Andy Schectman talks about why it’s still a good time for investors to consider bullion, what precious metals he sees as the most exciting this year and how blockchain can help the mining industry.
At this year’s Sprott Natural Resource Symposium, the Investing News Network (INN) caught up with Andy Schectman, president of Miles Franklin.
Speaking about the state of the market, Schectman shared his thoughts on how to approach this season.
“I think you accumulate precious metals as often as you can. And if it’s subsidized and inexpensive, it makes it that much more attractive,” Schectman said.
He added that when investors buy bullion they should “take a minute to see who [they’re] working with. It’s a whole lot better than saving $1 or $2 on a gold coin or 50 cents on a silver coin to work with the company that will deliver your metal.”
For new investors, he suggested they stick with American and Canadian mint products.
Watch the video above or read the transcript below to learn more about Schectman’s thoughts on precious metals. You can also click here to view our full Sprott 2018 playlist on YouTube.
INN: We’re here at this Sprott show in Vancouver. How are you finding the event so far?
Andy Schectman: It’s the best show in the whole year’s calendar. It’s really the only one that I circle every single year. It’s the best to the best. Rick Rule, who runs the show, personally vets everyone. That’s really important, a lot of the shows that I’ll go to. It’s more long lines of who can pay to come and have a booth and exhibit. It’s the antithesis of that here, it’s the best and the brightest and people who have good reputation. So, aside from the people exhibiting, the people here, the quality of the attendees are as good as you’ll ever find. If your listeners and viewers are wondering what show to pick out for next year, this is the only one that I circle, for sure.
INN: In the current state of the market, it’s a bit slow and it’s summer, is it still a good time to invest in bullion?
AS: You know, to me, investing in bullion, I typically take the work investment out when I think of bullion. I would be disingenuous if I wasn’t keenly aware– if I said I wasn’t keenly aware about what the prices are doing, to me, gold and silver are wealth. Especially in times of uncertainty, it’s that much more important. And, you know, if you can buy wealth on sale, if you can buy inexpensively, and just about every metric, it’s undervalues. So, yes, I do believe it is. And I think you accumulate precious metals as often as you can. And if it’s subsidized and inexpensive, it makes it that much more attractive. Absolutely.
INN: For new investors that might be wanting, let’s not say invest, but buy bullion, what would you say it’s the best approach?
AS: Sure, absolutely. First of all, it’s important to know that it’s a federally non-regulated industry. And somewhat of a Wild West. And I can’t state how important that is. My home state, the state of Minnesota, is the only state in America that regulates the precious metals industry. And as such, we are behold into the Commission of Commerce with background checks of all our employees, and continuing education in a compliance that no one else in America has to abide by.
The significance of that, it’s pretty significant, it’s few fold. Number one, I don’t know of any companies that have taken the time outside of Minnesota to register in the state. They’re just more or less boycotting Minnesota so they don’t have to be subservient to those regulations. But number two, in the last four years, three of the biggest companies in America, online retailers, have gone bankrupt, defunct. Their presidents and owners are in prison, and they have stolen accumulative north of $150 million that will never be recaptured. Just last year, it was Northwest Territorial Mint, they were the biggest online. They had a huge presence, always inexpensive; $25 million stolen from 3,000 clients, and their owners are in prison.
So to me, the first thing you do is due diligence upon the company whom you’re working with. If I could bet myself on the back aside for our Minnesota regulations, we’ve been in business for 29 years. We’ve done north of $5 billion in sales. We have never had a customer complaint, not one. You can spend all day online looking for one, you won’t find one. To me, that piece of mind is worth something and should carry a value. There are lots of good companies out there. The morale of the story is really take a minute to see whom you’re working with. Check the reputation. Check the Better Business Bureau. Do a little digging. It’s a whole lot better than saving a $1 or $2 on a gold coin or 50 cents on a silver coin to work with the company that will deliver your metal.
And then secondly, for new investors, people who are just getting into this arena, stick with American and Canadian mint products. That’s for this side of the pond, it is– I guess, an analogy will be Pepsi and Coke. It can’t go wrong. They’re widely recognized. They’re widely sought after. They’re very liquid. They’re non-subjective. It can’t get hurt by brand new minted US Eagles and Canadian Maple Leafs. Can’t go wrong; both gold, silver or platinum.
INN: This year, is there a particular precious metal that you see as the most exciting? Why?
