- Gold has captivated people for centuries, whether as a hedge against inflation, a shiny keepsake, or a means to turn a quick profit. But there is more to gold than meets the eye. From Costco selling gold bars that fly off the shelves to people who score massive profits on limited US mint drops, the modern day gold market is so full of surprises.

In today's episode, I'm joined by Trey Benedict who knows the ins and outs of this market and is the founder of Pure, one of the biggest places to buy and sell gold online. We're going to break down the myths and realities of gold investing, the dynamics of spot pricing, and how you can navigate and profit in this market.

I'm Chris Hutchins, and if you enjoy this episode, please share it with a friend or leave a comment or review. And if you want to keep upgrading your life, money, and travel, click follow or subscribe. Trey, thanks for being here in person early in the morning. - Yeah, thanks for having me and glad to be here, you know, before everything gets crazy, so.

- Yeah, yeah, we're doing this early 'cause the gold markets. But I guess let's start with the gold markets. How big is the gold market? - The gold market's pretty large. So you've got like your, you know, larger like central banks which is like, you know, obviously governments trading around gold to hedge their currencies as well as reserves.

Then you've kind of got like the market makers, which is like, you know, your JP Morgans and like, you know, hedge funds and stuff like that of the world. And then you've got kind of more of like this like retail segment as well that's really kind of adapted in this last like, you know, 30 to 40 years since they've actually made gold legal to own in the US since the 70s.

So it's kind of like, you know, there's this expanded market but if I had to put like an actual number on each, you know, the large markets, like in the trillions, like it's quite a lot, like there's a lot of gold in just the overall market. And then the market makers, you know, obviously are kind of in the billions area.

And then like our retail sector for like gold bars is around 55 billion. So, you know, it kind of depends on which segment you're looking at. - Okay, and good backup. So gold was not legal before the 70s. - Yeah, so gold was outlawed in 1933 when the currency of the US changed from actual gold coins to what we now have as like, you know, federal reserve currency.

So treasury notes kind of replaced what used to be like a gold backed currency. And then the first bullion coins were the Krugerrand and the Krugerrands from South Africa. So I know a lot of people kind of, you know, used to buy those and you still see them nowadays.

But then the US started wanting to play a little bit more in that market and they realized how much money South Africa was making. So they produced the gold eagle and production started in 1985. But the first actual US gold coins since the 30s was these things called like an arts medal.

So they literally, you'd send the post office like 30 bucks in the mail and they'd send you back like an ounce of gold. And so that was like the first adaptation to, you know, retail investors getting involved in the United States. But the gold eagle seemed to be like quite a hit and it's still kind of like the top coin around the world for people who are buying like retail investments.

And then they also introduced like the buffalo as well, which is a 24 karat gold coin. So the buffalo is quite a pure gold coin is to compete with the Canadian maple leaf. And it's pretty successful and it's like launched. So the US has done quite a good job of getting into the retail sector market, so yeah.

- For those on audio, we'll get into a little bit of my recent foray into gold, but I'm holding a buffalo and a few other coins here. Why do you think people are buying these, right? Is it to own gold? Is it collector's items? Is it speculation? - Yeah, so I think there's a couple, also a couple different types of people that buy them.

I think, you know, the first off is kind of your, like I'm scared of the government taking away like, you know, currency and like, you know, the dollar going down, which is not something I personally subscribe to, but like, you know, I can understand why people would be hesitant and why it could cause some anxiety for some people.

So, you know, having some sort of tangible like asset, whether that be like, you know, collectible or art or something to hold a store of value, I think that's one kind of area. And then I think the other thing is, you know, obviously gold is kind of like on a massive run the last like year and a half ish or so.

And I think, you know, general heightened like tensions with the election and like in kind of like politics and just like overall around the world, like people have seen gold as like a place to, you know, park a little bit of extra investment cash. So I think people would typically go for physical gold just 'cause it has a premium over like, you know, buying like just, I mean, you know, the regular ETF, but you could obviously just go buy an ETF and get the same exposure.

So I think it's just kind of choice there, but obviously there's some collectability and some coolness of just like holding some gold in your hand. So I think it's always cool to be like, oh, you know, it's like a gold bar. So it's like, that's a fun thing for all that.

So, yeah. - Though full disclosure for people listening, in my idea, a one ounce gold bar that costs, you know, 2,500 plus dollars, depending on where the price is when this comes out, always seemed like it was gonna be a lot. And then I picked it up and it's like, you know, the size of like 10 playing cards, right?

Like, and that's in the plastic case, out of the plastic case, it's like two postage stamps wide and like a quarter of an inch high. So I just, I had this idea when I went to Costco the first time and bought a gold bar and I thought, oh, I'm gonna have this big gold bar and bring it back home.

And my wife was like, well, make sure people don't see you carrying it around the parking lot. And I was like, yeah, it fit in my pocket by like, you know, it's smaller. It's about the size of a credit card. - Yeah, and I think people often get like confused of how dense gold is.

