World renowned coin expert discusses preserving your wealth and protecting your privacy with gold.
Outsider Club's Gerardo Del Real interviews renowned coin expert Van Simmons.
Gerardo Del Real: This is Gerardo Del Real with Outsider Club. Joining me today is Van Simmons, Partner and President of David Hall Rare Coins, one of the largest and most respected rare coin companies in the country. Van specializes in portfolio construction, set building, and helping clients acquire the worlds finest rare coins and collectibles. Van has been a rare coin collector since age 12 and 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 1,350 dealers that sell his product. PCGS has graded and certified over 30 million coins over the last 30 years.
In addition, Van was also a co-founder and holds a seat on the board of directors of Collector's Universe, a publicly traded company, which trades on the NASDAQ exchange. Collector's 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 1,200 authorized dealers within its network. I could be here for a long time listing Van's many accomplishments, hopefully you get the idea. Bottom line is, there is nobody in the coin and collectible universe that we trust more than Van Simmons and David Hall Rare Coins. Van, thank you so much for your time today.
Van Simmons: My pleasure, thank you. You make me sound pretty important.
Gerardo Del Real: Everybody that I respect and think is pretty important respects you and thinks you're pretty important, so I think that.
Van Simmons: I appreciate that.
Gerardo Del Real: Now we spoke a few months ago and we talked about how you help people preserve and enhance their wealth. In my lifetime, I've never seen such a coordinated effort to intrude on people's rights by governments. Whether it's the war on privacy or the war on cash, there seems to be a coordinated effort on a global scale to restrict people's freedoms. I had the pleasure of speaking with Mr. James Dines recently and he spoke at length about how he encourages people to use coins to help protect against that effort. I know you're a student of history Van, in your experience have you ever seen such an effort to restrict and monitor the movement of cash and people?
Van Simmons: No, never. Let me start off, Mr. Dines, I've been a big fan of his work forever, 35, 40 years I've read his stuff, so he's going to forget more about this than I'm ever going to learn. Going back to your question, there is a war on currencies, there's a war on gold. I mean you can even go back to Anthony Sutton's original book, The War on Gold, which explains quite a bit of it and that was written I think in the 70s, maybe early 80s. No, 70s. Going back, when Ross Perot was running for president, one of the reasons I did not vote for him was he was in favor of building more and more larger computers that could follow and track every cent that everybody spends, and buys, and makes, and everything else. Even he was talking back then about going to a cashless society and going to an all-credit society. It's interesting, there's a lot of countries, as you and I have spoken about, that are eliminating cash, certainly cash in large size bills.
I've talk to lot of clients who live in some of these countries, and I talked to one about two months ago and I said, "Do you use much cash?" He goes, "Never, everything goes on the debit card." I said, "What does that mean," he goes, "Everything." I said, "Well you must carry some cash." He goes, "Van, I haven't had more than five dollars in my pocket in a year or two," he goes, "Just everything goes on there." I said, "Aren't you afraid of the government watching everything you do?" He goes, "Well they know everything," he goes, "what's the difference? The government knows everything you do." I tend to disagree because there's a lot of product you can buy that the government can't track or doesn't track.
It is a war, they're going after everything that we do no matter what your political favor is, whether you're republican or democrat, conservative or liberal, there's so much intrusion into everything we're doing and the way we live our lives. One of the things they're going to continue to do is monitor and restrict how we spend our money.
Gerardo Del Real: Agreed, I mean we're seeing it in India, we're seeing it in Europe. Here in the U.S. we've had Larry Summers doing the college tour as I call it, floating it out to think tanks and talking about how only criminals would oppose the restriction of cash or the doing away of large denomination bills. I think it's definitely an interesting time. I imagine, you mentioned the client that hasn't had more than five dollars in his pocket for a year or two, I image that with the scope of clients that you serve that you have a firsthand experience and perspective of how clients globally might be positioning themselves to counter some of those intrusive government policies. What do you see on that front Van? Have you seen an active movement whether here in the U.S. or abroad, of people maybe hedging themselves and buying some protection on that front?
Van Simmons: Yeah, quite a bit. Part of it is it's a worldwide phenomenon where people are striving for privacy. I, last month had to fly to Paris for a day, meaning I flew out of here on Sunday, got there Monday night, and had a meeting all day Tuesday with a client and flew back Wednesday morning. The client had a couple of original bags of $20 gold pieces and he wanted to have them graded. We have a grading company in Paris, which we've had for about seven years and I wanted to go over and see it. It was a good opportunity to see the office and get to know this client. I said to him, I go, "What's the deal with the $20 gold pieces?" He goes, "Well, where else can I hide my money?" He goes, "I'm not hiding it because I did anything wrong," he goes, "I just want my own privacy."
