Gold Coins Worth “Infinity”

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is partner and President of David Hall Rare Coins, Mr. Van Simmons. Van, always a delight, how are you today sir?

 

Van Simmons: I'm very well, thank you.

 

Gerardo Del Real: We talked a bit off air, we're living in interesting times, it seems like both monetarily and economically as far as policy goes anyway, we are in the wonkiest experiment that I've ever seen, and I'm being kind and generous by using the word wonky. You've seen many, many, many cycles. You've seen booms and busts, and seen it many times over. You also happen to have your finger on the pulse of collectors all around the world, right, some of the more influential and wealthiest, everything from school teachers to the untouchables. How are you feeling about the current state of monetary and economic policy? I know you just got back from Freedom Fest, which I heard was fantastic. I got to get your thoughts on the macro scene that we're living through right now, and then we can dial into what you're looking at in the coins and collectible space.

 

 

Van Simmons: Well, be a little more specific. Are you talking about what do I think the economy is doing right now?

 

Gerardo Del Real: No, the economic policy as it relates to money printing and monetary policy.

 

Van Simmons: That's like the wild wild west right now. I mean, there's absolutely no control, I'm sitting here laughing. But I mean, it's like, there's no controls, even though they're acting like there is, and it seems like they're trying, they being the administration, is almost... This is probably politically incorrect for your liberal clients, but almost trying to buy votes. I mean, it's like who all can we support? Gavin Newsome here in State of California just decided to pay everybody's rent who wasn't able to pay rent for the last year and a half with the money that was left over that he didn't give to people during COVID. And I think the printing and stuff that they're doing right now is insane. I was talking to... Do you know James Grant, the interest rate observer?

 

Gerardo Del Real: Absolutely.

 

Van Simmons: I was talking to him a couple of months ago and we were laughing about inflation and I made the comment about do you think we're ever going to see inflation here, and I was kind of being sarcastic. He goes, "Well if we don't see it here they better take the word out of the dictionary because it must not exist anymore." And I thought that was pretty well put. You have interest rates at zero, or nominal rates close to zero, and I don't know where people are going to put their money, it's punishing everybody who saved all their life like myself because I am a saver. So I think they're just going to continue the printing presses and continue to kick the can a little further down the road, I don't think they have any choice of what they're going to do, everybody would get voted out of office at some point.

 

Gerardo Del Real: You deal with everything from comics to watches and coins and metals and collectibles of all types, are you seeing new capital hedging against inflation with either metals or coins or collectibles, or a combination thereof, or an increase in acceleration of capital moving into those sectors to get away from holding Fiat currencies right?

 

Van Simmons: Well, I actually see both. I mean you have old time buyers and collectors and investors like myself and my business partner David, and we started the company PCGS and PSA, the baseball card grading company, which we took private in '99 and actually it just sold about four months ago. We took it public in '99 and it just got taken private a couple of months ago, but that was new money, that was Wall Street money, the guy who owns the New York Mets bought our company.

 

Gerardo Del Real: Yeah.

 

Van Simmons: And it was just a small boutique business, but it grew and became extremely large, and I'm sure he's going to make it much larger because I think he sees the writing on the wall where the world is moving towards tangible products.

So I have old time people who come in and are buying because they're realizing probably the future devaluation of the U.S. dollar and all currencies, and it's almost a race to the bottom. It's not just a dollar, it's all of them, I don't think there's any currency that makes any sense. And I have money in four different currencies, and I think the strongest currency is a Singapore dollar, but most of my money is in the U.S. Dollar because I live in the U.S. But then you also have new buyers who are coming in and some of the new buyers don't have what I call the old coin dealer mentality, where it's like, geez, it used to only be $10,000, now it's $30,000, I wouldn't buy it at $30,000. They come in and to them $30,000 is cheap.

I was talking to a guy the day before yesterday, and I was talking about a 1907 wire edge $10 gold piece. Well, what happened with that coin was Roosevelt when he was president hired Augusta St. Gaudens's to design the most beautiful U.S. coins, and he designed the $20 St Gaudens's, and the $10 Indian.

 

Gerardo Del Real:  Right.

 

Van Simmons: The $20 St. Gaudens's he designed and it was called a high relief because the relief and the strike on the coin was high, and he couldn't stack the coins. They made about 11 or 12,000 of them, and then discontinued them and had Charles Barbara redesigned the coin. Very, very world famous, popular coin, always popular, but 11 or 12,000 of them struck, and it's probably a $50,000 coin in mint state, 65 or 40, let's say 45 to $55,000 depending on how nice the coin is, and always famous. The other coin he did, and he died by the way a month before the coins were ever struck so I never saw the end product. And he also did the $10 Indian. Well, the first coin struck was the wire edge, $10 gold piece and they only made 500 of those. And that coins like let's say $90,000, but it's multiples rare.

 

Gerardo Del Real:  Right.

 

Van Simmons: So to me coins like that are really good values, but I look at it and I was talking to a guy the other day, this is where my story's going, sorry, I get distracted. And I said, "So what do you think about a wire edge 10 in price?" He goes, "Well with interest rates at zero or below zero based on inflation," he goes, "Infinity." I go, "What do you mean infinity? There's no price limit on any of this stuff today." He goes, "A lot of these collectibles can go for anything."