Like it's quite a dense metal, even when you compare it to something like silver, palladium or platinum, like it is much, much smaller. Like an ounce of gold is just like, it's heavy. You can like feel it in your hand. And sadly we don't have a kilo bar here, but kilos are interesting.

If you were to have a cell phone made out of gold, that's basically what a kilo would feel like, but it's quite heavy. Like you feel it and you've got some heft to it. - So you mentioned you're 22. I imagine most people are thinking someone who loves gold and is, you know, thinks about it a lot is closer to 75 or 80 than 22.

How did you get into this? - Yeah, so I got into this basically because of my dad. He's kind of likes buying and collecting, you know, different stuff. And he introduced me to coins when I was a kid. I used to go to coin shows in North Carolina. That's where I was originally from.

We describe them now as like redneck coin shows. Like you go and there's like a whole bunch of like, you know, people you'd see like from like places you've never heard of. And they just have all these coins in front of you. So I would always look for Chinese coins, but he was interested in buying gold.

This was like a bit after the 2008 recession. So like, obviously I think there was some like, you know, fear and anxiety in his mind on like how to like keep, you know, assets stable. But like, I think, you know, he always wanted to kind of, you know, include me in what he was doing.

And so I was able to figure out very quickly that you can make a lot of money on coins. And so I would just start flipping Chinese coins back to China. And it was super fun and, you know, made a lot of money as a kid. - So out of curiosity, making a lot of money as a kid, what is that like?

Tens of dollars, hundreds of dollars? - I would say like my biggest score as a kid was like, I made like 10 grand off of a coin that I had bought for like 400 bucks. And so I was like, probably in like seventh grade. And I had bought this like Franklin half dollar, just like basically generic silver coin.

And it was graded already. So it was in like one of the holders that, you know, PCGS or NGC are like grading companies. Same as sports cards, you can get them certified and have like a specific number attached to it. And so I was able to get that number up, upgraded pretty quickly by like, you know, using different techniques that restoration people would use.

So I was pretty good at doing like what they would call just coin restoring. So I'd be able to identify, get it re-graded and then be able to sell it again. And that was, that's kind of like a specific path that a lot of people do in the coin industry to make like a lot of money.

So you can do that at higher volume or lower volume, depending on like, you know, your budget. - And that's allowed. It's not like a gray area. - It's like a, you know, you don't go around telling people like you're like a coin doctor. You go around telling people like, hey, you know, like I'm a coin dealer and like I have nice coins and here they are.

So like, you know, the results kind of speak for themselves, but obviously you're not gonna like disclose all of this information of how you've done it to people. And so that's kind of like the trade secret, I guess, to like why some coin dealers are better than other coin dealers.

But that's particularly with rare coins. I think, you know, generally like the other stuff is more of bullion, which is boring to them. That's kind of like how they perceive bullion in this realm. - Maybe cover the difference there. There's bullion and how does that market compare? What are the different aspects?

- So most rare coin like collectors would describe them as numismatists. Like they are the collectors of rare coins and bullion sort of branches into numismatics and the fact that there are coins that are bullion that happen to become rare. Like, you know, a gold buffalo could become rare if the mintage is low and that's happened.

Like some gold eagles are worth like, you know, two to three times their spot value just because they're rare and people collect them. But modern markets are a little bit different in the fact that, you know, a lot of them have to be graded. They have to be like, kind of have that stamp of approval that they're like a 70.

A 70 is like the perfect grade. But for rare coins, it's very rare that you would see anything above a 67. Like a 67 is like quite a nice rare coin. And rare coins, you're usually not traded upon their spot value. People really just don't care. Like, you know, you could have a $20 St.

Gaudens, which is essentially the equivalent to a gold eagle these days. But it could trade very rapidly differently than a gold eagle does just because, you know, the eye appeal and like the scarcity, as well as just like, you know, people may like it better than the other one so they pay more.

So I think it's more unique into that fact. So it's hard to kind of quantify why someone would want to pay more for the gold value. But I think it's just like, you know, as there is with art, like people will pay more just because they like it. - Now, when it comes to actual gold, similarly, there's no intrinsic value, right?

This isn't an income producing asset, but it has a value. How is bullion and gold kind of more broadly than just rarity and coins valued and priced? - The first thing that people look at is like, is it denominated? Like, you know, is it an actual coin or is it a bar?

So I think for, you know, a buffalo and an eagle, they're actual $50 coins. So they have a little bit more use case in people's mind. - Now, obviously I paid way more than $50, but worst case for this buffalo, I can take it to the US government, you know, or a bank and get $50 from it?

- Yeah, I mean, theoretically, you could go to Taco Bell and buy some tacos with it. But I think that would cause some problems if you tried to do that. I don't think, there's like random YouTube videos out there of, you know, people being like provocative, trying to like turn in their gold at, you know, some random fast food and it just doesn't work out.

But I think that, you know, generally people start from like who's, who made the coin or bar. And so, you know, for bars, that's like the assayer versus the coins, the mint. So you just wanna be able to make sure it's like a reputable assayer mint. And obviously like, you know, the United States men and Pamp Suisse are like quite reputable and so their name brand.

