The Role of Gold in an Investment Portfolio With Simon Popple
Simon Popple:
Gold typically is viewed as a safe haven asset. And so when there are concerns about other asset classes, a lot of people move to gold. You've obviously seen the gold price move up. But then if you look at where the gold price was in the late 70s, early 80s, we're nowhere near the kind of levels that it hit then.
Ryan Kolden: Welcome to Alternative Wealth, where we explore traditional and alternative investing, retirement, and personal finance concepts. I'm your host, Ryan Colden. Join us as we talk about the strategies and tactics that can help you make better financial decisions.
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Ryan Kolden: Today on the show, we have Simon Poppel, Managing Director at Brookville Capital. Simon is an expert in gold investing and has been working in the gold industry for over 15 years. Simon started his career in corporate finance at Singer and Freelander, and then went on to work in the senior banker group at ABN Amro, as well as serving as head of investment management at Strutton Parker Real Estate Financial Services before moving to serve as director at Topland, one of the world's largest private property companies. Something that I personally found really interesting was that Simon was asked to partner with Jim Rickards to write a newsletter called The Gold Spectator. Simon, welcome to the show and great to have you.
Simon Popple: Great to be here. Thank you very much.
Ryan Kolden: Perfect. Well, let's just get right into it. So Simon, in your opinion, what role does gold play in a person's portfolio?
Simon Popple: Gold is basically, it's a very important asset for people to have. It's used, you know, in our everyday language, you know, Charles has been as good as gold, looking forward to our golden years. You want to win the gold medal. But very few people have it. And if you look at how it's performed, it's actually performed very well. Now, I'm not a gold bugger. I don't think you should have all your money in gold, but I think you should have some and very few people have any. So I think that it's an important component of an investment portfolio.
Ryan Kolden: Okay. And it's been said that gold, well, people have insurance on their home, they have insurance on their car, they insure all these things in their life. but they don't have insurance on their money. And it's been said that gold serves as that function to access insurance on your money. What would you say to that?
Simon Popple: Well, I wouldn't disagree with that. I mean, I think that you get insurance before an event happens, if you see what I mean. you know, with debt being so high, you know, all the kind of worries that people have in the world, I think having some gold, you know, yes, you probably view it as an investment, but there's no reason why you shouldn't view it as insurance. And I think that having something in your portfolio like gold, even if it's just one cent, doesn't have to be much, but just having some of it, can potentially help you if there's some sort of crisis, currency crisis, whatever it may be.
Ryan Kolden: And how did you personally get into the gold industry? How did you come about realizing that gold was something that you wanted to include in your portfolio?
Simon Popple: Well, ironically, I actually made my money out of property and I'm a great fan of property. But everything goes in cycles and the interest rates coming down. You know, it's no surprise that property prices go up, you know, because they become more affordable. But when things started getting printed, that's when commodities became particularly interesting to me, because you can't print commodities. And I think that They are tangible. They're required globally. And one of the things I like about gold, to be honest, is, you know, if you look at gold as an asset class, you can take gold anywhere in the world. I mean, anywhere. And it's considered valuable. Now, you can't say that about literally any other asset class. You know, you have a property in New York. It's expensive because it's in the middle of New York or in the middle of London or wherever, wherever it may be. But as soon as people don't want to live in New York or London or wherever it is, then the value of that property goes down significantly. You don't have that with gold. There's a finite amount of gold on the planet. It came to Earth from outer space from meteorites and things like that. So you can't make it. And I think it's a great asset to have some exposure to.
Ryan Kolden: Okay. And generally speaking, because you're talking about cycles, what kinds of macroeconomic environments or types of cycles does gold do well in and what kinds of environments does it do poorly in?
Simon Popple: Gold typically is viewed as a safe haven asset. And so when there are concerns about other asset classes, a lot of people move to gold. You've obviously seen the gold price move up, But then if you look at where the gold price was in the late 70s, early 80s, we're nowhere near the kind of levels that it hit then. But I think that gold is generally seen as an asset class where people don't really know where to invest, and especially properties high. Equities are high. I know bonds have come down a lot, but if inflation takes off and I think bonds could get really hit, then I think that people are sort of thinking, well, having a bit of gold, as you said earlier, as a form of insurance, it makes some sense.
