In times of uncertainty, gold is often considered a safe-haven asset. But is it possible to gain exposure to gold within an Opportunity Zone investment?

Josh Phair, CEO of The Wyoming Reserve Opportunity Zone Fund Corporation, joins the show to discuss his innovative approach to combining the advantages of Opportunity Zones with actively managed investments in precious metals.

Episode Highlights

• A high-level overview of The Wyoming Reserve, a tax-advantaged precious metals vaulting business located in an Opportunity Zone in Casper, Wyoming.
• The two-year journey to structuring a tax-advantaged precious metals vaulting business within a Qualified Opportunity Fund.
• The macro outlook, reflecting caution amid economic and geopolitical uncertainties, and the bull case for holding physical gold and silver.
• How Wyoming’s favorable regulatory environment may help shape the future of physical metals vaulting as well as crypto custodianship.

Guest: Josh Phair, The Wyoming Reserve

• Josh Phair on LinkedIn
• The Wyoming Reserve
• Scottsdale Mint

Also Featured On This Episode

• Press Release: The Wyoming Reserve Opportunity Zone Fund Corporation Launches (PR Newswire)
• OZ NewsHour Episode: The Wyoming Reserve OZ Fund (OpportunityDb YouTube)
• Foreign Trade Zones (Trade.gov)
• Section 1202 Qualified Small Business Stock (Plante Moran)
• Familiarize Yourself With The Craziest JP Morgan-Federal Reserve Conspiracy Out There (Business Insider)

About The Opportunity Zones Podcast

Hosted by OpportunityDb founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in the Opportunity Zones industry.

• Subscribe on Apple Podcasts
• Subscribe on Spotify
• Watch on YouTube

Listen Now

Show Transcript

Josh: A lot of the problems that we have today were created by government, you know, stepping into the medical crisis, and then they in turn created an economic crisis, and they just printed too much. The biggest hurdles right now for traditional real estate OZs is interest rate risk. So, deals that were attractive when someone was trying to work on it, the cap rate isn’t looking so good?

Jimmy: Welcome to the “Opportunity Zones Podcast.” I’m Jimmy Atkinson. Now, most Opportunity Zones are pretty plain vanilla real estate deals. We love those plain vanilla real estate deals. Nothing wrong with that. But my guest today has an OZ deal that I would say is anything but plain vanilla. So today’s episode’s gonna be a little bit different. If you like operating business, or maybe you have an interest in precious metals, you may really enjoy today’s conversation. Joining me on the show today is the CEO of The Wyoming Reserve Opportunity Zone Fund Corporation, Josh Phair. And Josh is coming us today, coming to us today, from Casper, Wyoming. Josh, welcome to the show. Great to see you. Happy to have you here. How are you?

Josh: Hey. Yeah. Yeah. Thanks for having me. I’m doing well. So, staying warm in these Wyoming winters. So, this is my second on the books, so, excited to be here and talk OZs.

Jimmy: Excellent. Awesome. And Josh, my audience might be somewhat familiar with you. I have a audience of Opportunity Zone investors and advisors, and they may be familiar with The Wyoming Reserve, because we did cover you and your press release last month on our OZ NewsHour show. But for anyone who may be unfamiliar, maybe they’re new to the program or they didn’t catch up on that last episode of OZ NewsHour, can you briefly explain a little bit about your background at Scottsdale Mint, and what The Wyoming Reserve OZ Fund Corporation is all about?

Josh: Yeah, sure. I’ll kind of explain how I got here, why I’m in Wyoming, and why we’re talking.

Jimmy: Yeah, please do.

Josh: So, I used to do corporate risk management for mining companies, some of the biggest copper, gold, silver mining companies in the world. Fell in love with the metals space, and then in 2008, so, just over 15 years ago, started what’s now known as Scottsdale Mint. So, I’m the founder and CEO of Scottsdale Mint. Scottsdale Mint is actually a manufacturer for, of precious metals, gold coins, silver coins, and bars for foreign governments. So, we produce legal tender coinage here in the United States for smaller countries all over the Caribbean, a lot of the Commonwealth, the British Commonwealth, we do a lot of the South Pacific, some in Africa. So, we are actually striking legal tender coinage for roughly 25 nations. We also do stuff for private banks. So, if you’re in Canada, and you were to walk into a bank branch, let’s say you’re in Toronto, you walk into a TD Bank, and you buy a silver bar from the bank there, there’s a good chance that was actually produced by my company.

And have spent a lot of time in Singapore, Dubai, Geneva, and looked at how those jurisdictions in the world have created really interesting tax, you know, cap gains deferrals, or exemptions, and just different incentives for people to make investments. And I said to myself, this was about three years ago, I wanna create something in the United States that is involving precious metals, that could have some tax benefits. So, I purchased a building, almost three years ago, in Casper, Wyoming. So, the company’s, was based in Scottsdale, Arizona, and the mint is still operating down there, as of right now. But this building that I’m coming to you from today is owned by the Scottsdale Mint. So, this, our OZ fund is not a real estate play. So, the real estate here is owned by the Mint ownership, and we’re building out what will be about a 70,000-square-foot facility. We’re currently in operation, and producing product here, as of just about six months ago.

