The Chris Voss Show - The Chris Voss Show Podcast – Dan Barrett, Founder at Plutus Software Inc & Pacific Precious Metals

Episode Date: April 27, 2022

Dan Barrett, Founder at Plutus Software Inc & Pacific Precious Metals Aureuspos.com Pacificpreciousmetals.com

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He is the founder of Pluta Software and a co-founder of Pacific Precious Metals. He was one of the original owners of Pacific Precious Metals. He was one of the original owners of Pacific Precious Metals when they were founded in 2010. He was actively involved in the operations and oversight of the company for the first few years. This led Dan to found Plutus Software, which provides a point-of-sale software system to other bullion, coins, jewelry, buying, and collectible paper money industry. Users of this software can manage their inventory, accounting, and reporting in order to streamline day-to-day operations, and it's integrated with the user's website and can list their products on external sites such as eBay and Collector's Corner.

Let's see. His background before Pacific Precious Metals was working as an equity analyst at a variety of Wall Street banks for nine years, and he left Wall Street at the end of 2009 to go into the gold business. Welcome to the show, Dan. How are you? I'm great. Thanks for having me here. I'm excited to be here. Awesome, Sauce. So give us your dot com so people can look up on the interwebs these different things that you're doing, please. Well, so both of the companies, one is PacificPreciousMetals.com. I know it's a little bit long to type out, but it's a gold dealer. It ships everywhere in the country. They have four physical locations in the San Francisco Bay Area where people can go in and buy in person or order online and go pick up in person. And then the company that I deal almost exclusively with all of my time now

is Plutus Software. So the reason I got into that is having, being involved in a gold bullion business, and there's no software package out there for any of those guys to use to manage their inventory or get reporting or integrate with a shopping cart, etc. And I have a bit of a, you know, tech background sort of interest. I decided to found Plutus Software and build a commercial package for all the little mom and pops and medium-sized,

even large guys out there so that they could sell their stuff online. Wow. And so, you know, when I was growing up as a kid, I was thinking I was like 11 or 12. I'm probably giving away how old I am. You know, my dad and some of our family got into silver coin buying and coin buying. We would go into the shops in California and see the coin business.

How big is the business then? The gold business in general, the industry, it's a multibillion- coin business. How big is the business then? The gold business in general, the industry, it's a multi-billion dollar business. It's, you know, the biggest wholesalers are in the, you know, $5 to $10 billion each. But, you know, you sell an ounce of gold and it's $2,000 today, right? It doesn't take a lot of ounces of gold

to add up to a few billion, right? And that's still paltry, right? That's still a paltry number compared to if you look at the investment market as a whole, right? Bonds, equities, all that other stuff, right? That's trillions. That's trillions of dollars. So it's a pretty tiny industry, at least today, right? There's been a big shift since COVID started. People are putting

more money into physical assets and one of those being, you know, the traditional store of wealth, which is gold. Yeah. I was just going to ask you about that because I know, you know, the market's starting to, you know, we're starting to see the turn from, you know, buying into stocks and stuff and bonds are, I think, on their way back up. But, you know, we're starting to see the turn from, you know, buying into stocks and stuff and bonds are, I think, on their way back up. But, you know, there's always that shift of money when we move into recessionary times. I would imagine this is a good time for the business. It's the last, since COVID started, it's been a great time to be in the business. It's a cyclical business like any commodity.

I don't care whether you're talking about oil, cotton, copper, whatever. It's, you know, commodities are up and down. There's peaks and valleys. But in general, I would say we're in a structural move higher and it'll have ups and downs along that path. But we're in a structural move higher, particularly if you look at what's happening in the world, right? Inflation is raging. We're likely headed to a recession by the end of the year, but now the Fed has to cut or raise interest rates going into a recession, which is the opposite of what they normally would do to try to combat inflation. So we've got the Ukraine war.

We've got all these other issues going on. We've still got COVID. I mean, look what they're doing in China right now, 400 million people locked in their apartments. It's a good time to be in a safe haven. Yeah. And people like gold for that safe haven thing. It's kind of funny, the price of gold. I come from the old Wall Street era where the attitude or the accepted thing was that gold would never break 800. There was no reason for it to ever be over 800. Like, it was always that. That was the peak zone.

