Hedging Against Volatility With Precious Metals with Christopher Blasi

And today we have Chris Blasi, who's the president of Neptune global holdings. Neptune global is a full service precious metal dealer, serving advisors, broker dealers, institutional investors, and individual investors. Welcome, Chris.

Chris Blasi  00:40

Thanks, Doug. Good. Great to be on your show.

Douglas Heikkinen  00:44

Thank you. Tell us a little about Neptune global and how it got it start?

Chris Blasi  00:50

Sure. So Neptune global is 18 years old. And we're kind of a unique organization. I mean, you refer to us as a precious metals dealer. But we're actually we believe much more than that, we actually developed a global trading platform for the precious metals, which is a big differentiator. And on top of that we've created and productized precious metals, investment assets, that are really designed to give maximum benefit, flexibility, liquidity, and transparency to investors.

Douglas Heikkinen  01:21

So what exactly are you doing at Neptune global? And how does it work?

Chris Blasi  01:26

Sure. So what you know, to go back to our origins, I came from a background in your traditional full broker dealer world in New York City on Wall Street, worked with a mergers and bank, m&a firm and merchant banking firm. But was was very enamored by macro economics and, and what drives major trends. And in the mid late 90s, I saw that, from my research that the precious metals were going to enter a secular bull market, beginning in the early 2000s. And that means basically a market that's going to run 20 to 25 plus years. So that's a real long term trend. And I want to get in front of that. And I wanted to participate in a big way. So and that market, I'm referring to that was going into this secular bull market is the precious metals. And I went into it, and I saw that there was a lot of there was a lack of innovation in the precious metals world, right. So there was a lot of productizing of, of offerings that were the underlying was always debt or equity. But the precious metals were kind of neglected. And that's because it went through a long term 20 year bear market prior to 2000 2001. So that's how we come up with the idea of the creation of certain products and benefits the investor beyond the traditional options for precious metals. So, you know, that would be the gold and silver bolt accounts and the PMC ounce. And I'm happy to say that these have been in the market for over 10 years, and they have handled the, you know, the PMC ounce has handily outperformed golden silver, particularly on a risk adjusted basis. And the golden silver bolt accounts are also serving investors Well, so what we basically long and short, we took the best of both worlds, we gave the customers all the benefits of owning physical metals, but with the ease of trade, transparency, liquidity that they'd expect, and they're used to with exchange traded products like ETFs.

Douglas Heikkinen  03:30

It's certainly a misunderstood asset class, how can you help us get an understanding around it? Sure.

Chris Blasi  03:37

So you know, I'm going to step back and here's how misunderstood when it comes to wealth preservation. When you talk about the true dynastic wealth of the world, you know, it's three items, it was land, it was fine art, and gold. And when I say dynastic, I'm talking about stores of wealth that go back hundreds and thousands of years. Companies, which are represented by stocks and bonds are transient, right? They come and go, we all know that there were plenty of businesses 100 200 years ago, even 50 years ago that don't exist anymore. But those are acts like more tactical investing. So Fine Art, though, is really not something out you know that most investors can participate in land we understand as the real estate market. But and land does of course, in real estate is always heavily promoted because there's big industries that make money off those transactions like banks, you know, mortgage originators and such. And then there's gold. And gold is extremely unique, because unlike land is divisible and portable, fine. Art, again, is not liquid, it's very limited. So gold is something that almost all investors can participate in. And it's important to realize that it is a an has always been a store of wealth. And if anyone thinks that has changed They have to ask themselves and why do the central banks hold one reserve asset, and that's gold, they hold it, they don't let go of it. And they continue to add to those positions, especially in countries that are trying to achieve a bigger seat, or more stability. And it will be countries like China and Russia and Turkey have been adding to their holdings. So with that in mind, I think investors should remember that this has always been a store of wealth, it continues to be a store of wealth, and that working with the right organization can help them navigate and position themselves in the proper form to hold it in. To for that portfolio benefit that it offers,

Douglas Heikkinen  05:44

We run lots of stories about gold on the site about the price of it going up and down, how things are going to affect it? Are we thinking about gold in the right way?

Chris Blasi  05:57

Again, I would say, no, realize when the when we look at the traditional news stories about stocks and bonds and interest rates, there's usually you know, there's there's a an agenda behind it, there's a promotion on certain asset classes, and because of the nature of gold, because it isn't generally a asset, where your typical broker dealers can realize, you know, as the same level of maybe revenue, or that they can with gold is gold is more of a buy and hold at least hold for intermediate term, it generally is kind of neglected. But that, that, that is not a reason for investors not to participate. And wealth managers, right, the wealth managers, and client and investors always should have and now more than ever have a position in precious metals and gold just being one of the precious metals in their portfolio. And firms like Neptune global have made it their, their charter, what we what we've done since the beginning is how do we make precious metals investing easier and more beneficial, and to trade and transact in a way that wealth managers and investors are used to and comfortable with and expect because that's what they get from their other assets. So that's what we've done. And we've been doing it successfully. So basically, we've made precious metals investing and gold investing. We've improved upon it to make it more attractive, and to be embraced by the greater, you know, the broader audience.

Douglas Heikkinen  07:37

So gold is easy for us to understand, because there's so much around, there's so much media around it. It's around our fingers. But what are some of the other precious metals? And why are there Why are they important?