But yeah, I think, you know, people generally look for, is it like a government coin? And then if it's not, is it a reputable assayer? - An assayer is the person who creates the bar? - So an assayer is a person who refines and actually produces that bar. So for Pamp Suisse, it's Pamp Suisse.

Like they are the assayer and refiner. So on every bar, you can see kind of like who is the actual assayer of that place. So on the back, there'll be a signature of that assayer. Not exactly sure who it is, but there is a certified assay on there. - Ilana?

- Yeah, Ilana. Shout out Ilana. (laughs) But yeah, so you can kind of generally see like, you know, is it reputable based upon that? And then from there, it's, you know, like just choice of design. So people kind of look and they're like, you know, what is the design that I like?

And, you know, what will hold the most value? That's kind of the question I always get from people who are like quote unquote investors in gold is like, what will always have the most resale value in the future? And generally the more kind of premium products like Pamphortunas and Buffalos and Eagles kind of have that like extra added value.

Like you're always gonna be able to get like a certain value, like pretty close to the spot value if you hold one of those compared to OPM metals, like that's a random brand that's like unaccredited now. And you're not gonna get very far over the spot value. Like essentially that's gonna be melted down.

But premium product like, you know, Fortunas and Buffalos are always gonna have like the value of the gold plus maybe a little bit of premium value just because there is that like inherent resale. - And the value of the gold, talk a little bit about spot price and how that market works.

- Spot price, it kind of is a little bit different than your general like, you know, stock trading hours. Like it's similarly follow. So every Sunday at 3 p.m. PST. So that's kind of when the like, you know, market opens in our eyes. So overseas, you know, there is gold trading starting then.

So people who are like very serious about, you know, the market and following it will be kind of at their computers like ready to go at 3 p.m. on Sunday. And so you have 3 p.m. on Sunday, 24 hour trading all the way until Friday at 3 p.m. So it's quite some time that you, you know, you have to be kind of involved in the market.

So, you know, in the middle of the night, the whole spot price could move up or down, you know, 50 to $60. And you would never know until you'd wake up in the morning unless you're like, you know, trading overnight. But I would say the larger like physical traders are fully hedged.

Like they have zero risk to the market or very little risk. So they're trading on what we call the premium. So the premium is just basically like our positive or negative markup on the actual physical items themselves. So like buffalos are like, you know, between 2% to 3% premium right now.

And fortunos are like between 15 to $30 premium. So essentially, they're always trying to make a spread upon, you know, like what that premium is rather than the spot price itself. I think this is a little bit different than, you know, general investors like perception, because the general investor perception is like, what is my all out price that I'm gonna get?

And you would quantify that by the spot price plus or minus the premium that you would have. So it's a little bit different between the two. - So someone's actually like making a bet that these gold buffalo coins are going to be worth more than spot price in the future.

And so they're kind of not worried about what the spot price of gold does. Whereas I'm imagining a retail investor buying GLD, the ETF is solely concerned with spot. - Yes, yeah, it's like literally the opposite mindset between someone who is like actually a trader of physical metals versus someone who's like a retail investor of the GLD.

The physical traders are, yes, they're trying to create a supply and demand market based upon like what the scarcity of that specific item is. So there are some really interesting items that, you know, Costco could easily offer that actually fluctuate quite a bit. We quantify those as like proof gold.

So it's like a buffalo, but it's in a collector strike version. And so the background of the buffalo is actually like a high like polish versus this is just like, we would call that like a burnish strike. People would trade these like collector coins at a higher premium and they'll fluctuate quite a bit.

Like, you know, they'll go from $200 an ounce over to $500 an ounce over, depending on like how the spot prices move. - For the average, you know, person who's like, I wanna invest in gold. I think it's a good hedge against inflation. So I'm buying gold ETF or even buying gold bars or you know, whatever.

What's causing that spot price to move? - Yeah, it's a little bit beyond my control of like how I think about it. Like, but I think generally it's like, you know, economic data that comes out. Like nearly every like FOMC meeting, there's some movement, but I mean, that's the same in stocks.

Like, you know, some stuff will go up, some stuff will go down. And then, you know, just like geopolitical tensions, like we'll kind of always have our eye on different stuff just to make sure that, you know, like whatever hedge position is open is like, you know, staying clear of like different events.

So I think, you know, general market makers obviously are selling to like larger people. So they always try and mitigate risk by understanding all of this data. But to a retail investor, I think it may be a little bit beyond our control. - So it's not too dissimilar to most speculative assets, right?

- Yeah. - Like Bitcoin is priced at what it is mostly because of supply and demand. - Yeah. - But when you said a lot of the traders are trading these coins, do you mean coin traders or do you mean like the JP Morgans of the world? - There are a couple larger firms that trade physical metals, like not really as much as they used to.

Like Scotiabank used to be a pretty large trader of metals. And, you know, HSBC is still pretty big, but their access is very, very limited. Like they still run a physical trading desk. So you can call them up. They'll probably tell you, you know, like, hey, you need some enterprise account to like trade with us.

But I mean, if you have the means to do it, you could possibly buy from them and maybe even sell to them. But it's very difficult now just because like people running physical gold desks is a thing of the past. It used to be quite large in like the '80s and '90s.

