as a company. And that should not be happening and they can always reach out to me personally. It's very simple. [email protected], and I will personally make sure a customer gets taken care of. That should never happen.
Finally, about hidden fees. You can go right to our site. Pricing's right there. We're very transparent about our pricing. When we first launched, we actually had no markup. We were charging spot. Now we're charging I believe it's 30 basis points. Which, depending on the price of metal, can be four cents for silver, like I mentioned, a little over $3.00 for gold. So we're charging 30 bips on the front end. And then we charge a storage fee per year. For silver it's 30 bips per year. For gold it's 12 bips. All very visible, very transparent, right on the website. So there's no hidden fees anywhere. And anyone wants to show me proof of that, I'll take care of it.
But I could assure you we're very transparent. Our FAQs, as an example – I wanna say last thing I checked, they were running north of 100 pages long. 'Cause we want to be known as a company that's transparent, takes care of customers, do what we say we're gonna do. So I don't think you'll find a better price out there for silver or gold anywhere in the market. Even competitors selling a similar product to mine are charging more than we are at this stage of the game.
Dan Ferris: Great. So, basically the answer to that credit card thing is: why on earth would you fund this account with a credit card when you could do an ACH which charges you nothing? That really is the answer.
Ken Lewis: I think it is. And, look, we want convenience. One of the things we do on our site that's very unique as well for precious metals – you know when you go and buy a stock, you've gotta fund your account with the money first and then you can go execute the trade. We actually allow you to execute the trade and send the money in afterwards. So sometimes I think people think, "I wanna do a credit card funding so I can real-time fund it and then I can go buy my gold and silver." You can actually buy your gold and silver on the front end, say you're gonna mail a check in or do an ACH, and you'll actually be able to send the funds after the trade, not before it. Another example of just giving a real simple experience for customers. We don't want anything to cause them not to wanna follow through on a transaction. We wanna make it very easy for 'em.
Dan Ferris: Okay. So this same guy – he's asking about the proof of title based on the blockchain ledger, which when we interviewed Fraser, that was kind of a big deal in that discussion. And here's what he says. Let me just read what he says here. He said, "I can't find any information that supports the statements" by Fraser at the time "that you receive proof of title based on the blockchain ledger." And he's also looking for support by the statements that the product can be redeemed directly through the Royal Canadian Mint or some other retail provider. So those two concerns.
Ken Lewis: Well, again, I'm very surprised. 'Cause right on your dashboard – if anyone wants to log in. Again, you get $5.00 free to try this. So I challenge any of your listeners to give it a run. With your $5.00, you'll see right underneath your holdings there's a link you can click to that will take you to the Tradewind website, which is the blockchain. And so what we've done here is: our databases records your ownership. We also write everything to a blockchain held on an independent third-party system that you can access directly from our website. You can only access it if you're logged into your account, naturally. But you could go out there to the blockchain and see your visible ownership at all times. And you'll see that it matches exactly what I'm showing you on our website as well. So that's very transparent. It's right there. It's a link right underneath your holdings on your dashboard. So that's the first thing.
And in terms of redemption, it's right on the site. It says: "Redeem." Just click "Redeem" and you can pick any of the products we have to offer there. You can pay with your digital metal. And you can execute that and it will ship same-day. So I'm not real sure – it's almost like I wonder if the person's using our site or not. But if they like, they can call our customer service and we can walk 'em through it page by page and show 'em where these things are.
Dan Ferris: That's great. I was sure that there were simple, obvious answers. And I went to the homepage. I knew there were answers to a couple of these. But real simple and obvious answers.
Okay. Here's another one. Just one more reader. So this guy has two issues. He said – what did he say? He said, "I was told that I was buying and what was being stored were gold bars. However, if you go to redeem the bars, there is an additional premium on the bars." For some reason that was a surprise to him. But what's the premium?
Ken Lewis: Yeah. So let's be clear. First and foremost, you're having a pool ownership. You're having a pool ownership of metal. We state this very clearly on the front end. That's how you're getting the metal at such a low cost. You're getting silver four cents over spot. I can't get a silver bar fabricated for cheaper than 50 cents over spot. So you're getting pooled ownership of a broader metal source, if you will. So there are no exact serialized gold bars sitting in a cage that are yours. You're getting a part of ownership of a number of products or products in different conditions. Could be in a smelting stage. It could be in a melting stage. It could be literally where it's sitting in a blank stage or even in a finished good. You're getting and ownership in metal that the RCM is 100-percent telling you is present at all times. So that's what you're getting.
