Archive for February, 2010

PCGS Members Only Show

Posted on February 19, 2010 by 2 Comments

I am here in Vegas as another successful PCGS Members show starts to wind down. Yesterday we had over 70 visitors. One gentleman came all the way from Scotland to attend! Another drove all the way from Florida! This is a great venue and the shows are a unique opportunity for PCGS collectors and dealers, but I was amazed at the great distance these guys would travel to attend! On Thursday Jeff Oxman and Mike Faraone hosted a lively discussion on collecting VAMs. Several expert collectors were in attendance and the conversation was very engaging. At each Members show we keep the number of dealers setting up to two dozen or less. This keeps it intimate but still offers a great variety of top quality coins. Also, all of these dealers are anxiously looking to buy as well. I heard of one individual who sold a large number of coins to several dealers as he walked around. Overall these shows are great time for all of us. We get to relax and socialize a bit while we continue to pursue our passion – coins! We are already looking forward to our next Members Only show in May!

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LONG BEACH SHOW REPORT

Posted on February 7, 2010 by 2 Comments

The Long Beach show was very active. Dealers had pretty good sales and there was a lot of activity. Look, it’s not 1979 or 1989 or even 2007, but considering the current economy, rare coins are doing extremely well.

The thing I noticed about Long Beach was a significant lack of quality material…not just the really rare stuff, but some of the more generic items. For example, slightly better date to better date Peace dollars in nice MS65 or better…very, very few coins available and dealer inventories extremely low on even crappy looking 65s. Silver commems…the classic era, 1892-1954…very few coins available. Van and I have been buying these for two years now. The prices keep going down (shows you how smart we are?!?!?!) but we keep buying. We have a huge appetite and would take a large six figure deal with pleasure. Our Long Beach purchases: less than $20k and it was one and two coins at a time. Silver commems may be the most underpriced major area of the coin market…but you can’t buy very many coins at current levels.

Auction action was good. We tried to buy the 1892 proof $20 Lib in the Goldberg auction and didn’t even get close. The 1875 gold dollar PCGS MS66 brought $109,250 against a PCGS price guide price of $45,000. One coin did sell at a much lower level than the price guide was the 1849-C Open Wreath gold dollar (NGC EF45) which brought $218,500. Probably would have brought $300,000 to $400,000 in 2007. The interesting thing about the Heritage auction was that there were much fewer top quality coins than usual. So the cupboard was pretty bare at the show and the auctions.

The one area of the market that does look soft to me is generic gold coins…like commonest dates in MS62,63,64. There seems to be a lot of coins around and prices are soft.

But all in all the rare coin market is doing extremely well and I think we’re going to have a great year.

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Gold…Real Money

Posted on February 2, 2010 by 12 Comments

Investor/hedge fund manager extraordinaire George Soros recently called gold an “asset bubble.” While I certainly feel Soros is a very smart guy, I’m really certain he got this one wrong. I think he’s implying that gold is overpriced, but in my opinion he’s making the same mistake everyone makes when talking about gold. He’s measuring gold in terms of the value of gold in U.S. dollars as if the U.S. dollar was …what an appropriate term…the “gold standard” of value. To me this is backwards thinking. The issue for me isn’t the price of gold in U.S. dollars, but the value of the U.S. dollar in terms of gold.

Let’s look at the long term facts. And the stone cold hard fact is that in the long term the U.S. dollar has consistently and significantly deteriorated in value. What’s the cheapest price you remember for a gallon of gas. I remember in the early 1960s when gas was 29 cents a gallon and would go down a little lower during “gas wars.” As a high schooler, we would give rides to the beach to anyone who could contribute a quarter for gas money even if we didn’t like them because if you had 75 cents you had enough money left over to get from Santa Ana to Newport Beach and back and still have enough money left over to buy two Der Weinerschnitzel hot dogs with chili, cheese, and onions for 15 cents each.

Continue the exercise. What price did your parents pay for a house in the 1950s or 1960s. My parents bought a semi-decent house (2500 sq ft plus a real swimming pool) in Santa Ana, California for $14,000 in 1960. Even though California real estate has come down pretty hard that house is still worth $400,000 or so today. I remember the 3 cent stamp for first class mail. And I remember movies at 25 cents and popcorn at a dime. I’m not trying to sound like an old timer here but the fact is that the dollar buys less now than it did 40 years, 30 years ago, 20 years ago and, in many cases, yesterday.

And what is our government doing? They are printing more money…or sticking it in computer accounts or however they expand the money supply today. Record deficits, health care plans, wars, bail-outs…spend, spend, spend. As my commodity trading friends would say, this is an obvious trade.

It is guaranteed that the dollar will continue to lose value long term…unless U.S. fiscal policy is dramatically changed and you and I know that’s not going to happen. The value of the dollar will decline and real things…land, oil, real businesses, milk, pasta, and our favorite…rare coins…and of course gold, will increase in value when measured in depreciating U.S. dollars.

So what do we do. First, everyone needs to get their head on straight about how to measure value. I own some ounces of gold…U.S. eagles and a few other things. I have to tell you I don’t fret about the price of gold measured in U.S. dollars. If the price of gold goes up, then the coin market is good and the gold I own is “worth” more so I’m happy. If the price of gold goes down, I’m also happy because then I get to buy more ounces of Oro Puro and I know the decline is only big picture temporary.

My advice to you, if you want to buy gold, go for it! But don’t try to pick the right time, because a lot of people who are way smarter than you and me only get market timing right 50% or so of the time. And don’t worry about the price. Buy your ounces of gold, put them away and forget about them. The only number you should think about is the number I focus on. I don’t think about the price of gold…that’s not the number. I think about how many ounces of gold I own…now that’s the number I think about and the number I want to grow, no matter what the price of gold is in terms of U.S. dollars.

So buy gold if you like it…and of course have fun with your coins.

Your gold bug friend David Hall

Filed Under: News