And what I created, with a team, roughly eight law firms, Deloitte, FORVIS, two different accounting firms, have really took the better part of roughly two and a half years to structure this deal. And, like you said, you saw the press release, it’s a product that’s actually being syndicated out through the wealth offices. So, it’s gonna be with the RIA firm. And to hit those levels, to get the due diligence done, it took a lot of steps.

So, what is The Wyoming Reserve Opportunity Zone Fund? Well, first and foremost, we’re a vault. We’re a high-security vault. So, we’re armed. Armed physically, heavy-duty, some of the highest-grade classes of vaults in the world. So, for those that aren’t familiar with what a vault operation is, the big names, you’ve probably heard of Brinks. The other ones is Loomis. Those are some of the big, big, big vault operators around the world. They move the cash for banks, for the Federal Reserves, and they’re moving a lot of the gold and silver from the mines to the refineries to the end users. They’re doing the diamonds. They’re doing all these things. And, you know, going back to having spent a lot of time in Singapore, at the Freeport, I wanted to create something similar, but do it a U.S. style.

So, The Wyoming Reserve is a vault operation, that is in a OZ, and we’re also in a foreign trade zone. So, we’re currently in process to be designated, later this year, as a freeport operation, which means our vault operation will also be essentially a, like, a bonded facility, that would not be subject to duty, customs duties and tariffs for various things. So, and I can get into why that might be interesting in the years ahead. Our vault operation, though, is a lot different than what a Brinks or a Loomis would. So, while the vault may hold governments’, it might hold states’ assets, it might hold private assets in a third party. Think of it as real estate. You know, from, if you’re, if you have, let’s say you’re a storage container company, and you’re doing it through U-Haul, or all these different storage companies. You basically are breaking down, you know, how many acres do you have, and how many containers, and how many doors. We essentially do the same thing, except we are going by cubic inches, and how much can we insure? So, what we’re going off of, basically, how much insurance limits can we get through Lloyds of London. And that’s a carefully-crafted thing. So, think of it as an annuity business. Someone that wants to stick something that, high net worth, let’s say they wanna stick, you know, millions of dollars in storage, and have it fully insured, it’s probably gonna be parked here for, it could be a decade or more. And you charge a slight fee. So, that’s what The Wyoming Reserve does as, is first and foremost. What makes it a little bit different…

Jimmy: Is this…? Sorry to interrupt. Is it, can I kind of consider this almost akin to a very specialized self-storage deal almost, like, but instead of storing boxes of your old crap in there, or maybe your RV in there, you’re storing precious metals, gold, jewelry, and the like?

Josh: Yeah. And I’ll get into it. So, and it’s a little bit more active. It actually almost becomes similar to what a bank or a Amazon distribution facility would do, and provide other services in relation to the storage as well. So, let’s say you were a bullion dealer, for example, and you had, you’re Jimmy’s Coin Shop. And Jimmy’s Coin Shop, you wanted to have product made with your brand on it. Similar to how a car dealership, let’s say you’re Ford, right? You’re a Ford dealer. You probably don’t own most of the trucks and cars on your lot. It’s financed probably through Ford Credit. Most dealerships are financed through various means of financing.

Well, this vault operation, what makes it really special and really unique is it owns over 90% of its assets, is in tangible, physical metal, in gold and silver. So, and it can be in any form. So, it could be in the raw material, or it can be in finished goods. So, going back to our discussion about Jimmy’s Coin Shop, Jimmy’s Coin Shop, you’ve got a big sales team, and you want to have, let’s say, $10 million of product with your brand on it. Well, it can be held in The Wyoming Reserve. It can be manufactured with your name on it, held on the balance sheets of The Wyoming Reserve, and by holding it, we charge you a small interest rate that we would call metal availability. And so, instead of loaning it and sending it to you, we’re unsecured, if we hold it in our vault, it’s now secure. And then, as your sales team goes and sells down that $10 million each week, let’s say you have a good week, you sell $2 or $3 million, you would pay The Wyoming Reserve for that metal, and then The Wyoming Reserve would provide fulfillment services, similar to what Amazon would. So, let’s say you didn’t even wanna touch it, you just wanted Jimmy’s Coin Shops to get packages direct. We would white-label and ship it directly to your customers.

Jimmy: So, you would pour the gold into some sort of mold, you’d stamp my face on it, right? And then you’d drop ship it to my customer? Is that essentially it?

Josh: Yeah. So, that would already, that would be done by another company. That would be already done. That would be done through Scottsdale Mint.

Jimmy: Got it.

Josh: So, Scottsdale Mint is the manufacturer, and we’re in the same building. So, think of it as a large building, and The Wyoming Reserve just leases a small amount of the building, and that has its own vault. So, Wyoming Reserve owns the vault, and everything inside of it. So, Jimmy’s Coin Shop contracts Scottsdale Mint to make the coins and bars, it goes down the hallway, into the vault. It’s owned by The Wyoming Reserve, and as Jimmy’s Coin Shop goes and buys, we now ship and fulfill either to your coin shop directly or to your customers. So, this is where we’re adding… We’re a distribution facility. And we’re creating yield. So, this raw material that we bring in, of gold and silver, it would be already refined. So, it’s coming from other banks or refineries. And then a lot of that feedstock is gonna be sold to Scottsdale Mint, and then financing Scottsdale Mint’s customers on the way out the door.