So when it comes time to actually convert to a physical product you want mailed to your home, there is a premium associated with that, just like there would be if you went to my retail website, APMEX.com, that sells physical. But what we've done for consumers is we give you our best-tier price for anyone who buys digital metal and wants to buy physical. You can get the best-tiered price we offer on the APMEX website. So an example is: my best price for Gold Eagles – you gotta buy 100 units to get that best price. For a person on OneGold when they redeem, they can buy one Gold Eagle and get the best price I have on the APMEX website. And those premiums vary depending on the products you're gonna buy. And I think people will find those premiums for physical are very competitive in the marketplace.
Dan Ferris: Yeah. I just everybody who listen like – Ken is the boss. He knows the business [laughs]. And he's saying a lotta stuff about how cheap it is to buy gold here and encouraging you to look around and see if anybody does it better. So either he's crazy or he's right [laughs]. You know? It's a little strange that people complain about fees or anything when you're obviously saying, "Go look elsewhere."
Ken Lewis: Yeah. Well, more importantly, Dan – and I really encourage people. We put a Shopper Approved. So after any transaction, consumers can leave feedback. And if you go look into that, we're not able to take negative feedback and not show it. Just go to my site. I've got a 4.8-out-of-5 rating. Consumers are blown away by the ease of use. Just read their comments. I read 'em pretty much every day. I like to see what consumers are saying. We're doing over 500 transactions a week and we're only – what is this? Our fifth month really of being live? I think consumers are telling us it's a pretty good product.
Dan Ferris: So, let's see. If I redeem and I get it shipped to me, that's just like a regular shipping charge, right?
Ken Lewis: Yeah. Actually, believe it or not, depending on whether you're shipping it to the US, it's free freight. If you're shipping overseas, we have to charge a fee just because of cost of getting it there. But in the US it's free freight. So we're not charging you any freight and we're typically shipping it the same day that you redeem. So the redemption process – what we did was we tried to mirror what APMEX is really good at on the physical side and give OneGold customers that benefit when they redeem. Only two percent of our volume is being redeemed. So it's a very little amount of volume being redeemed. But that experience – go use a product like Goldmoney and they use SchiffGold as their partner for redemption. Go experience that process and tell me if my process isn't ten times easier and more transparent.
And I hate to name names of competitors but the point is: when we looked at the marketplace, we wanted redemption to be super simple, no friction, always available to you, knowing very little people will select it in the process. But we're not gonna make it hard on you. We're gonna make it easy, transparent, and simple for you to do.
Dan Ferris: All right. I just got a couple more of these. One guy says he did business with a company called Bullion Direct and they went outta business or filed bankruptcy or something and he lost some money. And he says, "What would happen if you guys went outta business or filed bankruptcy?"
Ken Lewis: Yeah, it's a great question. And we've actually worked with Tradewind and the Royal Canadian Mint in this case to make sure consumers understand their rights. And so it's on our website. We try to outline this for you. But basically the beautiful thing about it is: I can't sell metal that I don't own. And the only way I can own the metal is the RCM has to validate I have ownership of the metal. So the net of this is: if I were to go bankrupt, all of the metal is still sitting at the sitting at the RCM. The title is sitting there where the individual consumers – because of the blockchain, we know, by identifier, who owns what.
And then we would work through the liquidation process, if you will, of taking that gold and being able to send it off to consumers. Or give them back dollar-wise by liquidating the metal. So I can't sell metal – let me repeat: I can't sell metal I don't own. That ownership is always documented by the Royal Canadian Mint on the blockchain. So there's no risk of metal disappearing in the process. It's just not possible.
I'm also gonna launch a product that's not with the Royal Canadian Mint that's actually sitting in my own vaults. When I do that, there will be a Lloyd's of London contract that will protect consumers of any loss of physical inventory in the process. One hundred percent. Or I wouldn't offer the product to you. We do not want consumers to feel any risk in this process. And unlike when you go out in your bank account and you have SEC restrictions on what they'll cover, we're gonna have no limits on that coverage. You're fully covered no matter what your dollar amount balance is at all times.