But nowadays, like most of it's done on computers and warehouses that we would never know where they are. - And when I'm buying GLD or kind of something from my computer on my brokerage platform, is there physical gold somewhere? - Yeah, so there's a couple different types of GLD.

There's like allocated versus non-allocated. So somewhere around the world in some Comex depository, there's probably a 400 ounce gold bar that is allocated to some contractor, 400 ounces worth of gold allocated to a contract. And so essentially you're buying right to the exposure of that bar. People actually enacting physicals and like converting contracts and waiting till expiry is a little bit rare, but I have seen particular instances where contracts need to be backed.

And so if you have an opportunity to play at a larger gold market, you can end up backing contracts when we call it like the EFP exchange or physical gets like into a negative zone. So where the ETF price is actually higher than the physical price. There's like a certain amount of arbitrage where if you have physical gold and you can back it in large quantity, you can back these contracts and be able to help a retail investor be able to have that exposure.

So generally most of them are like semi-allocated. So you're buying like the right to potential future exposure. So it's like, it gets a little bit complicated. But I mean, that's like do your own research on which GLD you're gonna buy or like what specific ETF you want to play in.

- So the reason we got connected is that in the last few weeks, I've been just exploring this after going to a conference and listening to a talk about Costco gold. So I came back and went to Costco. I said, oh, there's this gold here. And I think the thing that for me kicked it off was the U.S.

Mint had this release of a 230th anniversary flowing hair coin. I honestly have no clue what that means. So I'm gonna ask you to explain it. But I picked up a couple and it was almost like everyone knew in advance that if you could just go on the U.S.

Mint website and buy this at 9 a.m. Pacific, you would make money. And sure enough, that was the case. Talk a little bit about that and how there are opportunities for regular consumers to invest and make money in gold. - Yeah, so we've been planting seeds for quite some time on this flowing hair gold coin, like probably a year in advance.

Like this is something that we knew was gonna be good from the start. And it ended up being not as good as I thought, but still quite well for the people I think got involved. But essentially, the U.S. Mint makes commemorative coins. And so they try to commemorate some event in U.S.

history, which happened to be the Flowing Hair Silver Dollar, which is our first silver dollar in the U.S. And they actually did a really good job on the rendition of it. I don't know why they picked a 230th anniversary. It seems kind of arbitrary. But the original silver dollar is a little bit larger of a size and it has edge lettering.

But the $17.94 is one of the most expensive U.S. coins that you could possibly have. I think one recently sold for like $10 million. Yeah, so it's a very like esteemed coin in the coin industry. Like everyone knows that that's a really great coin. So when the U.S. Mint decided that they were gonna put that on the product schedule, we immediately knew like that's gonna be like really good.

And it kind of started with the silver medal. I don't know if you'd bought the silver medal prior to. - I didn't. - Yeah, so they've made a silver counterpart which they had basically created this like lottery out of. And the Mint's been doing a great job on making consumer coin releases like limited drops.

They've basically taken the Supreme model and made it for the U.S. Mint, which is amazing. Old like boomer collector people hate it. Like they hate the Mint doing that. But I think that it's the best way to get people into coins. 'Cause obviously now we're talking about it. It makes no sense that we would be talking about a limited coin release unless it was like, you know, it's sold out and there was a resale market and there was all this like hype generated around it.

But the silver medal had this like privy mark, which is something that the Mint has done in the past. And they basically randomly put in 1794 of these privy marked coins into the 50,000 that they sold. Those privy marked coins are worth like four grand now. The retail was a hundred dollars.

So some people became instantly like, you know, could pay their rent, could pay groceries for like a year. Like they had all of this like excess, you know, consumer surplus from buying this coin for a hundred dollars. So I think people got really excited about the gold one. The sad part is they didn't do a privy for the gold.

They're actually auctioning them and they're going for ridiculous prices right now. But the gold ended up doing very well 'cause the design is just, you know, good. Like it's just hands down, like a very nice design. Like, you know, a lot of coins we see come through the platform and when we got the first one in, we were like, wow.

Like that was kind of the reaction that we had. And I think it's been a while since I've like actually liked a coin that the Mint has put out. So the, I think, you know, maybe just some other people that are more familiar with coin releases, like they would call this one a dud in comparison to the other ones.

'Cause in 2020, which was like what I would consider like peak coin market, they had released a privy gold eagle, proof gold eagle, and the retail was $2,000. And that coin sells for like 20 grand in a perfect 70 now. And they're very, very hard to come by. - But if you were relatively tech savvy sitting at your computer the day it launched, would it have been easy to get one?

- Yeah, yeah. Like if you can buy like Amazon in two clicks, you're fine. Like your competition is very low. And I think a lot of numismatists that are interested in modern coins are likely not your most tech savvy people. So it's a little bit difficult to have them go on and buy a coin.

So I think that's why they're probably upset that they had to buy them on the aftermarket. But yeah, it's generally like, you know, the process is like making an account, it's putting your credit card info in, waiting until the drop time, and then just going to hit buy and then hope that the order goes through.