So, those are little ways to create… You can kind of start to see where, how we stay in compliance with the Opportunity Zone, is, we’re holding tangible physical property, but we are not stagnant. It is always turning. So, this metal, we can continually keep it moving. So, while it does third-party storage, long-term, that’s not what The Wyoming Reserve owns. We just, we obviously just make, like you mentioned, we’re a storage fee business. But on our assets, of The Wyoming Reserve, we’re able to create yield. I always say, you know, one of the knocks of, against gold and silver, and there’s a lot of reasons we can cover as to why people wanna invest in it. A lot of times people, say, “Well, if I own it, it just sits on the shelf. It doesn’t create any yield or extra interest.” So, when you’re inside of a business operation, you better bet that we’ve got the ability to create a little bit yield above just, obviously, metal that’s sitting on the shelf, because we’re creating a lot of things.

So, realistically, we wanted to create something, and I’ve got it, that, we wanted to reduce tax liabilities. So, as we look at reasons for why would people need or want to invest in this, we wanna reduce tax liabilities for investment. We wanna manage portfolio risk. We wanna create liquidity, which we’ll cover in a little bit. And we wanted to grow during uncertain times. We are in, this has been one heck of a decade so far. I think we can all look forward and say we don’t know what’s coming. A lot of us, you’re starting to see the layoffs are starting to hit the tech sector over the last few weeks. And then, you know, realistically, how do we create returns? So, if we’re looking at gold and silver as insurance first and foremost, that’s how people traditionally will look at it, we’re also saying how do we create yield, and a way to earn on it as well? And I would say, you know, people typically are going into precious metals for a diversifying against the, let’s say, the U.S. dollar, for example.

So, a lot of the problems that we have today were created by government, you know, stepping into the medical crisis, and then they in turn created an economic crisis, and they just printed too much. And so, now, you’ve got a situation where, you know, inflation is rampant everywhere, and people are really struggling to keep up with, you know, wage inflation, cost inflation, and now, you add, I think, one of the biggest hurdles right now for traditional real estate OZs is interest rate risk. So, deals that were attractive when someone was trying to work on it, the cap rate isn’t looking so good. So, we’re really approaching a different time, and the beauty of our OZ is we have no interest rate risk. We are not taking on debt to buy and develop, and to do these things. So, we have a pretty interesting, I think we have a pretty interesting offering here.

Jimmy: Yeah, we have a lot to unpack. A lot to discuss, it sounds like, a lot of different threads we could pull on. The first thing I wanna turn to, though, is a two-part question about Opportunity Zones. One, I wanna know what led you to Opportunity Zones in the first place, and then part two of the question is, how were you able to structure this as an Opportunity Zone deal?

Josh: Yeah. Excellent question. So, going back to the whole, like, what do other countries offer, what are some interesting scenarios, and realistically, was really drawn, actually, to what was going on also in Panama. Panama created a precious metals zone. They’re trying to create something that’s similar to Dubai, where you go from Europe, the idea is you stop over at Dubai on your way to Singapore or Southeast Asia, and hopefully people go there, they stop, and shop, and spend money. So, Panama has an interest of kind of being the stopover between North and South America. But, I don’t know Spanish. So, I’m like, you know, that was a risk factor that, I’m like, you know, that’s a learning curve. I could get taken. And I’m a big fan of America business. You know, we’re going through some tough times, but it doesn’t mean we’re completely lost. I think the world, all the world, is going through tough times. No place is immune to problems. But I still think we’re the greatest country there is. And so, I wanted to kind of look at ways that people were being creative.

So, I’ve watched the story of Opportunity Zones evolve from when it was a bipartisan passed, you know, when Trump was under office, and how, you know, people have really, are looking at ways to apply economic incentive, so I wanted to create something that was a little bit similar to what I’ve seen in Dubai, in Singapore, and Panama, and but look to how can it be applied here in the States. So, I found, in Casper, Wyoming, the foreign trade zone, and an OZ, in the same facility. So, that’s really kind of what we’ve done to marry it all up. Wyoming is also one of the best states for business. It’s a low-tax to no-tax state. They’re very pro-business here. They love commodities. It’s a energy-intensive state. Good labor pools. It’s a metalworking state, so, Casper’s big into oil, gas, and basically pipeline business to service that industry. And this was just kind of a nice place that, you know, most people, most large vaults are in New York City. And a lot of people forget, when 9/11, the basement of the towers had billions and billions of dollars of precious metals. And that was a big problem. It was all recovered, but what a mess.

