Van Simmons of David Hall Rare Coins Talks About The Best Values in the Rare Coin Market Right Now

July 12, 2016

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is Van Simmons, partner and president of David Hall Rare Coins, one of the largest and the most respected rare coin companies in the country. Van specializes in portfolio construction, set building and helping clients acquire the world’s finest rare coins and collectibles.

Van has been a rare coin collector since age 12 in a rare coin dealer since 1979. As one of the founders of professional coin grading service, PCGS, the largest rare coin grading service in the world, he has helped revolutionize the rare coin market. Van has over 1350 dealers that sell his product. PCGS has graded and certified over 30 million coins over the last 30 years. Van has also won acclaim as a collectibles dealer in sports cards and memorabilia, rare firearms, Western memorabilia, and even collectible knives.

Van was also a co-founder and holds a seat on the board of directors of collectors universe, CLCT, a publicly traded company which trades on the NASDAQ exchange. Collectors Universe has several different companies that it owns along with PCGS. They also own PSA, Professional Sports Authority. PSA grades and authenticates sports cards and currently has over 1200 authorized dealers within its network. I could go on but hopefully you get the picture. Van, we're excited to have you on. Thank you so much for joining me today.

Van Simmons: Thank you.

Gerardo Del Real: Van, in the intro I mentioned that you’ve been a rare coin collector since age 12. Can you share with us how you got involved with rare coins and why coins resonate with you the way they do?

Van Simmons: Well, I think as a kid all of us ... Now, I'm 64 so I've been doing it a long time, but all of us back in the 50s and 60s collected coins or stamps. I collected both of them, but mostly resonated more towards coins because they were silver and they were gold and they were heavier than little stamps.

It started off back then, people would go through change and find rare dates of change that they'd get from the grocery store and things like that. Then, as the market moved forward a little bit, people started collecting rolls, through the 60s they would collect rolls of silver dimes and rolls of quarters and half dollars and dollars and pennies and things like that. Then the market moved more towards rare dates and higher grades. As markets matured, they became more efficient and they start moving towards finer higher-quality products.

People can tell me, "Oh, my father collected coins," and I'll say, "Well, when did he buy them." They can tell me about when they bought them and I can tell you what they have in their safety deposit box because that's sort of the way the generations have changed over different things they've collected. Coins tend to hit me as a very historical part of the United States.

A lot of people don't realize it, but when a country first starts striking its own coins it's a sign, like in 1795 when we struck the first five dollar gold piece, they struck about 5400 coins and it was a way of us resonating to ... They're telling the rest of the world, "We're our own free sovereign nation and here's the coins we're making," and they were shipped all around the world to Britain and Europe, and everyplace else.

Somebody standing on the mountain top beating their chest saying, "Here we are," and it's been a big thing of freedom to make our own coins. Now, a lot has changed over the decades, but every time there's a change in something politically ... Not every time, in the the old days, each coin change, coin design change was because of something that changed politically, like they lowered the gold content in coins in 1834, 1835 so the larger five dollar gold pieces and ten dollar gold pieces that were struck from 1795 to around 1833, 34, ended up becoming hitting a melting pot because there was more gold in them.

Then they lowered the gold content in the coins and as the governments do, kind of sign of things to come with our governments as they continued to take silver and gold out of the coinage. It went all the way until 1964. We started buying all silver coins because they were stopping to make those. It's just always been something I like ... As a kid, my grandfather would give me silver dollars that you'd get in Las Vegas, which is true of a lot of people I know, big heavy silver coins. The eye appeal and the design and stuff like that I think of the coins are very desirable.

Gerardo Del Real: That’s absolutely fascinating. Now, I also mentioned that you were one of the founders of PCGS, the largest coin grading service in the world. How did that come about?

Van Simmons: It was in the mid-80s, about 84 and there was a big run on high-grade silver dollars, MS65 silver dollars were going up in price even though the price of silver had dropped by 90%. The price of Morgan dollars and high-grades MS65 were moving up. We were trying to buy them and we were back ordered. We'd get dealers sending us coins saying, "Here, I'll set aside these MS65 coins at your bid," whatever our bid was at the time and we'd only accept maybe 5 or 10% of them as the correct grade.