Dan Ferris: You know, and this whole issue of where the gold is sitting and who has custody of it – it kinda brings something up. Look, you and I both know a lotta people – thousands of people are listening to the sound of our voices right now and I bet you a lot of them: if they like gold at all, they like it for the tangibility and they like to have it in their possession, right? So when they hear it's stored in the Royal Canadian Mint, it feels a little far away or whatever. But the fact is: you and I both know, Ken, there is risk in taking possession of it. Right? If you take possession certainly of any quantity of gold – you have a couple coins around the house, that's one thing. But if you take possession of any meaningful quantity of gold, that's really risky, is it not? Of course I know what you're gonna say. But you're right.
Ken Lewis: Well, it's funny. Remember, I'm in the physical space and I do close to a billion dollars a year in physical. So we always say that there's three ways to own gold: there's paper, there's digital, and there's physical. And depending on the consumer and depending on their situation, each one of those products may be right for them. We look at physical – physical people tend to not trust the financial systems, don't want the risk of not knowing what the financial systems are gonna be doing down the road, feel like they wanna be able to pass on their inheritance physically to their family members, wanna always have the ability to liquidate metal at a local coin shop privately if they need to. So they have a very strong opinion about wanting the metal, if you will, off the grid.
With that comes a couple challenges. One of 'em is obviously security within your own facility, your home. The second one is: liquidation can be a little bit more cumbersome. You've gotta physically ship product. You've gotta physically take it in. Matter of fact, on APMEX we made it easy to liquidate 'cause we give you a ship label. We cover the insurance. We try to make simple if you wanna do that. But, again, it's just more cumbersome. On the digital front, as you can imagine, you can instantly buy and sell at all times. You can get into it at a lower price. And you're probably gonna have a tighter spread as well. But you gotta be comfortable with the concept that it's digital. And not everyone can get their heads around that.
What's beautiful about APMEX partnering with Sprott is you have the two largest players in alternative investments you're probably gonna find in the market. Sprott has over $7 billion under management. I've sold over $15 billion in physical metal since we've been formed. So you're getting partners you know you can trust. You know they're not gonna have the case of probably going bankrupt, and if they did they're gonna protect you and find ways to make sure you're protected. So that makes our digital product a lot different than crypto, where you never heard of the companies out there; you don't know who you can trust. And of course I already mentioned the physical's always there.
On the paper side – and not that your consumers don't already know this. But on the paper side, there are some challenges as well. They're charging 40 bips a year. I'm charging 12 on gold, as an example. So you got a cost-of-ownership deal. But also what I hate about paper is: it sometimes doesn't trade to spot. It has a premium or a discount at any given point in time. If you catch it on the wrong end, you can actually lose some money even though metal may be flat. So there're some challenges. And everyone says: is physical really backing paper, the paper product? Depending on the product you look at, I think there's some strong questions and doubts about that. And I think that concerns some people as well.
So, look, all the products have their values, depending on who you are and your situation. And when we built this digital, we just wanted to offer another way of owning metal. But physical has its merits and some people swear by it. And we wanna take care of those people and we don't wanna judge. Our job is to give you a number of ways to shop. Back in my old says at Home Depot we realized shipping online or selling online or selling in a store – those consumers who do both are your best customers. I think the consumers that buy physical and digital are gonna be my best customers long-term.
Dan Ferris: So, Ken, why start a business where you guys are handling the custody and not the mint? Does it just cost less?
Ken Lewis: Yeah.
Dan Ferris: What are you trying to do there?
Ken Lewis: So we hold the custody rather than the mint? Because the key there is we offer a storage product called Citadel where you buy Gold Eagles, we'll store it at Brink's in Salt Lake City, and you're good to go. The challenge with that is: one, you gotta buy fabricated products so there's a bit of a higher premium over spot for that. The second thing is: I gotta pay a fee to Brink's to store all that product as well.
On a product we're selling at the Royal Canadian Mint, it's the gold that's flowing through their operation at all times. So my cost of acquiring that product is much much lower than a fabricated product and my annual fees that I pay tend to be lower than what I would have to pay at Brink's. So I can offer a better price to customers. So if pricing is important to you, I can offer you a better price. And then I still give you the ability to do redemption if you so choose down the road. So we think it's the best of all worlds. You got a physically-backed product. It's got a very low cost. And you have the comfort of knowing that you're protected at all times in case something happens. So we think it's a balancing act between the two. But, again, you gotta be comfortable with someone else holding your assets and not everyone's comfortable with that.
Dan Ferris: Ken, is every facility that calls itself a mint necessarily engaged in the fabrication of product?