So I think it's pretty easy to be able to do that. - How often does the US Mint release something that is exciting? - I would say like generally once a year. And it's kind of at the end of the year. And some years you may get really lucky.

And like, for instance, 2020, every single product that came out was good. Like every single one for like eight releases in a row, which just like-- - And so they do multiple releases a year, but the hyped one that's exciting is towards the end of the year. - They usually do, like they have their continuing series, and they'll release those every year.

And sometimes the continuing series can be like very good. Like I said before, like Proof Gold can end up being like a very good release. And generally that's because like, you know, just supply and demand, you know, the dealers want more supply to sell to their like, you know, retail customers.

And so they want to create a market for buying these. But yeah, at the end of the year, around November, there's always kind of one coin that catches everyone's eye. And they didn't do it in 2022, which was kind of sad. So there was kind of like a lull period.

2020, 2021 were good. 2023 had a release that was like not as popular, but still did well. And then 2024, obviously the flowing hair coin. So we don't really know what's going to come in next year until like maybe about a month from now. And then I can kind of tell you like that one might be okay.

And then we kind of need to wait for a little bit more info. But I mean, I had been writing about the flowing hair coin since like June, and I had had like, you know, mock-ups done and everything. And then everyone started using that. So I think it was, you know, really good for us to be able to be early on that information.

And then we also kind of got some, a little bit of insider stuff just because we're a bulk supplier of the mint. So we can see kind of a little bit before the public sees like what, you know, the mintage is going to be and like what that coin might actually look like and stuff.

And so I think it's always good to share that info as it comes out so people can kind of see like, you know, what are they actually going to buy? And I think they didn't release the product images until like two days before or something. So it was very strange release for this one.

- I don't think I got into this release until about two days before, so I missed the whole backstory. - Yeah, there's quite a backstory. And you know, obviously like, I mean, our kind of drive is that, you know, we have to create a supply and demand for that specific item.

And obviously like, you know, people can sell it on eBay or locally or all this other stuff. But I think, you know, we were trying to take like a StockX approach to it. And the fact that, you know, StockX would promote releases prior to when they come out ended up working quite well.

I mean, you know, kind of on par with eBay sales and, you know, hopefully trying to continue that. So I think just having more outlets is also good. - So what you've done with Pure, my experience, I don't hold any shares, I have no equity here. But you started basically, as I would describe it, as a marketplace for buying and selling gold that operates a bit more like an investment marketplace where there's a bid and an ask, and you can see the order book.

But if I remember right, I could actually see, I could actually sell my flowing hair coin before I even got it. - Yeah, so when we originally started Pure, we were actually trying to tackle this like mint problem, just 'cause we had bought and sold a lot of coins on the mint prior.

And there really isn't a lot of liquidity. Like, you know, without Pure as it exists right now, like you could go on eBay and sell it, but then, you know, there's obviously complications with like what you're gonna do on eBay and a lot of people do well there. But we kind of started listing the Costco SKUs as like a ha-ha funny sort of thing, and it ended up working like quite well, because, you know, obviously people need liquidity for specific bars.

And I think the other thing was that we were able to tackle the premium problem really well, 'cause most people would just define the gold bars as just generic. But, you know, the difference between a Fortuna and a Koi is actually, you know, like 15, 20 bucks. And I think that kind of makes a difference to a lot of people, considering that spot premium is like, you know, literally that.

So, yeah, and then we had kind of gotten back to our original roots when we started doing the flowing hair coin. And it was really cool to see how the market opened and we kind of just let people trade from the beginning. And obviously like some people canceled, so like on the back end of things, like we had a couple coins live to be able to make sure buyers were whole, just so we could like play around with the market.

But generally most people are, you know, pretty nice and like happen to, you know, follow through on their things. I obviously think, you know, our onboarding like kind of makes people like, "Hey, I need to be able to fulfill this." But yeah, we just kind of let people trade as they would on it.

And just to see how it would go. I know a lot of people started like pre-selling. And so we didn't allow any pre-sales, but right after the release, if you had a confirmed order, we were like, "Hey, like that's fine." So some people got canceled, but you know, we made the buyers whole, so.

- Yeah. And when it comes to Costco, since you mentioned it, this is kind of where I got into this a little bit. You basically, Costco is selling gold bars at checkout, more so on certain days of the week than others. And there's a pretty active market for selling them.

So if you walk into a Costco, you could buy a gold bar and you could probably go on Pure and sell it before you even get to your car. - Yeah, there is quite a lot of liquidity for Costco items. I think to the fact that Costco may be selling more than they originally anticipated.

So they've in turn kind of created this like after market where people want to buy these bars and whether that be at Costco or not at Costco, people need them for different, I don't know, different sales activities or investment activities. So they've really kind of put gold in this like mainstream.

I think, obviously a lot of news outlets have covered this, like Costco gold is selling out in like 10 seconds. But generally, you could just walk into a Costco, I think they have like a product limit or something. So you can't go in and buy like all of them, but you could get like five.

