Silver and Gold, Silver and Gold, Everyone Wishes for Silver and Gold...

Welcome once again to Mr. Stillman's Opus, joined this week by a very special guest, Richard Puccarelli. He's a financial advisor in the Charlotte metro area. I've known Richard for five or six years now, learned a lot from him in several aspects of life.

He's been a financial advisor for a long time, but before that a chiropractor, so I've learned a lot about the healthcare world. From Richard. Richard, thanks for being here, buddy. Not a problem.

Glad to be of service. I know that one of the things that you're big on is precious metals, so I wanted to get your perspective on several questions that I have in that realm. I'm not necessarily a huge proponent of precious metals, though I'm not opposed to people having some exposure or some percentage of their net worth invested in gold or silver or something like that, but I thought it'd be helpful for you to kind of explain to us, first of all, how you recommend people think about precious metals as a part of their portfolio.

Why is it a good idea to have some exposure there? There's currencies, there's commodities, and there's precious metals, so those are the five different asset classes, and true diversification would be diversifying into those five asset classes and then diversifying within each asset class, and that would give you the ideal diversification that you're looking for to protect you against all the potentialities out there. Now, right now, we live in a world that's in deep, deep debt. Worldwide debt, United States government debt, there's a lot of debt out there, and the paper, the paper money that we use to do business, to engage in commerce, that money is just basically a piece of paper with ink on it. It really doesn't have any value other than the value given to it by your government, and so throughout history, or at least since the advent of the Federal Reserve, you've had a devaluation of that currency. So a $20 gold piece back in 1915 bought a good quality suit, and today, a $20 gold piece still buys a good quality suit, so $35 an ounce versus $1,200 an ounce. You can see that gold actually retains its value, purchasing value, over time, but there have been times where crises, economic, financial crises have occurred, and having precious metals in your portfolio makes a big difference in terms of maintaining your purchasing power.

Now, if you're retired, and you retired with a million dollars, and we have a devaluation of our currency over the next 10, 15 years of 50%, 15 years from now, your lifestyle is going to change. So by allocating a portion of your assets into precious metals, you put yourself in a position where you're protecting against that devaluation, that enhanced devaluation that may be coming, and you put yourself in a position where you maintain your wealth, you maintain your purchasing power. I think it's a good idea to have a small portion, maybe a 5 to 10% allocation of your growth portfolio in precious metals so that you can protect against that potentiality. Now, when it comes to actually purchasing precious metals, there are several ways you can do it. You can own physical gold or silver that you have in a safe somewhere. You can own precious metals that is stored somewhere else. You can invest in funds that buy precious metals. You can invest in companies that do things like mining and things like that. So how do you recommend that people go about actually purchasing precious metals if that's something they want to do?

Well, you know, it depends on the individual, Jon. You know, if you have a day trader, then certainly there's a number of ETFs, mine and stock, that you can trade on a regular basis. But primarily for my clients, what I like to do is just have a portion of those assets in the hard asset, the real metal. And I like that metal to be stored at the Delaware Depository in Wilmington, Delaware, so that when the time comes to sell it, we just simply have to make a phone call and move that metal. Otherwise, if you take possession of the metals, which I don't have a problem with a small amount being in your possession, but a large amount, you've got to create it, insure it, ship it.

And by the time it gets where it needs to go, it needs to be assayed. They need to verify that it's real. By that time, the opportunity to sell may have just disappeared. So we use a custodian called Equity Institutional out of Ohio. They allow for a precious metal portfolio. I have a relationship with a precious metal broker. I don't actually buy the metals myself. And then what I do is I am an interested party on the account. There's no advisory fees on that account. It's simply a storage fee and an account fee on an annual basis.

So you're looking at $180 to $230 a year. And you buy the real metal. Now, right now, I'm recommending that people buy silver.

You certainly can buy gold, but I think silver has more upside potential, so I'm recommending silver. But no, they have the real metal. We start out with 1,000-ounce bars, 100-ounce bars, and then we do the silver rounds. Silver rounds are a lot cheaper. They have a lower premium than the actual coin like an American Eagle silver dollar. So you might have a higher premium on that Eagle versus the silver round. But that's the type of stuff that we buy for our clients.

And we store it at the Delaware Depository through Equity Institutional, who's the custodian. I think a lot of people, when they think about using precious metals as a hedge against everything sort of collapsing around them, they think of having gold coins, and if something happens to the world economy, they're backpacking around the Chattahoochee National Forest with a backpack full of gold. But that's not really the idea, right? You're truly just using it not as something that you're going to use for actual currency if everything goes to hell in a handbasket. Well, gold is not an investment. You don't earn interest on gold. You don't earn dividends on gold. Gold is just not an investment. It's money. So we've had situations in the world in history where the currency has collapsed.

It has no value. You look at the Weimar Republic, you look at the people fleeing South Vietnam. These things happen every now and then. The Brentwood, the system that we are functioning on today began after World War II.

That's 60, 70 years old. It doesn't last forever. Things change, and we are on the precipice of a financial reset.

So, no. Yeah, I don't have a problem with you having a few gold coins at home and some silver. I prefer that you buy junk silver, maybe an eighth of a bag, which is about 500 old quarters, you know, the 1964 quarters that have 90% silver. You know, have those in your possession if you need to barter at some point in time temporarily. But in the long run, I don't see that as being a viable concern. What we're trying to do is we're trying to maintain our wealth. So if I have $500,000 today, I want $500,000 in purchase and parlor in 10 years. And to do that, precious metals will help maintain that in the event that we do have a situation where devaluation occurs at a more accelerated rate. So, no, you don't want to have $100,000, $200,000 of gold and silver stored in your home.

You don't want to do that. What we're going to do is we're going to wait until the ratio between silver and gold approaches 25 to 1, 25 ounces of silver to buy 1 ounce of gold. That'll be our sell signal and we'll get out of precious metals at that point, take those dollars and put them into a secure location. Would you say there are any common mistakes you see people making on the precious metals front in terms of how they purchase, how they handle the holdings that they have? Is there anything that you see as sort of a recurring issue?

Absolutely. Don't buy off the TV ads. I mean, a lot of those institutions haven't been selling gold and silver but for the last seven, eight years.

You want to buy from a very reputable dealer. They're going to guarantee that they buy it back. They want to make sure they've been in business for a long, long time, that they know what they're doing, that they know how to position your gold and silver to maximize benefit and don't buy proofs. I mean, don't sit there and buy things that are going to have a higher premium. For example, you can buy a Saint-Gaudens or a Liberty $20 gold piece. We call those numismatic coins. Those are collector coins. But you're going to pay a significant premium above the spot price on gold to get that coin. That doesn't mean you shouldn't buy them.

I mean, if you like the collectible aspect of the coin, then sure, go ahead and do that. But you're going to pay another $300, $400, $500 an ounce for that coin when if you bought an American Eagle, the premiums are much, much lower. And if you buy Bullion, the premiums are much, much lower. So whenever you buy metals, you want to know what the premium is that day and whether or not that type of metal is appropriate to buy. What we have found recently, especially when we're buying silver, is that your 1,000-ounce bars, your 100-ounce bars, and the silver rounds are as close to spot price as possible.

So when you buy metals, you want to buy as close to spot price as possible, and then you want to make sure you store it properly, and then you want to make sure what the signal is for selling those metals. That's basically the approach you want to take. Richard Puccarelli, founder of Carolina Retirement Resources in the Charlotte metro area, a good friend and a wise fellow, I have to say. Richard, always good talking with you, my friend. Thank you. Hopefully that's some good insight for you, and we'll talk to you again very soon right here on Mr. Stillman's Opus. Have a great week.