Mark Pey, Head of Strategic Relationships for Monetary Metals in Dubai, joins the podcast to explore the convergence of crypto and real-world assets like gold. He breaks down how earning a yield on gold, paid in gold, could be the foundation of a new, emerging asset class.
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Transcript
Monetary Metals:
Welcome back to the Gold Exchange podcast. My name is Ben Nadelstein. I’m joined by my good friend all the way out in Dubai, Mark Pey. Mark, welcome to the show.
Mark Pey:
Thank you, Ben. Great to see you again.
Monetary Metals:
So, Mark, you are in charge of strategic relationships based out of Dubai for Monetary Metals. And I want people, first of all, who only hear things about Dubai, maybe in the media or in the news or on TikTok, tell us a bit about Dubai and where it sits in the gold world. Because if some people do know about gold, they think about London, maybe if they’re from the US, they only know about the US. But tell us about gold and Dubai and where they sit.
Mark Pey:
Sure. So happy to. Dubai is currently somewhere north of 25 % of all gold trade. And a lot of that comes from its strategic position, which is it’s a trade hub for the entire region. So you have the second largest container port in the world, and they’ve really leveraged that. And so in the gold trade, you have a really a flow of gold from mostly African countries. So the miners in Africa, Ghana, and Congo, and Mali, and all these places, the gold comes up into Dubai where it is refined. And there’s dozens and dozens of refineries in this country. And so then the gold flows typically, often in the form of jewelry, but also investment bars, to Turkey, to India, particularly, and to Europe, and then the of the world. So there’s this flow of gold. Now, we were meeting with the head of the Gold Sup, which is a gold marketplace, and we asked him, What’s the volume that you guys are doing through here? And he said, Oh, it’s probably around three tons. And we said, Per month? And they said, No, per day. So the volumes are truly astounding. Now, Dubai is leveraging that position by establishing its own standard called Dubai Good Delivery.
So famously in the gold world, there’s LBMA and the good delivery standard there. They’ve launched a competing standard here for investors that want to own gold that’s certified by Dubai and might be custodied here. So it’s an alternative to holding gold in New York or London, for example. So that’s really why we opened an office here, is to service that gold trade and be somewhere where there’s 25% of the world’s volume in port and center.
Monetary Metals:
And in terms of people might hear of a London good delivery bar, now there’s a Dubai good delivery bar. What are some things people should know in terms of gold standards? Some people think, well, there’s a certain purity or where’s this gold coming from? Is it mined ethically? How should people think about that when it comes to an area like Dubai?
Mark Pey:
Look, I guess I’d say that LBMA has promulgated rules over the years, and they’re very strict about responsible gold and sourcing of gold. Dubai Good Delivery Standard has the same level of rules. And so it’s an incredibly strict regime with regard to the source of the gold, is it conflict gold or anything like this. In fact, the regulator here really put their foot down at the end of last year. They closed 30 refineries here. So no, you guys didn’t quite do your supply chain work, right? So they’re very serious about it. Now, I think what you see in the difference is the depth of the market liquidity. And the Debye Good Delivery, the spreads are a bit wider for now. The The volume is not quite as much. It’s not as much as London and New York, LVMA bars. But certainly it’s a very high quality standard, and they’re pushing hard.
Monetary Metals:
And finally, in terms of West versus East. Talk a little bit about demand for gold or where each area sees gold, because in the United States, investors generally don’t think about gold other than, Oh, yeah, maybe 5% of my portfolio, or 2% in gold, or whatever. Oh, yeah, maybe grandpa has some gold coins in the garage somewhere. But where do they see gold in that part of the world?
Mark Pey:
So my background and everything, I was in the US and then Australia, and so it’s the Western view of gold a bit… Come on, it’s a pet rock, right? That’s what the bank system has told us for decades. And you come here and you expect that there’s a very different mindset about gold, but you have no idea the depth of that mindset. As I’ve gotten into it here, it’s in their DNA, okay? An example, for example, is India. I think it’s 23% of global demand for gold. And the main reason is that their local currencies in this part of the world, Africa, Asia, Middle East, their local bank currencies are really poor quality or have really let them down. So the example there, of course, is the Indian Rupee. It’s launched in 1948, the modern Rupee, one to one with the dollar. I think it’s trading 83 to one today. So So that gives you an idea. Their local bank currency, they just don’t see bank savings as a safe place to hold funds the way we would, for example, in dollar world or Euro or Yen or some of these other main currencies. So that’s what triggers it.
