Gold owners often value physical possession precisely because it removes the need to trust someone else. But what happens when that gold is put to work?
For Gabriel Nasser, our Chief Asset Assurance Officer, trust alone isn’t good enough.
If someone else is responsible for your gold, they should be able to prove where it is, what’s happening to it, and whether the systems designed to protect it are actually working. Asset assurance replaces trust with something more concrete: independent verification.
In this episode of the Gold Exchange Podcast, Gabriel explains why “don’t trust, verify” sits at the heart of asset assurance, and what it takes to apply that principle to physical gold.
Read the transcript below.
Transcript
Monetary Metals
For someone who’s clicked on the video and they want to know what is asset assurance, give us a breakdown.
Gabriel Nasser
It’s about trust. So if I tell you something is where it’s supposed to be, I’m there to make sure that it is, and I need to find a way to prove it to you. So when we talk about gold in this context and people giving us their gold so we can deploy it, so it can be productive and earn yield, so we’re there on the ground day in, day out, making sure that their gold is as safe as it is in a vault. So on a daily basis, we have all our jewelers perform an RFID scan, which is using radio frequency identification technology. What if somebody spoofed that?
Well, guess what? We have CCTV systems watching the whole scene. So at the same time, that’s our second factor. Well, that machine has an IP address and it’s sending us GPS signals saying, well, guess what? That person is actually using a device that’s at that location. So it is geofenced. We talk about the whole trust but verify approach. But you know what? We actually take it a step further. We say, don’t trust, verify. If you look at the blockchain world, etcetera, that’s kind of their mantra, right? We’ve been audited, we’ve been verified, and we’ve been doing this for over 20 years and never lost a single piece of gold.
Monetary Metals
Welcome back to the Gold Exchange Podcast. I am delighted to be joined by my good friend Gabriel Nasser. He’s the Chief Asset Assurance Officer for Monetary Metals. He joins us today to talk about all things asset assurance. Gabriel, welcome to the podcast.
Gabriel Nasser
Thanks, man. Great to be here.
What is asset assurance?
Monetary Metals
For a lot of people, they may not even know what asset assurance is or how it compares to just regular physical security. So for someone who’s clicked on the video and they want to know what is asset assurance, give us a breakdown.
Gabriel Nasser
Yeah, that’s a fair question. At the heart of it is it’s about trust. So if I tell you something is where it’s supposed to be, I’m there to make sure that it is, and I need to find a way to prove it to you. So when we talk about gold in this context and people giving us their gold so we can deploy it so it can be productive and earn yield, right? We need to make sure that as we give them that promise and hold up our Hippocratic oath of gold, right? We give them that trust. So we’re there on the ground day in, day out, making sure that their gold is as safe as it is in a vault.
Monetary Metals
And so for a lot of people, they hear, okay, asset assurance is about trust, but Clearly you’re not just going to give gold to a jewelry store and say, well, trust me, you know, we’ll bring it back. So, you know, break down what you do to make sure that that trust is actually being documented and confirmed rather than just, you know, by handshake.
Gabriel Nasser
No, it’s a good question. So obviously before we give gold to anyone, we have a very thorough process of screening, due diligence, KYC, and all that stuff, right? So before we put a single ounce of gold at a retailer location, all those retailers have to pass thorough checks, right? I mean, we’re talking beyond bank-level checking and verification, etcetera. Once that part’s done and then we deem someone worthy of our client school, then we make sure that the site itself physically is ready for it. And typically that starts with a site survey.
A site survey is a thorough walkthrough, physical walkthrough of the entire location. The surroundings, inside, outside, the safes involved, the systems installed, the panic buttons, how everything is laid out, the fire alarm system, everything, right? So this is a whole end-to-end, soup-to-nuts breakdown of the location. And then we take all that information, roll it up into a site survey, and then internally discuss and understand the weaknesses.
You know, when we, for example, look at the CCTV system installation, Are there any cameras that are not covering critical areas? Are there cameras that are blurry? Are there cameras that are pointed too low or too high? So it’s that kind of detail that we dive into, and then we fix those things. And once we are satisfied with everything being in place and worthy enough of having the gold on site, then we basically give the location a passing grade. And that’s where it all begins.
How gold lease locations are vetted
Monetary Metals
And talk to me on that initial walkthrough, what are some of the things that you see that you go, wow, this is great for asset assurance? I see a CCTV camera, camera, you know, I see a certain safe or a vault or even a panic button. And what are some of the things that you’re like, I can’t believe this jewelry store doesn’t have this basic level of security? So what are some of the positives and some red flags that you notice on that initial walkthrough?
Gabriel Nasser
Yeah, I mean, look, we’ve seen a lot of these locations, right? And the one thing that continues to amaze me is how sloppy some of the basic work gets. And it’s interesting to mention because people today, without naming names, they’re actually very good or really focus on the hard areas. You can tell that a lot of people put effort, thought, design, and implementation into these areas. However, they do that at the expense of neglecting the easy stuff.
So we find ourselves often plugging holes in those little holes that go unnoticed and that people overlook. And I think that is part of the main story. When you are taking a holistic approach, a holistic view of the entire thing, you make sure it’s solid top to bottom. The thing is we’re vested and we are held accountable to not losing the gold. So we don’t install these systems, but we want to hold somebody accountable when they install them.
Even further, we gotta make sure that they’re up to snuff for our needs and that they exceed our basic requirements so that we are comfortable in saying, you know what, we put our stamp on this and it’s ready to go. So that I think is a bit counterintuitive. Right? Everybody misses the small stuff very often. And I say everybody. So this is where we look for, uh, shortcomings, if you will.
