Where's All the Gold?

Written by Gerardo Del Real
Posted April 6, 2020

The $100-$200 daily moves in the gold price are here and appear to be here for good. Interest in gold miners is surging upward.

The combination of unlimited legal counterfeiting by central banks around the globe, mixed with refiners shutting down at a time of high demand is creating dislocations in the gold space that may prove incredibly consequential.

Spreads between bid/ask in the spot market are at levels I’ve never seen. Ditto for spot vs. futures contracts one month out.

The very simple version is there isn’t any gold available — in meaningful quantities — at anything close to the spot price.

I recently spoke with Van Simmons, partner and president of David Hall Rare Coins (best in the business and in a lot of cases created and reinvented the coin business) who explained what he’s hearing about supply constraints in the gold market. Enjoy.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader


Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is someone again that needs zero introduction, partner and President of David Hall Rare Coins, Mr. Van Simmons. Van, how are you today?

Van Simmons: I am very well thank you. You make me sound pretty important.

Gerardo Del Real: I couldn’t think of a better person to be speaking with today, Van. I woke up this morning, or I should say I got up in the middle of the night to check the price of gold. It was up over $100 the spot price. And then I looked at the futures and a similar situation there.

So I can’t think of a better person to call to ask about what’s going on on the ground in regards to not just gold but silver, because I understand the premiums are getting pretty extreme on both sides of it. Could you provide a bit of context to what you’re seeing Van?

Van Simmons: Well, the premiums have increased, which is natural because there’s very little product available. I was talking to a dealer today who writes articles. He lives in London and he goes, “You couldn’t find a kilo bar in Europe of gold if your life depended on it today.” I mean all the physical gold has pretty much been taken off the market.

A week and a half ago, the U.S. Mint announced that they were completely out of Gold Eagles and Silver Eagles. I didn’t see where they said if it was going to be for the rest of the year or if it was just temporary.

But everybody I know thinks they announced basically saying they were done for the rest of the year manufacturing Silver Eagles and Gold Eagles. That was on a Friday and on Monday everything from every manufacturer got taken off the market.

The physical market has been completely different than the futures market and everything, because the futures market for the last couple of weeks has been down as everybody knows, based on people who have margin calls and stocks.

Gold is the only liquid thing they could sell and raise money. But the physical market, the premiums have been increasing because the supply is so thin.

Gerardo Del Real: And it’s not just gold, it’s silver as well. Right?

Van Simmons: Yeah. I have a lot of people who want to buy silver. I’ve discouraged silver a little bit over the years only because of the weight and problems. And I’ve told people to go on the SLV Exchange or the Sprott Trust and buy silver there because of storing silver.

But a lot of people don’t realize gold has broken off as a real currency worldwide. If you look at the central banks of India, central banks of China, central bank of Russia, central bank of the U.S., they all have millions of ounces of gold on their books, but none of them list any silver. So it’s looked at as like an industrial metal where gold is looked at as a real currency.

I just think that that’s why gold is shooting up so much and silver’s moving up a little bit. But silver got hit pretty hard, because I think a lot of people felt industry- wise if business slowed down and industry slowed down, silver wouldn’t need to be used as much. And I know you’re going to get a lot of flack for that comment, but gold has broken off as real money.

Gerardo Del Real: Oh, absolutely. And it’s something I’ve said for months. I didn’t really put a lot of faith in the rally in silver just because it seemed like it was tracking more as an industrial metal than “gold’s little cousin” as it’s sometimes referred to. Right? I think there’s definitely dislocations in the market that are more prevalent in the gold space, for now anyhow.

Let me ask you, Van. We’re going to get a lot of new speculators in gold, precious metals, portfolios, coins. What would you recommend? What is a deal right now? There’s a lot of interest and a lot of that interest, as you just stated, can’t be met.

What is available that you would recommend if someone is newer to the space or is looking to buy something that in two, three, four, five years hopefully appreciates a bit?

Van Simmons: Well, you have a couple of different areas. You can buy gold and I get it in everyday. Everything I get is from Europe. I mean I’m probably able to buy a half a million to a million and a half a day worth of old $20 gold pieces and $10 gold pieces. I think they’re by far the best value out there.

Gerardo Del Real: I know you’re buying the mining shares, but obviously as far as physical gold, be it coins or sets, where you see value if someone was looking to come into the space and buy something they could put away for a few years.

Van Simmons: I guess the other value I see right now is the really rare coins. There’s been a huge demand for those for several years. With the inflation and everything that everybody is looking forward to us having at some point when we get out of this deflationary period, there’s a lot of people out there who are trying to buy trophy assets.

A good example is there was a very large auction over the weekend, and I think it was about $150 million worth of rare coins. Several coins sold for several million dollars.

And the demand in that auction was unbelievable.

The world was falling apart and people were paying record prices trying to get their money into something tangible.

David and I, my business partner and I, we titled it trophy assets. I have one client who’s listed in Forbes. And years ago, I said, “Well, what do you focus on to buy?” And he goes, “I try and buy things, I don’t care what the currency is.” He goes, “But in 20, 25 years it’s still going to have demand and still going to have value and people are going to want to buy no matter what currency’s around at that point.”

So, a lot of people are looking for things that they can put away that are real, real products that everybody has always wanted. So the rare coin market is probably the best area for that, due to liquidity availability. You can buy and sell very quickly and they’re authenticated and everything else. So that’s probably the best. I know I’m preaching my own product here, but that’s the way I feel.

Gerardo Del Real: Van, thank you very much for taking the time today. How can people get a hold of you if they’re interested in physical gold, physical silver, coins, collectibles? I know you do it all. How can people get a hold of you?

Van Simmons: Probably the best way is email me at van@davidhall.com. Or you can call me at 1-800-759-7575.

Gerardo Del Real: Best in the business. Van, thank you so much.

Van Simmons: All right, Gerardo. Thank you.


For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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