And then, of course, you have the cultural thing, for example, for India. Now, they had an effort to get the gold out of the temples. So there’s gold held at temples in all different cults in India. And there’s a big government effort to get that out and monetize it. It failed. What they said is that the priests said, We don’t own the gold that God’s do. The gold that’s in the basement. And you’re talking about hundreds of tons of gold in the basements of the temples. So this is embedded in the cultural fabric, in the religious fabric, in the mindset, in how they think about wealth. And so very much an emphasis like that. So the thing that we say to people here, and it lands with people, is don’t think about price, think about quantity. How much do I have and how can I get my hands on some more? So very, very different mindset. Super interesting.
Monetary Metals:
And I want to ask you, as someone who’s been in multiple parts of the world and seeing different regions, do you think that as you go Western or as you go Eastern, that there’s a gradient? So for example, the Germans might understand gold a little bit more than people the United States. Does that happen geographically? That the closer you get to the United States, the worst people understand gold, and the farther away you get, the better?
Mark Pey:
I think you can correlate it to the quality of local currency and bank money. So Germany, you give that example, in the great grandfather and great grandfather, they had hyperinflation in Germany. And so that’s still in their muscle memory to understand that, hey, at the end of the day, if you buy currencies, you really You can’t put all your trust in them. So yes, there’s a gradient now. Of course, in the United States, we’ve had King Dollar. So that’s always been… It’s a bit like asking a fish what water is. So people that operate a dollar world, they just don’t even really think about USD is like the water. Some of that is changing, but certainly demand, I think, is inversely related to the quality your local currency.
Monetary Metals:
And do you think that people, they talk about an exorbitant privilege in the United States that we have such a strong economy, a strong currency. There’s this talk about, Oh, we export our inflation, all these different discussions when it comes to the dollar versus other currency. Do you think that that is actually going to strengthen over time? Do you think the dollar is going to get stronger over time compared to these other currencies, maybe not compared to gold? But do you think that the dollar is basically going to continue to outperform versus foreign currencies? Or do you think that over time, maybe places like Dubai or the Middle East will actually say, Hey, our currency is going to strengthen compared to the dollar, the Yen, the Ruble, the Wuhan? Where do you see these other currencies compared to the dollar?
Mark Pey:
Yeah, there’s been a lot of commentary around exactly this, but let’s just stick with the basics. The US won World War II, and we designed the Bretton Woods dollar-based world economy. So two out of three dollars are outside the US. That’s for starters, two out of three. People think of the US Federal Reserve Bank. It’s none of those things. It’s not a reserve. There’s no bank, and it really doesn’t control the dollar. When Mitsubishi borrows from Deutsche Bank in Tokyo denominated in dollars, the Fed has absolutely no control or oversight or anything over those dollars, and that’s two out of three dollars. Okay, let’s just level set. The next thing to think about is derivatives trade in the world. The % of derivatives trades that have a dollar leg to them is 99 %. We live in dollar world. Now, when was the last time you saw something in huge demand go to zero as a price? Really just not a likely scenario. Now, remember that gold stands in opposition to all of the bank currencies. It is the anti-currency. It’s the kryptonite for bankers. And so, relatively speaking, I think the dollar is going to be just fine relative to the other currencies.
Last year, you had a currency crisis where the dollar lost 24% against gold. Anyway, that’s the perspective. There’s a lot of commentary in gold world about how the dollar is going to go away and the BRICS country is going to launch a lot of thing. I don’t think it’s necessary to buy into that. As I said, I think you want to think about quantity. How much do I have? How can I get more?
Monetary Metals:
Now, I do want to ask you more about Dubai here. So a lot of this gold trade has moved to Dubai, and obviously a lot of this crypto trade has also moved to Dubai. And I think part of the reason is because in the United States, people maybe don’t necessarily see the reason to have a stablecoin because I already have a US dollar. What would be the point of putting that onto a crypto or onto a blockchain? Why would I need a token when I have the real thing with me? But talk about the rest of the world who do want dollars, like you’re mentioning, where dollars are part of their ecosystem. Why do you think that places like Dubai or these other areas have embraced crypto, embraced gold? Do you think part of that is because they’re saying, Hey, we need dollars, and this is a better way to get those dollars?