Monetary Metals
And give me an example of something that’s super obvious that sometimes they’ll miss and then something really, really technical that you would think, wow, most people have not even heard of this, but almost everyone’s got down.
Gabriel Nasser
I mean, you look at cameras that cover, for example, the, uh, POS area, right? The area with the cash exchange, etcetera. More often than not, we find that the cameras are not oriented properly and covering at the right angle. So you get to have too many chances for a switcheroo going unnoticed, right? And what I mean by a switcheroo is that in insurance language, people talk about mysterious disappearances, right? It’s those things that go missing where after checking, you know, every CCTV camera or going over records, you can’t explain how that valuable piece of jewelry, for example, disappeared. And so We are there to make sure we minimize the chances of any mysterious disappearance going unnoticed.
Monetary Metals
So, and give me an example of something that’s maybe a bit more complex that people really are paying attention to that maybe your average Joe or your average consumer wouldn’t think about.
Gabriel Nasser
So a lot of people think about the CCTV camera installation, the panic buttons, and the entire security setup inside the store. And of course it is there to protect the store from burglary, from all those, you know, crazy mishaps, right? It’s also there to secure against bad customers, bad actors walking to the store during normal opening hours.
A lot of times, unfortunately, people tend to ignore the employees. And this is not to say that employees are inherently dishonest. It’s just that sometimes you can create the right environment for opportunity for someone to grab something without being noticed. And the reason I mention employees is that day in, day out, They’re in the stores day in, day out. They do the same thing day in, day out. They watch the process and day in, day out, they start to become attuned or educate themselves on what, what’s going on.
So out of all the possible people involved, the stakeholders, if you will, they’re probably the best placed at beating the system, so to speak. And so how do we make sure ourselves that even with all those systems in place that we are looking in the right places and watching for the right patterns to prevent these things from happening. Essentially, that’s our work, right? So once everything installed, right, on day one, you flip the switch, it’s not fire and forget. We don’t just say, okay, it’s great, you get a passing grade, you know, bye-bye, see you next month.
No, we’re watching these locations every day. We’re getting signals from different types of devices and we use the data to build a picture of what we think is normal behavior. And we try to use some patterns to sort of surface unusual activity that may not be nefarious, which it isn’t most of the time, but that feeds back into the learning as in, okay, well, what’s going on? Why did this happen? Why are they doing it like that? Okay, this is okay.
They’re doing it because they had a process that was dictated in their standard operating procedure. But when they’re doing it day in, day out, they found an optimization that sort of deviates from the standard operating procedure, but that’s not necessarily a bad thing. So what do we do then? Well, we technically should go back and say, hey, let’s have the jeweler update the standard operating procedure to match what these guys are doing underground because it is more efficient. And yet it doesn’t compromise the security.
The biggest security risks jewelers miss
Monetary Metals
And I want you to give the audience this analogy you’ve used before, which is this kind of multifactor authentication Yes, you can say, okay, we’ve got a camera and that, you know, should lower the risk of theft, for example. But if you add more levels of security or more levels of authentication, you can much with a higher degree confirm that, yes, the gold is where it says it is. So explain that multifactor kind of nature of the security.
Gabriel Nasser
Right. That’s a good point you bring up, Ben. So, you know, in the online world, we’re all used to, you know, logging into websites, having multiple accounts. Right. And then Passwords. For a long time, passwords dominated the scene. They were the cool kid and we all used them and we all wrote down our passwords and pinned them to our, you know, to our desktop screen, etcetera.
So we relied so much on passwords to protect sensitive data, even our banking data. Yet at the same time, we acted so in a sloppy way. I look at my parents, I look at my friends and things like that, you know, and people around me. I mean, it’s just unbelievable how they keep their passwords in plain sight. And so the answer to that was the industry came up with ways to have more than one factor of authentication, which means more than one method to really say that Ben is who he says he is, right?
And then you talk about passwords, you talk about these one-time codes that get sent to us via SMS, you talk about these authentication apps, you talk about Passkeys, You talk about hardware keys, right? You got all these things. Sometimes there’s Face ID. So the idea behind that approach is that passwords on their own may be easy to crack. A fingerprint on its own may be easy to forge. An SMS sent to someone may be spoofed and easy to compromise.
However, when you put all of those things together, it becomes practically hard to break such a system. So when Ben goes and logs in, right, you know, he’s typing in his password. Okay. He’s at a computer that is known and that has a signature. Okay. He gets a code on his mobile phone, which is another device. Okay, great. And now for some bad actor to really have access to all these things and sort of intercept Ben’s communication, that’s really hard to do. So the analogy here is that we rely a lot on devices and data coming in from different devices in the store to build the picture of what’s going on.
So on a daily basis, we have all our jewelers perform an RFID scan, which is using radio frequency identification technology with scanners that can read labels that are securely attached to the jewelry pieces. And each of those labels has a unique ID, and it’s responding in secure fashion back to the scanner. Now, that’s great. So you’re doing all of that. We’re securing the communication between the scanner to the software system and so on. Great.
What if somebody spoofed that? Well, guess what? We have CCTV systems watching the whole scene. So at the same time, that’s our second factor. We can see the guys holding the scanners, scanning, and we can correlate that with the data that’s coming to the system from the scanners. At the same time, they’re using a machine that’s sitting in the store. Well, that machine has an IP address and it’s sending us GPS signals saying, well, guess what?