So let me back up a little bit. Baseball cards, which they just sold, my baseball card grading company just got taken private, and the guys who bought it are big baseball card collectors. Well, I've been buying baseball cards since the early '80s, and I was a big investor in baseball cards starting in 82. We had a buy sell spread on baseball cards from '83 to '89. I sold the company in '89. Then we started a grading company for baseball cards in I think '92 or '93 to stabilize and make it a more efficient marketplace with grading.

Cards I used to buy, like a 1952 Topps Mickey Mantle, which is his rookie card, in gem mint, which is as good as it gets, we grade them one to 10. Well, the ones I was buying as gem mint in the '80s would probably grade seven or eight or nine. A 10 I think we've only graded three of them in 30 years probably. So I was buying these for a thousand to $1,500 a card. In '88 or '89 when we sold the company I sold them for $8,000 to $9,000 a card. If I had one today that was an eight, one recently sold, when I say recently two weeks ago, for $2.2 million in auction. And a 10 right now I understand there's three buyers for one that would grade a 10 in the $10 million range. And a lot of your listeners may know what a Honus Wagner baseball card is a T206.

 

Gerardo Del Real:  Yeah.

 

Van Simmons: Very famous. And to me we graded Wayne Gretzky's card back when we first started grading the cards, I think we graded his a nine. And I don't have any idea what the card is worth now, but I know it traded at $5 million several years ago.

So one just traded, I had a guy in here week before last at at a grade of 5.5, so it's the second finest. Now these are tobacco cards that were done turn of the century, and when they started making them, Honus Wagner was like, "Wait a minute, I'm a Southern Baptist, you can't put my picture on tobacco because I'm against tobacco."

 

Gerardo Del Real:  Right.

 

Van Simmons: So they recalled all of them. Well some of them still stayed up. Well this one that was 5.5, the guy was in here and he's looking at, he's saying, "Yeah, I'm placing this, I'm delivering it tonight, I'm flying out." And I said, "Flying out, what's something like that worth?" He goes, "What do you think is worth it?" I said, "I have no idea." He sold the card. $28,500,000 for a baseball card.

 

Gerardo Del Real:  Wow, incredible.

 

Van Simmons: So my friends comment the day before yesterday of infinity, he's right. Because some of this big hedge fund money and Wall Street money is looking for tangible products to put money into. And infinity may be the right number right now until they get some controls under everything, and I don't know if they're going to be able to control it. I think what they're doing we could, I mean I sound like a doomsdayer and I don't mean to, but I mean if we saw free fall in the dollar it wouldn't surprise me a bit. So things like gold and other products, real money or things that people want to own, whether it's farm land or anything like that. I mean, some things like that are going to end up becoming very not irreplaceable but priceless, how's that?

 

Gerardo Del Real:  A lot more valuable possibly to infinity, well said. Van, I know you have to get going, I appreciate your time. I have to ask you before you leave, on a risk reward basis, clearly you're a fan of real assets, hard assets, collectibles, coins, anything specifically out there that you would point our readers to? I got to make sure we put a link up, and I know you're always great and gracious about talking with people and helping people construct portfolios, everything from the school teacher with the $20 budget all the way up to royalty, right? But is there anything that looks attractive in this current environment?

 

Van Simmons: Any of the higher quality rare coins I think are really under priced right now because we can't buy anything in auction, it's selling for 50 to 200% over what I think I should sell it for, so the coin market to me seems very under priced right now.

Gold, gold can go down two or three or $400 and it doesn't make any difference to me because it could go up two or three or $4,000 just as quick. So in the gold market I think the best value right now is the older pre 1933, $20 gold pieces. For 40 or 50 years they traded at about double the spot price of gold, which today would put them at about $3,600 a coin, and I sold them for 40 years in those price ranges, because that's what the demand was. And in the last few years of premiums come down to 10% over. So I mean now where gold's $1,800, they're probably $1,900 or $2,000, or $1,950 let's say for a circulated $20 Liberty, or you could buy a brilliant uncirculated mint state '63 or '64 St. Gaudens' graded and certified by PCGS for let's say $2,100. I think those are real good values.

And your downside on buying the older coins is so limited that there's not a lot of risk. I mean, risk may be two or 3%, but the upside could be pretty dramatic. When gold was $275 an ounce Maurice Chez was the CEO of Revlon back in the '80s, and he wanted to buy him a 64 St. Gaudens and I said, "Geez, gold's $275, they are $2,000 a coin," and I'll never forget he looked at me, he goes, "Van, just stack them up on my front doorstep, I'll take as many as you can get at $2,000 coin. Now those are $2,100 and gold's $1,800.

 

Gerardo Del Real:  Right.

 

Van Simmons: So I mean to me they seem like a really good value, not just based on past prices, but future performance. I think the leverage is there, it has much more leverage then say Gold Eagle or a Kruggerand. I mean, if I had Gold Eagles or Kruggerand I'd trade them for the old $20 gold pieces right now, I think it's more of an arbitrage leverage play for me.

 

Gerardo Del Real:  Van, fascinating as always. Congratulations on the sale of the company to Mr. Cohen and the team over there, and the group. Thank you again, and again we'll make sure we put a link up here for anybody to reach out. Again, I know you're always gracious about talking with everybody and helping people out, including myself, so thank you.

 

Van Simmons: My pleasure, thanks a lot.

 

Gerardo Del Real:  Appreciate it.

 

To reach out to Van and David Hall click here.