And the prices are quite good. Like I'm pretty sure they're selling them at a loss. Like, we get the pretty similar distribution from HAMP and the cost per bar is like quite high. So I'm sure that, obviously they have like whatever special deal that they're running, but it seems like it's like another like chicken baker, like hotdog situation.

But instead it's like a $2,800 gold bar that they're able to push. But I think generally for like our community, it's been quite good 'cause prior to this, you would have like shady investment quote unquote, gold firms call you up and be like, "Hey, do you wanna liquidate your retirement account "into this?" And people are like, "Oh, that's horrible." So I think Costco created a really good entry market for people who are curious.

And it's a familiar storm. - And I think if you look at the price you're gonna pay in Costco, and you look at the price you can sell on Pure, and this is something I've been monitoring closely. Just to be clear, if you go buy your Costco gold bar with U.S.

dollar cash, you're not putting it on a credit card, you're not a Costco executive rewards member getting 2% back. You're just looking at what's the retail price for Costco gold, which in most states is not subject to sales tax. And then you look at the Pure price that you can sell it at and let's net out the fee.

You guys charge a fee that's very reasonable, I think for a Costco gold bar, it's like 0.75%. And if you did a lot of volume, it would come down. And you're not gonna make money on most days. But Costco's executive rewards program, if you have the $130 membership instead of the $65 membership, you get 2% back on all your spending at Costco.

And from watching the prices the last, I don't know, month or two, just personally, the Delta is usually within that 2% band. And so if you buy a gold bar at Costco and you turned around and sold it right away, that 2% Costco executive rewards that you pay $130 a year for, will close the gap on any amount that you might lose selling it.

And then added bonus, Costco will let you pay with cash, with a debit card or a credit card. And so you get those rewards as well. But I think if you just forget the credit card rewards for a second, there's actually a profitable buying and selling gold. And then the credit card rewards would be a bonus.

- Yeah, I think we've created a lot of tools like in our passing time to be able to kind of help people understand like where the price point lies compared to like what the active market is. And, you know, there are opportunities where it's just like mispriced, you know, like you go in and it's like $100 below where it should be.

- And that's the case with these gold buffalos. - Yeah. - When I was looking on Costco's website, I joined a couple slacks then discords where there were Costco gold notifications and one popped up and said, "These buffalos are available." And I went in and I went and ordered five of them.

And then I looked at Pure at the same time. And I was like, the price I paid at Costco was less than the price I could sell them for in a moment. Not factoring in executive rewards, not factoring in credit card rewards, I actually made money buying this coin from Costco and selling it.

- Yeah, and I think it's kind of created a drop ability like to these releases, like people are kind of, you know, waiting and waiting for restocks. And it just reminds me of like, kind of like the sneaker era of like all the stuff where people were buying Yeezys and things like that.

So I think it's kind of cool to see that that's came alive in like a different market. And obviously, you know, I mean, Costco makes a lot of money in other sectors. And I think that their kind of play, like obviously I don't know this for a fact, but their play is just, you know, volume, like how much can they sell?

Being able to do like hundreds of millions worth of gold a month. Like they've got to be like, you know, top three in the industry now for how much sales they're doing. Like it's quite a lot. And they've kind of came onto the scene in a different and larger way than most other people.

But there are some people kind of breaking into Walmart now. So that's good. - Yeah, I have seen that Walmart also sells gold, but not as competitive as a price as Costco. - Definitely not as competitive, but Walmart's model is a little more different than Costco's model. Obviously Walmart doesn't sell gold in store and Walmart's more of like, you know, online marketplace than anything.

Taking cards on gold is like an incredibly risky area. You know, you have one person charge back and it's like a whole nightmare. So I think, you know, from our perspective, like we tend to stay away from that area 'cause a lot of people have asked us, why don't you just open Pure to add cards?

And I'm just like, I don't wanna deal with that headache right now. But, you know, in larger scale like Costco, Walmart, like they kind of have that figured out already. And so they're able to kind of offer that, like, you know, rewards to having it. - And I haven't looked into this, but I wanna do another episode on gift card reselling, because I actually think there's an interesting market there to similarly buy gift cards that are on sale at a discount.

And then, you know, there are places to resell them online. And that can also be a profitable business. But I often see Walmart gift cards at a pretty big discount. And by pretty big, I mean like 10, 12, 15%. And now it has me thinking, well, if you can buy Walmart gift cards at 15% off and use them to buy gold, could you get a discount on gold?

- I think that's the loop. If I were to, you know, place a bet on why people would be buying gold at Walmart, I would say that that's the reason why, so. - Yeah, and just to be clear, some of these things might sound like it's all about credit cards, but buying a lot of these discounted gift cards at scale is actually something where you have to pay a fee to use a credit card.

So when I look at a lot of these things, this is not a credit card points play for buying Walmart gift cards. It's actually a discounted gift card and gold price play that's independent of credit card rewards. That said, you know, I think for some people, the credit card rewards would be a compelling thing, but I actually view both gift cards and gold, and potentially some buying group stuff that I won't even get to now, as opportunities to find mispriced items at programs where either their currency, i.e.

gift card is sold at a discount, or their membership includes a 2% discount, which full disclosure for everyone, is capped at $62,500 a year. So, you know, you can't go spend a million dollars on gold. - They figured out their loss for it. - Yeah, yeah, they have. One thing for people who are, maybe go to Costco, maybe pick up a few bars and wanna sell them, and go to Pure, help alleviate some concern they might have with what happens next, because presumably they've spent a ton of money, right?