That person is actually using a device that’s at that location. So it is geofenced. And so you can tell with a high degree of confidence that they’re actually doing a stocktake at that location with those intended items. So I can go on and on about the different ways that we do this, right? I can’t disclose everything, but I think that’s the idea I want to get across. Like you said, can’t rely on a phone.
Maybe I can rely on two phones and my Face ID. And that’s the idea behind that. We’re always trying to push the envelope with what technologies are available with, how practical and cost-effective it is to deploy them, but also how can we really be that orchestrator, right? Essentially, that’s what we are. We’re orchestrating the data, the devices, making sense of it, and trying to stay ahead of the curve in terms of security and therefore the asset assurance promise that we convey to our investors.
How RFID tracks gold every day
Monetary Metals
One of the things I find fascinating is this RFID tagging technology. And you mentioned that these tags are put on securely. So can you explain to our audience what this looks like? Obviously, maybe people have gone to a grocery store and had their, you know, food scanned by a scanner, but can you break down how this technology is different than maybe other RFID tags you’ve seen before and what it means to securely tag something?
Gabriel Nasser
So each of these labels or tags has a unique number. And what I mean by securely tagging is that it’s got special circuits that once you put the tag around a, let’s say, piece of jewelry, a ring, right? It’s there, it’s glued, and it works pretty well. The moment you go and cut it or try to peel the tag off so that, for example, you put it on a different piece of jewelry with a lower value, right? Something happens to the circuit that triggers an alarm so that when we do scan it, it scans properly, but now we know that it’s been compromised, right?
And that is the kind of technology that we put in. Now I wanna tell you something about this, which is interesting. And ties back to the multifactor security that we talked about. What we want to ensure is that these tags don’t generate false positives. So we want to know that if something’s compromised, it’s truly compromised, right? Sometimes they may generate a bad signal, say, okay, hey, it’s compromised, but it may be an innocuous event. Maybe some customer came and tried a piece of jewelry, pulled on the tag so much or even removed it and was like, okay, this is fine.
So we want to be able to detect and find out whenever the tag thinks it’s been compromised, right? And then investigate that. But we want to make sure that those events are few and far between, right? We really want to investigate when there’s a truly valid event that, okay, something has been compromised, right? Otherwise, we’re flooded with this unnecessary data and we spend all day going around and chasing just basically false events. So that’s essentially what a secure tag is about.
On their own, again, I’ll tell you, they are not secure enough. We don’t stand by just using those tags on their own. And this is why we fuse multiple technologies together, our processes, our data analysis, our algorithms to overcome these shortcomings. And especially in the jewelry space, it is very challenging to have a tag that can perform as well on all kinds of designs of jewelry. You got rings. You got bangles. You got these—fancy design, you know, it’s so hard.
It’s not like tagging a product at a supermarket, like a Coca-Cola can. They all look the same, or the bottles, they all look the same essentially. Even if it’s Coke Zero or Coke One, whatever it is, they, they all look the same. So it’s easy to design a tag that fits all those cans. In this case, we have to be more creative. And therefore, by being more creative, you can’t settle for signal technology.
Monetary Metals
And I also want you to talk about the kind of GoPro footage I’ve seen of them actually securing that, because that’s another thing, right? Like while someone’s securing the technology, you want to be sure that they’re securing the right, you know, ring or the right piece of jewelry, either by accident or maliciously. So talk a bit about the footage that you guys get as well.
Gabriel Nasser
We have this mantra or this approach, right? We have technology in place, we have monitoring, and then we have our auditors, right? But then who’s auditing the auditors really? And I’m not talking about a third-party outsourced company that can come and check on us, but there are several who have done that and we need that for external validation.
But we wanna tell everybody we’re so disciplined that we stand by our process. And the reason we have cameras worn by all our, our staff, especially when they visit sites, is the same reason why law enforcement officers wear body cams. That’s really what it is. You want to have footage that serves multiple purposes. One is training. Two, the facts. Can I review the facts?
Of course, from that first-person perspective, right? Now, if you have multiple law enforcement officers on the scene, obviously you may get a better perspective there. But the idea is that we wanna be able to review and ascertain, right, what happened. And 3, when somebody comes and audits us, whether it’s our insurers or even our investors say, hey, listen, we trust you, but we need to verify, right?
Well, then have at it. Here’s the footage. We told you that a stock place, for example, took place. We told you that we watched it. We told you that our guys went and audited X amount of pieces. Here they are on camera using the XRF scanner. And again, we use the same approach. Every single device has its own—data coming in independently. And so it becomes very hard to refute the fact that Ben, our auditor, was on site during those times and he audited those 7 pieces. That’s essentially what it is.
XRF scanners & verifying gold purity
Monetary Metals
And Gabriel, explain to the audience what an XRF scanner is because they may have heard RFID. What is an XRF scanner?
Gabriel Nasser
An XRF scanner is a special type of device that emits X-rays. And those X-rays are used to bombard a piece of jewelry. And we use it to ascertain the purity of the gold. Now, when jewelers and other clients of ours deploy and tag items, we need to verify what their claim is true. So they input the data in the system. They weigh the piece. They do all sorts of things.
Now it’s our job to cross-check that. And we don’t just cross-check it by putting the piece on the scale and making sure the weight matches what the system says. No, we want to make sure physically that the purity, for example, is what it says it is and that it is within a tolerance range. And XRF technology is probably on the bleeding edge of what you have there in terms of portable devices that can help you check things on the go. At the same time, we are using probably some of the best-in-class devices on the market you can find today.
Monetary Metals
I want you to talk to me about some of that technology and how it’s enabled better asset assurance. Obviously, You know, a big buff guy like me standing at the jewelry store might, you know, deter a criminal, for example, but it might not deter an employee who, you know, maybe knows the ins and outs of the process. So what are some of those examples of technology that you can use to help with asset assurance?