Ryan Kolden: Gold, as of recently, has had a pretty spectacular run. What is your take on why this has happened? Why has gold performed well after basically having a long period of time of basically, I don't want to call it non-performance, but just really not doing a whole lot?
Simon Popple: I think that gold, again, it goes back to this, people worried about debt, people worried socio-economic situations across the world. And I think that has been helpful for gold. But I don't think we're out of the woods yet. And I think that people think that we are, because inflation has come down as far as the official figures are concerned. But I think that there's Gold has got better days ahead of it than behind it. I'm a great believer that you should have some in your portfolio.
Ryan Kolden: There's two interesting trends right now. that I've noticed, and maybe you can give me your take on this, but over the past several years, and it's slowly been happening, it hasn't been extreme, but it appears that some countries are ditching their dollar reserves, U.S. dollar reserves as their reserve asset and have been accumulating additional stores of gold, probably as a potential alternative to using the US dollar. What do you make of this, of the central banks around the world purchasing a little bit more gold than they have in the past, say, 10, 20 years?
Simon Popple: Yeah. Well, I mean, I think, first of all, it's not a little bit more gold than they purchased. It's a lot more gold than they purchased. But I think there's a bit of FOMO, fear of missing out. If you said exactly why are they doing it, the answer is I don't know. But the fact they're doing it, I think is quite interesting. And so I would say to people, as I said earlier, don't go crazy, but it makes sense to follow what people perhaps in the know are doing. And if central banks are buying gold and it's viewed as an asset, that people want. And if people are de-dollarizing, then having some in your portfolio is probably no bad thing.
Ryan Kolden: And I want to shift gears a little bit into talking about how someone can actually invest in gold. And a common A question that I think I see gets asked is what's the difference between gold and silver? Why would someone consider buying gold over silver or vice versa?
Simon Popple: I think that there's a few things. First of all, you need to look at the premium that you pay over the spot price. Typically, that tends to be higher for silver than it is for gold. You also then need to look at the tax considerations. You probably should look at the insurance cost of the two assets. Personally, I buy gold, but as I said, I get someone to store and insure it for me, so I've got absolutely no gold in the house or silver in the house, nothing like that. I wouldn't say have gold over silver or vice versa. I think you should probably have a bit of both. But it's a strange old beast. No one knows what's happening to gold prices, silver prices, copper, uranium, whatever. But as I said earlier, you can't print them. And so having perhaps gold is the backbone of your portfolio, but then having some major commodity companies involved in other areas such as silver, copper, uranium, I think it makes a lot of sense.
Ryan Kolden: And what are the different ways that someone can invest in gold. There's physical gold, paper gold, investing in miners. What's your take on how someone should approach including gold in their portfolio?
Simon Popple: I'm a great believer in diversity and I don't just talk about diversity in terms of different products, but also different currencies, different countries and all that sort of thing. So as I said earlier, I use a sort of fancy football format. So I'd be more inclined to perhaps start off with having the physical and then perhaps having the funds and sort of build your team from the back. It depends on how much money you've got, but I mean, I'd certainly start off with just having physical gold and perhaps some funds. Personally, I'd rather have funds that invest in mining companies rather than futures and things like that. That's not to say you shouldn't have any companies that invest in futures, but I wouldn't put all my money into that. I think having a blend of your investments made sense. and you can go up the risk curve and have other mining companies but I think one of the big misconceptions that people have is, you know, they invest in a mining company to go, you know, I've got mining, you know, sorted. Now, you could have invested in an iron ore company or a copper company or nickel, whatever it is. So you kind of, you do need to do a little bit of homework, which is, you know, one of the services I offer, you know, to say, look, these are gold, copper, nickel, whatever companies. And so, you know, if you want to invest in them, then you get exposure to that commodity. But just because you invest in a mining, a gold mining company doesn't mean that you've got exposure to silver, let's say. So you do need to sort of, I don't know, you don't need to do much work, but you need to do a little bit of work.