Clearly, that's been thrown right out the window. But, you know, I remember for a long time, you know, everybody would be like, yeah, once gold gets 800, that's pretty much it. Yeah, got to sell it. And people would be arguing about it. They're like, no, gold can go higher. And people, you know.

But, yeah, it's something that people want to definitely be into. So tell us more about Pacific Precious Metals. I guess we'll start there and then we'll get into Plutus Software. Tell us more about what they carry, what they sell. You know, what am I looking to buy when I go there or what interests should I have? Well, you know, I could give you that little spiel. I mean, so they started the – well, I started the business, right? But I think of them as they now because I don't really have a lot to do with the day-to-day is, you know, they offer people well-known invest be a Canadian gold maple leaf, could be silver eagles or silver maples. And then there's a variety of private makers like PAMP Swiss and Credit Suisse and Valcambi, et cetera, from Switzerland that are, you know, you can take

these products and you can sell them to any dealer on the planet. They all recognize them. So that's what they sell. They sell gold and silver, primarily gold and silver. They do sell platinum, but there's not as big of a market for platinum. But they sell that in physical form so people can go to their website, pacificpreciousmetals.com, place their order, or they could just walk into one of the stores with cash and say, hey, give me three ounces of gold, right? Place their order, come in, pay for it, pick up the gold,

and go home and stick it in a safety deposit box or under their mattress or wherever they want to store the gold and take it from there. So it's a way of getting money out of the banking system if you don't trust it. It also eliminates typical risks that are associated with having all of your assets tied up at your brokerage firm or in your bank. I mean, you look like you're old enough to remember the 08 crisis. You're a little younger than me, I think, but you remember Merrill Lynch went bankrupt. Yeah. Lehman Brothers went bankrupt. Yeah. Sterns went bankrupt. Right. And MFC Global, which was a big commodities house, went bankrupt for all sort of different reasons. But all, you know, if you had your money with them, sometimes, like, I think it was with Bear Stearns or maybe it was Lehman.

Some people had to wait a year before they got their money back. With MF Global, a commodities firm, people didn't even get all their money back. Yeah. Right? So it's a way of you've got physical possession of the commodity. It doesn't matter who goes bankrupt outside of your world. Right? You've got the gold.

Yeah. So that's kind of the premise of one of the reasons I got into the business back then in 2010 when I started it, one of the other reasons was at the time, cash for gold, where these commercials were on with girls with tight T-shirts and big boobs flashing big wads of cash around saying, send us your gold. I thought, who does that, right? And I was actually going to wait. I had just left Wall Street. I was going to wait. That was a cyclical trough. I was just going to wait for it to pick back up and then just go get a job at another hedge fund. And I, you know, I said, ah, I'll just start a little

gold business with a couple other guys and do that until the markets come back and then I'll shut it down and, you know, it'll be, you know, it'll be done. But I'm still, you know, then I'm still owner. It's still there. They've expanded their, their, you know, we've got four going on five locations now. So it's a fun business to be in. And the number of stories I could go on with the probably 20, 25% of the American-born clientele, because we have in the Bay Area, they have a lot of clientele that are tech guys that have come over from Asia or from Europe or whatever. They tend to be more sane.

But I would say 25% of the American boring clientele are conspiracy theorists. Really? Where it's a scale of how far down that conspiracy theories, they will go. I mean, I remember early on, a guy came in to the office and he's a big believer in gold and silver and great for him. He's made out like a bandit. Comes in and he puts his hand on my shoulder

and says, don't go onto the bridges today. I'm going like, any particular reason? Is there some sort of an alert out by the feds that something's going on? He was like, no, one of my podcasts is telling me that there's going to be a water event today

and it might take out the bridges. Water event? I don't know what that means. Yeah. So it's a really fun business because you meet a lot of interesting people, particularly some of the conspiracy theorists. But at some point, I wanted to get in on the tech side of it because I thought there was a lot more room for growth. And that's, you know, in 2015, I started already building the software platform. And then that formally took off in 2016. Now, you guys are industry accredited.