Gabriel Nasser
In the end, we’re not there to stop the big smash-and-grab events. That’s not us, right? There are first responders, there are qualified people, and legally we can’t do that, right? So there’s insurance even for that, right? We’re not there for that. We’re there to watch for the skimming activity, for the gold that disappears bit by bit without anybody noticing until it’s too late, right? That’s where we come in.
And so when you combine the technology, the monitoring, the processes, the surprise audits, and so on and so forth, then what we’re doing is we’re sending a signal also to the clients that we’re not just Big Brother watching you, but we’re keeping everybody in check, right? Because There are times where you, as a jeweler, may receive gold items that are of lower purity than what was intended. And it’s not your fault. It may be a glitch at a supplier, or it may be a bad supplier. Either way, what we’re saying is that we’re here to make sure that these events don’t accumulate into something uncontrollable.
How surprise gold audits work
Monetary Metals
Talk to me about those random audits, because we’ve mentioned those a couple of times. When I think of a random audit, I think of a guy in—plainclothes, maybe showing up unannounced and saying, hey, I want to try the hamburger, and it turns out he actually works for McDonald’s. So what does a random audit look like with the asset assurance world?
Gabriel Nasser
So you got that half right. So we do show up without announcement. That we do. And when our guys are there, they do pick pieces at random without anybody prompting them. So that part is there. However, they know who we are. Legally, we have to announce ourselves, and so on. And we have to be allowed. Our guys are bonded because they’re touching jewelry in the end. If something were to happen to the jewelry, we want to make sure that we can stand by what we did.
And again, this is where the footage comes in, where if somebody points the finger and said, oh, Ben broke that piece of jewelry, dropped it, we’re like, look at the footage. Let’s review everything. You may be right. If you are, that’s great. Then it’s mea culpa. We will make you whole. But the idea is that we are there to make sure that our audit is as good as it can be. And so surprise audits make sure that nobody is waiting for us.
Nobody can prepare the environment, so to speak, and sort of put specific pieces of jewelry in view, take others out, maybe try to influence our guy, you know, all of that. And remember, Ben, we’re all human. We all fall victim to bias or to influence. But that’s why we have the videos again, because we review our processes. Our MO, and then if we notice something amiss like that, then we retrain our colleagues and we tell them, all right, don’t fall for this trap and here’s how you avoid it and so on and so forth. And that’s essentially what we do. But we are a known entity. They know who we are. They give us access because that’s part of the agreement and they let us do our work and everybody gets along.
Our colleagues are always trained to be friendly, right? Don’t act hostile. And that’s key. That’s key to get cooperation and buying from these guys so that the process can happen smoothly, right? And that the next time these guys come, they actually welcome it. I’ll give you an example which is very relevant in places like the UAE and Dubai. The Dubai government requires a hallmark on every piece of jewelry. If an inspector from Dubai municipality happens to drop by and finds a piece that doesn’t have a hallmark, the jeweler may be liable for fines and imprisonment. And we’re talking about serious fines. We’re talking about 250,000 to 500,000 dirhams.
So this, you know, we’re talking about $150,000 of fines, right? They take it seriously, right? So it’s part of their zero tolerance approach. Now, where do we fit in on all this? And this has happened a few times. We found some items and that were just not stamped with the hallmark and it was just a manufacturing mistake. But we reported to the owner and guess what? Now we actually prevented Dubai Municipality discovering this and potentially finding him. But by working collaboratively in that sense, we create a better working relationship and a sort of synergy. We technically may have saved that guy $50,000 in fines, right? And that essentially what it boils down to. That’s the kind of dynamic and environment in which we operate.
Why gold requires extreme security
Monetary Metals
Well, that goes back to the trust component that you said asset assurance is about trust, not only trusting that, hey, if we lease gold to a jeweler, the gold’s actually physically on the premise with the purity that they claim. But for the jewelers themselves, hey, if I get something from a supplier, I want to know I wasn’t the one who made a mistake or an employee was pilfering some items, that there’s trust, you know, on all ends and all inputs and outputs of the spectrum.
I want you, Gabriel, to talk a little bit about what makes gold so unique, because obviously gold is quite small as an asset. And in terms of its value to weight ratio, it’s something that you lose 1 or 2 pieces, you can be out thousands of dollars. So we mentioned, you know, a grocery store with its tracking technology of a banana. But all right, if Target loses a banana or, you know, a t-shirt every once in a while, you know, maybe that’ll add up to a couple hundred dollars worth of theft. But in a jewelry store, obviously, because the items are of such high value and such little weight or small sizes, there’s a different level of security and asset assurance that has to go into that. So talk about gold as an asset compared to securing other assets people might know about.
Gabriel Nasser
That’s right. And actually, that’s a great example you give. So in a typical retail environment, whether it’s at a grocery store or, you know, clothing retailer, right, the items are bigger technically, but the loss there doesn’t compare to what happens at jewelry stores. And when you look at a lot of retailers, mainstream retailers, you know, they build in inventory shrinkage and theft as a cost of doing business. But if jewelers behave like that without controls, you know, they’d be out of business. So fast. And like you said, gold is small, it moves between hands, it’s in the store, right?
People are trying it and all that. It’s easy to lose, but one loss, that’s a big ticket item. So with jewelry inherently, obviously gold-based jewelry, the carrying costs are high, the insurance costs are high. So you gotta make sure that you’re investing in technology processes, right? And discipline to make up for the, you know, the potential of theft and shrinkage. And this is the environment in which we operate. When you operate in the high-value good space, your behavior is different. The amount of money and time you spend on mitigating risk of theft, risk of shrinkage, is much higher than in other industries. When you look at us, we are an independent guardian of the inventory.
