Physical Gold through the Coronavirus Chaos

Published on
March 30th, 2020
Duration
50 minutes


Physical Gold through the Coronavirus Chaos

The Expert View ·
Featuring Simon Mikhailovich

Published on: March 30th, 2020 • Duration: 50 minutes

When disaster strikes, it is critical to have an insurance policy. Simon Mikhailovich, co-founder of The Bullion Reserve, joins Real Vision to explain what the global coronavirus shutdown has meant for the global economy and financial markets through the lens of the gold market. He explains how both gold refineries and bullion dealers are dealing with accelerated supply and demand pressures because of refinery shutdowns and a significant step up in demand from investors looking to protect their wealth. He examines why the dip in gold prices is normal behavior for gold during the early stages of a crisis, how gold acts as insurance, and why the prices of physical gold and paper gold derivatives have diverged so dramatically in recent weeks. Finally, Mikhailovich reveals why the recent bounce in markets is a gift for investors and the most important factors to look when implementing gold as insurance against financial calamity.

Comments

Transcript

  • VK
    Vipin K.
    11 April 2020 @ 08:03
    You guys get the experts that is what is unique to RV
  • DP
    D P.
    4 April 2020 @ 19:31
    Always a pleasure to hear from Simon Mikhailovich. One of the most eloquent and wise voices in finance.
  • YW
    Yowshi W.
    1 April 2020 @ 23:03
    Listening to this, gold seems so archaic.. there has to be a better insurance
    • JL
      Jack L.
      2 April 2020 @ 03:32
      Does there? Imagine, a monetary substance that has survived & retained its value through every single horrible human conflict of the last 5000+ years. I hold a basket of public cryptocurrencies as a call option on some future restructuring of global finance but I'm weighted far heavier in PMs. If and when sh*t truly goes down I have a lot more faith in gold/silver's proven track record as SoV's.
  • LQ
    Leslie Q.
    1 April 2020 @ 09:57
    A truly wise and informative view of physical gold. The way Simon simplifies the current situation is brilliant.
  • AW
    Andrew W.
    1 April 2020 @ 05:38
    Not only fantastic information but a genuinely lovely person! Really enjoyed his wrap up and the sage advice that we have a golden opportunity to put plans while there is a lull due to the massive injections by the Fed. Same is happening in Australia and although Simon mentions OTC shops in Melbourne we do have secure bullion dealers such as Ainslie that sell,buy and store gold and silver as well as Gold & silver crypto tokens
  • AC
    Andrew C.
    1 April 2020 @ 04:13
    local gold shops in Bangkok? Closed ! Not an essential service! I couldn't even buy masking tape for some hobbies to keep the family entertained during the "lock-down" !
  • MS
    Matt S.
    1 April 2020 @ 03:24
    seriously f**k RVTVs lack of buffering!!!! Fix It!!!!!!
  • CT
    Crispim T.
    31 March 2020 @ 23:05
    This is why Bitcoin is the new gold. Almost all the advantages, with a lot less limitations.
  • AH
    Andrew H.
    30 March 2020 @ 13:13
    Bitcoin. Near instant settlement. No flying to other countries when sh!t hits the fan.
    • SM
      Simon M. | Contributor
      30 March 2020 @ 15:27
      Validation of all Bitcoin transactions relies on the functioning cyber environment and unimpeded access to the global networks. Just as logistics networks can get disrupted by a bio hazard, cyber networks can be disrupted by the cyber warfare, electrical outages, government sanctions, etc.
    • ME
      Michael E.
      30 March 2020 @ 16:49
      Compare 5,000 history to 10 years. Gold is real money, BTC is a tool.
    • ME
      Mina E.
      30 March 2020 @ 17:36
      Bitcoin is extremely resilient. There have been transactions conducted over ham radios. If all the electricity and networks are offline, things would be so bad that gold would be the least of your concerns.
    • JL
      Jack L.
      30 March 2020 @ 21:08