You've got lots of certifications. So people can know that you guys are a reputable business. A lot of these coins and stuff you guys are selling are issued by the government. Yes. Well, the other thing I'd say about that, right? So one of the things that Pacific Precious Metals does to differentiate itself is they, and this is one of the things I was paranoid about when I first started the business, is how do you know if it's a fake?

Yeah. Right. Somebody comes in and sells me 10 Krugerrands, you know, and I hand the guy $15,000 or whatever the price of gold was at the time. Right. And it's like, I better be sure it's real.

Yeah. So the only thing I know about gold is to chew it or something. I'm pretty sure that's a Hollywood. That's the old, that's the old Hollywood Westerns bite it. If you can put a dent in it, it's gold. Which you really can't do even back then because it that wasn't pure gold but so i bought a bunch of test equipment right for the x-ray fluorescence specific gravity now

they've got we've got other things like it tests the electrical conductivity on the inside of the coin make sure it matches gold so there's a variety of different high-tech testing that they do so that when clients go in and they want to take the gold with them, you can put it on all these different test machines and say, that says it's gold, this says it's gold, that says it's gold. Hey, if it looks like a duck, it quacks like a duck, and it walks like a duck, I'm going to conclude it is a duck, right? Now, you guys also do jewelry and dental gold and industrial precious metals. Yes. So anything that's got precious metals, the jewelry, you know, silver, gold, platinum,

people will bring it in. It's either broken or, you know, maybe somebody got a divorce and they don't want that engagement ring anymore or whatever. And I'll tell you a funny ad that I ran, you know, probably in 2011 or something on that. But they bring it in, we put it into the x-ray fluorescence machine. It tells you exactly what the percentage of gold, silver, platinum, or whatever is in that object. Then you just weigh it and multiply. Okay, it's got 75% gold and it weighs, you know, six grams. You got, you know, you got four and a half grams of gold here. And then you just

pay them for the gold content. You throw it in a bag and at the end of the month, you ship it off to a refiner who throws it into a furnace and melts it all down. But going back to that advertisement, I was advertising at the time in a local Marin, which is the county in California. I started at Marin Magazine, and we put in a big full page ad with a giant engagement ring and said in the middle, it's not over until you sell the ring. There's about an 80% divorce rate in Marin, right? Or 78% or some crazy high number. So it was pretty funny the you don't you don't have closure until you sell the ring get closer today call us it looks like the i guess

the dental gold that would be great if you can come across some rappers who decide i don't know leave the business how much is in your mouth about 45 000 holy crap i'm gonna punch you in the face no i don't recommend that. So people can sell their jewelry. You probably pick up, I noticed estate sales are one of the things on there. If someone has an estate or maybe they're. Yeah, somebody passes away and going through all their stuff. It depends. Some people have gold coins and bullion and other different things that they can take into Pacific Precious Metals and sell.

Cool, cool. Anything more we need to know about what you're doing into Pacific Precious Metals and sell. Cool, cool. Anything more we need to know about what you're doing at Pacific Precious Metals? Probably not anything, but if you're in the Bay Area, you don't have to be in the Bay Area to buy from them. They ship anywhere in the country. It's fully insured. It doesn't belong to you until you sign for it. So there's virtually no risk in ordering and getting stuff shipped to you until you sign for it. So there's a little, there's virtually no risk in ordering and getting stuff shipped

to you from them. And they're cheaper than any of the big online only guys. So no downside, really. No downside. And you guys buy and sell in that sphere? Correct. So people can walk in one day and buy from you. And a week later, if they change their mind, they can come in and sell to you.

If I bring in my wife who has the gold band that I want to sell on the ring, can you give me some cash for her too? Can you take the deal? Yes. You get an extra 10 bucks. All right. There you go. So let's talk about the other business that you're involved with. It's kind of tied into this. Let's talk about that. Right. So Bluetooth software. So I started the business, you know, what I got into originally in the gold business, I ended up saying like, well, how do I do accounting for this? How do I record transactions? And so I, you know, at the time I helped out the guys that were actually running it day to day. I said, all right, let me call a bunch of other dealers as well as all the wholesalers around the country and find out what software do they use.