And so I think, you know, people are looking at where are my assets stored all around the world, and jurisdiction’s important. And this is, I think, a situation where certain states have not fared very well since COVID, and how they dealt with shutdowns and their, you know, unfunded liabilities. You know there’s gonna be tax changes in certain states. There’s, and so, you know, businesses are now moving, leaving California, New York, they’re going to, you know, obviously, the big names you’ve heard of, obviously Florida and Texas, probably some of the biggest beneficiaries. And obviously, Wyoming, there’s only a half million people here. And so, to put a high-security vault in a place that doesn’t have the same gang problems and other problems as other parts of the world was fairly attractive. So, that’s why I kind of got to the point of wanting to create something that was special and unique, to provide some tax incentives, and had to bring in, I brought in a good friend of mine, who’s also serves as the general counsel for Scottsdale Mint, and basically said, “Hey, let’s go hire some of the best securities counsels, and the some of the best OZ consultants that we can. Tell us what we can’t do, and tell us how we can do something to put this together.”

And so, we’re really excited to have what has now just gone out to the public for a $50 million offering. Insiders, we put in, I think, somewhere around $8 million, I think we’re might be close to $9 million right now. So, we just have announced it, as you mentioned a few weeks ago, and that’s something that I think, actually, there’s a conference going on in Atlanta, with registered investment, through a broker-dealer network. So, this is a product that is gonna be evergreen. So, we’re able to, you know, finish a round, complete it, and then we strike a new, we get audited financials, we strike a new stock price, and we can keep growing and growing, without diluting our investment base. And we can definitely cover that a little bit.

Jimmy: Sure. Well, what is the investment exactly? Because an OZ fund can’t hold gold and silver directly. I’m not suggesting that that’s what you’re doing. But you mentioned Scottsdale Mint, you mentioned The Wyoming Reserve, which is the storage and shipping and fulfillment business, essentially. If I’m an OZ investor, and I’m coming into your deal, what is it specifically that I’m getting access to?

Josh: Yeah. So, the key is, The Wyoming Reserve can own gold and silver, because it’s considered Qualified Opportunity Zone property, because it is always in, it’s always for sale, and it’s circulated, it’s moving. So, Wyoming Reserve essentially can hold as much gold and silver as it needs to serve its customers all over the world. So, if it’s handling a stake, it’s handling banks, it’s handling refineries, working with bullion shops, it’s able to hold precious metal. So 90-plus percent of our fund’s capital is gonna be held in precious metals. And that’s where the, some of the alpha really kind of gets created out of it. So, outside of the vault, it’s just everything inside the vault. And that process of just owning that metal, and always continually turning it, is critical to staying in compliance.

Jimmy: And you said you’ve worked with eight law firms, two accounting firms, over the past two years, to get this deal structured, and arrive at a level of comfort, where you can show investors, “Hey, here’s who we’ve worked with. Here’s their take on the situation,” because it is a little, it was a head-scratcher for me when I first heard about it, I’ll be honest with you, Josh. I’m like, “How are these guys in compliant? This doesn’t seem right.” But you have some sort of comfort letter, I believe, from your attorney group? Is that correct? Could you talk about that a little bit?

Josh: Yeah, it’s our, we have a… So, our investors, if they were to be interested, we do have a legal opinion letter. So, we originally got a memo that allowed us to kind of continue to go forward. We do have an opinion letter that says that we are structured correctly. And as I mentioned, the largest accounting firm in the world handles our tax. And I think this kind of shows we wanna do this the right way. We wanna do this the right way. Our hope is that one day, there’s the chance where we’ve got thousands of investors, and possibly hundreds of millions of dollars, is where we’re wanting to go. And you gotta do it right. You gotta do it the right way, and making sure, every step of the way, to do it. So, we’ve done a lot of due diligence. Our vault is, we just completed last month, we are audited. And we’re actually gonna be one of the few vaults in the world that’s gonna do third-party quarterly audits, even on our third-party… So, a lot of vaults in the world don’t do that.

So, what we’re doing is running this as close to a publicly-traded company as we can, in terms of compliance. So, we’re compliant with FINRA and SEC, and we’re doing everything we can to run this thing correctly, so that we can be in business for, you know, 10, 20, 30-plus years, is the goal for this. So, obviously, the QOZ has benefits, right? You know, there’s the deferment here in the next few years, and then there’s the hold period of 10 years. And I forgot to mention, we’re also a qualified small business stock for the first $50 million in. So, we’re a QSBS and an OZ hybrid. So, that, way that would mean is, is an OZ investor would be able to defer, just like they would in a traditional OZ, but instead of having to wait for a 10-year hold, it’s a 5-year hold, and any gains upon sale, above that, after 5 years, is complete tax-free. So, up to $10 million. So, this is, it’s a pretty interesting hybrid here to create, especially in the world that we’re in right now.