      Apparently over 60% of bitcoin hashrate comes from China specifically: https://www.forbes.com/sites/youngjoseph/2019/12/12/new-report-shows-china-dominates-bitcoin-mining-is-this-a-sign-of-worry/#26ef669d42e1 What happens to the "digital gold" narrative -- this supposedly-unassailable store-of-value -- when China decides to manipulate or destabilize Bitcoin by clamping down on China-based miners? They could either go after miners at the network level (more-severe firewalling, etc.) or go after them physically, showing up at (mostly) makeshift mining datacenters with armed police and shutting them down. What happens to physical gold's basic characteristics in the above scenario, by comparison? Cryptocurrency in SOME form or another is no doubt in the world's future as a major component of the financial system. It has important characteristics of divisibility, portability, low custodial & TX costs, etc. that gold cannot match -- but all cryptocurrencies are *inherently* full of counterparty risk because it depends heavily on the good graces of the major governmental powers for its viability -- it is highly debatable whether it will replace gold on any forseeable time horizon. I don't believe it will be until the G5 (or 7, or 8, or 12) countries formally sit down & hash out (no pun intended) a "Bretton-Woods-of-Crypto" agreement that one or more gov't-backed cryptocurrencies will become an institutional-grade, regulatory-compliant store of value.
    • PS
      Pavel S.
      31 March 2020 @ 19:43
      When Ethereum transitions to proof of stake consensus algorhythm, we will not need miners. All the arguments in this thread against crypto are the "let me think what could go wrong TODAY" but crypto is about the future and what it will be in 10 years. Not having 1-5% of your net worth in crypto is potentially your biggest investment mistake lifetime.
  • RE
    Renato E.
    30 March 2020 @ 18:27
    BTC enthusiasts against Gold bugs in 3..2..1. You see it already in this thread. I own both, but BTC fans should think about the possibility that the powers-to-be might be able to undermine the trust of BTC before it goes main stream. How? Just compromise the most known crypto exchanges or take them offline. You don't have to steal every BTC on those exchanges to destroy trust, just demonstrate that crypto exchanges can be hacked from time to time (e.g. by targeting exchange admins, providers etc.). You can buy zero day exploits for every major application or OS on the black market - Government organizations use them already for quite some time. BTC is not main stream yet and Governments are working hard on their own crypto solutions. I see the potential of BTC, but also the risk of a massive Gov intervention before BTC has the chance to establish itself as the go-to solution. Time will tell, but don't count on the security mechanisms implemented by crypto exchanges...
    • SB
      Stephen B.
      30 March 2020 @ 19:49
      I agree with you but come at the question from a slightly different perspective. My approach: (i) The worlds Central Banks (coordinated by the BIS) have total control over the worlds currency's; (ii) No CB has suggested that they would be willing to give up that control. On the contrary, they have been floating academic papers etc, suggesting that the world needs a new global digital currency, solely controlled by them; (iii) the threats to their plans are cash, PM's and crypto's; (iv) they are engaged in a war on cash and, through proxy's. keep a lid on PM prices; (v) That leaves Bitcoin and other crypto's. How robust would support for Btc. be if subject to a concerted market supression effort?
    • JM
      James M.
      31 March 2020 @ 15:11
      The corporate crims dont have to destroy,steal,break,interrupt etc btc or any other asset, as they have demonstrated many many times they can just create lil digits on a screen and buy every asset available on any market, Gold, Crypto, Comms, Ag, Real Estate, anything u name it .... No?
    • PS
      Pavel S.
      31 March 2020 @ 19:38
      We do not need exchanges anymore. There are already decentralised exchanges built on top of ethereum. Centralised exchanges is like cars driving in the sand roads after horse carriages before we built proper asphalt roads. BTC vs GOLD is an old debate, bitcoin wins.
  • MT
    Mark T.
    31 March 2020 @ 17:57
    Simon M. is great. I appreciate his perspective and wisdom derived from it.
  • Sv
    Sid v.
    31 March 2020 @ 17:22
    very useful
  • AN
    An N.
    31 March 2020 @ 05:34
    stonks
  • DM
    Douglas M.
    31 March 2020 @ 04:35
    I hit "play" and then "like" before I heard even one word. Of course, I've been drinking a bit, but this guys' stuff is always good so it's a safe roll of the dice.......
  • RS
    R S.
    30 March 2020 @ 23:00
    U.S. Mint selling one ounce gold coins today for $2,175 on its website. Incredible.
    • KM
      Klayt M.
      31 March 2020 @ 04:10
      JM Bullion still has Buffalo coins available for around $1870ish. How many, who knows?
