JF1650: Learn More About Another Passive Investment #SkillSetSunday with Ken Lewis

Precious metal investing, that’s what we’re covering today. Ken runs a company that sells precious metals. He’s sharing the benefits of precious metal investing with us today, even if you never pay him for services or products, he shares great information for you to think about. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Ken Lewis Professional Background:

  • Results-oriented professional with more than 25 years of leadership experience across a broad range of retail and technology organizations, many of which are in the Fortune 500
  • Chief Executive Officer at APMEX, the largest precious metals retailer in North America
  • Based in Oklahoma City, OK
  • Say hi to him at https://www.apmex.com/

 


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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

First off, I hope you’re having a best ever weekend. Because today is Sunday, we’ve got a special segment for you called Skillset Sunday. The purpose of today’s episode is to introduce you to a new passive investment – well, it’s new to me; it might not be new to you – that you can learn more about, and if you already know about it, then perhaps you can hone your skill by listening to today’s expert. First off, how are you doing, Ken Lewis?

Ken Lewis: I’m doing great. Thanks for the time, Joe.

Joe Fairless: Yeah, my pleasure, and looking forward to our conversation. A little bit about Ken, and then we’ll get into the type of investment. He’s a results-oriented professional with more than 25 years of leadership experience. He’s got that across a broad range of retail and tech organizations, many of which are in the Fortune 500 group. He is the CEO of APMEX, which is the largest precious metals retailer in North America, and we’re gonna be talking about passively investing in precious metals. Based in Oklahoma City, Oklahoma.

With  that being said, Ken, do you wanna give the Best Ever listeners a little bit more about your background? And then let’s talk about precious metals.

Ken Lewis: Yeah, great. I think the key is I’m an operations-oriented executive; I’ve been at companies like Microsoft and Home Depot, and had an opportunity to join APMEX about almost eight years ago. APMEX has been for many years one of the largest internet retails in the U.S. Actually, I think we were just recently ranked the 45th largest internet retailer… And it really got me into precious metals, and trying to understand that as a business concept.

I came into the company as an operations head. Over time I’ve broadened my responsibilities, and about three years ago I became CEO. So our whole thing is just trying to reinvent ourselves and remind our customers (and the world, really) about the advantages of potentially investing in precious metals. We’re known for top-notch customer service. Anyone who’s heard of our company will know that. We’re known for integrity, we do what we say we’re gonna do. We’ve got over a million customers, believe it or not; we’ve done over ten billion dollars in sales in our 18 years of existence… So a proven player that is all about trying to educate your consumers and others about the advantages of owning precious metals.

Joe Fairless: You said you’re trying to reinvent yourself… What were you, and in what way are you trying to reinvent yourself?

Ken Lewis: A lot of that is — I’ll give you the best example… About 4-5 years ago we didn’t have a phone team, and what we realized is we needed to have the ability to explain complicated concepts on the phone with customers. We couldn’t be up here, 100% internet play. So it was just about being able to walk them through the process, and educate them, and be there to support them with their questions.

Another example of that is we’ve literally just launched – about 4-5 weeks ago – a concept called One Gold, which is really digital precious metals. Some consumers would rather not have precious metals shipped to their home; they’d rather have it more in a digital form, where they take a position in metal, but they don’t have to worry about the security of protecting it.

So it’s just different things like that we’re constantly doing to try to find ways to make precious metals ownership be available to a broader mass.

Joe Fairless: From a passive investment standpoint — I mean, clearly this is incredibly passive, because I imagine you do one purchase and then you can just sit on it; you’ve got that allocation of either digital precious metals, or the tangible product, right?

Ken Lewis: Yeah, we kind of look at investors as a little bit of everything. There’s some who wanna collect, because they like the beauty of the product. There’s some that are doing what I call income allocation, where they’re taking incremental income and they’re maintaining a position in a metal. And there’s others out there that do asset reallocation, where maybe they sold some property, or they had a lifetime event, and they wanna have a percentage of their net worth tied to an asset that they think diversifies their portfolio.