One day I was frustrated. My business partner David Hall and I were having breakfast and I said, "Man, this so frustrating. We can get coins from JD or Gordy or these guys and we agree they're great, but everybody else that comes in, we have to return about 90% of the coins. We're just spending a lot on shipping," and we had to fly back then to different shows, like if I wanted coins and I had to fly to Florida or New York or different shows around the nation.

Then the next day we were meeting for breakfast and David goes, "What do you think about us starting a coin grading company?" I said, "I think that'd be great." I go, "But how do we do it?" He goes, "We just write the standard." He goes, "You and I and everybody that's good," and so we got 4 or 5 of us together, 6 of us together and came up with a standard. It took about two years to get it set up and by the time it was set up within 30 or 60 days, you couldn't sell a coin unless it was graded by us.

There was a big backlog of getting coins graded. It was taking 6 to 8 months to get your coins graded by PCGS. In fact, it was funny. There was actually a secondary market. They were called "slots" where we were charging $30 to grade a coin, let's say a gold coin, they were trading. If your time was up in less than 30 days, like your slot was coming due in 30 days, you could sell if for 60 or $70 to dealers because they needed their coins graded and they were willing to spend more money to buy different slots.

Of course we raised our price on faster services. So that's where that came from. It came from a group of guys wanting to give all the correct information to the public and make a level playing field for the clients. That was the ... Because they'd get clients all the time would come in and have coins that they bought from somebody at one grade and they weren't the right grade. It was more of trying to ... And I remember sitting there and telling David, "If you made a level playing field, at some point there’s big money in the world that wants to buy coins but they want to have a feeling of security, they trust what they're getting, so that's what we did.

Gerardo Del Real: That's fantastic. That’s incredible, so it was the six of you if I'm not mistaken?

Van Simmons: Yes.

Gerardo Del Real: Fantastic. Now, I understand rare coins are your passion, but you’re also considered an expert in the collectibles such as guns and golf clubs and even French glass from what I understand. Can you share with us a few of the most unique and memorable collectibles you’ve come across?

Van Simmons: Well, I'm not per se an expert in French glass and things. I collect a lot of English pottery and a lot of old Tiffany lamps and things like that or I used to collect them. I don’t buy them so much anymore because now they've gone up in price. I tend to buy things that I think are undervalued and at some point they become overvalued and becomes time to no longer own them.

In the antique firearms, I've been a gun collector, guns that won the West and won World War I and World War II or Revolutionary War, things that changed America, very historical things. Not a lot on European firearms or anything like that, almost all US. That I did for about 25 or 30 years. I used work about 40 to 48 antique firearm shows a year so I was on the road quite a bit doing that and just loved it, what was your question again?

Gerardo Del Real: If you could share some of the most unique and memorable collectibles you’ve come across. I read an article that featured you and I think they were speaking about a Bengal tiger in these oriental [runs 00:08:13] and just all these really unique and neat collectibles. Can you share just a couple of the most unique ones that are kind of memorable to you?

Van Simmons: I’m drawing a blank right now to tell you the truth. There's been so many different things that have come though my hands, but I've had things that have belonged to different presidents, just things that the usual person doesn’t even know exists. I apologize now for not having answer for that-

Gerardo Del Real: No, that's a good answer-

Van Simmons: The Bengal tiger story and all those things, those are just deals that a guy had a big gun collection up in Beverly Hills and actually lived right across the street from Cassius Clay, or Muhammad Ali and he wanted me to come up and buy his antique gun collection. When I did, he had this 3500 ft.² trophy room filled with stuffed animals. I bought almost the entire room.

One of them was a Bengal tiger. There were bear rugs, there were lion rugs. There were all kinds of things, but I bought them just because they were cheap. I wasn't a collector of them but you haven't been able to shoot a Bengal tiger since the 60s. This guy had one for sale and I ended up buying it and a few years later, I ended up selling it. My wife hated it. I had this 10 ft. long Bengal tiger in my living room. She wasn't a big fan of it, but it was pretty funny.

Gerardo Del Real: That’s a great story. With resource stocks, one of the best pieces of advice that I ever received was to never fall in love with the stock. With collectibles, I imagine that can be very challenging. Are there personal collectibles, Van, that you simply won’t part with regardless of the price or regardless of the offer?

