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Bob Coleman: Why Gold and Silver Markets Continue Being Driven by Paper Derivatives

Tom welcomes back Bob Coleman from Idaho Armored Vaults to the show to discuss the physical and derivative metals markets.

Bob explains the influence of the paper gold and silver derivatives on the physical gold and silver market. He discusses the financial industry model and the creation of paper assets, highlighting the importance of understanding the risks associated with these investments. He notes the number of structured ETF products has been steadily increasing.

Basel III regulations have changed the landscape for banks in the gold market. The banking system needs to deleverage and it’s important to diversify investments to protect against systemic risks.

Different storage options, such as allocated and segregated storage, were discussed, stressing the need for investors to understand the terms and agreements of their chosen storage method.

Finally, potential risks associated with investing in precious metals, including counterparty risk, sovereign immunity clauses, and political risks, were discussed, and the importance of conducting thorough research and due diligence before making investment decisions was emphasized.

Talking Points From This Episode

  • Bob discusses the risks associated with investing in physical metals, such as custodian fraud and derivative products with no physical exposure.
  • He outlines potential issues related to product authenticity, chain of custody, sovereign immunity clauses, no warranties and accessibility.
  • Investors should be proactive in mitigating potential risks and research different storage options.

Time Stamp References:
0:00 – Introduction
0:38 – Metals & Derivatives
5:02 – Increasing Derivatives
6:45 – Big Players & ETFS
9:39 – Proxies & Price Exposure
11:44 – UCIT Funds & Physical
12:52 – More Underlying Risks
15:26 – Basel III Bank Rules
17:45 – Running A Depository
27:18 – Jurisdictional Risks
28:00 – Ownership & Intermediaries
40:34 – Confiscation & Privacy
48:28 – Wrap Up

Guest Links:

Bob Coleman is a Registered Investment Advisor since 1992. In 2001, he founded Profits Plus Capital Management, LLC (RIA) and Dollars and Sense Growth Fund. Recognizing the necessity for physical metal storage, he founded Idaho Armored Vaults and Gold Silver Vault in 2008. They are a distinguished and respected leader in the precious metals industry specializing in storage, transportation, shipping logistics, and security.

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