Ken Lewis: You know, that's a great question. The Royal Canadian Mint's different in that they do refining as well. A lotta mints will make blanks and stamp the product and then ship it out. Some mints – I actually have a small mint myself, believe it or not. Very small, by the way. We'll buy blanks and we'll fabricate the product ourself – we'll stamp the product ourself with a design on it. So I think a mint can have varying levels of capabilities. They can refine. They can make blanks. And then they can actually stamp the product with whatever goes on the product.
And then between all that, there're LBMA-approved mints, which make a big difference in my mind in terms of quality and meeting a certain requirement or minimum requirement. They can be approved from an ISO standpoint, things like that. So, yeah, mints not necessarily do all the same things. And, frankly, I find that mints that I'm comfortable buying from – they're far and few between. There's probably just a handful in the US that I would buy from that I would feel comfortable with.
Dan Ferris: Okay. So, Ken, just a minor pet peeve on behalf of my listeners. I hate to leave things like LBMA and ISO just kind of hanging unexplained.
Ken Lewis: [Laughs].
Dan Ferris: Just tell us what they are and why you care about them.
Ken Lewis: Yeah. LBMA is – I can't remember exactly – London Bullion Market Association I believe it was called. And what they do is they attempt to go out and make sure that certain refiners and mints meet certain quality standards and have appropriate source of product tracks. So they know that it's non-conflict-type gold and silver. So whenever you hear LBMA-approved – and also for the markets, the COMEX and the London markets, these products meet certain conditions that allow them to be traded on the markets as well. So it's really important to find an LBMA-approved mint or refiner when a person does business with 'em. Nine times outta ten, those individuals don't deal directly with the public; they deal with companies like myself. But there's just a quality standard that comes with that.
And then on the ISO side, I can't remember exactly what ISO stands for but it's an organization where you go through and you get audited from an outside firm where they check your procedures – are you documented? Do you have fail-safes? Are you meeting a certain standard at all times in the way you produce product? It's very common in the manufacturing space, very common in the automotive space back in the day, and so companies pursue ISO certification frankly to give consumers confidence that you're offering a very high-quality product that's consistent, scalable, on a day-in, day-out basis. And, believe it or not, my mint up here north of the city here is actually ISO-certified. I went through the whole process, spend a couple hundred thousand dollars to do that. Because I felt like for customers, you wanna know you're doing business with someone who's been ISO-certified.
Dan Ferris: Yeah, what's on the coins you stamp at your mint? Is it your face, Ken? [Laughs].
Ken Lewis: [Laughs]. Well, you know, it's funny. Believe it or not, a couple weeks ago we did a John Wick coin for the movie and worked with the studio to do that. We've sold over 17,000 silver coins and we actually stamped those ourselves, as an example. We also have 9Fine Mint-branded product, which is the company that we call our mint, that consumers can buy. And the intention here is not to be competing with the really large mints. It's meant to be a niche where we do kinda unique products that consumers can purchase that hopefully meet their needs.
Dan Ferris: Okay. So what prompted this asking about mints and things: when you talked about the flow-through – and I realized you addressed this earlier too and I meant to come back to it. The flow-through of the Royal Canadian Mint, which gives you better pricing than – I think you named, what, Brink's in Salt Lake City? What is the difference there really? What does that amount to? I don't quite get it.
Ken Lewis: Yeah. So think about it like this: mines send metal into an RCM for refining. RCM then refines that and has an output. They then typically fabricate that into bars that often will go into vaults that're then gonna be used to trade on the exchanges. That's the most common form of how metal moves from a mine or from out of the ground through to the refining process, gets fabricated, and then ultimately shipped back out. So, in that process, all that metal's moving through naturally through that process. So the Royal Canadian Mint or wholesalers or even mines own that metal through that process.
So I'll go to one of those partners, say, "Hey, I wanna buy some gold that has been entered into the RCM process." And they go, "No problem. We'll sell you that gold." They'll sell me that gold oftentimes close to spot. Because that same metal, remember, is going to ultimately be used to trade on the exchanges. So I can buy metal through their operation at spot. If I go to buy gold bars that are fabricated and I need to store at Brink's, I gotta first pay anywhere from we'll call it $10.00 to $30.00 over spot just to get a metal bar to start with. Then Brink's is gonna charge me a storage fee that will vary greatly depending on your size, but let's say a guy like me spends 10 to 15 basis points per year to store at Brink's, where the RCM won't charge me anything. Because it's a process of having the metal go through the process.