If you bought five bars, you're over 10 grand, and you're probably gonna say, "Here's a mailing label, can you send it in the mail?" How do people think about that aspect? - I think the biggest thing that we've been able to do is obviously everything's open under camera, so we'll have reports of everything as it comes in.

We keep allocated storage of people's orders, which I think is another big thing. People always ask if a package was tampered or lost, is it insured? And we have insurance on all packages. We're using overnight or express mail to be able to make sure it's all good. I think a lot of people could probably take a packing lesson, so we may produce some videos on that, and be able to say this is the way to properly pack your items, 'cause I think most people think about Amazon returns as their only other comparison to when they actually go out to ship stuff, and sending $13,000 in an Amazon box, or a Chewy box, or some Huggies diaper box is probably a bad idea.

Every now and then, there'll be some strange stuff, so I think we've gotten down that route of how scary can someone package their really expensive items? But I think one thing is being able to lock the price of the item. I think that's a big win for the service that we offer, is being able to give you the peace of mind that when you actually sell those items, that price is frozen.

I think sometimes people get confused. If it goes down, then they are making money, but either a positive or negative loss, you're kind of on the hook if you don't fulfill those items. - Does that mean that, let's say I sold my flowing hair coin at $4,200, and two days later, before I even shipped it out, or maybe a day later, it's at $4,300, and I cancel.

Am I on the hook for that spread? - Yeah, you would be on the hook for the spread at that point, because there's a buyer on the other end, we have to make sure that buyer's whole. So we would call that the market loss. So if you sell your flowing hair, and it goes up to $10,000, and you decide to cancel, yeah, that spread's gonna be quite large.

Obviously, we kind of determine fair market value on a fair spread. We're not gonna just pump the prices up to make it look like there's a larger market loss. But yeah, generally, I think the biggest concerns come with shipping, receipt, and payment. And I think one thing that we're trying not to be able to do is be people's bank.

That's something that I think Pure is trying to actively avoid. I think some people are trying to use Pure as a way to cash in gold in large quantity to be able to turn credit card points. Obviously, some people do high volume, but we kind of moderate accounts as they go.

So if you're selling here and there, it's a good activity, but we keep a lot of close eyes on how people's activity are trading over time, how do they have a business set up. At the end of the year, what coins have they sold? Are those coins falling under 1099s?

There's a lot of different aspects that go on behind the scenes. So I think, obviously, people should be aware of all of these when they're buying them and kind of understand all the different tax implications that have it. Call your CPA, make sure that what you're doing is fine.

If you're selling it for a loss, make sure you're taking that loss at the end of the year to be able to write it off. So there's a lot of different things that you should probably consider before entering this market. - And then, obviously, there's definitely a lot of money laundering and fraud risk within the gold market.

And so, from our perspective, we treat everyone as if we give them the blank slate to begin with. You go through identity, you go through a bank account check, and if you don't pass that, then too bad. We're not gonna be able to take them as a customer. - Yeah, I've seen everything from a guy on WhatsApp that you can message and sell gold to that says, "I don't do 1099s, I don't do ID verification," to a reputable person who runs a company but maybe doesn't have as big of an operation as you and maybe does do an ID check but might not do 1099s, all the way to you are trying to do this as by-the-book as possible.

So I think there are a lot of options out there. If I could just hand these to you, I would. I'd save me some shipping, but I'm gonna ship 'em off 'cause I want the experience of packing them up and shipping them off. But there are all the degrees of places that you can buy and sell from, and everyone has to choose what's right for them.

But I did an episode on taxes with a woman who after that episode released as a follow-up a video about the taxation of credit card rewards and stuff. And I'm trying to do things legally. I'm not trying to skirt any corners. I'm trying to do all the things correctly.

And so the fact that you guys are trying to do as much of that as possible feels like a good place for me. - Yeah. - Might not be a good place for everyone else, but I like to do things by the book. - Yeah, and I think we're still figuring out a lot of the logistics of how to handle a lot of operations as well as the financial operations and stuff.

I mean, our company is a little bit over a year old, and we've been working on our own playbook, I guess, for this market because no one has really experienced the growth that we've had in this short amount of time. And obviously this has been propelled by Costco. We just built out a new vault.

There's another whole aspect to the operations side of things. And so the biggest thing for me is I like to be able to slow things down, go through them methodically, understand how to do everything in the right way. And we err on the side of precaution. So if there's an issue with a bank account getting disconnected, we're gonna reach out to that person.

If there's an issue with something getting tampered, we're gonna reach out to that person, and we're gonna provide as much information as we can. So we understand the perspective of what people are trying to do. But generally, the Costco segment of customers is like one part of our business, and we're happy to serve those.