AS: Yes. So, it’s kind of two-fold. Silver and platinum, to me, are amongst the two most undervalued assets on the planet. If I look at silver, to me, I see a metal that’s really gotten beaten down. But if you take a step back and take a look at what JP Morgan is doing, JP Morgan is the most sophisticated, well-funded, well-informed, conglomerative traders on the globe. They are the top of the food chain. According to Ted Butler, who is an analyst who I admire and follow, he will tell you that they have a mass north of 800 million ounces of physical silver in their house account. Now, that’s a number that is shockingly large. In fact, it’s the largest stockpile of silver the world has ever seen at one time. It is eight times the position that the Hunt brothers try to corner in 1980. This is a monster position. They’re doing so in a very clandestine, secretive manner. It took an awful a lot of research by Mr. Butler to pry this out. But when you see the most sophisticated, well-funded, well-informed traders on the globe massing such an enormous position many times what the world has ever seen at once, it should be very illuminating and give hope to those people who are a little depressed by a deflated depressed silver price.
And if we look at platinum, today, the platinum to gold ratio, meaning if you were to trade your gold for platinum, reached the lowest level it’s ever been in history. Meaning, that right now platinum is drastically undervalued. For most of my career, platinum would trade at a few $100 premium to gold. I can remember just a few years back, gold at $850 and platinum at $2,300. I think that was somewhere 2010-11. The morale of the story is platinum is many times more rare than gold, it’s always traded at a premium. And today, it’s at about a $400 discount. It is at the greatest disparity that I’ve ever seen. In fact, in the history of the two metals, going back as far as you can find, you will never find a better opportunity to trade your gold for platinum or just to buy platinum.
Rick Rule is always a big fan of saying, “buy things on sale. Buy things when they’re cheap.” And I think that’s solid advice. But you know what, it’s really hard to do. It’s hard to catch a falling knife. But since we are little kids, everyone always said, “buy low, sell high.” Easier said than done. But I can assure, taking a position at these subsidized levels, looking at the world in front of us, don’t forget, just make it real simple. We have a $22 trillion debt and $150 trillion in unfunded liabilities, and a trillion seconds ago, it was 31,688 years ago. The numbers are so big. You have to protect yourself with precious metals. And in the best of times, people should have a 5 percent to 10 percent allocation. And I don’t think these are the best of times. So, as far as I’m concerned, there’s great value in platinum and in silver. And even though I look at them as wealth, maybe not such as an investment, I think you’re looking at buying opportunity of a generation in both investments in both metals that can really, really, really super charge a bang for your buck.
INN: A couple of days ago, you gave a presentation about blockchain and how it can help the mining industry. Can you talk a little bit about that?
AS: Certainly. To me, blockchain is summed up in one word and that’s disintermediation. Blockchain is really a kind of a buzzy word these days. And if something has blockchain attached to it, it gets excitement. For me, blockchain is really relevant but it’s also equally relevant is who’s behind the blockchain. You could have a blockchain in some Third World country that offers a great product. But you want to be able to know that the people standing behind it are solid. That to me is equally as important. As it pertains to this industry, one word I would associate with blockchain and that is disintermediation. It will cut out a lot of the fat. It will make the gold coming from the mine to the end user. It will create an environment that has far less friction, which will make it less expensive, and will create a better discovery for the participants within the ecosystem. Greater price discovery, greater transparency, greater liquidity. And so, blockchain certainly has a role in this market, but most importantly, who’s standing behind it. That to me is as equal importance as it is revolutionary the technology, that blockchain brings to the industry.
INN: My last question for you today, you also mentioned a bit about this Tradewind program. Can you share about what it is and why investors should look into it?
AS: Sure. And that kind of dovetails nicely into my last point. First of all, Tradewind is a consortium of three players. You have Sprott (TSX:SII), you have Goldcorp (TSX:G) and you have IEX Exchange. IEX Exchange is an exchange on Wall Street, have a really impressive pass in their own rights. Gold Corp. is a second or third largest gold producer in the world. And Sprott is, I think, a $10 or 12 billion probably trading company. But they’re all at the top of their game. They’re all at the top of the food chain. And if you look at the people behind the Tradewind program, behind the scenes of the blockchain and growing the infrastructure that they are bringing onto this ecosystem, the success is all but guaranteed. It’s a for sure you’re dealing with the best and the brightest in the mining industry, in the banking industry, in the bullion industry, all coming together in one ecosystem to bring gold to the end user in a much more efficient cost-effective transparent way.
A bullion retailer like myself, someone who’s been doing this for 29 years, it can be a little frightening to face something as game-changing as that is, but I think you either roll with the changes or you get rolled by it. When Sprott asked us to help launch a product that I knew very little about, only that I knew I had to have a piece of, it was something that I was very excited about. Getting to know the folks of Tradewind and the people behind it. I’ll tell you that I’ve never met finer people in all the years I’ve done this. I’m very, very excited for what the future holds. And if I had to make a statement about what is coming down the road, I would say to you that the blockchain, as it relates to bringing gold from the mine to the end user, will be defined by this type of program. It’s just the beginning. And I think everything in this industry is about to change dramatically.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.