Mark Pey:
Yeah. So you have to acknowledge that in the previous regime, the last four years, was very anti-crypto. So SEC was really cracking down. There was also an effort to debank crypto companies. And so really an anti-crypto vibe from the US. So other jurisdictions have picked up the slack. A great example is Dubai. Now, they have something called Vara, V-A-R-A, Virtual Asset Regulatory Authority. You go there, it has the stamp of the Dubai, Government of Dubai, at the top of the page. And It gives you in detail how you must react here, what are the regulations. They’re extremely open, and they’re very clear, which is why there’s so much crypto activity here now. The stablecoin subject is a super interesting one. It’s a way, for example, for people in Nigeria to own USDT. They want to transact in dollars. They want to own dollars, and it’s a very simple way for them to get their hands on it. You have an interesting dynamic right now where the USD stablecoins are contributing significantly to the demand for US treasuries. Why would the US want to limit that? There’s some acknowledgement of that. There is some regulatory clarity that’s happening out of the US on the stablecoin side.
What’s interesting to us, of course, is the gold asset tokens, and what are the different ways to architect that? I’m sure we can get into that, talk about that at some more length. But really on the USD and the stablecoin side, it’s just useful. It’s a useful way for people, like I said, Nigeria, to get access to dollars and to use that.
Monetary Metals:
I do want to ask you now about this crypto world and gold world. So some people might look at you and say, Mark Pey, you don’t seem like the guy who would know a lot about crypto. And Ben, you might be the crypto guy, and actually vice versa. Mark, you’re all about gold. And Ben is like, I don’t even know what that is, right? But where Where do you see… Tell us, the audience, a little bit about you, your background, how you got into this gold world, the crypto world, and how you do know so much about both of these worlds.
Mark Pey:
So I think like a lot of people, 2008, 2009 financial crisis I was really curious, hey, what happened there? We were going along, there was prosperity, and then all of a sudden, what? The banking system broke. So as you do your own homework, you see there’s the investment layer. Below that is the banking layer, below That’s the banking layer. But below that is the monetary layer, which is this mysterious realm that we’re not educated on, we’re not told about. I think that’s really changed since 2008. People understand what the word debacement means. Nobody knew what basement was in 2008. As I dug into it, you inevitably arrive at the monetary layer. Then I think you have to arrive at the yellow metal. You must acknowledge that this is something it has just it has just worked. Then you start digging into why it has just worked for thousands of years. When you decide not to own gold, you’re making a bet against something that has worked for thousands of years. I hope you’re pretty confident in that. So now with regard to crypto, I got interested about 2012. I had spent nine years at Microsoft in the technology side, big enterprise computing, so I understood how the software flows.
I went 2012. I flew to Silicon Valley to the Bitcoin conference, 2012. And it was just a room full of kids in black T-shirts at that time. And look, I bought some for 140 bucks, some Bitcoin. And Sold it at 800. It was a genius trade because it then went to 200. But everybody’s got their crypto origin story. And so really have followed it from a transaction processing platform point of view. Really thinking about it, they’ve told us it’s money, they’ve told us it’s for remittances, they told us a lot of things over the years. It hasn’t really ended up being… I mean, if it was the great transaction processing platform, Amazon would use it, Apple would use it, Microsoft would use it, they don’t. It has its absolute benefit, certainly as a speculative asset. But from a platform point of view, it’s been super interesting ride. You’re waiting to see which This is the platform that is going to at least go to the next game. There’s never an end game. It’s always just the next game. All right. So the next game, we watched closely Bitcoin Colored Coins back in the day. Now, for the crypto enthusiast, I think I’d just say that when they changed, when BIP changed to merged mining, I think that was really a watershed point.
So now you have consolidated mining in these small groups of consolidated power that are able to essentially centralize. If Bitcoin had stayed truly decentralized, it would have really been a very different game. So then along comes Ethereum. My comment about Ethereum is that if layer one was good, layer two wouldn’t exist. Layer two exists in order to fix what is really terribly broken about layer one. Feed levels, fee calculations. So So it’s been super interesting from a platform point of view. Now, new chains have come along. I think there’s some real merit to the… So in a technology adoption, the first one is rarely adopted as the final one. So the first one was Bitcoin. What’s the likelihood that that is the final platform that people settle on? I think it’s relatively low. Now, Bitcoin could be a super interesting asset. 93% of Bitcoin has been mind. It’s set up to encourage hoarding, not to encourage circulation, certainly not as money. Why would you get rid of any of it in your hands? I know I’m going around a lot of different subjects here. Solana is super interesting to us because you have some real software development, technology experts, senior network engineers from Qualcomm that designed this.
