Rocket Your Dollar Ep. 45: Precious Metals IRAs with OneGold

OneGold CEO, Ken Lewis, shares how the modern platform offers a fast, easy, and cost-effective alternative to investing in precious metals with your IRA.

Transcript:

Thomas Young:

Hi, everyone. Welcome back to the Rocket Your Dollar podcast. Today, we have something pretty exciting. We've got Ken Lewis, who is the CEO of APMEX and OneGold. And we're also joined by Henry Yoshida, who's my co-founder at Rocket Dollar and our CEO. It's a relevant topic that we're talking about today, which is precious metals as an asset class and also inside of your retirement account.

So a little bit about Ken. Ken is a results-oriented professional with more than 20 years of leadership experience across a broad range of retail and tech organizations, many of which are in the Fortune 500. His strategic and operational changes have resulted in growing both the top and bottom lines of the organizations that he's been a part of. He recognizes the importance of customer care, as well as improving his employees and helping them to be the best they can be. Ken joined APMEX in 2011 as an EVP of operations, then two years as chief operating officer, and now, as CEO.

And Henry, as many of you guys already know, is the CEO of Rocket Dollar. And Henry's been both in the tech world and the financial world for a long time. At Merrill, he was planned sponsor's retirement plan advisor of the year, and before Rocket Dollar, was the co-founder of Honest Dollar, which is also in the retirement space, exited to Goldman Sachs.So we've got two industry pros. Well, first off, Ken, thank you so much for taking the time and for being here with us.

Ken Lewis:

Hey, man, I appreciate the time.

Henry Yoshida:

Well, look, why don't we jump into it for our audience? You know, this is a timely episode for us to be able to give to our audience because a lot of people have been asking it and you see it a lot in the news right now. I think the last time that I saw a recording of you speak was in 2019. And oddly enough, I think you referred at the beginning of your talk that there was some turmoil just politically in the world, but it wasn't that bad. And now you flash forward to 2020, and I'm not even sure that the most imaginative directors in Hollywood could have imagined what so far transpired in 2020.

So maybe you could tell us a little bit about APMEX and then, more relevant for our audience, the digital subsidiary of the company, OneGold, and then maybe just your kind of overall thoughts about the asset class in general. So that kind of gives you an opening to where maybe you can give a real kind of long-winded couple minute answer to all that.

Ken Lewis:

Yeah, I could go on for a while there, but real quick, APMEX is a 20-year-old company. We're doing our 20-year celebration this week, believe it or not. Owed by one gentleman, never had any outside investors. Kind of grown it from a family-run organization to something that now has 250 employees, probably do around $1.6 billion in revenue this year. We've got over two million customers. And really, we've built our business on integrity, transparency, taking care of the customer. That's where everything starts with us, whether that'd be our web experience, whether when you call the phone, you got an issue with your order, we're going to take care of the customer and that's really how we built our business.

And been around, like I said 20 years. We're the largest player we believe in North America, by a good amount, by the way, on the physical side. Think about APMEX as kind of like the Amazon of precious metals. You go online, you place an order, we ship it out the same day. The next day, it comes your door, heading up the dollar value, you sign for it and you got your precious metals.

Henry Yoshida:

Good. So you don't leave it on the doorstep though, right?

Ken Lewis:

We try not to, although with these COVID rules sometimes, it makes them more challenging, as you can imagine.

And then about three years ago, we had an idea. Frankly, we were watching the crypto space, watching it very closely, seeing how popular it was getting. Frankly, a lot of our users, our employees knew your Coinbase and some of their user experiences. And we said, "We think there could be a fit here for precious metals." We didn't want to necessarily go down the stablecoin or the Bitcoin route per se, or crypto route, but we wanted to offer kind of the user experiences people were used to in that space, level that physical product that would be held in a vault, with the great customer experience and integrity reputation of APMEX behind it.

And so about two and a half years ago, we came out with OneGold. It's been live in the marketplace for about 23 months. We launched our app in January of this year. We're on track to do north of $200 million this year, which that's a record pace growth, as you can imagine. It's been well, well-received by the broader markets. And we'll talk later about some of the attractions of a digital product versus a physical product, but it just depends on the consumer as to which one fits for you.

But [inaudible 00:04:57] precious metals had a great year. And we talked about the markets, the interviews I've done, I always say today's climate is perfect for precious metals, right? Low-interest rates. The economy is kind of in an unknown state if you will. We've got an election going on and the unpredictable nature of that. You got worldwide events, you got COVID. You got a lot of things going on that are just like the perfect climate for precious metals.