That last one I just mentioned, they tend to be — I wouldn’t say one-and-done, but to your point, it typically tends to be large transactions, and then they kind of hold on to that and they wait to liquidate that years and years down the road, where others are a little bit more actively involved.

Joe Fairless: What are some common misconceptions about investing in precious metals?

Ken Lewis: That everyone who does it buries the stuff in their backyards, and they’re a conspiracy theorist. I think that there are a lot of customers out there, and we see it in our data… Look, our average customer is a 55 to 60-year-old individual with a 2x average net worth than the average consumer, who looks at us as an investment opportunity, not a way to protect only against the insecurities of the government.

So I think a lot of people, myself included, when I came into this business, frankly thought that the investors in metals were more the conspiracy theorists in general, and that’s just not the case. You can see that in so many different data points out there in the market… Many, many more people are now getting into metals as just a diversification strategy. It’s like holding bonds, or real estate, or other products. It’s just giving you some diversification in your portfolio in case something doesn’t go the way you expected it.

Joe Fairless: When you look at the changes that your company has had over the eight years since you’ve been with APMEX, what are some of the things that are noteworthy, other than some of the things that you already mentioned, like needing a phone team?

Ken Lewis: I think one of the most important things is we try to be the best in everything we do. The best example of that might be in today’s world, when you’re buying online, you expect your order to ship very quickly, and precious metals – the service levels tend to be a little bit slower than that. We actually now ship over 80% of our orders that are funded the same day, up until 3 o’clock in the afternoon. That’s just one example of taking the service to an absolute other level.

The other thing we’ve done that’s pretty significant is for those people who like a variety of product, we have over 18,000 different products on our website. It gives you the variety you’re looking for. Really, there’s nothing we probably don’t have that most consumers want, where many years ago your assortment was a fraction of that volume. Some consider that makes it confusing; what I would say to the average consumer is that you educate yourself and you become more knowledgeable, you find that you’re now wanting more variety of product, and we’re there to meet all of  your needs, and not requiring you to go to other players to be able to meet those needs. Those are just a couple of examples, Joe.

Joe Fairless: What are your top-selling products?

Ken Lewis: That’s a great question, and I’m gonna use this as an opportunity to also dive into the new product we’ve just launched… So American Eagles – the U.S. government actually makes an American Eagle coin, in one-ounce form, gold and silver. They tend to dominate our sales. I think we have about a 15% market share of all the Eagles sold in the world today. We do millions of ounces a year in silver, and a significant amount of gold as well.

What most don’t realize is when you go back and you look at the U.S. government – yeah, they print money, yeah, they have a big impact on our equity system, but precious metals is something the government has supported for many years, and their product tends to dominate our assortment.

Other products that people like to hold are one ounce gold bars, silver rounds they like to have as well… Products are typically in a smaller form factor, which is easy to handle in your home. Most people don’t realize, Joe, that we do about a billion dollars a year, and we’re shipping this to people’s homes. This is like getting an Amazon order with electronics; we’re literally shipping this to your home that you signed for, at your home, and you take delivery of it. So it’s very reachable, it’s really available to any number of players who wanna do that. We actually ship over 600,000 orders a year, so it’s become more commonplace, and we’re really the largest, not only in the U.S, but in the world, who are doing that.

One more thing, Joe… One of the things we did is we understand that still buying gold and silver online, and having it shipped to your home was still a hard concept for some people to get their heads around. You can actually own gold today in ETFs like GLD, or [unintelligible [00:09:51].12] or some of these other products, but we launched a product called One Gold, where it’s like crypto – you can go online, you can actually take a position on it immediately, you can instantly liquidate it anytime you need to… If you ever wanna take physical, you can do that transaction right online. It looks a lot like some of the crypto websites that are out there, but the coolest part about it is everything is backed 100% by metal, so you don’t have to worry about having an ownership in something that doesn’t have an intrinsic value to it.