Jimmy: Yeah, that’s a QSBS, qualified small business stock, section 1202, if I recall correctly. I’ll link to some more resources about that in the show notes for today’s episode, if any of my viewers or listeners may be unfamiliar with that. So, oftentimes, Josh, I have a guest on here, and we’re talking about his Opportunity Zone deal, and most of the time, as I mentioned in the intro, it’s a real estate deal. This isn’t a real estate deal, so, you know, we don’t really have cap rates to talk about. We don’t really have…we don’t need to talk about the insatiable demand for multifamily, but instead I wanna talk about your worldview, essentially, as we sit here in early 2024, and you gave us a little glimpse into it over the course of the first 20 minutes or so of today’s episode. But I’m just curious, what is your worldview? Can you expand on that a little bit, and how do you believe investors can hold on to their wealth? I mean, essentially, I’m getting at, you know, why precious metals, not just overall, across any timeframe, but why precious metals specifically right now, at this moment in time, as we sit here talking about this in February of 2024?

Josh: Yeah. So, my personal worldview, and why I’m in this industry, is, historically, governments don’t always act in the interests of individuals. And so, you know, you have to go above and beyond. You know, you’re not gonna learn anything in college that’s gonna make you super, super amazing. You gotta go out and beat everybody else. And so, realistically, if you look at the historical nature of fiat currencies, they don’t last forever. And the reality is, is our politicians in, really, in all countries, they just keep spending and spending and spending. And so this adds a lot of troubles to all things, including our own banking sector. I think about this time last year was when Silicon Valley Bank was about to hit. It was March of last year. And we saw Signature Bank and a few others. And the reality is, is there’s more banks right now on the list, to go under. I’m gonna guess there’s a lot of people watching today that reviewed what is an FDIC insurance limit, and how does that apply. And then as people realize, “Oh, boy. I may not have insurance. I’ve got exposure,” and so, suddenly, people are doing, syndicating out to different bank accounts. They’re doing overnight, you know, repos in the Treasury products. I mean, these are the things that hit us just last year, maybe for the first time in our lifetimes.

And a lot of people don’t realize this, but the only thing really on central banks’ balance sheets today, outside of their own currencies that they make up, is gold. It’s the only thing on their balance sheets. And, you know, just last week, Poland just bought more gold on their balance sheets, and I think it’s interesting to see, you know, why did they do that. And we, basically, the last two years have been 70-year highs, by central banks buying gold on their balance sheets. So, you’re seeing an inflation of currency, and spending of government, right. And now they’re talking about the, you know, what does the word “great reset” mean to me? What does that mean to others? We don’t really know. There’s some, like, you know, sometimes they tell us right on their own websites what these things means. But I think the reality is, is the financial system is breaking, it might be broken already, and how is this all gonna play out?

So, why I’m in precious metals, is it provides an alternative. I live in America. I work here. My retirement’s here. We’re completely exposed, typically, to one currency. So, just like you can hold in your, and, you know, personally, you can own Euros. You can own Mexican pesos. You can hold Yen. And sometimes it goes up and down, and as an international business, you manage that. So, Wyoming Reserve really does the same thing. So, we hold Treasury, we have Treasury assets, which can be gold and silver. We can also be in other Treasury assets, just like any company, and say, you know what, maybe we’re … someone pays us in Euro, you’re like, well, let’s hold on to it for a month or two, just depending on where things are going.

So, I think, as we look at things, there is risk no matter what, no matter what industry you’re in. And does that inflation or deflation of that product affect your core business? And for some people, if you’re Starbucks, and your coffee beans go up too much, you’re gonna have to raise prices on your consumers, or we’ve seen in the airline industries, they have to manage the price of fuel. And so, you know, and at some point, if fuel gets too expensive too fast, you know, customers say, “I’m not traveling this month.” So, these are the things that, as we kind of look out and say, I can’t predict, but we can storyboard what may or may not happen in the next number of years. And I think, as things are getting more and more uncertain, this is why people do turn to gold and silver. And traditionally, advisors, financial advisors, they don’t have any products to sell. And so, the precious metals industry, it’s, gold and silver’s in the trillions of dollars, and on the private side, if you take out the central banks, it’s in the mega billions. And I mean mega billions of industry.

And most of that’s self-directed, meaning someone is calling up their broker and saying, “Wire me money to my account, and they’re going and buying physical metal on their own, and trying to figure out, “Is it in my house?” Which, I’m a big proponent of having some, you can have some in your house, you know, for bad times. But the reality is is how much do you want in there? If someone walked in and put a gun to your wife or your child’s head, and says, “Hey, give me all you got,” you’re gonna hand it all over. And that’s why vaults exist, is for people that have, you know, six and seven figures and up of metal, and they need it in a place that actually is insured, where…and like I said, it’s audited. It’s got all those things. And we can ship it to you. We can fulfill it to you.

So, those vaults around the world are actually being created and built. They’re growing. Banks own their own vaults. So, JPMorgan has their own vault in New York City. And so, a lot of people think, “Oh, Josh. You’re in such an esoteric business.” I’m like, “No, not really.” JPMorgan, TD Bank, Bank of Montreal, all these guys are supplying the central banks. And they either operate their own vaults, or they use third-party vaults. And so, this is the, frankly, this, what we offer is a private solution to the problem that’s existing, and we just wanna do it in a sleepier jurisdiction, in Wyoming.