I was looking at my notes here. Silver is up 33% this year, gold's up 24%, the S&P is up 3%. So it's had a great year, just like you would expect it to have. What many people don't recognize is gold is the actual second-best performing asset class since the year 2000, only behind real estate. It takes the S&P and beats it down a little bit, believe it or not. And I don't think about gold as, "Wow, it's going to be the best performing asset class in my portfolio," I think about it as a haven investment that kind of worked inverse to the equities markets. And that's really what it's done historically. So for me to say it's the second-best performing asset class and for the year it's had this year, it just shows its colors, that in certain times, it performs well and it doesn't get beat up as bad as other investments might.

Henry Yoshida:

I see. And then for us, like your OneGold subsidiary and us over at Rocket Dollar, we're trying to bring technology into what was traditionally a pretty old school non-tech or analog industry. So for you guys with OneGold, you're essentially bringing a digital way to purchase gold, but you're also bringing the advantages of the physical gold itself. So this is something that I've had some conversations with friends about too, and I come from, in the past before my technology days, I was in the financial services world. So they were always people that we're talking about mutual funds that might track gold or ETFs that might track gold and so forth, but I guess that your breadth and depth as a physical dealer, you can now bring the digital component to it, but there's a very substantial and substantive, let's say, physical matching of gold to tracking asset, for example. I may be using the wrong terms, but-

Ken Lewis:

No, I think you're on the spot. I tell you, APMEX strives to be a tech company, but we're a physical precious metals dealer. That's who we are. And we've been great at tech for many years and we knew it was a strength of ours. So building a OneGold user interface that is best in class, in our opinion, and then combining it with our expertise in precious metals we think is the best of all worlds. You know, we know what metal procurement's about. We know how to hedge the metals. We know how to store the metal and what partners to use for that.

And on the OneGold product, we thought trust is the number one priority for us. We built OneGold with trust. Trust who you're doing business with, trust the metal's there, trust that you're going to be taken care of through the process, have transparency through the process. We spent hours and hours on FAQs because we want to answer the question before you ask it, right? We want to be completely transparent in how we run this business. And there's a lot of products out in the world that I would argue they're good at tech, but they're not great at precious metals. They've never dealt with any consumer type relationships.

You know, one of the beautiful things we did on OneGold is we integrate [inaudible 00:08:08] your bank accounts into our platform. So you can move money instantaneously between your checking account and OneGold and back and forth. Well, just being able to do that, we see that the investors now come in and buy so much more often. And in the digital world, you don't have to buy a thousand dollars. You can buy $5 of gold and do that daily, do that weekly with an auto-invest feature and automatically do dollar-cost averaging, and it all happens for you electronically and you can forget about it. And then I have a top-five accounting firm that comes in and audits the metal and makes sure it's always there.

So it's a really good combination if you're comfortable with that environment. Some physical buyers will say, "If you don't hold it, you don't own it." We cater to that client as well. But for those that are in the ETF space or those that are comfortable with modern technology and using apps to do their purchasing, what a great product.

I mean, gold is so complicated and difficult to buy for so many years. When I came to APMEX, I had a buddy of mine about four years ago. He's a Mensa guy. Bright guy. He calls me and he goes, "Man, how I buy precious metals? This is so confusing. Spot price and premiums and spreads and eagles and maples and bars. I'm so confused. Can you guide me?" And OneGold makes ownership of metals so much easier and so much less complicated. We're finding that, demographic, it's also skewing much younger, which we're excited about because the younger the person in the metals, the better long-term that's going to be for our industry.

Henry Yoshida:

Well, and let me go back. You mentioned about the outperformance of gold as an asset class so far year to date versus the S&P 500. And then, for our audience and us here at Rocket Dollar, we provide retirement accounts. So maybe you could talk a little bit about why or the difference between owning gold and let's say retirement accounts. So you spoke about the absolute return, but I don't know if gold itself is as volatile an asset, which might lend itself better to a retirement account.