If I’m a jeweler, right? and I have more than one store and I want to grow and I have these ambitions, right? I always need to be careful about my margins, my business, especially when gold jewelry accounts for 50% of my cost, my business cost. I don’t see any way where I can grow confidently without having either an in-house team that’s super good, always on the edge and making sure that, you know, we are not losing anything that’s costing our business tens of thousands of dollars, or I would have to trust someone in the industry who could do it on my behalf in a meaningful way. And that’s where we come in, right?
We sit between the jeweler and between the investor and the owner and the employees, and we just say to everybody, look, we’re guardians of the inventory. And I know everybody talks about this whole—and I think you mentioned in the beginning, we talk about the whole trust but verify approach, right? Yeah, but you know what? We actually take it a step further.
We say, don’t trust, verify.
If you look at the blockchain world, etcetera, that’s kind of their mantra, right? So the blockchains are built to be verifiable, right? They say, look, no single node is trusted, but together they can be verifiable. That’s essentially our approach. And this is why we have footage of everything that we do. This is why we have processing in place that allow you at any point to say, look, I don’t trust you guys. I’m gonna verify you, right? And so we wanna prove to you that that verification process is sound and that that verification process shows that we can be trusted to do what will you expect us to do.
How gold theft actually happens
Monetary Metals
I wanna ask you now, obviously a lot of what people think of asset assurance, they think maybe in the movies they see a smash and grab of a jewelry store or a bank robbery. How often is external theft like arm robbery compared to internal theft maybe by employees or even by the management themselves? Give us a breakdown of what jewelers should actually be worried about compared to maybe armed robbery, which is more of a Hollywood fantasy.
Gabriel Nasser
Yeah, look, I mean, there are certain areas that are risky, right? And I can tell you, in my entire career, we’ve never had a shop that was burgled. Like, nobody came in with weapons. There was no, you know, holdup hostage situation, nothing like that. However, we did run into situations where during a holiday season, an organized group of shoppers walked in and pilfered dozens of items worth tens of thousands of dollars underneath the, you know, salespeople and the shop manager’s eyes. Nobody knew anything. Now, our systems detected anomalies.
I can’t talk too much about it, but we were able to quickly identify that those items are missing because we triggered a stock scan, a surprise stock scan, just to ascertain what we thought was anomalous behavior. And lo and behold, we saw an abnormal number of pieces missing. We created a report out of it, immediately communicated with the police went and looked at the CCTV footage.
And remember, right now we’re not blindly looking at 48 hours of footage. We have timestamps within which we can search. So now our search is effective and optimal. And we do that. We take a few screenshots, send them to the police, and then they go about doing their thing and the thieves are caught 2 days later. And yeah, absolutely. And this is the kind of thing where I wanna say that it happened under trained people’s eyes and it’s, No fault of their own. We’re all human. The shop was super busy. People everywhere trying out things, right? Shopping because there are sales here and there.
But sometimes this happens and you can’t always beat the system. However, we avoided situations where we had mysterious disappearances because we were able to go back, trace everything, prove what happened, and build an exact timeline with photos, with video footage, with all that stuff to conclusively say, yeah, this is absolutely it. And when it came time to trigger the insurance claim, it was a no-brainer. However, we got lucky because I believe over 90% of the jewelry was recovered.
And so the insurance company covered the remaining 10%. So this is the kind of stuff that happens, right? There’s no glamor. But I can tell you that the adrenaline is when something anomalous happens, and then now you’re going in, you’re essentially acting like an investigator. Let’s look at evidence. Let’s look at data. Let’s review footage. That, when I see the team working on that and in that process, you know, you can tell everybody’s engaged, everybody’s excited, emotions are running high, but they’re focused. And in the end, when they get to the answer, everybody feels great. There’s this like sigh of relief and then, oh, we did it, right? So it’s like these online sleuths like doing their work and then finally winning at the end of the day and then, you know, saving the jewelry.
Insurance & protecting investor gold
Monetary Metals
And Gabriel, you mentioned insurance. How important is insurance? Obviously, if someone just said, hey, trust us, we’ll keep the gold safe, you know, maybe an insurer wouldn’t feel comfortable insuring gold in a lease or gold on a lease in a jewelry store. But talk to us about how this type of asset assurance integrates with insurance and where kind of insurance covers the gaps and where asset assurance covers the gaps.
Gabriel Nasser
Look, I can’t talk in detail about it, but essentially we have layers of insurance to mitigate essentially all of the foreseeable risks and unforeseeable ones. What I want to emphasize, Ben, here is that while insurance cover is important and we do insure everything, we are always wanting to work towards the goal of never triggering an insurance policy. And so when you have that kind of drive, when you have that kind of focus and mission, right, you do things differently within the company. We’re not sitting there feet up on the table and kicking back.
Yeah, we got CCTV, we got all that. No, nothing like that. And I think this kind of approach and sort of attitude has enabled us to have the confidence of the largest insurers in the world. And when underwriters stick by your side for that long, it’s because they know they have a reliable partner doing their work professionally day in, day out. And I can tell you, over the past 20-plus years, we’ve never had a single claim. Knock on wood. But that essentially is a testament, if there was any, to the kind of work and how seriously we take it and sort of the, the drive that keeps us innovating and staying ahead of the curve.
