May 30, 2023 • 11 mins
This episode marks the triumphant return of Breaking the Dollar after a long hiatus. Host Everett Millman recaps the many developments in his career since the podcast last aired. He also gives a firsthand account of what has been going on in the gold and silver bullion market over the past few years to provide insight into how the industry has dramatically changed over that time.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
This is Breaking the Dollar.
(00:05):
The podcast that dismantles some of the biggest misconceptions about money.
Presented by Gainesville Coins.
Hello everyone and welcome back.
(00:27):
Finally, at last, to another episode of Breaking the Dollar.
As always, I'm your host, Everett Milman.
And we have finally returned from our extended hiatus.
So this episode is going to recap why that was the case and explain in these intervening
years how the market for physical gold and silver bullion really transformed from 2020
(00:49):
to today.
So when I started this podcast back in 2019, the gold market was just beginning to wake
up from hibernation that lasted for over five years.
That summer in 2019, gold prices finally got back above $1,400 an ounce for the first
time since 2013.
There was a liquidity crunch going on with American banks, the gold price rallied, and
(01:14):
gold really never looked back after that.
So from my experience and what I've studied, I've always understood the precious metals
markets to behave very cyclically.
You get big price movements in these long cycles of seven to 10 years.
So this pattern basically fit that model.
As you can imagine, the renewed interest in gold and silver meant a lot more folks were
(01:36):
buying precious metals.
In fact, after the start of the COVID pandemic in 2020, we saw sales volumes that were on par
with the mania that occurred from 2009 to 2011 following the financial crisis.
It really was an all hands on deck situation at Gainesville Coins at that point.
And some of my projects like Breaking the Dollar ended up taking a backseat to other
(01:59):
priorities.
On top of that, the surge in metals prices meant that I was staying really busy with
other opportunities for media appearances.
So I've done almost weekly interviews with KITCO News.
They have two reporters who I really enjoy speaking with, Anna Golobova and Niels Christensen.
I've been a regular guest on the TD Ameritrade Network with Ben Lichtenstein.
(02:21):
I also had the privilege of appearing multiple times on other podcasts such as The Money
Life Show with Chuck Jaffe and Market Buzz with Mo Ansari.
I've also had an occasional spot on Bloomberg Radio and Reuters.
So I have been keeping myself quite busy.
My favorite of all these renewed relationships has been the pleasure of working with Jan
(02:44):
Nieuwenhuijs, who is a gold researcher and writer from the Netherlands.
And I can say that he is truly the most impressive and dedicated researcher that I've encountered
in the gold space.
Jan has a wealth of knowledge about gold's role in international reserves, how gold is
traded, and especially why gold will still play a part in the way the global monetary
(03:07):
system evolves in the future.
I really cannot recommend Jan's work enough.
It's been an honor for me to help him edit and publish more than a dozen articles
on the Gainesville Coins blog.
You should definitely check out his substack.
It's called the Gold Observer and he's also quite active on Twitter.
So that's what I've been doing during this prolonged absence from doing this podcast.
(03:30):
But let's also get into what's gone on in the actual metals markets because I can say
without any exaggeration that it has been pandemonium.
I'll explain more about that in a minute, but it's quickly worth examining how we've
had a perfect storm, so to speak, for gold prices to move higher.
So aside from the public being worried and flocking to gold during the pandemic, we've
(03:55):
of course experienced the highest inflation rates we've seen in four decades.
Historically, gold has a solid track record of maintaining its purchasing power as inflation
eats away at the real value of government currencies.
So naturally, this has been reflected in higher gold prices.
Central banks have continued to buy gold in record amounts.
There's been geopolitical strife, particularly between the West and China and of course,
(04:21):
the ongoing war in Ukraine, both of which have driven safe haven demand for gold.
There's also been widespread uncertainty about whether the world economy is teetering on
the brink of recession.
And more recently, there's been stress in the banking system as two medium sized banks,
the First Republic and Silicon Valley Bank, as well as a rather large bank Credit Suisse
(04:43):
have all failed already in 2023.
So if you're counting, that's three major bank failures in the span of about a month.
Anytime that people are worried about keeping their money in banks, understandably so, they
tend to turn to gold for safety and protection.
And if you've paid attention to the news lately, there's also this drama brewing in
(05:04):
Washington over whether or not the government is going to raise its self imposed debt ceiling
and avoid defaulting on its debt obligations.