They thought about the crypto problem and designed this thing. They have something called proof of history, which just is transaction ordering, and that’s a fantastic way to solve it. And super low fee levels, transaction throughput is high. What you can do with a native token is very established. Really super interesting. So there’s still platform wars that are going on. I think I’ll just say quickly, the original ethos of DeFi, your centralized finance was peer-to-peer. Now, you’ve seen a lot of centralization in liquidity pools. That has meant a decrease in user control, decrease in transparency. Yes, there’s more liquidity. You look at total value locked, as they say for Ethereum. It’s substantial. But there’s vulnerability. You had Hyperledger, for example. They decided to change how their Oracle feed works. Oh, sorry, we’re just changing the game midstream. That’s because it’s centralized with an Oracle. So you’re going, I think if DeFi would get back to its original peer-to-peer roots, there’s tons of promise there. Anyway, Now, from a regulatory point of view, the US is opening up. It’s clear. They have some much clearer guidelines from SEC. There’s been a lot of talk about Trump and his openness to the whole thing.
However, Now, as you see, did announce that you can’t just do anything, that there are going to be some coins that are securities. They pointed specifically to governance tokens and utility tokens. I’d say, caveat, MTOR there, right? Singapore, by contrast, has told local crypto providers that they have 30 days to cease their overseas operations. Yes, they’re allowed to do crypto things for local Singaporeians, not allowed to do something overseas. So there’s an exodus of crypto companies out of Singapore. We thought Singapore maybe was going to lead the way. They were early with some clarity. Dubai, I think, has just the right balance. They don’t have their heads in the sand, for starters. They’ve made very significant investments in the domain. They have very, very significant tens and hundreds of millions of dollars from the official sovereign wealth funds and things like this. And then a very clear Regulatory regime, I suggest people go to Vara, V-A-R-A. It’s all laid out for you. Anyway, those are initial comments about it. Now, specific to a gold token, you have a man with a gun standing over a bar of gold. It’s Monday morning, 9: 00. How do we make sure that that bar is represented on that blockchain?
Just internally, we call it the Monday morning problem. You can make different representations about how the ownership of that bar is represented by a token. You have, for example, PAX Gold, who’s one of the pioneers in the field. But you have to note that the PAX token has not been very successful. They have 45,000 users total after seven years. It’s interesting. They do some things. They got some early hedge funds to buy it. They’re doing some trade of it. I think 36% of PAX is held by the top 10 people. It’s just not really been successful. We have some really, I think, important ideas about how you can use yield to make your gold token successful. Those are the top-level thoughts about it. And then it is a stable asset, Obviously, gold, and having a representation of it on a blockchain we think is interesting and useful. Our point of view is that’s a distribution channel. We’re not in the business of issuing a token. We don’t touch crypto in any part of our operations, just so people are clear. Because we maintain this regulatory distance from that world. We supply gold now to a crypto token and have a bunch of other conversations underway to do that in a fashion that reflects the full promise of gold, which includes some yield.
Yeah.
Monetary Metals:
Yeah. So, Mark, I do want to touch on that now. So obviously, for those who don’t know, Monetary Metals provides a yield on gold paid in gold. We do that through our different products, either gold leases or gold bonds. And there was this idea of an asset class called a real-world asset. So it would be a token or some type of crypto where they said, Hey, instead of it just being numbers on a ledger and those are worth something for some reason to some people, instead, we would have a real-world asset, whether that’s a mortgage on your real estate, or whether that was a piece of gold, or whether that was art so that someone tokenized. So this came along in crypto and they called them real-world assets. I want you to talk about those for a minute, and then now, of course, the real-world productive assets where I think we’re leading the way.
Mark Pey:
Yes, that’s correct. That’s a great intro. So yes, people… Okay, so there’s ones and zeros on a ledger somewhere that you can own. You want to own essentially… Remember what one of the phrases was, You will own nothing and you will be happy. Anyway, there’s ones and zeros that you can own if you want. But there are real-world assets, obviously. Now, if When you think about tokenizing something like stocks, shares, it’s a complicated thing to do. Let’s say you wanted to tokenize shares of IBM. They have about eight different classes of shares, Class A, Class B. They do things like what are called corporate actions, which means the share split, the share pay a dividend. Then you have things like proxy voting. The shareholders need to vote on proxy. This is a very difficult asset class to actually tokenize. I would say that real estate is equally difficult. It’s been 5 or 8 or 10 years since people talked about tokenizing real estate. I don’t see. I see a few projects where they seem to have gotten it right, but there’s all different title systems around the world, multiple title systems in each country. So tokenizing real estate is a bit hard.