Before you kind of step into that, my positioning for our clients tends to be that certain long-term, let's say, illiquid asset classes with high return potential are suited to a retirement account. But what Rocket Dollar does also, it allows folks to access retirement accounts that they already have, which tend to be a pretty large asset base for them. And they haven't been able to utilize purchasing anything outside of let's say stocks, bonds, and mutual funds. So sometimes it's just a, "Hey, I have a lot of money with a long time horizon over here, so I'm interested in doing something alternative such as precious metals, real estate, you name it." Our customers are across the board, but maybe you could talk a little bit about that, just specific to our audience here, which tend to be using retirement accounts to access alternative investments, one of which may be precious metals.

Ken Lewis:

Yeah. Well, first, I think it's great that companies like yours make it possible because for so long, our only options as investors is to buy equities with IRAs. And if you go look, and I'm not in your space, but you can maybe speak to this, I got to believe that a considerable amount of people's net worths are sitting in IRAs nowadays. You look at where your investible assets are and you look at your options, and this is where I think products like yourself make it a lot more attractive to be able to look at different options that I might want to do. I know you guys allow people to do cryptos, I believe, and several different products to invest in, and I think that's fantastic.

And I've always been a believer, and it's funny, I've got 22-year-old twin sons, and their dad made a deal with them. I said, "I tell you what we're going to do. For the first five years of your professional experience, I'm going to max out your IRA. And then I'm done, I'm done investing, but for five years, I'm going to max it out. I'm going to put six grand into your IRA, or whatever I'm able to based on your earnings," because they were interning at the time, "and we're going to do this. And then what I'm going to do is I'm going to have you do your research and tell me what you would invest in."

I thought was a great experience where I think, imagine now, a 22-year-old kid that's never invested a dollar in their life, pretty smart kids, they didn't get it from their dad, they got it from their mom, right? So smart kids. And it was amazing to me. One of my kids came back and wanted to own gold. Now, he goes, "Well, [inaudible 00:12:06] you did that because I'm in this space." He goes, "No, Dad, let me show you some data that I pulled." And I was so impressed. That's exactly how you make an investment decision. You do your research, you pull your data, you understand concepts like diversification. He's doing this at 22. And I was like, "You're thinking right."

Now, some people would say with that long-horizon at 22, to go after growth, growth, growth, don't worry about safe haven investments, but the fact that he's already thinking about portfolio management is a good thing. And that's where IRAs I think really... People make that mistake. They put all their money into one or two main areas and they don't diversify enough at all, and that could be a mistake for you long-term.

And I mentioned to you earlier, I've got a few stats here I think people may find valuable to you. I looked at the diversification of owning gold in your portfolio, and what would that do for you depending upon your mix and whatnot. And like I said, a hundred dollars invested in the year 2000, the gold would be worth 646 bucks today. If you had bought large-cap stocks, they'd be worth $336. So you go, "Wow, okay." So that's one interesting piece.

The second thing is you look at volatility. Well, okay, man, the rides we've had. Everyone who's had any money invested in 2008 knows exactly what happened. Anyone who had investments in March of this year knows what happened. And you go, "God, stocks can be pretty volatile depending upon what's going on in the world." We looked at the volatility metrics for gold again, they're considerably lower, considerably lower than stocks. Now, I say that, notice I keep saying gold, silver, on the other hand, is starting to show some colors where it's a little more volatile than I might've thought it would be but so undervalued, it's done very, very well from a return standpoint.

So it's just one of those things where I'm now 50 years old, I just turned 50, and I was looking at where do I put my money at 50? Because it's a lot different than when you're 22. And I'm thinking I need to hold some cash. I need just even to hold onto cash because, in this market, I can't trust the market. I don't know what's going to happen. And then I went back and did some research on inflation and I go, "Oh God if I just hold cash, I may not have any money left the way the government's going for any dollars right now." The stat I quote is, 1990, a dollar is worth 49 cents today, right? So if you held just dollars for 30 years, you've got 49 cents. Do you want to hold dollars? And how much do you want to hold in dollars?

That's a hard one for anyone to guess, but I know it's one thing I think twice about now that my conservative investments shouldn't be just holding dollars. It should be looking at other things that might be less volatile, something maybe like gold.

Henry Yoshida:

I see. Let me kind of switch gears real quick and ask a question. So on the OneGold platform, is there a minimum for people to transact? Do typically see like a certain size, a lot that people have to buy. How does that work?

Ken Lewis:

Yeah, I mean there is no minimum. I guess you have to round out the math of can you buy a dollar of gold. I had to go out and check the decimal places on it and tell you, but it's probably two bucks you can buy or three bucks you can buy in gold. I know you can buy a dollar in silver right now based on the math.