But we also have a whole other side of the coin people, the dealers, the shops, and all this other stuff. And the way that the two sectors do business is very, very different. The expectations are much different. The ability to reconcile transactions is much different. So I think being able to cater to both markets is something that we're learning to be able to do.

But yeah, I have to keep my mind in two different areas when talking to different types of customers. - Let's jump to the other side. But first, real quick, I'll put a link in the show notes to Pure. Is there anything, if we put that link in, that someone might get?

- Yeah, so we have a referral program, so hopefully we can set something up. - Yeah, so whatever you come up with, I'll put it in the show notes. But one of the things that I've been thinking about is that other side of the market is people whose family has gold.

Whether those are old coins or even jewelry, where's the market for that? And I know that might not be something on the jewelry side that you guys participate in, but what advice would you give to someone who finds out that their grandparents or their parents have various kinds of gold and don't wanna get taken advantage of?

- I always tell people that if they're not comfortable with going somewhere online, then go to your local coin shop. And I'm gonna shout out all the local coin shops here because I'm still a big fan of the in-person business. I think if you find a collection or you have a collection that's passed down, generally, on the off chance that there's something quite valuable, a local coin shop could tell you very quickly.

I think the general stance is that doing research on Google and stuff is probably gonna lead you in the bad way. So I think the quickest and easiest search is just local coin shop. And then just go to whatever one has the best reviews. And so if you're able to decipher what items are what, then I think that Pure is probably a great place to go because then you can find your items very quickly.

We're happy to help you if you send us photos. But there's a network of really good coin dealers and shops out there that are a part of the P&G. That's essentially the Professional Numismatic Guild, and they're all very reputable. They have a coat of honor. It's very difficult to get in.

It's something that should be very prestigious to someone who's around that. And even in the Bay Area, there's multiple P&G dealers. And most of the shops we work with are on a certain level. So I'm happy to point someone to a shop if they're not comfortable with doing online experience.

And I do think there is something tangible to going in and being able to actually hear someone out and look at other items and understand the pricing. I think it's a very good educational experience. - What about the, I was walking downtown the other day and I saw this giant We Buy Gold banner.

Is that like a thing that should deter people? - I think that's like the worst possible place to go. I would compare the We Buy Gold to like the like check cashing places. Like, you know, they'll give you your payday like two weeks in advance. - Like at like 1,000% interest.

- Yeah, you're gonna get pretty raked going through that. - So a lot of these coin stores in the P&G group, you probably can't show up there with a bunch of gold jewelry, right? They're dealing in coins. - I've worked in shops before and generally most shops also act as a jewelry shop and they probably have a pawnbroker license and they will buy scrap gold.

But I think people expect a lot out of scrap gold. Obviously this isn't something you can sell on pure. Like we only take like assayed and marked gold. We're not gonna take jewelry. There's like way, way too much risk and like where it's from, what it's going on. So I think, you know, the protocols in a shop are probably the best place to go for jewelry.

And generally they're fairly, you know, pretty good about like being on, you know, payment and as well as like, you know, giving you a fair price and giving you an assay for them and stuff. So, and they may even pay you more for stones. You know, like if you have nice like stones within the jewelry, I think that's also a win.

Like they kind of act as a jewelry store as well. And that kind of keeps them in business when the coin industry is not like, you know, super hot like it is now, so. - Well, I wouldn't have thought that. So I'm glad you said it. I know that there are gonna be some people over the holidays find out their family has collections of gold or coins and with prices the way they've been the last year, I feel like people are probably gonna wanna figure out what that's worth.

And so going to a reputable coin shop, great suggestion. Where online would you send people to learn more about all of this? - One of them is PCGS coin facts. That will basically give you, it's like a massive database of every US and world coin possible. For pricing, I always look at auctions.

So like heritage auctions, Stacks Bowers galleries, those are kind of the big ones. And then just for like general information about how to become a numismatist is like the ANA is money.org. And that's kind of an organization that all numismatists should support at some point. And like, I'm a lifetime member, a lot of other people are lifetime members and there's not a lot of new members coming in, but I always think that that's good.

And then obviously like, go to a coin show, go to a local coin shop or go to your local coin club. Like you'll learn a lot. It may be boring for some people, but other people might find it to be very cool. And you might meet a lot of interesting people from the bullion sector that have crossed over into this coin world.

And maybe you'll be able to make money in the coin world too. - Do you think like garage sales and estate sales are places to-- - I think that those have already been fairly picked over. But I think that generally the best place to find coins is just a coin show.

- All right, this has been awesome. Any parting words for someone trying to get into the gold thing, things to avoid and common mistakes? - I would just avoid anyone who says the words tangible wealth or I hate the word safe haven. That's like a red flag to me.

If someone calls it a safe haven, you should probably look the other way. Anyone who's like fear mongering, like bad idea. Like you want to be able to figure out who's being transparent about their activities and kind of telling you what they're gonna make as well as you. So people get taken advantage of a lot.

So just keep your red flags up and just keep it going. - Perfect. All right, thank you so much for being here. And I'll send everyone links, collectpure.com. - Sweet. - Awesome.