Tokenizing bonds has its challenges. Tokenizing gold is relatively simple compared to those. There’s a bar and you have an owner of the bar. You know the weight of the bar. You can get a market value of the bar. There’s a custody, there’s a jurisdiction. It’s very straightforward. So there’s been some vanilla tokens that have been launched. We’ve talked about packs. I spent quite a few years around Silicon Valley, and one of the things that I remember a smart guy told me, he said, For people to adopt something, it has to be better. I’m not sure what’s better about buying and selling gold using blockchain. You look at the gold dealing companies, they can buy and sell gold online instantly with an app, very simply. So what we think is better is a gold token with a U. So we’re talking about real world asset, RWA, people are very excited about it. Rwpa is a category We think we’ve invented. And so real-world productive asset. With our leases, we do leases to companies that are in the gold bullion trade. They use gold in their business. We provide financing in the form of gold to those businesses.
They pay a little bit of return for that, a little bit of yield. And we have tokenized that in one of the partnerships that we’ve just launched here in Dubai. And look, I think the promise of that is tremendous to finally be the thing that unlocks a lot of interest in a tokenized gold offer.
Monetary Metals:
And Mark, I want to ask you now about if you think these different rails or different methods getting into gold, I want you to help me walk through someone all the way from an average Joe, and we’ll go all the way to central bank. So you’re an average Joe. You hear Costco is selling gold now, or Walmart is selling gold now. And gold had a great It’s a great year in 2024. It’s having a great year in 2025. And you think, I’ve never really owned gold. I’ve never really thought about owning gold. So for those people, it’s most likely going to look like what if they wanted to dip their toes in for the first time? Is it that they should look for a gold token? Should they go check an ETF? Should they just go find a coin shop? What would even be the first step for a person like that?
Mark Pey:
I think the first thing… So people have this impulse, right? Oh, gold, it’s independent from the financial system, and it’s valuable no matter what happens out in the world. I’m going to I’ll buy some and I’m going to bring it home. That’s the first impulse people have. Now, that’s fine. It ends up being problematic. You put it under the bed. Now, someday it’s got to come out from under the bed. And unfortunately, you exchange it for cash, let’s say. Unfortunately, the guy that you’re going to exchange it to, he doesn’t know if it’s real gold, he doesn’t know where it’s been, he doesn’t know origin, anything like this. So he has to only pay you a very discounted price. So that’s an The option that you can have is to bring it home, but really, it’s got its problems. Now, the next option is you have a professional custodian. So a company like Brinks, for example, that custodies your gold. Brinks has been doing it for 160 years, something like this. You can own gold. It is your individual personal property under a bailment. This is the oldest form of ownership. It goes back to the middle ages of bailment.
So it’s a super simple legal structure. You are the owner of that. It’s similar to going to the parking garage. You hand the guy your keys. He has possession of your car. He does not have ownership of your car. You own the car. In this case, you own the gold. You’re the owner. That’s a progression. You have it sitting at home in a bar under the bed, or you have a professional custodian. Now, if you have a professional custodian doing it right, you presumably have a dealer that can make a price. Everything is liquid, you can buy and sell. There are apps to do that. It’s quite simple. And there are some great apps. We have a great partner, new partner here out of Dubai that does a fantastic job on the app side. It doesn’t touch blockchain. Super simple. Take the app in the app store, and now you’re going to You are the owner of physical metal. Wow. So a blockchain gold does enable you, as the promise to enable you, to do quite a few interesting and exciting things with gold, to move it around very quickly, to put it into yield products.
So there’s a promise there that we think is very strong. I would just mention lots of people own gold. They think they own gold in an ETF, exchange-traded fund. I would suggest that people read the prospectus of those funds because there are good ones and there are some not-so-good ones. If you look at one of the very biggest ones and you read the prospectus, it talks about the custody of the goal and the ownership of the goal. It talks about sub-custodians and sub-sub-custodians. So the guy holding your gold has hired a guy to hold your gold who has hired a guy to hold your gold. You don’t even require a contract between those different layers of custodians. I’d say that be clear, you own a share, trade it on the share market that is the price of gold. You’re not really a gold owner. Owner. So the benefit of gold for 5,000 years has been to be the owner. So we just think that those ETF products are an inferior way to own the product, to own this metal.