  • CB
    Chris B.
    30 March 2020 @ 23:21
    This was an excellent video so thanks to RV and especially to Simon. I find his talks to be educational and his logic is always clear. On this sounding like a promotional video I respectively disagree. Having listened to many videos by Simon to me it is clear he established a business around his working philosophy. So, it is hard to talk about the philosophy without promoting his business as they are one in the same.
  • MV
    Max V.
    30 March 2020 @ 06:11
    Now that Grant is gone... please get us more Simon.
    • PE
      Patrick E.
      30 March 2020 @ 08:36
      What happened to Grant?
    • TM
      The-First-James M.
      30 March 2020 @ 15:34
      Would recommend you find and watch the "Thankyou Grant Williams" video.
    • SB
      Stephen B.
      30 March 2020 @ 19:55
      I did but i don't think it actually said what has happened to Grant. Health issues? Management disagreements? He wants to sit on a beach somewhere? I wish they would treat us like grown up and just come and say. The uncertainty is killing me :)
    • ND
      Noel D.
      30 March 2020 @ 22:39
      Grant going strong at TTMYGH.
  • II
    IDA I.
    30 March 2020 @ 18:24
    I do respect Simon Mikhailovich , but I would prefer you interview him on something he doesn't sell or earn commission from. I understand that he is authoratative, but it is not an impartial interview....
    • SS
      Simeon S.
      30 March 2020 @ 20:58
      Totally agree, views like a promotion video
  • JE
    James E.
    30 March 2020 @ 20:37
    Great video.
  • DS
    David S.
    30 March 2020 @ 10:32
    It is reasonable that holding physical gold in a “completely secure” location is better than owning paper gold in a "secure" location. Gold has always been scarce and in demand in good times and even more so in trouble times – an exception is Voltaire’s Candide. If I were wealthy, I would happily go through the setup to buy physical gold. Alas, as the world’s smallest family office, I do not want to go through the setup problems and long-term commitment. Currently I am waiting for the gold price to go down further as I expect leverage problems in the next leg of the Bear Market – different discussion. I normally trade a combination of AAAU, SGOL, NG and GLD. Being old my fear gauge is off the wall and my greed gauge is attenuated. I do like to have a 5-10% paper gold allocation in my Roth IRA – tax considerations. If I lost faith in jumping in and out of paper gold, I would probably look to Bitcoin. I do not give investment advice. I will tell you what I am doing. Good Night. Be safe. DLS
    • JA
      John A.
      30 March 2020 @ 12:55
      Hi David. Always great commentary. I would suggest that NOTHING replaces ownership of physical gold. I have seen reports that show up to 400 futures traded for every ounce in existence. That means 400 people who THINK they can take delivery of those ounces. Also, physical has no counterparty. Considering what is happening in China and Hong Kong right now, I’m not sure I would want to trust HSBC (the custodian of GLD) right now. At a time when we can’t trust management or their books, owning physical is a way to diversify your risks, counterparty risk being one of them. Best wishes.
    • DS
      David S.
      30 March 2020 @ 20:36
      Hi John. I agree with your points. I do not expect any of the following to happen, but there is always counterparty risk in any investment. Gold can be stolen, debased etc. There is still a trust issue with any company holding your gold. There is the government confiscation without compensation risk. The oldest game in the world is debasing gold coinage/bars. All these counterparty risks are magnified with paper gold. When times change, I will change. If the market tanks, I would prefer to buy solid corporations with my cash. Even in German hyperinflation, companies that made it through the debasement turned out to be good investments. If I lost my positions in paper gold, I would still be OK. Thanks again for your comments. Isolation is making me a little stir crazy. No time to socialize at the micro-brewery. Beer, food and wine are better with people. Be safe. DLS
  • EP
    Eric P.
    30 March 2020 @ 13:08
    Does anyone have first-hand experience with BullionVault.com?
    • TW
      Tim W.
      30 March 2020 @ 13:23
      Yes I trade silver & gold - never had any problems, even in the past week when spot & futures diverged
    • JB
      Johan B.
      30 March 2020 @ 15:40
      Used them for years. Works fine.