There's a large base of people around the world who are looking for havens to place money that not everybody's aware of. I just Googled a friend of mine's name on the internet and I found out how much he paid for his home, how much he paid for his vacation home, everything. I called him and I said, "I didn't know your first wife's middle name was this and that." He was laughing, he goes, "How did you get that?" I said, "Well, there's these websites you can go to and you can track everything everybody does." I think what we're starting to see is there is a group of, whether you want to call them libertarians, or anarchists, or conservative republicans, or conservative democrats who just don't want everybody prying into their business. A lot of them are buying certainly gold. That seems to be one of the better vehicles as long as they don't outlaw it someday or tax it to death.
If you look at the central banks of the world, Central Bank of India, Central Bank of China, Central Bank of Russia, they all have millions of ounces of gold on their books and they don't have it there by a mistake. You look at Putin who continued to buy gold all last year, whether you're a fan of Putin or not, I mean he's certainly a smart, tactical player in this world and if he's building up his supply of gold there's a reason. I just think that there's different vehicles that people choose to use. Some people use art and paintings, and I collect old pocket knives and coins, and a bunch of different things. It's just a nice asset to have that nobody pays attention to.
Gerardo Del Real: Absolutely. Now, the last time that we spoke you were kind enough to offer some advice on some of the better risk/reward opportunities in the coin space. Could you share a few of the more compelling opportunities that you're seeing in the coin space right now Van?
Van Simmons: Well, when you're talking about coin, let's talk about gold bullion and silver bullion.
Gerardo Del Real: Perfect.
Van Simmons: We can go to rare coins later if you want because a lot of people will classify these as rare coins. A lot of people call in and they'll say, "I want to buy some gold, I want to buy bars." Well I haven't sold a bar in decades, everybody buys one ounce coins. The majority of the coins I've sold over the last 30 years have been $20 gold pieces and U.S. Gold Eagles. I don't sell many Krugerrands or Maple Leafs because in the early 80s, both of those traded on the COMEX exchange. If you wanted to sell me back 20 or 25 Maple Leafs or Krugerrands I'd have to fill out a 1099 form and mail the IRS on you. If you wanted to sell me back $20 million worth of Gold Eagles, I don't have to report anything, or $20 million worth of $20 gold pieces. It's your responsibility to report what you need to report, but I don't have to go out and fill out a bunch of forms.
One of the biggest windows that you see right now is the old circulated $20 gold pieces, which is the most widely traded gold coin universally around the world for the last 100+ years. Almost, well I wouldn't say almost, all of them that we get in to my office, which is every single day come from Europe or South America because when they outlawed gold in '33, starting in the early 20s they kind of all went over to Europe as bank depositories, and bank hordes, and personal business hordes, and things like that. Now they're all being repatriated back to the United States. Typically, and I'm not talking about high grade rare coins as a rare coin collector, I'm talking about circulated coins that could've been drug behind a truck or something, normally trade at 50 to 100% over the spot price of gold and right now you can buy them for less money than a Gold Eagle.
If they were priced where they are today they should be about $2,500 a coin and you can buy them for $1,275 or $1,295 or something, a small percentage over the spot price of gold, which is just to me almost, not laughable, but you sit there and you scratch your head and think, "Well how long's this game going to last?" Because it's not going to last forever. At some point the premium will come back like it has been there for 40 or 50 years. The other thing, I'm not talking about a premium that was one year or two years, I mean I had a couple of families on the east coast who bought $20 gold pieces all through the 90s. During the 90s the price of gold ranged from $265 to $285 an ounce. If you look at what they paid for the coins, they were paying $575 to $625 a coin for old, circulated $20 Liberties and $20 St. Gaudens. Now you can buy those for a few percentage points over the spot price of gold.
If you were my brother and you had Gold Eagles I'd say, "Gerardo, trade them for $20 gold pieces right now." It's almost an arbitrage where if gold goes up they're going to go up, but if the premium goes up they're going to go up even more. It's a very logical trade right now.