Monetary Metals:
And I also now want to ask quickly about institutions owning gold. So recently, China has said, Hey, we’re going to loosen some regulations. Some pension funds might be able to own some gold. And obviously, that could be a big source of demand, simply because in China, there’s just not that many investable asset classes. Real estate might be a bit of an issue in China, the stock market an issue in China. Gold is that asset that you’re saying. It doesn’t have that counterparty risk. It’s been around for 5,000 years, and people think, Hey, this is probably going to hold its value compared to something like a Taiwan or some other currency that I could jump into. When it comes to something like capital controls, it’s really the only thing that they could maybe reasonably buy. I want to ask you now as we come towards the end here, how big the institutional world is there when it comes to gold? Is it mostly retail people who are in gold? Where do we think about central banks or institutions? How should people think about these big players in the gold market?
Mark Pey:
I just make a quick comment. People have this view of China being a communist country. In the 1980s, Deng Xiaoping said, To get rich is glorious. Since that time, they have led people to accumulate wealth, and They’ve been very proactive about suggesting that gold is a great place for them to hold wealth. So yes, they made some changes where I think it’s an insurance company and other pension funds are able to hold gold. So yeah, very significant. I think institutional demand is still pretty modest. So central bank demand is strong. The people that supposedly know the most about money in the money system are buying it hand over fist. So that’s the central banks. The other investment institutions in the West, it’s still very underowned. And so as we continue to see gold price strength, I think we are in a bull market. In a bull market, you might have price dips, but then the price recovers and ends up heading higher. I think as that bull market continues, institutions have no choice but to have a really closer look at how much do they Now, owning gold with a yield is far and away better than just owning the bar in the vault, where they’re subtracting from the amount you have every year to pay for storage.
I think institutions are waking up to that. We certainly have strong institutional demand for what we do starting to. I think institutions wanted to see us as a our company mature and get our marketplaces deeper and get our processes deeper. We now have a SOC 2 registration certification, right? So we are getting very strong institutional, small institution and medium and large institutions, even, looking at our various investment products, leases, and bonds. That’s the comment I’d make about institutions is, yes, more and more they take notice as this bull market continues. I think all of the elements are in place for that bull market to continue. Nothing of the fundamentals from last year has changed in a substantial way. So all the fundamentals are still there. So very exciting time to be involved.
Monetary Metals:
Yeah, Mark, I do want to ask you, it does feel like there’s a bit of a horseshoe because on the one end, there might be some retail action where people are saying, Now’s my time to get some gold. I’ll go to Costco and get some, or I’ll check out a crypto app and I’ll get some gold. And on the other way, other end, you have central banks where the biggest players in the world, the most in tune to foreign exchange at reserves, and they’re adding gold to their stockpiles. But then in the middle of the horseshoe, there’s maybe a family office, right? And someone who says, Well, I have stocks, and I have bonds, and I have real estate. Why would I really add gold to my portfolio? So let’s say that guy comes to you and he says, Hey, I’m the head of a family office. Do we really need to add gold to our portfolio? It’s just going to sit there. It’s going to collect dust or collect fees like you mentioned. So what’s the pitch to that family office? Hey, here’s why you should own some There’s some really good academic work that’s been done by Oxford economics on this, about the value of adding gold to a regular portfolio.
Mark Pey:
Let’s call it 60, 40 shares and bonds, stocks and bonds. And it actually increases the return while reducing the price volatility. They have a sweet spot, maybe it’s 6 or 8 or 10% added to that portfolio. We get slightly higher returns and reduced share price or reduced portfolio price volatility. When you add instead a yielding product, the benefit runs away to the upside. We’ve got some great graphs and things that can walk people through that. Gold, for example, since the turn of the century, has returned 8 or 9 or 10 % in all the major currencies. You add another 4 % to that, which is the yield currently on our gold products, our secured insured gold offers Yeah. And the return difference is it’s night and day. It really is. So I think those are the comments I’d make for that mid-sized family office has been thinking about it. Absolutely think about it. Make sure you hold the metal. Don’t want to just hold a piece of paper. Make sure you’re the owner of the metal, and an owner of the metal in a scenario where you are earning some yield, you’re putting your gold to work, you’re making an interproductive asset that is paying the yield.
