00:00 Julie
Joe, thanks for being here. So, let’s go with physical gold first, right? This is this what I think most people are most familiar with, right? Because most people have some form of physical gold at home, whether it’s jewelry or coins or what have you. What are sort of the benefits and disadvantages of holding physical gold?
00:20 Joe
Sure, look, Julie, thanks for having me on and I think the topic of gold right now couldn’t be better placed in terms of having it on your program. So owning physical gold is an important thing to understand. Globally the gold market is an over-the-counter market and this is where most of gold trading takes place. What you need to understand and what you need to appreciate when you’re transacting in the space is understanding the shape, size, weight of the type of gold you’re purchasing and actually the physical element and what that means. That means you need to find a place to store it, you need to ensure the place to store it, and you need to deal with the logistics of moving it to and from that location for storage. That’s probably the biggest element that people need to understand when they think about investing in gold. In addition, you may have to do a little more work to understand the pricing dynamic of what it is you’re buying. If you’re buying a coin or a bar, there may be a premium attached to the price that you regularly see in the media or on a screen. You just need to understand what that is and do a lot of good work to make sure that you’re getting the right kind of pricing when you’re looking to sell, not getting deep discounts. When it comes to jewelry, less liquid, but definitely something you could use if you’re definitely looking at long-term store of value. But I’d say that right now, if you’re looking at the physical market, understanding the logistics of moving it and storing it, probably the key component.
01:53 Julie
And Joe, if you don’t want to bother with the logistics of moving it and storing it, then you might go for something like a gold-backed ETF. GLD is the biggest of those. Um, so walk us through what what the advantages are there.
02:11 Joe
Sure. These are really instruments that are well-designed physically owning gold in a vault, doing all of the logistics I just talked to on your behalf for a management fee. Simply put, as easy as buying or selling a stock is how you are buying and selling an exchange traded fund that is owning physical gold. Where I think it’s important for people to pay close attention is understanding specifically what the instrument’s holding. Those that are fully backed, fully owning gold bars in a vault will track the price net of a cost that management fee and that’s actually a very good proxy for owning gold. If you’re looking at levered or inverse instruments, or instruments that use derivatives or like you mentioned maybe mining stocks, you won’t get the same price performance that you’re expecting if you’re looking just at the gold price. So just know the type of underlying that the asset holds and actually look at the types of liquidity that come along with it. But very liquid, very commonly used instrument and actually right now, being adopted worldwide. This is what’s really kind of exciting about the ETF space, growing in China, growing in India as an instrument of owning gold versus the historical volumes of gold being bought in the physical space in those markets, but obviously very pronounced in terms of a US presence.