So it's been the confluence of all of these factors really at once that have made gold
especially attractive as a hedge or a financial insurance policy, if you will.
(05:25):
Now let me address the pandemonium that I mentioned before, the uproar and chaos that has really
come to characterize the bullion market.
As metal prices have risen near their highest in a decade with gold around $2,000 an ounce,
there have been these persistent issues with supply chains.
Most dealers and wholesalers have faced difficulty in getting bullion products as quickly and
(05:49):
as easily from their suppliers as they once did.
So as a result, the premium on these products (and the premium being essentially the markup
over their melt value), those premiums have exploded higher.
This has mainly been true of government issued coins from government mints.
For more generic products like bars and silver rounds, you can still find some low premium
(06:14):
deals and I certainly encourage you to do so if you're planning on buying silver.
But gold coins and silver coins that come from official government mints like the United
States Mint, Royal Canadian Mint, Perth Mint in Australia, so on, these coins are all heavily
in demand by investors.
That the mints have basically not been able to keep up with that level of demand, which
(06:38):
is causing severe backlogs in the supply chain and consequently much higher premiums when
you buy these coins.
It has stubbornly remained an industry wide problem for the past, I'd say, three years.
So to illustrate, prior to 2020, I can distinctly remember that the premium over spot for an
(07:00):
American Silver Eagle coin, for instance, was consistently
around $2.50 to $3.
So that's roughly 10% to 20% of the value of the metal in the coin, depending on if the
silver price was at the top or the bottom of its range over that time period.
We're talking 10% to 20%.
(07:22):
Today that $3 premium has become more like a $15 to $20 premium, meaning you're paying
almost double the coin's melt value, which is a 100% premium compared to 20% back in
the day.
So understandably, a lot of people are angry about this, but it's really economics 101.
(07:46):
Those premiums will climb and climb and climb until they reach the point that demand goes
down enough for the supply to catch up.
It's a problem that has affected the entire industry too.
It's not just one dealer, one wholesaler, or even one mint.
So in addition to that, as private mints and private suppliers of gold and silver have
(08:08):
had to pick up the slack and pump out more products as an alternative to Silver Eagles
and other government-issued silver, it's led to significant delays in the shipment of those
products.
Things that used to take a week or two to get processed and shipped out are now taking
six weeks or seven weeks.
And this has gone on now for multiple years.
(08:31):
It's incredibly frustrating for the people who are consistently buying precious metals.
I see it firsthand all the time, and I do deeply empathize with those frustrations.
Nobody wants to pay for something and wait two months to receive their product while
a company holds on to their money, but that really is the reality that we're stuck with
right now.
(08:53):
I'll also point out that one of the main reasons that the delays bother people I suspect
is that they're trying to flip their metals quickly to make a quick profit.
Not that there's anything wrong with that, but in my opinion, I generally look at precious
metals more like an inflation-resistant savings account.
So ideally, you should be holding them for the long run.
(09:16):
This problem with delays also gets exacerbated because the flood of new orders of people
buying metals never seems to stop coming in.
Those high sales volumes that I mentioned earlier really have not come down for three
years.
So even when the metal prices are high as they are right now, the volume of buying is
(09:37):
stronger than I've ever seen in my 10 years at Gainesville Coins.
Nonetheless, I mean, I have eagerly been waiting for this situation to revert back to what
I knew in the previous seven or eight years prior to all this madness.
But the longer that it goes on at this point, the less likely it seems that we'll ever get
back to the way it was before.
(09:59):
We could, but I'm not banking on it.
In the meantime, until things do normalize, I would suggest trying to buy privately minted
bullion products as a cheaper alternative and remain as patient as you can with the delayed
shipping times.
Just keep in mind that an online bullion dealer or even your local coin shop are having to
(10:21):
deal with those same problems with shipping delays from their own suppliers.
And moreover, those higher premiums we talked about don't necessarily mean that the profit
margins for gold dealers are actually any higher because the price that they have to
pay to wholesalers has skyrocketed by the same amount.
So just keep that in mind.
We are all really in the same boat here.
(10:44):
Thank you so much for listening to this episode of Breaking the Dollar.
If you enjoyed the show, consider leaving us a review, it helps other people find the
podcast.
Breaking the Dollar is brought to you by Gainesville Coins, one of North America's largest gold
and silver bullion dealers.