    • ES
      Edward S.
      30 March 2020 @ 17:09
      Until you want your gold in your hand, only in 400oz bars with a 3-5% withdrawal fee
    • SH
      Stu H.
      30 March 2020 @ 17:10
      Yes, used them since 2012 for a portion of my PM portfolio. Very happy with their service, the next best thing to holding it in your hand.
    • JR
      John R.
      30 March 2020 @ 19:57
      Have held gold, silver and platinum with them since 2009 in their Zurich vault. Very happy with the service. Will be buying additional silver with them tomorrow.
  • CD
    Christopher D.
    30 March 2020 @ 18:25
    Absolutely excellent, I love the - historic contextualisation, - flipping upside down the inert slab of metal argument with North Star comparison, - the normality of widening spread between physical & synthetic markets - money & relationship in the USSR economics of scarcity - common sense in how to set up operations, - etc. Simon is giving away so much that lay people do not normally think about. Well worth the 50mins of your time.
  • SS
    Stephen S.
    30 March 2020 @ 17:49
    Thank you Simon. From your comments I would expect securities like Sprott Physical Gold Trust to be trading at higher premiums to spot that they are. What am I missing? Is there that much border risk between the US and Canada? Tamara Sheldon
  • ES
    Edward S.
    30 March 2020 @ 17:13
    It is always a pleasure to listen to Simon, Golden advice as always
  • wb
    willem b.
    30 March 2020 @ 08:51
    Perth Mint is still open & you can still switch from Unallocated to Allocated. Steady mine supply from mines in WA
    • PF
      Pierre F.
      30 March 2020 @ 09:18
      Anywhere else?
    • CW
      Chris W.
      30 March 2020 @ 10:25
      @Pierre F. ABC Bullion in Sydney. You can buy into their pool allocated and convert into physical gold at any time.
    • ES
      Edward S.
      30 March 2020 @ 17:12
      Bullion Capital is selling physical in 7 Global locations
  • RM
    Richard M.
    30 March 2020 @ 12:56
    *** Milton/RV ***, when was this video filmed (important information). Great video by Simon as usual, thanks!
    • NI
      Nate I.
      30 March 2020 @ 15:19
      Fortunately Simon mentioned that it was filmed on the March 26th, but I second your call for publishing the filmed date.
  • PU
    Peter U.
    30 March 2020 @ 09:15
    Dear RV, Please provide a wardrobe budget for your team! Thank you.
    • DS
      David S.
      30 March 2020 @ 10:35
      The Wall Street wardrobe has changed since the 60s and people are working at home because of the Coronavirus. DLS
    • SB
      Salvatore B.
      30 March 2020 @ 14:48
      I can't imagine watching a great interview and my takeaway and main concern is what someone wore.
  • AS
    Aki S.
    30 March 2020 @ 09:56
    Please bring back the "Filmed on.." information!
    • PW
      PETER W.
      30 March 2020 @ 14:31
      It is mentioned in the video that this was filmed on 26 March 2020.
  • DC
    D C.
    30 March 2020 @ 11:21
    Feature request: skip intro.
    • WM
      W M.
      30 March 2020 @ 14:13
      I use the CHAPTERS markers to skip to the content I'm interested in. Click on CHAPTER #1 and you'll skip the intro...
  • SW
    Sze W.
    30 March 2020 @ 12:51
    There r many Wuhan local reports that this virus emerged as early as Sep in Wuhan. The CCP covered it up until Jan when cases were reported overseas. Perhaps someone in the known tried to play the market causing spike in repo.
  • AW
    Abigail W.
    30 March 2020 @ 11:56
    You could still get gold coin or bar in China as retailer. Apparently it is now too expensive for Chinese ;-)
  • JH
    Jesse H.
    30 March 2020 @ 11:23
    I have watched all of the interviews with Simon over the years. As far as substance is concerned, this might just be the best one yet. Wow. So many gems here. You will do well if you heed his advice on finances and life preparedness in general. I count myself fortunate that I had the basic common sense and intelligence to listen carefully to him years ago.
  • TC
    Thomas C.
    30 March 2020 @ 10:48
    Good points ref the physical Gold delivery issue and arb to deriv price. He's got too vested interest to be objective ref Gold as an investment.
  • jj
    jesse j.
    30 March 2020 @ 06:36
    Got it, shorting gold miners for now.
  • ML
    Mike L.
    30 March 2020 @ 05:22
    I haven't even watched the video yet and I'm excited! Ithoroughly enjoyed Simon's opinion during gold vs bitcoin week. Please also bring back Greg Weldon.