Monetary Metals:
Yeah. Yeah, and last question on this front. So in terms of the gold platforms, the gold providers, I think if someone hasn’t thought about gold as an asset class, they think, Oh, shiny pet rock, or I keep it in a safe. Can you talk a bit about the evolution of these gold platforms and these gold providers? Obviously, you can touch on monetary metals, but there’s other interesting platforms out there that are doing more things with gold than I think previously, if you haven’t thought about gold in the last decade or two, you might be surprised to hear about.
Mark Pey:
10 or 12, however, or 15 years ago, gold was very sleepy business. There was a dusty shop down on the corner that had some coins and things like this. I think, particularly in the West, that’s completely changed. You now have very modern apps that enable you to own the product and enable you to use the product. We have a partnership here where you can earn loyalty points, you can have cashback, you can use it for payments. So the app level, the software around the dealing and owning of gold has gotten much more sophisticated in the last 10 years. So I would urge people to have a look. Now, of course, our product has that added incredible bonus of earning you some yield on your gold. So if the 10-year treasury, if the bank, for example, is paying you 2 % on your… I mean, you can own the world’s artist money in best currency and are in four. So that’s a… How do you use the term? It’s a no-brainer. It is. I think as people look into how do we work, how do we do things, we’ve now done 75 leases, I think, over the last decade.
We have never misplaced a single gram of gold in that time. Every single one of those has oversubscribed, which means our investor demand is very strong. I think last year, our company was a triple. I think this year, the next 12 months, we make quadruple in size. It’s really an offer whose time has come is how we think, and we think as people really pull over, open the covers, look at us institutionally, we think that due diligence and everything is very credible, very credible how we do things.
Monetary Metals:
Mark, as we come towards the end of the interview, I want to ask you some questions, just broader questions about gold in a more rapid fire style, so you can answer as short as you want, as long as you want. So in your opinion, and now we just get to the fun crystal ball area. So obviously, we’ve talked about gold this interview, but we haven’t maybe touched on silver. So do you think that gold is going to outperform silver this year, 2025? And do you think that there’s a case that people who are looking at gold in their portfolio, do you think there’s a reason to add silver? Do you think people should think, Hey, maybe I should diversify my precious metals? Or do you think, Listen, if you like gold, maybe add more to your gold rather than adding a bit to silver. Where do you see the play between gold and silver?
Mark Pey:
I think gold is the king of the assets. So people need to. If you have none, precious metal side, own some gold. I think if you own gold and adding silver, I think it’s a great idea. There’s obviously, well, not obviously, but there’s a potential for better price appreciation. Silver has industrial uses, more than a thousand industrial uses, and it’s also consumed Which means when silver is used in a solar panel, unfortunately, that ends up in a landfill. And so that’s a flow of silver from the mine to the marketplace to a dead end. So it’s being consumed. Gold isn’t really consumed. So every ounce of gold that was overmined is essentially above ground and is still in human hands. Look, I’m not a specialist in silver. We’ve done a really successful silver bond. We raise 32 tons of silver from investors. They’re earning a 12% silver coupon in a silver-denominated bond for a mining project that’s in Idaho. And fantastic, right? It’s a three Year thing, 12% coupon in silver. Those people are going to have 36% more silver at the end of three years. So again, I think people need to focus on quantity rather than price.
I think they’re both the monetary metals. That’s the name of our company, is the Monetary Metals. Silver has been much less of a monetary metal in the last decades. Certainly gold is the king, and if people have none, that we would suggest starting with gold.
Monetary Metals:
Yeah, very interesting. And I want your take on this idea I’ve been mulling around, I’ve been asking people, which is that now with the ability to have either tokenized gold, crypto gold, or gold on an app, and you can buy fractions of gold and fractional gold, do you You think that the idea of silver as a monetary metal is starting to weaken, where people say, Listen, back in the day, if I needed to buy a Starbucks or a ham sandwich, I could use some silver, and using gold would just be so impractical. I’d need such a small amount. But as time has gone on, now you could really use a fractional gold. You can almost use an Apple Pay and say, Hey, here’s my credit card. Charge me five bucks worth of gold, and we’ll use that fractional gold. Do you think the argument for silver as a monetary metal is weakening, but silver as an industrial metal is growing, or do you think that there’s still going to be a role for silver as a monetary metal in the future?