Gerardo Del Real: Excellent, excellent. That's phenomenal insight Van. Now, you're always pretty keen to remind me that you're as happy to help people with a $50 a month budget to people that have unlimited budgets like your friends in Paris, right? How can people get in touch with you if they have questions or would like to get started in the coin and collectibles space? Or if they're just simply high net worth individuals that are looking to preserve their wealth in these very interesting times that we live in?
Van Simmons: Well there's a couple different ways. You can email me at Van@DavidHall.com or you can call me at 1-800-759-7575. It's pretty easy, I buy and sell gold all day long, I buy and sell rare coins. I mean they have a certain amount of gold and they think, "Okay, I want to buy some- ... " I just got off the phone with a client who's been a client for 15, maybe 20 years and he's bought a lot of rare coins and a lot of gold. He just sent me a big check and said, "Well, okay, let's do more rare coins," and I go, "What are you looking for?" He goes, "I'm looking for something that is going to be saleable no matter what the currency of the realm is 10 or 25 years from now. If the dollar goes to zero," he goes, "I want something that people are going to collect worldwide." He's going to look at a couple of rare coins because they're very desirable.
I buy and sell a lot of things. I don't have any commission salespeople working for me, my office is only four or five people. An accountant, an inventory person, a couple of assistants who help me, but I don't have people who are going to call you and try to talk you into anything. It's a matter of what you're looking to do. Certainly, as you know, we give advice to a lot of people, a lot of the newsletter writers and financial analysts of the world, we spend a lot of time helping them, figuring out what to recommend and what's undervalued. That's the biggest thing, the easiest thing to do in any market is spend money. The hardest thing to do is buy something that's value. If people think of themselves like myself, I try to be a value investor in stocks, or a value investor in real estate. It's the same thing in gold, or silver, or rare coins, or any collectible, it's like, "Where's the real value?"
I collect certain types of art and I look at artists that are very famous that may be under priced. That's sort of the way I look at a lot of these things.
Gerardo Del Real: Wonderful. Now can I pick your brain and if the dollar did go, let's say it didn't go to zero but it was devalued by 90% between now and two or three decades, and the euro doesn't exist anymore, what would you recommend in the rare coin space for a scenario like that?
Van Simmons: You mean if it does what it did the last 30 years? Is that what you're saying, devalues 90%?
Gerardo Del Real: Exactly, if history repeats itself?
Van Simmons: Well, the rare coin market, there's a couple of things that stand out quite a bit. The gold commemoratives, in fact I have a small article if someone wants to email me I'll be glad to forward it to you, that my business partner just wrote up. The U.S. mint right now is over 60 million people, which is what I've heard, on their mailing list that buy these new commemorative gold coins and silver coins that they make, and palladium coins. What a lot of people don't realize is from 1903 to 1926 they made 11 different types of gold commemoratives and a small percentage of the people who are buying the modern ones are starting to realize that there were these older coins that have had a collector base since 1903. It's like looking at an old pair of running shoes and saying, "There's a pretty good track record here on these coins as far as desirability, collectibility."
Almost all rare coin collectors will collect gold commemoratives. They're a coin that's been way oversold and selling at steep discounts to what historically they were 15 or 20 years ago. I think those are a tremendous value. The other thing is just the type coins, or one of each variety of the gold coins that the U.S. mint made. Some people collect a four-piece set, a $2.50 Liberty, a $5 Liberty, a $10 Liberty, and then a $20 Liberty. Some people will collect, or clients will collect and eight-piece set, which is four of the Liberties and four of the Indian coins, which includes a $2.50 Indian, $5 Indian, $10 Indian, and then a $20 St. Gaudens. Then other clients will include a $3 gold piece, which is a very limited production coin and a couple of the gold dollars, there's three different types of gold dollars.
You can put together a set of four coins, eight coins, ten coins, twelve coins, whatever you want in the gold type coins. There again, some of those coins are just l- ... I just got off the phone with a guy and he just mailed me a check for a quarter of a million dollars to buy gold and he goes, "You know what? I like your idea about the gold type coins. Let's put some of the high grade, brilliant, uncirculated, MS65 gold type coins." We're putting some of the money into that, and it wasn't that I talked him into it, he's just read a couple of things that I've written and it just seems ridiculous how inexpensive some of them are. The big thing is look for value, just like you would in a stock or anything else.
Gerardo Del Real: Excellent, fascinating. Van, it's always a real pleasure. Thank you so much for your time. I look forward to being back and touch and hopefully getting some more of your insights here in the following months.
Van Simmons: All right Gerardo, thank you.