Chris Blasi  07:50

And that's a great question, because you have silver, platinum and palladium. And the precious metals do not move in lockstep. And the reason they don't move in lockstep, is because they have different drivers behind them. Now, they will generally all trend together. But there are times when gold will be moving up and silver will be flat to down. But what's also interesting is if you diversify yourself intelligently across those metals, you're going to get the benefit of diversification, which is always being championed as part of a portfolio. And even in each asset class, you diversify, right. So if a certain percentage of your portfolio is in equities or stocks, you don't go into one you diversify across a number. Well, the same thing holds true with the precious metals. And there's different drivers. So silver is a what they call the quasi monetary and industrial metal. And monetary means it's moving on monetary issues, which gold really just moves on. But then there's the industrial applications for silver. And silver is naturally shortened supply. And it's used in all the most high growth industries that are so you think about it that's used in your mobile phones and your computers, right, these are high growth, and also from the environmental angle, or that perspective, what we call ESG. Investing. Silver is the critical component in solar panels. So if you look at it silver, even though it's volatile, you know, it's trending up. And it has such excellent under underlying fundamentals. Now, platinum palladium, again, extremely rare metals more rare than gold and silver, one of their big drivers is they're a key component in pollution control is particularly catalytic converters. So again, from an ESG perspective, that should make it very attractive to an investor. And on top of it, the reason it's so rare, and, you know, there's such support for its prices. platinum and palladium predominately come out of only two countries, and that's Russia and South Africa, and South Africa has very unstable, you know, their minds and their delivery of a product is very unstable. Russia, you know, obviously without saying there's a host of reasons that that puts the supply coming out of Russia in a precarious position. So, you know, again, for metals for different stories, different drivers, but work together in an X, you know, you know, ideally, when you diversify across them in an intelligent way,

Douglas Heikkinen  10:24

what are a couple of the biggest questions you get from advisors when talking to them about your product?

Chris Blasi  10:30

Sure. So we'll talk about the product of PMC ounce so the PMC ounce means precious metals composite, and that's that it's a turnkey diversified position across the precious metals. So with each PMC ounce you buy, you think of it like a pizza, there's a slice that is gold, silver, platinum, palladium, that's all back to hundred percent by the actual physical bullion in the depository. It's fully allocated, and it's titled in the clients name. Now, what advisor is asking is, so how does it provide a superior risk adjusted return? Now it's proven, it continues to do so. And how it achieves that is it's that position, that gold, silver, platinum palladium that you get with each PMC ounce is weighted logically, right, there's not the same amount of investment or size going into platinum and palladium as you are gold, gold is still the primary precious metals, followed by silver, platinum, palladium. But that unique weighting and allocation delivers a superior risk adjusted return. And just to put things into perspective, since 2008, and the reason we use that data is when the PMC ounce was launched. Since 2008. As of yesterday, gold is up 117%, silver up 132%. And the PMC ounce of 170%. That is not an immaterial difference. So it is bested gold in that period by over 50 points, silver just about 40. So you know, that's substantial. And to, to realize you have achieved that with a superior risk adjusted return is really something that almost all portfolio managers should be striving for, and investors.

Douglas Heikkinen  12:18

So once you get past the advisor barrier, and they understand what's going on here and what you're doing, when they need to talk about this opportunity with their clients, so they can understand it as well and feel it's a viable investment. How can advisors talk to clients about this?

Chris Blasi  12:35

Sure. So you know, a lot of this is new, an advisor has an important role. And a lot of times getting into the minutiae of the details of each product, you know, could be unattractive. So one thing we'd invite an advisor to contact us for any questions to assist them with. And, of course, if they ever decided to conference us in, we'd be more than happy to support them. So but we have a website that they can visit Neptune global calm. A lot of the basic questions are answered there. There we've also been recommended by a number of well known investment letter writers which, you know, they could probably find by searching, but again, our website offers a lot of the important basic information. And again, we're here to support the investor community out there. And that includes the institutional investors, the wealth managers and the family offices.

Douglas Heikkinen  13:31

How has Neptune global done this year in this environment? The company is, as you know, been home working from different places, and how's the growth been?

Chris Blasi  13:41

Well, so we've been growing organically at over 25% per year for the last seven years. And actually 2000 despite the Coronavirus, no difference we've actually even spiked up. So you know, 2020 has been an excellent year, we expect 2021 from where we see the precious metals trending, to be, you know, even greater than 2020. We've actually seen some of the things that we've warned investors about for years and that is when the market gets really aggressive for the metals that supplies get tight. So back in March, if you remember when the stock market got hit really bad, when the when the krono came out with you know, everyone started talking about the lockdowns and such the precious metals got knocked down in price too. But what did investors do investors actually poured in, and what they did is they did not cover their money so much into the derivatives. Of course, a lot investors did like a hedge fund, but a lot of investors who understood that really the greater benefits of owning the physical asset. They piled into the market, and there was extremely tight supplies and it drove premiums up and those premiums have back down a little bit more toward what they were prior to March. But they are still somewhat elevated. But it just goes to show how little press you have little gold and silver, platinum palladium, there really isn't the market. Now, there's always plenty of derivatives. But you know, you do not want to lose the benefit of actually owning the underlying asset. That is a that is a distinction that investors really need to consider, right? When you actually are title and own the underlying asset, you've stripped out all the counterparty risk, and precious metals are one of the few assets that you can actually do that with. So that is something that's a benefit when you're building a diversified portfolio not to overlook so not only do you want the precious metals in your portfolio, but you want that segment of your portfolio to have the counterparty risk associated with exchange traded products and funds stripped out. And that's what we offer.

Douglas Heikkinen  15:54

Chris, this is fascinating stuff. metals are precious. Thank you for joining us today. Well, thank you. For everyone at Iris mediaworks our producer jakey beard and the power your advice podcast team. This is Doug Heikkinen.

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