Ryan Kolden: Right. And one of the things that you you just brought up was a misconception that people have about about gold. Are there any other major misconceptions just kind of off the top of your head that you see people having on a consistent basis?
Simon Popple: Yeah, I mean, I think a lot of people think you need to take delivery of it and you're going to have gold bars lying around the house, which is a massive misconception. You know, you buy it and it's a bit like buying wine. If you buy it and it never leaves the premises and you store it with them and insure it with them, it sounds like you sell it back to them. And I actually find it's got a useful proxy for cash. Yeah, you know, when you buy it, you buy it at a a slight premium to what the market is and you sell it at a slight discount. But once you've made a certain amount of money, but let's say it takes you six months a year to do that, then you're kind of in the money on it. And it's nice to have something that you can easily convert to cash if you need to. But chances are you don't want to. So it's a nice asset class to have from that perspective. And I think that liquidity is very important to people, especially in today's world. So the last thing you want to do is invest in a bunch of assets, not so much gold, but equities, bonds, whatever, in a property. And if you've got a cash call, you want to sell something at a profit. You don't want to be forced to sell something at a loss. Just touching on property, one of the things I particularly like about gold, to be honest, is you could buy a gold bar that's, let's say, worth $2,000, $3,000. Now, if you buy a property, that's probably worth $300,000, $400,000. Now, you can't sell a bit of your property. You can't just say to someone, look, have the garage for $50,000. It doesn't work like that. You have to sell the whole thing. So if you want to have a lot of money, then sure, you can sell your property, get a lot of money, there's a lot of tax and all that sort of stuff. But one of the things I like about gold is you can actually buy a bar that's worth a few thousand dollars. And if you need a few thousand dollars, you just sell it. And I think that's quite attractive to investors.
Ryan Kolden: Yep. Now, Simon, can you describe for the listeners what you do at Brookfield Capital, what it is that you help people out with?
Simon Popple: My whole rationale is I want to educate you. I don't want to touch your money. That's your thing. So you basically set up your own brokerage accounts and you probably have a bullion account for a reputable fund or a bullion dealer near you. And the whole idea is I just help you do it yourself. And I think that's a nice thing for people to do. And it's incredibly easy. You set up the accounts, the brokers and bullion dealers try and make it as easy as possible for you. And then once you've got these accounts, you can have a bit of fun in terms of what you do. And I think one of the important things to remember is you can actually sell this stuff. It's not like I've got a client who's poring over what should I do and all this sort of stuff, which is great. He's doing the analysis that is invaluable. But, you know, what I said to him is, look, If you screw up, you can sell it. And I think that's really important. And I think that's actually quite an important life lesson as well, because we screw up in all walks of life, not just investing, but everything we do. Yes, you go into it with the best intention of it working out, but you will screw up. And I think part of the idea of having a diversified portfolio is some things won't work out as you want them to work out and that's just human nature that's just the way the world is but if you've got a well diversified broad portfolio then even if you get some losers you should get some decent winners as well and it doesn't really matter
Ryan Kolden: Yep. One of the things that stood out to me that you just talked about, and we were talking a little bit about real estate earlier and kind of the pros and cons of real estate versus gold and how you can sell your gold, but not the piece of real estate is illiquidity and liquidity when constructing a portfolio. And just for people to not get in the trap of creating a portfolio that is, you know, 70 80 90 percent like illiquid and then having like you said a cash call or needing some kind of to be able to raise cash and not be able to access that and One of the things that I talk about frequently or deal with is alternative investments. And that's one of the cons, depending on how you look at it with alternatives, is that depending on which fund it is, there are sometimes lock periods on the order of quarters, years, five years. So I just thought that was an interesting point that you brought up with regards to liquidity.