Visit GainesvilleCoins.com to shop for gold, silver, and platinum at the lowest prices
in the industry.
This is Breaking the Dollar.
(00:05):
The podcast that dismantles some of the biggest misconceptions about money.
Presented by Gainesville Coins.
Hello everyone and welcome back.
(00:27):
Finally, at last, to another episode of Breaking the Dollar.
As always, I'm your host, Everett Milman.
And we have finally returned from our extended hiatus.
So this episode is going to recap why that was the case and explain in these intervening
years how the market for physical gold and silver bullion really transformed from 2020
(00:49):
to today.
So when I started this podcast back in 2019, the gold market was just beginning to wake
up from hibernation that lasted for over five years.
That summer in 2019, gold prices finally got back above $1,400 an ounce for the first
time since 2013.
There was a liquidity crunch going on with American banks, the gold price rallied, and
(01:14):
gold really never looked back after that.
So from my experience and what I've studied, I've always understood the precious metals
markets to behave very cyclically.
You get big price movements in these long cycles of seven to 10 years.
So this pattern basically fit that model.
As you can imagine, the renewed interest in gold and silver meant a lot more folks were
(01:36):
buying precious metals.
In fact, after the start of the COVID pandemic in 2020, we saw sales volumes that were on par
with the mania that occurred from 2009 to 2011 following the financial crisis.
It really was an all hands on deck situation at Gainesville Coins at that point.
And some of my projects like Breaking the Dollar ended up taking a backseat to other
(01:59):
priorities.
On top of that, the surge in metals prices meant that I was staying really busy with
other opportunities for media appearances.
So I've done almost weekly interviews with KITCO News.
They have two reporters who I really enjoy speaking with, Anna Golobova and Niels Christensen.
I've been a regular guest on the TD Ameritrade Network with Ben Lichtenstein.
(02:21):
I also had the privilege of appearing multiple times on other podcasts such as The Money
Life Show with Chuck Jaffe and Market Buzz with Mo Ansari.
I've also had an occasional spot on Bloomberg Radio and Reuters.
So I have been keeping myself quite busy.
My favorite of all these renewed relationships has been the pleasure of working with Jan
(02:44):
Nieuwenhuijs, who is a gold researcher and writer from the Netherlands.
And I can say that he is truly the most impressive and dedicated researcher that I've encountered
in the gold space.
Jan has a wealth of knowledge about gold's role in international reserves, how gold is
traded, and especially why gold will still play a part in the way the global monetary
(03:07):
system evolves in the future.
I really cannot recommend Jan's work enough.
It's been an honor for me to help him edit and publish more than a dozen articles
on the Gainesville Coins blog.
You should definitely check out his substack.
It's called the Gold Observer and he's also quite active on Twitter.
So that's what I've been doing during this prolonged absence from doing this podcast.
(03:30):
But let's also get into what's gone on in the actual metals markets because I can say
without any exaggeration that it has been pandemonium.
I'll explain more about that in a minute, but it's quickly worth examining how we've
had a perfect storm, so to speak, for gold prices to move higher.
So aside from the public being worried and flocking to gold during the pandemic, we've
(03:55):
of course experienced the highest inflation rates we've seen in four decades.
Historically, gold has a solid track record of maintaining its purchasing power as inflation
eats away at the real value of government currencies.
So naturally, this has been reflected in higher gold prices.
Central banks have continued to buy gold in record amounts.
There's been geopolitical strife, particularly between the West and China and of course,
(04:21):
the ongoing war in Ukraine, both of which have driven safe haven demand for gold.
There's also been widespread uncertainty about whether the world economy is teetering on
the brink of recession.
And more recently, there's been stress in the banking system as two medium sized banks,
the First Republic and Silicon Valley Bank, as well as a rather large bank Credit Suisse
(04:43):
have all failed already in 2023.
So if you're counting, that's three major bank failures in the span of about a month.
Anytime that people are worried about keeping their money in banks, understandably so, they
tend to turn to gold for safety and protection.
And if you've paid attention to the news lately, there's also this drama brewing in
(05:04):
Washington over whether or not the government is going to raise its self imposed debt ceiling
and avoid defaulting on its debt obligations.
So it's been the confluence of all of these factors really at once that have made gold
especially attractive as a hedge or a financial insurance policy, if you will.