There's got to be some software package that's tailored to this industry. And there wasn't. A couple of the big wholesalers would say, yeah, we spent a couple of million dollars building our own system. There's nothing out there. So I had a choice of, okay, I can build one specifically for Pacific Precious Metals, or I could build a more robust version and make it a commercial package and sell it to all these other dealers all around the country. So that's the path I chose because I think it was more scalable and had the potential to be a much bigger company than, you know, one, you know, at the time it was only one bullion shop for Pacific Precious Metals. And it's building software is like any other construction type activity.

It takes you three or four times longer than you think it's going to and probably three or four times as much as it costs as much as well. But we've been building it since 2016. We launched it in late 2017, I think, and we're adding clients every month and it allows dealers to do bullion, which is the investable grade format, the coins or bars that only trade for their gold value. They don't have any collectible value to them. It's just if the price of gold went up 20 bucks today, that one ounce bar would be worth 20 bucks more, right? But I also designed it to handle what's called numismatics, which is collectible coins, rare coins.

And that's a really big and very idiosyncratic industry that's got all sorts of different little caveats to it of how dealers trade that stuff. That market's also exploded since COVID. I mean, it's up double or triple, right? Prices of those coins are up two or 300% in the last three years. It does the jewelry buying. It does services like estate appraisals and this and that. It does gems. It does paper money, collectible paper money. I don't know if you've ever seen some of that old U.S. paper money.

I never really saw any of it until I started going to these coin shows to talk to dealers to find out if they were interested in my software. But some of this old paper money, I mean, the artwork and the bills were all bigger before 1913, right? They were much bigger than our current $1, $2, $5, or $5, $10, you know, $20 bill. And the artwork is just unbelievably amazing on that. And I guess it makes sense, right? Back then, it's not like anyone had a printer or whatever. So you had these really elaborate art pieces of artwork with probably much less technology involved in a current bill. And it would be very hard to fake 100 and something years ago. So we also support that. So people who buy and sell that collectible market, and we'll continue to expand.

I'll add more categories. I may even branch out of the collectible industry into other industries where it's applicable, where the software kind of suits that model so that was kind of the nature of how i decided to get in what it'll address and you know and it does a lot of things for these guys right like don't have a website or the websites like some little static website that hasn't been updated in 10 years and so we give them a brand new website and their, their inventory is linked right in. So if they buy something, it's instantly on their website for sale as a collectible piece of coin or money or bullion or whatever it is. You know, we feed into the accounting system into QuickBooks. We, we can, we can get, let them list it not only

on their website, but we have a feed directly into eBay where they can list those products on eBay as well as another collectible site called Collector's Corner. So it's expanded a lot over the years, and I think it's become a really robust offering as far as for this industry. And it's a pretty small industry. It's maybe 5,000 dealers across the country, right? And I'm not talking about pawn shops. You know, the software is not suited for pawn shops. But it's for, you know, dealers aren't into pawn but are into the collectible side and are into bullion and coins. So it's not a huge market.

So I have no competition. And I haven't had competition for five years. That's awesome. There's been a few guys that have tried, but they all come at it from, you know, a collectible coin guy will try to build a product, but he's only thinking about the collectible coins. And then maybe one other guy will think about just the bullion side, but I've got one that handles all of that stuff

that almost all of these dealers do a little bit of in their shops, wherever their shop might be located. That's pretty cool. That's pretty cool. I mean, well, you have the background to think of everything. It looks like I missed a question. We had a couple of questions. Somebody asked price per ounce. I think we covered that, what it is right now. This is another question. Can it be leveraged like a CD with buying gold? This is kind of... No, you can't really use leverage when you're buying gold. You could potentially... If you're buying physical gold

that you're taking possession of, right? Unless you can find somebody that's going to lend you money and they hold the gold as collateral, I don't think you'll be able to use any kind of leverage for physical gold. Like you can't just go get a loan against it or something. Yeah, you might be able to. But, you know, even when I originally started Pacific Precious Metals, I called up the bank to say, do you do sort of financing for inventory? And as soon as I told them it was gold, they didn't really have any interest. Wow.