Simon Popple: Now, please go ahead. One thing you talked about, I just want to add to it, In a rising market, it's quite easy to sell property because it probably takes a month, six weeks, maybe two months to close a property deal. Now, if you sell a property, let's say, for a million dollars, but by the time you come and sell it, it's, let's say, $1.05 million. If you made a good profit, you just want to sell it, and so you do the deal then. But if the market's going down, and you do the deal at a million, and then you get chipped at the last minute, and someone says, actually, well, the market's gone down, I'll give you 950. You're like, oh, ow, that hurts. And I think there's a A lot of people are in for a bit of a shock, not a bit of a shock, a massive shock when they bought something and if the market does go down, they agree a price, they try and close the deal out of that price. But if the market really tanks, then they're in a nasty position because the person could well come back and ship them and they're then in a situation where they're like, oh my God, do I take the lower price and I've got all the costs of selling it? Or do I tell them where to get off and take these costs on the chin? But if the market's still going down, I don't know, it's an interesting dynamic, which I personally don't like.
Ryan Kolden: Yep. And illiquidity is a very interesting it's a very interesting thing because on one hand you have people that will say you get a return over a comparable liquid asset for the illiquidity premium, so to speak, and I think there does have to do a lot with investor behavior, but 100%, everything's gotta be taken in the context of what fits your situation, and I think the worst place that you could be in is needing cash and you're not able to raise it. I think that's a nightmare scenario almost for anybody. Now, Simon, you have a book titled Beginner's Guide to Investing in Gold. Can you briefly talk about some of the high points that you cover in that book and where people can find it?
Simon Popple: Yeah, sure. Well, I mean, if you go to www.goldprogramme.co.uk, not only can you get the book and the list that I'm alluding to, but you can get a whole lot of free newsletters and free reports that I've done. But basically, the book is designed to help you invest in gold. And it's written in a very kind of simplistic way. It is called The Beginner's Guide to Investing in Gold, so it's designed for people who perhaps haven't done it before or have got limited experience of it. But yeah, I mean, it's a journey I think that people should be on. And whether they get on it with me or someone else, I don't think it really matters. But I think that people should definitely look at the asset class. And if they look at it and decide it's not for them, that's fine. But what I find slightly upsetting is that people, they're just blissfully unaware of it. And I think they should be aware of it. That's the idea of the book, that you kind of read it and you kind of go, OK, perhaps I should have a closer look at this.
Ryan Kolden: I know this is a little bit out of place from the flow that we've been going in, but you just sparked a thought, which was on one side of the spectrum, we see people who don't have any exposure to gold, just like you said, that are blissfully unaware, either want nothing to do with the asset or don't know about it at all. But on the other side of the spectrum, you have people that, oh, no. stocks or bonds, they own no real estate and they have everything in gold because they fear either the collapse of a fiat currency or the end of the world. Have you ever dealt with that kind of person in just your 15 years being in the industry? And what kind of words of wisdom would you impart on someone who is not participating in any other asset class?
Simon Popple: Yeah, to us, we get a lot of them. And I I'm not really a sort of Armageddon type individual. Yes, you know, as you say that there's, you could have a collapse of fear currencies, you know, there's a whole lot of horrible things that could happen. But I think that if that happens, I'm not sure life is actually worth living, if I'm really honest. But I think that you should have enough money, enough investments, call it what you want, that you're okay for at least a certain period. Now, I think the reality is if something really nasty happens, I think the world will actually rectify, steady the ship and we will move on. But we just don't know what's going to happen, let's face it. And so because of that, I think you should have at least some um something that is valuable globally and you know you talk about fair currencies now you know let's say a fair currency collapses um you could be in an awful lot of bother you know if if if it was let's say a you know a uk or us or whatever it is um you know at the end of the day it's a piece of paper and you know if a bank goes bust and uh yes you're insured up to you know i think 85 000 pounds in the uk or I'm not sure what it is in the US or elsewhere, but I mean, if that ever happened, it would be horrible. And because of that one reason, there's lots of other things that can happen, both good and bad. But because of that, I think that having at least some gold in your portfolio, and if that happens, it's probably more like physical gold, probably makes some sense.