So I'm getting metal at dramatically lower prices. I'm not having to pay for storage expenses at the end of the day. And I'm able to pass it on to customers at a much lower cost. And so when you think about banks and wholesalers, that's how they trade metal. They trade at a very low cost.
Dan Ferris: Right. So what you're describing to me sounds like the LBMA and the Royal Canadian Mint and everything you're describing – this is like the most liquid path from the mine to wherever. Therefore it's the least cost.
Ken Lewis: You nailed it. And the fact of the matter is: a lotta times what happens – and you're gonna see this when I launch a product here in the US – a lotta times the mints or the mines, if you will, or the owners of the metal through the process of the RCM – a lotta times they're actually having to borrow money against that metal. And so there's a cost they're paying of having to borrow against it. We're trying to work with partners to where our customers can replace the banks. Let us own the metal rather than have to have it from a bank, if you will. And in turn, give me even a better price. Because now you're not having not to pay the bank of that money, you can give me even a better price.
And so the product I'm looking to launch here soon that's gonna be stored at APMEX is literally gonna be a no-cost, no-fee product that I can't quite do at the Royal Canadian Mint yet but we're working on it. But the product I'm gonna launch here in my vaults is going to be a product that will replace bank ownership and allow consumers to take that position instead of banks. And then, in turn, you'll be able to buy at spot and pay no fees. Because a company like APMEX is avoiding paying financing charges to a bank and instead selling you that metal directly.
So I think that's the future. I think allowing consumers to have a cost of ownership at levels that banks typically operate at – that's the future, and technology allows you to do that. It'd be very difficult to do this without the technology.
Dan Ferris: Right. And what I hope the listener has gotten from this discussion about all this LBMA and "What is a mint?" and all this – you said you're the Amazon.com of bullion. And you've just explained to them, in a way that they get – it was very clear to me. I think it's gonna be very clear to them why you're able to say this, how you're able to do this. And it makes a lotta sense. It's like this thing has been – I feel like it's been so long in coming to just be able to go online and buy a dollar's worth or five dollars' worth of gold just like that at little cost. It surprises me actually that it took as long as it did. But if you understand the clunkiness of the process, it kinda makes sense I guess.
Ken Lewis: Well, and Dan, one thing for your consumers to know is: down the road, because this model now gives you – it gives us the capability of doing other things down the road. So I'll give you two examples of things we're working on. One is: if you have a precious metals balance – let's say you have $50,000.00 in there. You're gonna be able to borrow against that balance just like you can do a second mortgage on a home. And we're gonna make that super simple. We're gonna be able to, click of a button – 'cause we've already done our AML. We already know who you are. We can trust you. We have the assets in hand.
We're gonna be able to loan money against your deposits at rates that're gonna be far better than what the banks loan you money against a house on. And you're literally gonna be able to do that with one or two clicks on your phone. Right? Kinda like the Rocket Mortgage but for borrowing against your metal deposit. So people talk about yields and other ways to leverage their assets or investments in metal. That's a great example of something that will be alive in the market before the year's out I expect. We're working on that right now.
The second thing that is not as attractive for the broader mass maybe, but the concept of being able to have a debit card to where you go in, you buy your groceries, and you let the groceries be paid for in gold. So it's a little gimmicky in some ways, but at the same time, you have the ability now to have a broader position in metal and use it for everyday purchasing just like metal was thousands of years ago. It was our currency. We're hoping to enable the ability to use a debit card and let gold or silver be your currency of choice when you're going into convenience stores or other places to make a purchase. So those are two examples of things that will be live in the market I think. There are some products already out there doing something similar on the debit side. I'm not familiar with anything on the loan side.
But those are two things you're gonna be able to do at OneGold we hope in the next 6 to 12 months at a minimum, or a maximum I should say. And that's just another way of making the digital product more attractive in the long run. Add to that currencies down the road that you're gonna be able to convert into euros or yen or whatever you wanna do. So OneGold's meant to be a worldwide product that should attract people from all over the world who wanna use it. So just think about those other features down the road that're coming. 'Cause I think that's also more merit for why maybe you wanna leverage a OneGold account rather than going out and doing an ETF through your brokerage account.
Dan Ferris: All right, Ken. We are actually outta time. But if I could ask you to leave our listener with one thought, what might it be?