Joe Fairless: Yeah, I’m on your site now, and… I think you mentioned – or maybe one of your team members mentioned when they were setting up this interview – that you would be giving away five 1853 Liberty Seated Quarters to the listeners… Is that accurate?

Ken Lewis: I’m looking at the individual who arranged the call… [laughs] I don’t think that was necessarily [unintelligible [00:10:45].27] but having said that, would I be open-minded to doing something? Absolutely. And I’ll tell you what we can do on your podcast – one of the things we can do is we’ll come up with something for your listeners, how about that?

Joe Fairless: There we go…

Ken Lewis: …something that might encourage them to take a look at our website and leave some comments. More specifically, I’d love them to take a look at OneGold.com. It’s just the brand new one we just launched. And if they created an account on there, maybe we can find a way to reward them for doing so.

Joe Fairless: If you’re not doing the 1853 Liberty Seated Quarter, maybe [unintelligible [00:11:15].29] Best Ever listeners, for some context, I just went to rare coins, and I scrolled all the way to the most expensive ones… One of them is $149,000, and the other is $144,000. So you almost got some good stuff, but unfortunately Ken wasn’t cooperating with us…

Ken Lewis: [laughs]

Joe Fairless: Well, I really enjoyed our conversation. This is interesting, it opens up a whole new world to me personally, and I know probably a lot of people are like “Dude, really? You didn’t know about this?” I’ve just got my head down on real estate stuff and I haven’t really focused on other types of investing… So it opened up a different world to me, and I really appreciate the time on this show.

How can the Best Ever listeners learn more about your company and what you all are doing?

Ken Lewis: Yeah, I’ll tell you what – and I’ll hit two things here real quick, for your listeners, which I think might be relevant… If I’m sitting in their shoes, obviously, you’re looking for investment; I can’t give financial advice, I can just quote some data… Just look at the five days, Joe – the Dow has dropped 6.2% or something like that; the precious metals or gold was actually up 1.6%. You go back to 2008 when we all know what the equities markets faced back then – equities markets were down 37%, gold was up 4%. And the last stat I’ll quote, and real estate is something I know your consumers focus on – if you had invested $100 in gold back in 2000, that’d be worth $429 today. The large caps would be worth $260 today. The only product that beats gold is real estate, at $738. So when you look at it from a long-term play and you look at these dynamics to the market, there are some very interesting stats that I would encourage your educated listeners to research. You can do that at APMEX.com, or they can take a look at our other property, OneGold.com, because sometimes the younger generation might find the One Gold concept frankly a little bit easier to execute and understand.

So that’s where I’d point your listeners, and we really appreciate their time and considering precious metals; even if you don’t buy it from us, I think it’s a valid play, and many investors out there — advisors will say 5% to 10% of your portfolio in precious metals is not a bad ratio to maintain, and the reality is most people don’t have any precious metals in their portfolios today.

Joe Fairless: Where on your website is that, where it shows real estate is number one, gold is number two, since 2000 or 2001?

Ken Lewis: You know, actually my team do that research for me. They actually pulled up the data and they’re using the Nareit Index and tracked that from 2000 to today. If you’d like, I can get you a copy of this analysis that you can make available to your listeners. It actually lists out large caps, small caps, it’s looking at international markets, real estate, bonds, cash, gold and silver, and I’ve got it since 2000 to 2018. So on my site we show you what gold and silver has done over a date range, where you can look at that and you can analyze just that. We don’t give you the other indices to compare against, but I’d have no problem sending this over to your team and maybe you can make this available to your listeners as well.

Joe Fairless: Yeah, I would appreciate that. You’re preaching to the choir, certainly, with real estate number one, and number two, if that’s what you’ve got, then we’re in good company, that’s for sure.

Ken Lewis: Yeah, and I appreciate that. Yeah, great.

Joe Fairless: So Best Ever listeners, there will be a link to download this document in the show notes, so you can just check that out. Well, thanks so much for being on the show, Ken. I really enjoyed our conversation. I hope you have a best ever weekend, and we’ll talk to you soon.

Ken Lewis: Alright, man. Take care!

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