Monetary Metals
I want you to kind of quickly go through some of these answers in a more rapid-fire way. So I’ll ask you questions from all over the map about asset assurance, and you can answer as short as you’d like in this rapid-fire section. So Gabriel, I want to start. When people think about theft in gold jewelry, what would you say is the breakdown between internal theft and external theft?
Gabriel Nasser
Yeah, we’re largely focused on internal theft because that’s where the risk lies. You have people day in, day out watching and learning what’s going on, and so you want to prevent adverse events from that kind of audience.
Monetary Metals
All right, next one. What’s the primary causes of loss for these jewelry businesses? It is—is it specific items? Is it certain times of year? What are these businesses most likely to lose their gold?
Gabriel Nasser
I think it’s across the board. Sometimes you have high periods of high traffic during special events where the crowds can make it very hard to watch everyone. And so in the frenzy, stuff gets lost. But there’s also the stuff that gets lost week in, week out without anybody paying attention. And this is the sort of level stuff that we catch with ease thanks to our processes, technologies, and approach.
Monetary Metals
Let’s talk about some of those technologies. Which technologies would you say have helped asset assurance the most in the last decade?
Gabriel Nasser
Definitely radio frequency technology and CCTV. I think CCTV provides you with really visual concrete evidence. And secure RFID scanning provides us with irrefutable electronic scans of the inventory at the location. So when you put the two together, I think they make a great team. Now, I say that, but we combine it with other technologies out there. But I think they’re number 1 and number 2. These are the front runners.
How AI is used to detect gold theft
Monetary Metals
And let’s talk about AI. Obviously, AI is able to enhance data and analysis. How important will AI be to the asset assurance space?
Gabriel Nasser
It’s actually not how important will it be, it’s how important it has been. And it is very important. And without getting into too much detail today, I can say that it augments human activity. So take for instance reviewing hours and hours, day in, day out, and continuous CCTV footage from thousands of feeds. There’s no way you or I and maybe 20 of our colleagues or 100 of our colleagues can do this flawlessly, right?
So AI steps in here to sort of do video analysis, pattern matching to help sort of distill and filter some of the events that are happening so that we can log them more confidently. And instead of having to review 1,000 events, we’re viewing 5 of them at a time. That’s one part. The other part is that AI is clearly helping us in a lot of the pattern matching and the data analysis part. And I think today we’re just scratching at the surface of what it’s going to be able to do, especially as we’re scaling fast here. And it’s going to be super important to help us maintain the level of assuredness, security that our investors require of us while at the same time deploying even more gold out in the field.
Monetary Metals
Let’s talk about the role between people versus technology when it comes to asset assurance. Obviously, a computer can’t go in and do, you know, a random audit. You need a person for that. But then there are areas where it’s really technology. You know, you want CCTV rather than a guy standing there all day long. So what is the breakdown of the roles between people versus technology in asset assurance?
Gabriel Nasser
Essentially, it’s simple. We take a view that all technology deployed out there is just a tool, and our team needs to use those tools to their maximum abilities so that we can do our job in the best way possible. Now, we as humans get involved in the orchestration part. Of course, we have systems that take the data, etcetera. But in the end, imagine you’re in a NASA control room, right?
And with the Apollo mission and stuff, right? You have all these advanced technologies, computers, etcetera. But in the end, What do you see? You see a lot of people on a lot of screens essentially making decisions. And ultimately, the hard decisions are still made by a human, right? And I like to think that this is the kind of way we operate, that all the tools, all the tech out there, it’s there to serve us and to make sense of it and to really augment what’s going on. It’s always a human overseeing all these things.
Monetary Metals
Gabriel, in your decades of experience, how often is the errors or the theft or the issues due to just manual error? Oops, someone dropped a piece of jewelry and it went missing versus, whoa, this was malicious theft. This person had an idea. I’m going to take a little extra bonus before Christmas. How often do you think is it malicious or just completely error?
Gabriel Nasser
Yeah so, so in the beginning it used to be a lot. We used to have a lot of errors simply because we were learning, right? And I’m talking about 20 years ago, right?
And over time, you start to reduce these errors. You start to reduce these instances. But today, I can tell you the team handles exceptions daily. That’s just the fact of it. And when you talk about how many of those instances are actual theft, etcetera, it’s less than 0.1%. And I’d like to believe that this is due to the fact that we are there watching on a daily basis, getting involved, right?
More than an owner would do, more than the internal team would do, right? Because our guys are not susceptible to collusion like a bunch of colleagues at a jeweler, right? So that’s a structural thing. And so it’s not happening by mistake. This is by design. And I think we want to work even further to reduce that error or those instances where theft is happening. But it just means that we are detecting them and we’re able to mitigate them and sort of minimize them as we go along.
Monetary Metals
I want to ask you quickly about POS integration. Obviously, maybe a lot of people at their different jobs from you know, a restaurant all the way to a grocery store, they have a POS system. How important is understanding or integrating or having security over that POS integration?
Gabriel Nasser
It’s super important, right? Because for a jeweler or a gold business, that’s their system of record. Essentially, it’s their team inputting data into that system. Now we hook into it, we take that data, and now we’re verifying the physical world against that data.
So if you take a piece of jewelry and say it’s, you know, 18-karat gold and it weighs 4 grams and so on and so forth, I’m going to hold you accountable to that because one day our auditors are going to walk into the store because the first thing they’re going to do is open up their audit app, pull the data from your system, which we already have, and say, okay, this one said, you said it’s 4 grams. I’m going to weigh it.