(05:25):
Now let me address the pandemonium that I mentioned before, the uproar and chaos that has really
come to characterize the bullion market.
As metal prices have risen near their highest in a decade with gold around $2,000 an ounce,
there have been these persistent issues with supply chains.
Most dealers and wholesalers have faced difficulty in getting bullion products as quickly and
(05:49):
as easily from their suppliers as they once did.
So as a result, the premium on these products (and the premium being essentially the markup
over their melt value), those premiums have exploded higher.
This has mainly been true of government issued coins from government mints.
For more generic products like bars and silver rounds, you can still find some low premium
(06:14):
deals and I certainly encourage you to do so if you're planning on buying silver.
But gold coins and silver coins that come from official government mints like the United
States Mint, Royal Canadian Mint, Perth Mint in Australia, so on, these coins are all heavily
in demand by investors.
That the mints have basically not been able to keep up with that level of demand, which
(06:38):
is causing severe backlogs in the supply chain and consequently much higher premiums when
you buy these coins.
It has stubbornly remained an industry wide problem for the past, I'd say, three years.
So to illustrate, prior to 2020, I can distinctly remember that the premium over spot for an
(07:00):
American Silver Eagle coin, for instance, was consistently
around $2.50 to $3.
So that's roughly 10% to 20% of the value of the metal in the coin, depending on if the
silver price was at the top or the bottom of its range over that time period.
We're talking 10% to 20%.
(07:22):
Today that $3 premium has become more like a $15 to $20 premium, meaning you're paying
almost double the coin's melt value, which is a 100% premium compared to 20% back in
the day.
So understandably, a lot of people are angry about this, but it's really economics 101.
(07:46):
Those premiums will climb and climb and climb until they reach the point that demand goes
down enough for the supply to catch up.
It's a problem that has affected the entire industry too.
It's not just one dealer, one wholesaler, or even one mint.
So in addition to that, as private mints and private suppliers of gold and silver have
(08:08):
had to pick up the slack and pump out more products as an alternative to Silver Eagles
and other government-issued silver, it's led to significant delays in the shipment of those
products.
Things that used to take a week or two to get processed and shipped out are now taking
six weeks or seven weeks.
And this has gone on now for multiple years.
(08:31):
It's incredibly frustrating for the people who are consistently buying precious metals.
I see it firsthand all the time, and I do deeply empathize with those frustrations.
Nobody wants to pay for something and wait two months to receive their product while
a company holds on to their money, but that really is the reality that we're stuck with
right now.
(08:53):
I'll also point out that one of the main reasons that the delays bother people I suspect
is that they're trying to flip their metals quickly to make a quick profit.
Not that there's anything wrong with that, but in my opinion, I generally look at precious
metals more like an inflation-resistant savings account.
So ideally, you should be holding them for the long run.
(09:16):
This problem with delays also gets exacerbated because the flood of new orders of people
buying metals never seems to stop coming in.
Those high sales volumes that I mentioned earlier really have not come down for three
years.
So even when the metal prices are high as they are right now, the volume of buying is
(09:37):
stronger than I've ever seen in my 10 years at Gainesville Coins.
Nonetheless, I mean, I have eagerly been waiting for this situation to revert back to what
I knew in the previous seven or eight years prior to all this madness.
But the longer that it goes on at this point, the less likely it seems that we'll ever get
back to the way it was before.
(09:59):
We could, but I'm not banking on it.
In the meantime, until things do normalize, I would suggest trying to buy privately minted
bullion products as a cheaper alternative and remain as patient as you can with the delayed
shipping times.
Just keep in mind that an online bullion dealer or even your local coin shop are having to
(10:21):
deal with those same problems with shipping delays from their own suppliers.
And moreover, those higher premiums we talked about don't necessarily mean that the profit
margins for gold dealers are actually any higher because the price that they have to
pay to wholesalers has skyrocketed by the same amount.
So just keep that in mind.
We are all really in the same boat here.
(10:44):
Thank you so much for listening to this episode of Breaking the Dollar.
If you enjoyed the show, consider leaving us a review, it helps other people find the
podcast.
Breaking the Dollar is brought to you by Gainesville Coins, one of North America's largest gold
and silver bullion dealers.
Visit GainesvilleCoins.com to shop for gold, silver, and platinum at the lowest prices
in the industry.
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