If it was a home where the price is pretty stable, but gold, you know, it fluctuates too much. Plus you can always find a home if you need to go look for it. If it disappears, you know, get your money back. Yeah, that's right. It used to be right here on this street. I don't know where the hell it went where the hell did it go i don't know so uh there you go there you go well this seems pretty interesting and and it it's you know there's so many of these companies nowadays i'm still a baffle at how many retailers that have you know mom and pop retail shops they don't have a good

website or a website. I know. You know, with COVID, there was a lot of people that got caught with their pants down, especially restaurants where, you know, they didn't have either a good website or, you know, one that could be converted to delivery. Right, right. Or, you know, like DoorDash or Uber Eats or whoever. It's just like, what do you guys think? Now they all are, right?

Yeah, now they're all over the place. Yeah. So it's good that there's out. And yeah, I mean, what do you, do you want to share any speculation that you might have of what the future might be of gold? I mean, we're kind of in a, you know, my speculation, two to three year trough. I think inflation is going to be bad for another year or two. Might get really worse.

The Ukraine thing isn't helping and that thing is going to drag on probably for a year. It could be longer. Yeah, unless somebody takes Putin out, I can't see how it doesn't drag on because we're not certainly stepping up like we normally do in the Middle East, for example, where we just send in our planes and take out the aggressor. Yeah. He's a bit bigger of an adversary. I agree. I think we're in a bit of a trough. We might actually see,

I think we'll be in a recession by the end of the year. Yeah. Especially if you look at the yield curve, right. Where the, usually a lot of people look at when the, when the yield curve flattens it. In other words,

the yield on long-term rates, 10 year, 30 year are lower than the short-term rates. That's usually a pretty good indication that we're on the cusp of a recession and we're getting pretty damn close. I think we crossed over briefly a few weeks ago, but we're moving again that way. You know, the Fed's tightening. Again, like I said earlier, the Fed's tightening into a recession. Yeah. Try to slow down inflation, but I think it's going to be a hard landing rather than a soft landing.

And then if you look at some of the other big economies around the world, I mean, even today, China devalued. Yeah. They took a big hit. Yeah. Devalued. And the yen is crashing. And they've been trying to do yield curve control for years now, trying to keep the Japanese government bonds lower than a quarter of 1%. But they have to keep going out and printing more money to do that.

And now the yen's crashing. And then they asked Yellen last week to help them intervene to keep the yen up. And she said, take a hike. So there's a lot of central bank monetary policy that's all pointing to further instability. And then add to that things like Putin invading the Ukraine and us sort of having a proxy war with them. It's all going to be good for gold, but I think we're headed for a deeper recession. I don't know when the market will bottom. The stock market I'm talking about I wish I could predict And if I could predict we could get together

And raise a bunch of money We'd make trillions But I think we have not yet seen the lows And we'll have to see what the Fed's actions are I think there's talk of 50 or 75 basis points On this next hike Coming out of the Fed The problem with the Fed I had a mortgage come for 20 years So I of the Fed. The problem with the Fed, I had a mortgage come for 20 years, so I live by the Fed.

The problem with this Fed is they are behind the eight ball. They should have moved a long time ago, like last year. They should have started moving. And so now they're going to have to overcompensate. And I know what that feels like under Volcker and Greenspan. Right. And especially if you start going back to Volcker shit. Oh.

We really have some fucking problems. So hopefully we're not that bad. Because, I mean, when we go to 21, 20, you know, God knows what, 20% interest rates and stuff. But so you have that. The other thing that no one really talks about, too, is the $8 trillion that the Fed gobbled up to sit on to buy up assets to keep the economy afloat during the COVID, especially in the first days. I mean, they're buying like $12 trillion a day or something to keep us afloat. And they're sitting on the largest bank of money they've ever sat on before.