Jimmy: Yeah, absolutely. No, yeah. The JPMorgan Chase vault. I think it’s underground in New York City. I wanna say maybe they have one underground in London as well. I’ll try to find those and link to them in the show notes. You mentioned building vaults. That’s what you’re doing at The Wyoming Reserve. I’m just reading from your press release right now that you’re commencing an offering of common stock, and seeking to raise up to $43 million from accredited investors interested in potential tax advantages from Qualified Opportunity Zone and qualified small business stock. The $43 million, what exactly is that going toward? Are you constructing a new vault? Are you expanding, or exactly what is that raise for?

Josh: Yeah. So, inventory.

Jimmy: Okay.

Josh: It’s for inventory. So, The Wyoming Reserve has already built its vault. It’s already here. It’s already in operation. So, the structure’s already in place. And I think, it’s a total of $50 million, and I think at the time it was right around $7 million. I think we’re right around $9 million as right this minute. Just, and that’s through insiders, friends and family. So, that, we’re now being syndicated out, just starting essentially later this month there. I believe we’re onboarding, I think there’s several in… We have one managing broker-dealer, and then there’s several broker-dealers being onboarded. So, this’ll be, this, The Wyoming Reserve stock price will be, it’ll be on the Schwab platform. It’ll be on the Pershing platform. So, a lot of these registered investment advisors are gonna be offering this product. We’re able to work, obviously, if people are interested in learning more, if they are accredited, they can come to our website and submit, and contact our, Carrie Davis, our director of investment relations, and, to take a look at our private placement memorandum. It’s a long one. It’s good. We also have a deck that kind of just walks through some of the things that we’re talking about.

And, you know, my lawyers would love me to say that all investments have risk. You can lose everything. But, you know, our goal is we would like to try to beat the historical rate of return. And so, people ask, “Well, what does gold and silver return?” And so, if we look back to when you were allowed to own it in the United States, was 1971. So, before that, you can not, as a private individual, you were not allowed to own gold. And so, 1971, President Nixon was the final block, or removal of any backing of precious metals with the U.S. dollar. And so, at that moment, you were allowed to own it again. It has, on average, if you took a 50/50 blend of both gold and silver, it’s returned right around 7% a year. So, if we look at a historical rate of return, and that’s through, you know, times of, you know, I call boringness, you know, there’s times where owning gold and silver aren’t that exciting. Typically, it’s exciting during times of big change, crisis, and uncertainty. So, our hope is that we’re able to, you know, not only hit those marks, but to hopefully exceed them.

Jimmy: Well, that would be pretty impressive. And not only exceed them, but exceed them in a tax-advantaged way, also, kind of tying back into Opportunity Zones. You mentioned earlier that the location in Casper, Wyoming is an Opportunity Zone, obviously, so you’re gonna hold some precious metals inventory in the vault, in Casper, Wyoming, in that physical location, but that location is also a foreign trade zone. You also used the term “freeport.” Can you go into a little more about what that is? What do those terms mean, and why are those…why is it important?

Josh: Yeah, yeah. So, yeah, why is this important? Freeports have been around since the Roman days. And so, freeports are essentially, think of, like, I think it, really, in the U.S., a lot of times, people think of it more of bonded warehouses. So, if you’re an alcohol company, you could import a bunch of tequila or alcohol in, and not pay taxes on it until it’s removed. So, if we are in a situation where we can offer a solution for someone that’s able to store something and not pay taxes on it until it’s removed from the zone, it becomes kind of interesting. So, right now, gold and silver are not subject to gold tariffs or duties imports into the United States. But if that were to ever change, and there are some politicians running for office right now, even Donald Trump is talking about a 10% tariff on all things. This is where suddenly, having a facility where you could bring it in, and Scottsdale Mint could manufacture and ship it back overseas. Or it could be moved right down the hallway, into Wyoming Reserve’s vault, and the customer would never have to pay tax on it.

So, these are some interesting things that we’re looking at. Like I said, we are in a foreign trade zone, and we are currently in process right now, with a law firm out of D.C., for us to be an operator as a freeport. And so, this is, you’ve probably heard it, freeport for artwork, all around the world. Artwork can come in to these various freeports all around the world, and someone could look at a Picasso painting. I know that the one in Singapore boasts that they have, they hold the most Picasso paintings in the world. So, the idea is if you wanna see something in person, it could be flown in, in that facility, someone could go and look at it, and let’s say you didn’t wanna buy it, it could go back to Europe or somewhere else, and not have to pay that in-and-out taxation. So, you know, I think this is where as you put it up, like, we’re essentially a warehouse, vault operation. What are the services that we can provide?

This vault operation will also be working in the blockchain space. So, while we’re not going to be a cryptocurrency company, folks have probably heard about fractionalizing of physical assets. So, let’s say someone has a very expensive, multi-million-dollar watch. It could be stored in our facility, and fractionalized, and sold as a non-fungible token, an NFT. And the state of Wyoming is sales-tax-free for NFTs. So, in theory, our vault could be the custodian for that tangible product that could be then fractionalized and sold, in digital form. So, our vault is really gonna be playing in, I call it the old world, and also the new world. And so, this is something where, you know, if you’re not looking forward, and saying where are things gonna be in a number of years, you might get left behind. And this is something where, you know, we’re pretty excited about. We’re in the right jurisdiction. Bloomberg did about a 15-minute, they did a 15-minute video about where is the headquarters of cryptocurrency going to be for the United States? Is it gonna be New York or Miami? And they said “Nope. It’s probably gonna be Wyoming.” So, Wyoming already has most of the custodial companies. A lot of the exchange, Kraken just opened up fairly recently, Kraken Bank, here in Wyoming.