Ken Lewis: You know, I think just do your research. I appreciate the tough questions. We're transparent. Do your research. Do your research on gold and its work for you. Do your research on paper, digital, and physical. And then, honestly, research the customer or company you do business with. I think you're gonna find that we're very proud of who we are and we've gotten to where we're at for a reason. But do your research and I think you can't go wrong.
Dan Ferris: Perfect. Thank you for being here, Ken. I really appreciate it. You've cleared up a lotta things for me, and I know for our listener as well.
Ken Lewis: Well, thanks, man. And, again, I wanna make OneGold available – or APMEX available going forward. So if there's any way they wanna reach to me or to my team directly, we wanna make that a possibility. 'Cause we want people to be educated and we're a very transparent company. So I think we can do that.
Dan Ferris: All right, Ken. Thanks for being here. I hope we'll talk to you soon sometime.
Ken Lewis: Thanks, Dan. Appreciate your time, buddy.
Dan Ferris: All right. You too. I'll talk to you soon. Bye-bye.
Let's do the mailbag, all right? Time for the mailbag.
Look, the mailbag is important, right? This show is designed to be kind of a conversation between you and I. And your part of the conversation happens in the mailbag. So please write in with thoughts, ideas, criticisms, politely stated, and questions and anything else at [email protected] Got a few good ones today. Let's get to it.
So the first one is from Jerry F., and Jerry F. says, "Dan, long-time listener and subscriber. I comment you for having your latest guest on. He was extremely well-informed about bitcoin." He's talking about Mark Yusko last week. "He was extremely well-informed about bitcoin and even offered the best rebuttal of various people's aversion to bitcoin, namely that it has no intrinsic value. He illustrated that gold, while tangible, really does not have much intrinsic value either. I would love to have him back on as a guest to discuss what will happen to bitcoin when there are no bitcoins being created to pay miners who are providing the validation and block-processing computational power."
He's got some more stuff in here but that was the bit I really wanted to get to. And I took that and I sent that to – and that was expressed by some other listeners as well. So I took that and I sent it to Mr. Eric Wade, and he sent me back a reply. "The plan is that once the block rewards for new blocks ends, expected to be in the year 2140, that miners will continue working to receive transaction fee rewards. Right now they already receive those but the block reward is big enough that the fees portion is a small percentage. You may have caught the fact that we have 100-plus years to worry about that. It's impossible to guess what type of innovations will happen in that time. But the plan is that miners will continue to be rewarded. For example, a recent block had 12.5 bitcoin rewards for mining the block plus 1.58 bitcoin reward for the transaction fee inside the block. By the time 2140 rolls around, the fees will exceed the mining reward, in theory."
And then another guy was asking about anonymity, so I'll just throw that question in here too. He says, "As for anonymity, another great question. Right now at least anything that connects fiat to crypto will have the same problem." People were asking about anonymity if you're redeeming bitcoin for dollars and dollars for bitcoin. The government's gonna know what you're doing. You're reporting it. It's income, whatever. And he said, "Bitcoin maintains the anonymity by buying it and selling it, at least in the US." He says, "But buying and selling it, at least in the US, is where you lose that. Anonymity is one facet of the value but the US laws limit how much of that we can enjoy." That's his answer to that.
So, a couple of issues there with bitcoin. I hope you got all that. Here's another question. "Dan" – this is from John H. John H. says, "Thank you for introducing us to Mr. Yusko. Wow. What an impressive and informative interview. I've listened to every one of your podcasts since you assumed the role and it was probably the most insightful interview across all asset sectors that I've heard. My question for you: I heard you say you bought bitcoin for the first time. I've been investing in bitcoin for two years and wondered how you made that decision. You have been not only skeptical, but if I might say, somewhat critical of anyone for investing in such a fad.
"I commend you for being willing to change your mind. But it would be helpful to better understand your rationale: why the change? Who influenced your thinking? I thought Mr. Yusko's explanation about the question, the value of money in general, and specifically blockchain technology, was as good as I've ever heard. I appreciate the effort and intentionality of your work with the Investor Hour. John H."