Okay, is it 4 grams? Yep, it’s 4 grams. Check. Is it 18-karats as you said? Okay, I’m going to XRF it. Okay, check. So we need that data because as a system of record, we are verifying things against it. And when we know that It’s the jeweler’s team who’s inputting data. And if they have a high rate of errors or data input, then we hold them accountable and we say, hey, what’s going on there?
Is it a system problem? Is it a person problem? Is it a process problem? And we can’t afford to have that. We aim for zero errors. That’s why we’re there. That’s where we keep the jeweler in check. And that’s how we give certainty to our investors.
Monetary Metals
And talk about these standard operating procedures. You’ve mentioned them a lot throughout this episode. So how important are the standard operating procedures versus, oh, well, we always just do it this way? Do a lot of jewelers have standard operating procedures before you come in, or do you have to build them, you know, in an integration often when you do this asset assurance? How important are these standard operating procedures?
Gabriel Nasser
They are super important, and it’s a mixed bag. Some have them, implement them loosely. Others have great ones. And implement them fully, right? And everything in between. And I’m glad you mentioned that because we fill that gap between what a supposed SOP and what the people actually do. And so whereas we don’t tell the jeweler’s people what to do, we just send recommendations, etcetera, we’re watching and making sure that that doesn’t go awry.
And I say this for very important reasons. When you go and avail of insurance, when a jeweler avails of insurance, right? He’s asked for these documents. He’s asked for his security system survey and things like that. They’re asked of what SOP they have in place. And when you don’t follow an SOP and there’s an insurance event, if they see that you failed to follow it, they’re not going to pay you. Simple as that. And it’s a darn shame if that’s the case. So we’re there to make sure that these events don’t happen.
Monetary Metals
I want to ask you again on gold jewelry specifically. Obviously, we’ve talked about because the fact that it’s very portable, obviously, it has a high value. It can be all these different complex pieces. There’s a lot of movement in and out of maybe a display case, someone trying on a piece of jewelry. So when you do these things like asset assurance and RFID tracking, CCTV monitoring, how important is it that the fact that the jewelry actually often moves quite a bit compared to some other items which are basically stationary? Someone points at it and says, all right, that’s what I want.
Gabriel Nasser
It is super important, obviously, for, for several reasons. One, When stuff moves around, sometimes it doesn’t go back to its original location, right? And of course, we have software that filters that and figures it out. And even if it doesn’t, we care about it being in location, right? That’s our primary goal.
Secondly, when you think about it from the jeweler’s perspective, look, if you can’t find it, you can’t sell it. So they can also use RFID technology to locate a missing piece because we have sort of this tracking function on the scanner that can hone in on a specific piece again, or and it goes like beep, beep, beep, beep, beep, beep, beep, beep, beep until you get close to it.
The closer you get to it, the stronger the beep, and then you can hone in and find it even if it was misplaced, right? So there’s a slew of technologies to make sure that, you know, the jeweler is also helping their case, right? They need to be able to sell something. They know they have it on hand. They can’t find it. You don’t want them to lose a sale, really, right?
Because that’s essentially going to hit their performance. The technology helps on all these fronts.
What happens when your gold is leased
Monetary Metals
I want you, as we come to the end of our episode here, Gabriel, to walk me through the lifecycle of a piece of gold as it goes through the Monetary Metals asset assurance phase. So obviously there’s this sale and leaseback portion, but before the gold is even on lease, on location at a jewelry store, your team is already there. They’ve walked through the jewelry location.
They’ve maybe done a couple of audits physically. They’re tagging, they’re tracing, they’re already having this security in place. So that by the time the gold is on lease, the asset assurance is there. So walk me through—I’m a piece of gold in a Monetary Metals client account, and I’m saying, all right, I’m about to go on lease and start earning a yield. Talk to me about what it looks like from start to finish and maybe throughout the leasing process for this asset assurance.
Gabriel Nasser
So essentially, it starts when the item is tagged, and the item is tagged and it gets sent to an approved location. What I mean by approved location is a location we deem fit from a security point of view to receive leased gold. That’s all it is. And once it hits there, we’re watching that piece day in, day out until it gets sold. So if you think of our investors, right, when somebody puts in 100 ounces, essentially they are backed by 110 ounces at a location of jewelry.
And the additional 10%, right, is to make sure we account for fluctuations. Because as you said, pieces are received. Others are sold, and so it’s a replenishment cycle. So we want to make sure that during that replenishment cycle, we don’t have less gold than is on lease. We want to make sure that we’re always keeping the investor whole. And these pieces, actually, they get to move from location to location. So take our jewelers are availing of leases at multiple locations, right? The multi-retailers. And that piece of jewelry is tagged and tracked from location A, and it can move to location B securely via secure transport.
We get to location B, it’s still there under the lease, and it’s tracked. And so when you look at this entire ecosystem of deployments, right, that piece is moving from location to location and eventually ending up on some lady’s finger. And when that happens, it gets replaced with another beautiful piece of jewelry that’s going to go through the same cycle. But we’ve essentially created a network of trust where all these locations are monitored and inventory movement between those locations is tracked and insured as well.
Monetary Metals
I want to ask you now, because oftentimes we have people say, listen, I have some physical gold at home, I’m interested in doing a lease with Monetary Metals where I take my physical gold, it changes, you know, form and location, and now it’s on the lessee’s platform. Maybe it’s in a jewelry store in the form of a bangle or an earring or a necklace.
But, you know, I think that storing some gold at home is actually safer than having it in the form of jewelry with some jewelry counterparty. So obviously today we’ve talked about the asset assurance team that you use and the actual different levels of inventory management and audits and reporting and technology. So talk us through some of the safety profiles that you see for gold that’s with a counterparty on lease compared to someone just keeping gold at home or under the pillow or maybe in their home vault or home safe.