Van Simmons: I say there is, but there’s been times where I've sold things. I had a rifle one time that I paid $27,000 for and I paid over the moon for it and a few years later, a friend of mine wanted to buy it. He didn't say he wanted to buy it. I told him it wasn’t for sale and he kept looking at it and looking at it and he says, "What's this thing worth at the end of the world? What’s it worth?" I said, "I don't know 40 grand, 50 grand."

He goes, "What are you going to do with it?" I said, "I'm going to give it to my kids," and he offered me some number that was way above that and I just handed it back to him. I said, "I guess you can own it." There comes a point where you have to sell stuff. I have things now that I can’t ... I have family things that I wouldn't sell, but most everything else, I’m married and I have a couple kids and those are the two things I guess I can't sell. Everything else, at some point, I decide to sell it because one, I either grow tired of it or somebody wants it more than I do. I've sold a tremendous amount of things to friends for what I paid 20 or 30 years ago, just because they really wanted them.

Gerardo Del Real: That's neat.

Van Simmons: But some things become really overpriced and some things become under-priced. I try and focus on things that I think are under-priced, I can fall in love with a lot of different things.

Gerardo Del Real: Absolutely. Absolutely. Van, you've structured and continue to structure coin portfolios for some of the wealthiest families in the world. If someone was just getting started in the coin and collectibles universe and wanted to start a coin collection or a collectible collection hoping to turn a profit at some point, how would they go about that?

Van Simmons: To begin with, I have dealt with some of the wealthiest families on earth, but I also got off the phone today with a little retired schoolteacher that I’ve done business with for 30 years and she’s in her late 80s and collects Buffalo nickels for $50 and $70. I deal in a wide variety of things, mostly all high-quality coins, but the easiest thing is to try and find something you like or you can call me or other people and find out what’s undervalued.

I'd shy away a little bit from telemarketing firms that are promoting certain things because they have big supplies of them, but there's some areas in all markets, some areas are very under-priced and very overlooked or very oversold. The hardest thing to do and yet the easiest thing to do is try and find something that is more of a value play. If you really think about it, you can pick stuff out that just the prices don’t make any sense. They just seem too undervalued.

I think today if I were ... If somebody called, which happens every day and said, "I’m interested in doing this," I can usually come up with something that makes sense to me. I just had a gentleman in here 20 minutes ago who's been a client for a long time and he says, "Yeah, I have X amount to spend today. What should I buy?" I picked out about seven coins and I said, "Take your pick. You can buy 2 or 3 of these or one of these or one of these," and he ended up buying one a little more expensive coins for, I think it was $9000, $8900.

Coins are different. Everybody likes different things and for different reasons. Some people are hooked on just gold coins. Some people want old nickels. Everybody’s a little different. Some people like Indian coins because they collect Navajo or American Indian items, things like that. There’s something for everybody.

The other thing I like about coins is the market is so large. There's so many buyers for every single thing. There's a coin show almost in some city in the United States every weekend and auctions every couple of weeks or every month. It's just a huge market, more so than other collectible and the spread are tighter than any other collectible. Spreads can be anywhere from 1 or 2% to 20 or 30 or 40%, but you go into antique furniture or pottery or glassware, anything like that, you’re talking 50 to 200%. Paintings are anywhere from 100 to 300%. The prices can, the spreads on a lot of things can be very high and I like coins because the spreads are so tight.

Gerardo Del Real: Absolutely. Well, it sounds that the market being so big provides the liquidity as well in the event that you want to take that profit and make that work for you.

Van Simmons: Yeah and the other things is, you like to buy when it's a collectors market. Markets, when they're really cheap, it’s mostly collectors buying which is where we are now. As the market gets hotter and prices start moving up, you have more investors and then at the end of the market, you have more speculators who jump in.

Just like gold or silver or stocks or anything else, towards the end, it's speculators who are ramping the chart to the moon. At that point you have to say, "Well, no collectors are buying anymore." You always have to look at where the end users of the product and what's the end user going to want?

I get people who say, "Well, you know, you only sell high-quality coins." I say, "Well, if I collected cars, I wouldn't want to buy a 1959 Cadillac that's been run into 15 walls. I'd want one that was brand, a nice condition." You want to have something that when you have it, everybody else wants to have it. Everybody who collects would look at it and go, "Hey, that's nice. I'd like to have that," so high grade of any collectible I think is one of the paramount things to look for.