And we did that because, you think about digital, the way it works is I have a 400-ounce gold bar sitting in a vault, and I could have 5,000 customers on a piece of that, as long as the [inaudible 00:15:16] needs of those 5,000 customers don't add up to more than 400 ounces of gold. So I can sell in any increment you want to buy, which is beautiful.

There's one more catch to that though. A lot of people like to take physical at some point. Let's say, for example, your client wants to potentially own a physical rather than just have it there. Well, on an IRA account, that'd be a little hard to do. We can't ship you the physical on an IRA account. But for other investors who don't have an IRA, they come in, they buy the goal, and then you decide, "You know what? I'm going to take physical." They go literally on the side and you convert their digital into physical with a couple of clicks on their iPad or their iPhone, and now physical is being shipped to the home.

So you can go from digital to physical in a matter of a few clicks. And you probably know this, some IRAs like the physical in a vault, not just digital, and we can do that as well for people.

Henry Yoshida:

I see. Of course, you've been around this space, so it's come up quite a bit, and it may be somewhat new for people in our audience. We have people that have invested across the board in different alternative asset classes, but the people that have kind of asked, and you probably heard this term Sue, but we have a pretty strong contingent of folks who are going into the digital, the cryptocurrency, so the actual digital cryptocurrency, and maybe you can talk real quick as let's say, a veritable expert on the precious metals side of what is the difference. Because I'm not sure if it's fair that financial journalists use the term digital gold, but they're referring to cryptocurrency. My guess is you have a very different take on what that is or what that'd mean for you, APMEX and OneGold.

Ken Lewis:

Yeah, it's funny. We actually got about naming the company at one point Digital Gold or something along those lines, and you realize it's associated with crypto space, and so we had to look for some other branding. And the way I tell people is, first, if you're going to buy crypto, try to go into stablecoins, if you can, that are gold-backed, right? Most people don't realize this. I believe the number one crypto that has failed is gold-backed crypto. Think about why that is.

Henry Yoshida:

I guess if I had to guess, they're not backed by gold.

Ken Lewis:

Well, that's it. But also, think about why they use gold as a reason to get you to buy the crypto. Gold is viewed as a haven. It's a kind of safety valve. It gives you the confidence that your investment is going to be there. And so everywhere you look, there were gold-backed cryptos everywhere, but there are many, many examples of where the gold was never bought. So you went and you bought, like a lot of cryptos are that are not stablecoins or asset-backed, you're buying digital keys and you don't even know really if there's anything substantive behind it. And it's just kind of like you're gambling, you're kind of gambling a little bit.

Now, I know I don't want to get myself in hot water here because there's some cryptos out there, fans that would say different than what I said, but stablecoins are meant to have truly an asset backing investment. The asset is sitting in a vault or is secure in some way. And there are some viable stablecoins out there on the market I believe, that if you wanted to go the crypto route, you could do that. My caution is, like I mentioned, research the company, make sure they have audited statements to show the metals are there and viable third parties that you can trust because I think there are many examples like I mentioned, that metal never was bought.

We put our brand out there, a 20-year-old company, over 12 billion in revenue, behind a digital gold product because we knew people could trust us. And yes, we're not crypto. We looked at it. We almost went the crypto with stablecoin rather than what we did, but we felt like, at the end of the day, we're more an investment, where some people look at cryptos as, "Well, I'm going to be able to go buy my groceries with my crypto." That wasn't our vision. We wanted to have a product you could invest it easily, and then be able to convert that to physical in a matter of a few clicks. And that was our goal going in.

So I own some crypto, by the way, I'll be the first to say. I have no problem with crypto as an investment. Just make sure you know who you're partnering with, that the product's truly backed by a physical product, and then watch your pricing. Because I think sometimes what you'll find is the markups, depending on the exchanges and the partners you're working with, and you start adding up all those fees, it might become more expensive than you realize.

Henry Yoshida:

I see. And then we're coming up on time. So I know that we had just started a partnership too. So at OneGold.com/IRA, people can now utilize accounts with us to go into the OneGold structure. So the question I'd have for you is you don't talk to, let's say, predicting the return of those, but all the talks that you've given and your thought leadership space in the field, is there a certain percentage that people should have allocated either to alternatives or just precious metals in general? I mean, everyone kind of knows about the 60/40 type of split, but maybe you guys kind of talk a little bit about like a 60/30/10, for example.