Gabriel Nasser
Look, this is what we get up in the morning to do. I understand completely people wanting to hold gold physically under their pillow, right? Or in a safe at home. That’s a human instinct. Now, the case to be made here is that gold out there is so much more productive. And if anybody’s asking us or looking at us and questioning what we do, you know, we’ve been audited, we’ve been verified, and we’ve been doing this for over 20 years.
And we’ve sort of secured and helped finance over $14.5 billion and never lost a single piece of gold. We always, always endeavored and did return the gold to its rightful owner at the end of a loan or lease. So we’re going to continue doing that. And we have so much exciting developments in store to help us scale this and to continue delivering the trust that you expect of us and really to give us your gold while making sure that it’s put to work for you and being confident that you’re going to get it back at the end of that cycle.
Monetary Metals
I’m a big fan of the TV show Columbo, and he’s a, you know, investigator, a detective. And at one point, you know, he catches this criminal and the criminal is like, how did you do it? And Columbo says, listen, I do this every single day. I try to catch criminals every day. I’ve seen thousands and thousands of cases. This is your first time trying to get away with it. So you’re going to make mistakes. You haven’t done this. You’re not a hardened criminal.
This is your first time and you’re going to be sloppy. I do this every day. I’ve seen every trick of the trade. So Gabriel, obviously you’re our Columbo when it comes to asset assurance. You’ve seen every possible trick that people can try to do. And of course, for a lot of these people, it’s their first time trying to steal a piece of jewelry or maybe pilfer something. So what are some of those things you’ve learned over your decades in asset assurance that maybe some people just don’t understand and that you have over your years of expertise?
Gabriel Nasser
Look, first of all, that characterization is great. But look, as you know, I want to highlight this. There’s a whole team behind this, right? This is not a one-person show. This is decades of experience across people who have been doing this day in, day out, right? And the learning, the evolution on all fronts, the technology, the process, the data, all of that, all of that helps make sure that we continue to deliver on that mission, right? And I’ll tell you one thing.
There is not a single week that goes by today where something happens and doesn’t amaze me, where we, ah, how did we miss doing this? Or how do we—I don’t want to get into too much detail, and I’m sure we’ll have more episodes where we can talk about specific cases. And that is where you’re humbled. And I’ll tell you one thing, when we discover stuff like that, the kind of energy and excitement among the team when we’re just digging through this, right? And we’re going Columbo on ourselves, right? What’s going on here? How, you know, and I think that is part of that culture and the drive and energy that’s going to ensure we are number one and we’re going to keep doing this better than anyone else can.
Is earning yield on your gold actually safe?
Monetary Metals
Gabriel, I want to ask you just two more questions. So usually I ask my guests, what’s a question I should be asking all future guests of the Gold Exchange Podcast? But I want to kind of slightly alter that question for you, which is for someone who’s interested in leasing their gold and they think, all right, you know, I’m interested in earning a yield on my gold. What’s a question they should be asking in terms of the asset assurance and the security of their metal before they actually do their first gold lease?
Gabriel Nasser
Look, track record. Look at the track record. And I mean that very seriously. However, check who you’re giving your gold to. Check how they actually approach asset assurance, if at all. Check if they’re outsourcing this bit or really doing it seriously. Are they really spending the money, the time, the effort, right, to deliver a world-class experience or not?
I say this, but also question the provider and ask them, how are they going to ensure that this continues and that they’re going to stay ahead of the curve in the future? Right? Because your track record can go so far. You can care so much about what you’ve done in the past. I want to know what you’re doing today, and I want to know what you’re going to be doing in 6 months and 3 years. And that is the kind of question you ask.
And I’ll tell you that most, if not all, providers will falter on many levels. And I come back to the one thing that you said, which is this Columbo analogy. This is our bread and butter. We wake up and we do this. This is not a line of products that we’re offering. No, we are focused just on that, just on the high-value industry, jewelry, gold, right? And that is where our mission is going to stay focused.
Monetary Metals
Gabriel, my last question, it’s an asset assurance question, which is I’ve asked you about RFID, about POS, I’ve asked you about XRF guns, basically everything with a couple of letters in it. I’ve asked you about, I’ve asked you about audits and random reporting. I’ve asked you about basically everything I can think of when it comes to asset assurance, but there might be gaps. So as the asset assurance expert, were there any gaps that I missed in today’s interview that you want to educate our audience about?
Gabriel Nasser
Look, I think, Ben, you covered everything. I mean, the gaps I want to talk about is that what we have in store for the future. Today, I’ll tell you one thing. There is a lot of human involvement in the audit process or the daily scanning of the inventory by the jewelers and their staff. This is an area where I’m very excited to say that we’re going to be improving a lot on.
We’re trying to really remove the human element as much as possible, not only to introduce automation, but to make sure that instead of doing one inventory scan a day, so to speak, we can actually do a continuous inventory when we like, right? So the gap I want to mention here is that, like, what are we doing? What do we have in store for the future? Right? And how are we going to give more assurance to our future investors and existing investors that there are more exciting things to come for bigger leases so they can take more of their gold that’s sitting on their pillows and put it to work with us?
Monetary Metals
Gabriel, it’s been an absolute honor and pleasure getting to work with you and the asset assurance team. For those who are listening and are interested in putting their gold to work with Monetary Metals, they can check out Monetary-Metals.com. Gabriel, thank you so much.
Gabriel Nasser
Thanks, Ben. Always a pleasure. Bye.