Ryan Kolden: I have a gentleman that I work with, and he always says, you don't need to worry about the collapse of the currency, because if that happens, the only thing you're going to need is guns, bullets, food, and water. So I agree with you. I'm not an Armageddon guy.
Simon Popple: I agree with that. Just talking about that actually, I think that you can probably buy some silver for a few hundred dollars. I'm not talking about massive investment here, but if you've got, let's say, 10 silver coins, if your family are hungry and you turn around to someone, hopefully they haven't got a gun, and you say, right, I'll take this food for this silver coin. let's say the silver coin's worth, I don't know, 50 quid in today's or $50, that's pretty good. What I don't think you should have is a gold coin that's probably worth $1,000 because they're unlikely to have a machine that can cut that coin up. And so I think that that's where silver actually can be quite useful because if you want to put some gas in your car and it something has gone pretty bad and fair currency is not worth anything, but you've got a silver coin, that's probably enough. But if you've got a gold coin, then your local cashier at Walmart or wherever, and you've managed to get your hands on some food, you don't want to pay $1,000 for a basket of food, whereas you're probably carrying 50 bucks for it.
Ryan Kolden: The other thing that's really interesting just on the point of just talking about currency collapse is that a lot of people just, I guess, haven't studied history or haven't cared to study history where it's like, The US dollar hasn't been the only currency in existence. There's been other currencies that have had the lion's share of the world's – acted as the reserve currency prior to the dollar. Even the US dollar, there was currencies that – in the United States that were used prior to the creation of the US dollar. So the world will keep spinning. It doesn't matter. But one of those things that has remained constant is 5,000 years of gold being used as a store of value.
Simon Popple: Yeah, I agree. I mean, what I like about gold is it's got form. And as you say, it's been around for thousands of years, which is a lot more than you can say for fiat currencies. I like to think it's unlikely that we're ever in some sort of horrible situation where there's currency issues, but with debt levels being so high and interest rates being relatively high, there's talk of cutting them, but they're not cutting them, then I just think it makes sense to have some gold. And you don't necessarily have to have much, but let's say you've got $100,000, why not have $1,000 in physical gold?
Ryan Kolden: Yep. Now, Simon, before I ask you to give your final thoughts, where can people learn more about what you do, what Brookfield Capital does, and how can they get in touch with you?
Simon Popple: Well, probably the best thing to do is to either Go to www.goldprogramme.co.uk or my name is obviously Simon Popple. You can email me simonpopple at brookbillcapital.com and I'm more than happy to have a chat with you or ping you an email, whatever it is. And if you want to put a portfolio together, great. Maybe you just want to buy the book or you may just want to get involved in newsletters now. I'm easy to contact. You can look at me on the web and just Google Simon Popple and Gold and I come up all over the place. I think that's probably a step in the right direction and if I can help you, I've got clients all over the world, it would be great to have a chat.
Ryan Kolden: Perfect. And just so for everyone listening, I'll make sure to put Simon's links and information in the description of the show notes so you'll be able to find it there. Simon, any parting words for the audience about anything we talked about today or anything we didn't talk about?
Simon Popple: Well, I think my parting words are at least look at gold. And if you've got some already, fantastic. But if you don't have any, at least look at it and, you know, at least consciously decide whether or not you, you know, you want to have some, because I think that it could be a very valuable asset for you and your family. And, you know, you should at least think about it.
Ryan Kolden: Well, perfect. Simon, it's been great having you on the show today. That's a wrap. Talk to you next time. And again, thank you for speaking to us today and having you on the show. Hey, real quick before you go, thanks for listening. And please remember to hit follow on your podcast player. You won't miss any episodes and it helps support us bring you the show. Today's show notes and resources are available to you by clicking the link in the description. The opinions and views expressed here are for informational purposes only and is not tax, legal, financial, investment, or accounting advice. This material is educational in nature and should not be deemed as solicitation of any specific product or service. All investments involve risk and a potential for a loss of principal. Should you need such advice, please consult with a licensed financial, tax, or legal professional. Neither host nor guest can be held responsible for any direct or incidental loss incurred by applying any of the information offered.