Thank you, John H. Look, I bought bitcoin because I don't know if you remember, within the past two podcasts, I dealt with a question where a listener said, "I just don't feel like I can do as good a research until I have skin in the game." And I agree. And I've heard this from other investors. I heard it from Warren Buffett. I've heard him say, in the past, when he was a smaller investor, he'd buy a few shares to get a company's annual report. You get skin the game and it gives you more of an incentive to do better research. So I just bought a very small amount of bitcoin recently because I wanted to know more about it. And owning it gets me skin in the game, gets me that kind of incentive juice that I need. That's really the whole rationale for doing it. So it wasn't like somebody came to me and said, "Oh, bitcoin, you're thinking about this all wrong. You gotta have religion" [laughs]. It wasn't like that. So, thank you, John H.
Let's do a couple more of these. Now, the next one is from Rick M. And it's really long so I won't read the whole thing. But he's basically saying he's traded futures since 1983 and he said, "I admit I got pretty riled up as you brought up again that you find no merit in technical trading." And then he tells me he's been doing it since 1983. He's made all kinds of money. He's 100-percent technical trader. He said, "I even use chart patterns. Yes, I use technical indicators."
Let me make something clear here. I've tried to make this clear before but the message isn't getting through, and that of course is my fault. I'm not critical of anything except what I believe is very naïve technical analysis. I think the average person who's doing this has not been doing it since 1983 [laughs] like you have, Rick M. And Rick says he made $70,000.00 one year trading. I assume this is part-time, right? I promise you that ain't the average result [laughs]. The average result is probably closer to losing $70,000.00 than making it. So that's really what I'm doing.
In the position that I'm in, I just hear so much feedback over 20-odd years here from people, and I'm pretty confident in saying there're a lot of people who are just not doing enough work. They don't do enough technical analysis. They don't do enough fundamental analysis. They don't do enough of anything before they put real money – sometimes substantial sums of real money – at work. And I'm trying to push back against that and tell them not to put the money to work until they've done the research and done the work and gained enough experience and know how to not lose money and know how to survive. You've survived and thrived, Rick M. And I appreciate your question.
And Rick recommends that we have our own technical guy, Greg Diamond, on the program. And we will do that eventually. I promise you. He will be on here eventually. But I hope that answers the question. I'm not against this stuff. I'm just leery of readers believing that it's some kind of magic and not putting the real research and work into actually doing it the way you've been doing it since 1983. Okay?
One more question and then we're done. This is a guy who just gave me his initials, HR. HR says, "Hello, Dan. Just catching up on my reading, specifically Investor Hour episode 102. In it you were discussion emotion in the market. And I've always been puzzled by this. I can say I have emotion. If the S&P is rising, I'm generally happy. When it drops for three days in a row, I question why I did not sell before, and is this the next bear coming? I can understand that and accept it. However, as far as the market goes, is there really emotion? I base this question on several items. One, we can discount the volume from high-frequency trading. It is mainly noise, and while it accounts for a great deal of volume, it is just liquidity.
"Two, I have always heard institutional traders make up 85 percent of the non-high-frequency trading volume. Three, which leaves the individual investor at 10 to 15 percent. Given these last two assumptions, are there really emotions on the institutional side? If not, that would only leave the individual investor as emotion" – the emotion, what he's saying: the emotion in the market, right? I'll continue here: "If his presence is only 10 to 15 percent, can the market really be said to be reacting on emotions? I am interested in your thoughts on this matter. HR."
Thank you, HR. Excellent question. I would say institutional traders are human beings, period. They're not – I don't think of them as any different from anybody else. We had Daniel Crosby who wrote a really good book about behavioral investing on the program a few episodes ago. And he's done I think the best work on this. And he does all this great work in his book. He comes to the end and says, "Knowing all these behavioral biases and things doesn't matter and doesn't change anything. They're still at work in you every time you go into the market." And I quoted Nassim Taleb in my rant today. And Taleb said one of his big epiphanies was when he realized his emotions – he was never gonna get his emotions out of it. Ever. And he's a hugely successful trader.
So I hear you but I think that the assumption that the institutional folks are not trading on emotion is not correct. That's my answer.
All right. That's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. Listen, it's my privilege to come to you every week. I love doing this. I love the e-mails. I love doing rants. And I just love doing this for you. So, talk to us. Send us an e-mail at [email protected] That's really where the rubber hits the road between you and I. Okay? So you can go to www.InvestorHour.com. You can sign up for all the alerts for every episode. And I hope you'll do that and I hope you'll come and talk to us or come and listen to us, and talk to us through e-mail next week. Okay? Thanks a lot. Talk to you next week. Bye-bye.
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