They have ever printed before. Yeah, yeah, yeah. I mean, they did that during the collapse with the 2009-2008. They sat on, I think it was about $4 trillion or $5 trillion. I think their balance sheet got up to about $4 trillion. And it took them like, what, 10 years to wash that out? It never really got washed out completely. No, really?

I think they started reducing it. Wasn't it in 2017? Maybe you remember. 2017, where the Fed started quantitative tightening. They started doing asset. They started doing asset. They started selling the assets they had on the balance sheet, right? And the market tanked, right? It was a 2017 or 2018 where we dropped 15%, 20%.

And then that got people worried. And then the Fed just reversed course. So do they do that this time when inflation's at, you know? It's so crazy that maybe they can never dump that money. But when I was watching, watching the Fed conversations lately, especially one of the, uh, Fed board chairs were, was on, I think one of the ABC Sunday shows. And she just, she, she, she's like, yeah, we're going to start letting that money loose. And I was like, and it was really, it was really subtle.

Like, yeah, we, we really think that things are going to be positive in the future, but we're going to start letting that money loose and, and trying to drive down that portfolio. And I was like, that's not like a good thing. Like that's not going to help us. So, yeah, I think think i think definitely gold is done for the future and uh who knows you know i mean at least you can trade it during the zombie apocalypse or maybe you can i don't know how that works zombies love it yeah i mean everybody's like

everybody's like i can't wait till kovats over and the world goes back to normal and then and then russia is, hold my beer. So, you know, there's that. I've been seeing the warnings of inflation, though, pressures for farmers and stuff on TikTok, of all places. About six months ago, eight months ago, I started seeing farmers talking about, hey, here's our load of onions that we have, and you guys need to get ready for the inflation because it's going to cost a bundle. And this was like eight months ago.

And, you know, farmers just talking about what it was costing. And they're like, it's going to get passed on. Yeah, of course. And then, you know, now with supply chain issues and then Ukraine. I mean, I didn't realize how much Ukraine fees the world. I didn't realize they were as big of an exporters pause as they are i mean luckily for the united states canada is also a really big exporter right so unless putin decides to invade them they're probably a you know barring weather or whatever you know something else that happens ternary crane is like huge in in fertilizer yes which

everyone needs russia. They plant food. Yeah, Russia, Ukraine, and Canada account for almost all the potash and stuff that comes out of, you know, into the export market. And we need that to grow food cheap. Yeah. There you go.

Anything more we need to touch on in what you guys do at your companies? You know, I think that covers it. So, you know, if you're a dealer out there and you're looking for some software to increase sales, manage your costs, et cetera, our product is not called, the corporate name is Plutus Software, but the product's name is Aureus Point of Sale. Aureus is the ancient Roman gold coin, A-U-R-E-U-S. And it's amazing how many modern collectors of coins don't even know that. But Oreos is the ancient Roman gold coin that was used for, you know,

600, 700 years as the main gold coin in the world for trade. So it's Oreos point of sale. If you're, you know, if you're out there and you're trading in the bullion or coin or collectible market, look us up, OreosPOS.com, and we'll be happy to give you a demo. There you go. Give us the other.com if you would, too. Sure. Pacific Precious Metals. Pacific like the ocean, preciousmetals.com, right? They got a nice website. You can order it right online. You can call them and talk to a person. It's not all

just chatbots, and they're cheap. There you go. There you go. And you could have it shipped to you anywhere in the world. Well, we'll ship to the, anywhere in the U S. Okay. Anywhere in the U S then I say corrected. All right. Well, thank you very much for being on the show. We really appreciate it, Daniel. Hey, thanks for having me, Chris. I appreciate the opportunity. Thanks for coming on. Thanks to my audience for tuning in, go to youtube.com for just Chris Foss, go to goodreads.com for just Chris Foss. Go to all our groups on Facebook, LinkedIn, Twitter, and all those great places across the internet. Thanks for tuning in. Be good to each other. Stay safe, and we'll see you guys next time.