Mark Pey:
I’ll give you an answer. Yes. I think the role of silver as a monetary asset is weakening. The central banks don’t own silver. Now, Russia announced they’re going to have a reserve of silver, and that’s fine. But as an industrial asset, it’s clear that a lot of high tech uses for silver is consumed in those uses, which is interesting. You’ve even had people say that silver is going to be extinct in 20 or 30 years. It sounds I think there’s a case for owning it. Again, I’m not really a silver expert, but I just really like the super deep liquid markets. It’s super, the very deep global demand from central banks all the way up to Indian housewives buying a necklace. It’s very interesting here to see, you go into the jewelry shop here and you see a necklace at the store. We’re used to in the United States or Australia or whatever, she’s coming with some of the fine gold. No, these things are heavy because it’s a savings account. So they buy the necklace, they take it home. The thing weighs four ounces. It’s got four ounces of gold in it. And what happens is, and you saw this during COVID, when times are tough, they sell it, they get cash.
When times are better, the monsoon was good and the harvest was good, they buy more. It is a savings account for people. Anyway, gold is the king. It’s the king monetary asset.
Monetary Metals:
Now, I want to ask you, in your opinion, are rates going to stay a bit higher in terms of dollar yields or currency yields? And if the rates do fall, do you think that that is a boon for gold? Because recently, we’ve seen basically a disconnect between interest rates or real interest rates, whatever type of interest rates you want to look at, and the price of gold, where previously people thought, Well, gold has no yield. Obviously not true. But they’ve said, Hey, gold has no yield, and therefore, when interest rates rise, there’s an opportunity cost to own in gold. But recently, we’ve just not seen that to be the case. We’ve had 5% rates or around there for a long time now, and gold prices have continued to go into this bull market. So do you think that that interest rate and gold price phenomena, where there was some seeming correlation for a short amount of time, do you think that’s over? And do you think if rates do fall, that helps gold in the same way that it has before?
Mark Pey:
That correlation with real rates has really broken. A very dramatic break there. So it’s likely that that is structural. In other words, not really going to see it correlate to real rates. I think the subject of rates… We’re watching to think about it pretty closely, right? So what’s the demand on the last 10 for auction, things like this, you had Jamie Dimon come out and say, The bond market is going to break. And then everybody jumped in and said, Oh, no, it’s not. Everything’s fine. So if you see faltering demand for the core reserve asset of the world, which is the 10-year treasury, then rates have to climb. Rates can’t climb because then the debt is unserviciable. So really, there’s a conundrum and a tug of war every day for demand for that key cornerstone asset, which is detain your treasury. When you have, for example, stablecoins, which could pull in additional demand for treasuries, well, no wonder the regulators are saying, Yeah, let’s make those okay now. It was super interesting times. Yes, treasuries at 5% is a competitor for gold. But gold at 4%, with 24% price appreciation against the dollar last year, plus your yield, additional yield, we think is super compelling.
So we’re just going to stick with our knitting, not going to worry really about where fiat money interest rates are not that much, no. And again, if people concentrate on on quantity rather than price, then they’ll be fine.
Monetary Metals:
Yeah. Mark, I get to ask you one of my favorite questions, which I ask all of our guests, which is, what’s a question I should be asking all future guests of the Gold Exchange podcast?
Mark Pey:
It probably would have to do with, do you know how money is created, how it comes into existence? Are you aware of how money is created? Because you can ask that of the CEO of a bank, and he does not know. All right? If they know that little about the product that they sell, right? How smart can they be? I think as you dig in to how our money is action, how it comes, how it springs to life, how it springs into existence as a ledger entry, then you start to think about, wait a minute, that’s really subject to abuse. It’s subject to political pressure. As they As those factors come to play. I’d say that’s number one. Number two, have people thought about what it means to have every economist in the world in groupthink, which is Keynesianism, neo-Keynesianism. Every single school teaches it. Every single economist. Every single economist. The Fed has got 1,300 economists or something on the staff. Every single one of them is a Keynesian. So I just say the thing to ask everybody, have you done your homework? Do you know how money is created? Do you know who Keynes was?
How about those questions?
Monetary Metals:
Yeah. Great, great way to end it. Mark Pay, thank you so much. And for those interested earning a yield on gold, painting gold, they can check on monetary-metals. Com. Mark, it has been an absolute pleasure, and hopefully I’ll get to see you in Dubai soon.
Mark Pey:
That’s it. Thanks, Ben. Thanks a lot. Really appreciate it. I think your podcast is going great.
Monetary Metals:
Thanks so much, Mark.
Mark Pey:
All right. See you.