And I was misquoted once in the newspaper. They said that it’s the lack of regulation in Wyoming. And I said, “No, no, no. It’s the fact that they have good regulation.” So, Senator Lummis, you’ve probably heard, Senator Lummis from Wyoming was leading the charge for the crypto bill that’s been in the Senate over the last few years. So, Wyoming’s a little bit more progressive, in the sense of they’re trying to get ahead of where things are going. Wyoming created the LLC, was the first to create an LLC. Delaware took that idea and did a much better job marketing it. And Wyoming doesn’t wanna get left behind as things go more digital.

Jimmy: Good. And so, with your deal overall, your Opportunity Zone deal, great tax advantages. It’s a freeport. It’s an Opportunity Zone. It’s a QSBS section 1202, and you’re getting exposure mostly to gold and silver. I think you said 90% of the assets of the business are essentially just in holding gold and silver, precious metals. Is that right?

Josh: That’s right. That’s our core…

Jimmy: And then, in addition to that, all these adjacent services that the business is associated with, the drop shipping, the storage fees, and the yield that you’re getting from holding that gold and silver, right?

Josh: Yep. You’re right. And it’s the exact same things that other banks, like some of the ones we mentioned, that they currently do. So, we’re just a private model of what’s already being done. So, while this, it seems kind of esoteric and really out there, this has been going on for a long, long, long time. This is just now a really slick way for regular individuals to be, own, and own the freeport of the West. And so, we are a private Fort Knox, essentially, is another way to think about it. And we’re just building it, you know, one step at a time, and we’re kind of excited. You know, I think people can get kind of excited about the idea of, it’s obviously a private equity offering, but it almost feels like a hybrid ETF. But we’re a real business. We’re a real business, and, you know, we hope to be around for a long, long time.

Liquidity is one of the bigger things that I’ve neglected to mention. Liquidity is really interesting, because, as I looked at OZs, one of the downsides is you’re pretty much committed… Obviously, if you are an OZ, you’re thinking 10 years, right? You’re thinking I’m gonna maximize my tax incentive here. But the reality is, is what happens if something in my life changes, I need access to that capital? Well, the reality is, is for most real estate deals, if you’re in a shopping center, a big project, an apartment complex, you know, it’s not easy to get out. You either have to wait until the property is sold, or you find an investor to take out your position. And the beauty of The Wyoming Reserve is we offer, it’s a two-year minimum hold, and at the end of each year, we send a letter out to our investors as, you know, if you wanna get out, just let us know. And once we strike…our financials are audited, and, you know, people are able to sell out, each year. And so, we’re able just to sell down our inventory. And so, gold and silver is one of the easiest, most liquid assets in the world. It’s a tier 1 asset, and it’s an easy thing to buy and sell. So, it’s an easy, as money is coming in and out of our fund, for years and years and years, we’re able to offer that liquidity provision each and every year.

Jimmy: You mentioned the terms “esoteric,” and “out there,” and it is a little bit, and it’s definitely quite esoteric and out there for an Opportunity Zone deal, which is why I like it so much. It’s so much different than a lot of the other deals that I see. It’s a very interesting, unique application of the Opportunity Zone structure. You know, one other, by the way, I love real estate. We’re not talking real estate today, and I hate to keep comparing this deal to real estate, but, you know, one of the other downsides to a real estate deal within an Opportunity Zone structure is, the vast majority of the time, there’s a construction period, you take on construction risk, and the thing doesn’t even begin to cash flow until year three or year four, oftentimes when the asset is stabilized. What is the cash flow like on The Wyoming Reserve? I mean, when can an investor in your deal start to expect some cash flow?

Josh: Yeah. I think, you know, as we look at this, we have the opportunity… It could be year one. That, it, depending on where the price of our inventory, if our inventory rises quite well, it’s probably not too hard. I will say, you know, the goal is, we really wanna get this first $50 million in the door. That’s kind of our table stakes for us to be operating. And then, as we enter into supply agreements with mines and refineries, we’re able to offer more value. As we continue to grow, the ability for us to make more and more money off the business operation, it becomes a lot easier. So, it could be a, it literally could be 2024 where we’re cash flow positive. It’s possible. A lot of that depends on when’s capital get in. Does our inventory… Obviously, our investors want to be long the metal. You know, are we down 3% or up 3%? Are we up double digits? I mean, obviously, you can kind of see how it wouldn’t be too difficult. And the beauty of, I think, Wyoming Reserve, it’s not a heavy-duty… We don’t have a lot of salaries to handle, and actually, I’m handling the salaries until it’s profitable, and it’s paid out of a 2% management fee, is how it’s done. So, really, there’s no founders’ dilution, in the normal sense of, hey, you come into a deal, and the founders own 50% of it, or something like that.