Gerardo Del Real: Absolutely. Now, you talk about searching for value and your contrary in nature and wanting to buy things that are out of favor that you find compelling risk, reward propositions for. Where do you see the most compelling opportunities in the coining collectibles market today, Van?

Van Simmons: Well, there's a couple different areas. I'll start with the commemorative area. There were gold and silver commemoratives. Let me start with gold because that trade to me is just a no-brainer and I think I told you before we talked that my business partner, David, is supposed to write a report on it and explain the whole theory on gold commemoratives, but the short story is starting in 1903, the US. mint made in 1903 Jefferson gold dollar. Then in 1903, McKinley gold dollar.

From 1903 to 1926 collectors started buying these coins from the US. mint just like to buy the commemorative coins today. There's the constitutional five dollar gold piece and all these other coins that the mint's making today, but from 1903 to 1926, they had 11 different coins they made. 9 of them were gold dollars, two of them were 2 a half dollar gold pieces.

During the late 80s, there was a short supply of coins because PCGS couldn’t grade them fast enough and there was a big demand. Then in the early 90s when the economy slowed down, the coin prices came down quite a bit. Well, prices on gold commemoratives continued to stay up because there were firms that were selling them and continued to raise the prices and continued to promote them. Well, they promoted them to the moon. You know, bull markets create bear markets and bear markets create bull markets. Things become overpriced and then they go into a bear market. Things get oversold or too cheap and then they go into a bull market.

They ramped some of these coins up, I think I was telling you yesterday that one of the coins I sold wholesale in 1990 to a dealer for $28,750. Well, in the early 2002, 2003 time frame they quit recommending them finally because they couldn’t sell anymore. The market has come down on them so much now that that coin's about $2300 today.

Gerardo Del Real: Ouch.

Van Simmons: I love buying something that's had a collector base for a hundred years that is down 90% in value, just a tremendous value. I'm talking about coins where they made 10,000 or 20,000. These weren't coins where made millions of them. These are rare coins to begin with.

Gerardo Del Real: Right.

Van Simmons: You also have to realize, all these coins were struck before the depression of the 30s. Two and a half dollars in gold in the 30s was a lot of money. People were making and $800 or $900 or $1800 a year. A lot of these coins got spent and the survival rate on them is higher because they were commemorative coins and saved but a lot of them just got spent. The demand for this type of stuff today is very, very strong.

I just think that they're one of the best values. The other one is high-grade silver commemoratives. They made those from 1892 until around 1954 and there's 50 different types. There's 150 different varieties, but there's 50 different types made for different events and stuff like that and in high-grades, MS66, 67, 68. They're the best value rarity or population. In other words, the amount of coins that we've graded in 30 years in these high grades versus the price. They are absolutely some of the best values out there.

Gerardo Del Real: Very, very interesting.

Van Simmons: Yeah, they are just like ... I don't want to say a no-brainer trade but I think as the markets move forward over the next 10 years, one of the things that really helps collectibles is an inflationary cycle which we haven't had. That's why antique furniture is down 70 or 80%. A lot of these things are just, dealers can't sell a lot of the antiques because nobody’s buying them.

When you get inflation again, I’m sure you agree at some point, they're going to wake up and say, regarding our dollar, "The Emperor's got no clothes on. This thing is supported by nothing," and we can have a pretty strong inflation, runaway hyperinflation, whatever you want to call it. At that point, people will gravitate towards all collectibles and coins are the most liquid.

Gerardo Del Real: Fantastic. Well, Van, it’s been great. Thank you so much for your time. I’m looking forward to the report that your business partner is writing up as we speak, and I believe that’s a week or two away and hopefully we're able to provide that to listeners and readers and maybe we can have you on in a week or two and get some more specific recommendations and why they make sense in the current market.

Van Simmons: Okay, any questions you have just give me a call. I'd be happy to help you.

Gerardo Del Real: Fantastic. Van, thank you so much for your time. We'll make sure to put a link at the bottom of this interview so anybody that has any questions can call in. For everybody that's listening out there, Van is the best at what he does and there’s a reason why he's the most trusted in the business. Thank you again, Van, for your time. I really appreciate it.

Van Simmons: All right. Thank you.

Gerardo Del Real: Take care.

Van Simmons: Bye bye.

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