Ken Lewis:

10's not far off. I think 5 to 10% with exposure to metals is not a bad number to be at. I would say that percentage grows when you're maybe a little older or shrinks when you're a little younger because you're looking for a little more stability in returns. I mentioned earlier, the volatility is not quite as high obviously for gold right now compared to other investments you can make, but 5 to 10% is not a bad range to be at, and again, maybe a little higher percent when you get a little bit older.

The beautiful thing about our platform and our partnership with you guys is people probably know the funds are sent the OneGold, they're sitting there in your account. You can go in and invest in whatever you want, silver, gold. We offer it in Switzerland, we offer it in London. We offer it in Canada and the US. Pick any location you want. You want to buy platinum, we have platinum as well. And then if you want to sell, let's say you want to get out of your metal position, maybe for whatever reason, someone's talking to you to say, "Get out," you can get out in a matter of a moment's notice 24/7. And it just sits in your account. And then you can go back and reinvest in metal again three days later if you want.

So the beautiful thing about our partnership is the money's sitting in an IRA and you can buy and sell, you can move it between metals, you can move it between locations, and you control all of that and we give you a great platform to do that will.

Henry Yoshida:

Okay. And then last question, our audience kind of knows that we, for IRAs, just have a flat sign up fee, and then a monthly ongoing maintenance fee for the account, but how are you guys priced on the OneGold side when customers of ours decide that they want to look at your platform and buy some precious metals?

Ken Lewis:

So our fees, when we first launched, we were at 30 basis points over the spot. So basically, very thin. You could have bought silver for 5 cents on our platform. Well, now, I can't buy silver as cheap as I could have bought silver a year ago. So I'm charging 3% on silver and I'm charging 1% on gold. But more importantly, if you start comparing that to the physical space, the average premium of gold is going to run you 5, 6% over the spot, and the average silver premium is going to run you north of 10% easily. But more importantly, when you go to sell, my spreads are much, much tighter than physical. So you're able to get out of it at a much better price than you could normally in the physical space.

So economically, we're finding digital is a far more efficient way of investing. And then we do charge an annual fee for storage. It's 12 basis points a year. So do the math on that. That's next to nothing on gold, and it's 30 basis points on silver. And when people do the math, unless you have $16,000 with us, you're paying $5 a quarter all-in. So you pay $5 a quarter to have your precious metals position. And when you get over about 16 grand, it slightly starts to go up from there. It's a very reasonable expense, I think people will find, to know the metal is physically there at all times. We think you can't beat it from a pricing standpoint.

Henry Yoshida:

No, that sounds great. Well, look, I appreciate that. We'll get this out to our audience so they can learn a little bit about it, but I think the takeaways here are that you guys are the largest metals dealers, now you offer a digital version that's just the true digitized version of the physical precious metals that you deal at a very reasonable price. And now, through both of us, we have a way to allow people to tap into retirement or tax advantage dollars to be able to invest them long haul, which typically for us just kind of results in larger ticket amounts too. So that's something that we all liked as well. It allows people to have a substantive position.

Ken Lewis:

Important, Henry, too, is you got any questions at all, online chat, email, phone calls, our people are here to answer your questions. We're not here to sell you. We're here to guide you through the process. As I mentioned, my FAQs are very transparent. So many questions they have, we want to answer those questions. You want to ask us about crypto, we'll try to answer that if we can. The team is committed to providing a great service, not just a great product.

Henry Yoshida:

I appreciate that. Well, look, thanks for joining us here on the Rocket Your Dollar podcast. Real quick as we sign off here, just what's the website? Is it OneGold, O-N-E-G-O-L-D.com? And if they want to look at the option, is just add the backslash and IRA, and then you can take a look.

Ken Lewis:

You're right. That's the best place to go for information. And try our app out. Even if you just want to track the price of metal and look at news in the precious metals industry, our apps at over a hundred thousand downloads and it's only been live for nine months. So it's done very well as well.

Henry Yoshida:

Okay, great. All right. And Thomas, we'll hand over to you to sign off.

Thomas Young:

Yeah. Fantastic. I want to thank you, Ken, for your time and Henry, for yours. This was very informative and I downloaded the OneGold app as you guys were talking here on my phone. It's pretty impressive. So anybody listening, if you have any questions for our team, you know where we are, rocketdollar.com. And if you have any questions for Ken and his team over at OneGold. But I know that everybody on our side is excited to be working with them and we look forward to creating more content and working together. So thank you and talk soon.