So, the way this is really structured is more of a traditional hedge fund. It’s a 2% management fee, and then there’s a performance metric. If we’re able to beat a 7% return, anything above that is split 80% to the investor, 20% to the founders. So, I wanted to create something that was easy for people to get in, and provide liquidity on the way out, if that’s what they want, but it’s a win-win. So, if we can provide some nice returns here, I’d say, near-term, that’s my goal. That’s our team’s goal. We don’t have, like I said, we’re not a heavy-duty… It’s just, you know, a handful of employees, that are able to run and manage the vault, and go from there.

Jimmy: But with so much exposure to gold and silver, you’re also kind of beholden to the whims of the gold and silver market, in many cases as well, right?

Josh: You are. And, but we do offer, I would say we’re a little different than just… You know, a good analogy would be is if you hired, let’s say you hired a new financial advisor, and you said, “Hey, Craig, advisor Craig, I’m gonna give you a million bucks,” and he’s, is he gonna buy all your investments in one day? Or is he gonna dollar cost average, and look to position? He might love Apple stock, or Amazon stock, but is he gonna buy it all in one day? Or is he gonna say, “You know what, right now, the risk isn’t there?” And so, we would call that, that’s part of our management of what we provide. So, we have a chief investment officer that looks, like, if, when money comes in, are we 50/50 gold/silver? Are we 65/35? And it really depends on where is the price point? Are we scaling in? Are we, while we wanna be net long, are we going all in or are we gonna go partially in this week, this day, and kind of scale that in?

And so, this is how, you know, money management is, you know, our hope is that we can beat just the traditional, “Hey, I just threw and bought it all in one day?” And that’s, unfortunately, that’s what gold and silver traditionally have. If you’re just buying an ETF, or you’re buying a bar, you really don’t have an advisor kind of helping you through that. So, our goal is we wanna manage that as that cash comes in, we wanna buy that inventory, and manage that inventory, and maximize it.

Jimmy: Yeah, so, in some ways, I think, to borrow one of your analogies, you’re an actively-managed gold and silver ETF, essentially. Yeah.

Josh: Key. Key. Actively manage is key. We’re actively managing that inventory, and we’re providing, you know, extra services and fees for our storage business, and, at the end of the day, like you said, we will, basically, our success will be predicated on where gold and silver will go this decade, and I think, you know, our listeners could probably go and research, and if people don’t like that space, we’re probably not for you, but if you’re like, “Hey, this is a nice diversification element to what the banking financial sector, what could or couldn’t happen in real estate, the stock market,” you know, there’s a lot of uncertainties. Even, you know, global conflicts and global war. Who knows what can happen? So, I think, we, I don’t think people say, “Hey, put 100% of your money in this type of investment,” but you’re gonna probably see, in the coming years, more and more advisors are probably gonna start recommending that people do put a decent percentage, whether they’re starting it at 5%, 10%, or higher, in the precious metals during this decade. This is gonna be, in my opinion, this is a tough decade. And we’ve got an incredible amount of headwinds and flashpoints to get through.

Jimmy: No, to your point, yeah, the decade started with a once-in-a-hundred-years pandemic, and there’s been war in Europe, and we’re barely four years in. So, we’ll see what is to come over the closing half of this decade, but who knows what’s in store?

Josh: That’s right.

Jimmy: Josh, this has been a pleasure, getting your insights on gold and silver investing, and Opportunity Zone investing as well. Very unique deal. Thank you so much for joining today. Before we go, where can my audience go to learn more about you and The Wyoming Reserve? If we have any investors listening or watching, what’s the best way for them to get in touch with you?

Josh: Yeah. Yeah. Check out our website at thewyomingreserve.com, and reach out to our investment relations, Carrie Davis. Send us an email, and we can, you know, we’ve got a nice portal that people can come in, look at our deck, look at our PPM, take a look at it, and then we’ve got a really good team of people to kind of work through all these different things. We’ve actually have, we’ve onboarded people that were in other OZs, that weren’t able to go anywhere. We had a, someone that was in a situation. They were stuck in an OZ that was no longer, it wasn’t viable, with interest rates where it was at. So that money was just sitting there, and he’s like, “Oh, boy. I gotta do something with this.” So, that money came over to us, and just started to go. So, we’re definitely willing to help you guys through, you know, looking at this as a potential solution.

Jimmy: Fantastic. Again, been a pleasure, and for my audience, I’ll have show notes available, as I alluded to previously, as always, at our website. You can find those show notes at opportunitydb.com/podcast. I’ll have links to all of the resources that Josh and I discussed on today’s show. I’ll try to find those JPMorgan Chase gold vaults also. I’ll link to a couple articles there. And please be sure to subscribe to us on YouTube or your favorite podcast listening platforms, to always get the latest episodes. Josh, again, it’s been a pleasure. Thanks so much for joining me today.

Josh: Thank you so much as well.