A road trip with Doug Casey... A top in gold?... What the world's top gold coin expert is buying today... Why you should sell a stock... The best steak in Baltimore...
Goldsmith comment: I'm driving to New York today for The Atlas 400's annual meeting. Master speculator Doug Casey is joining me on the road. Tune in for the rest of this week's Digests... I'm sure I'll have an interesting story or two.
We ended this year's Editors Conference yesterday discussing gold. Porter asked Van Simmons, the president of David Hall Rare Coins, what he's buying today. Van is one of the world's top experts on rare and collectible coins. He is the co-inventor of the Professional Coin Grading Service (PCGS) – the most respected rare coin appraisal service. His clients are some of the wealthiest people in the world
Van deals in a variety of collectibles... art, antiques, guns, watches. If it's a good value, he'll buy it. To give you an idea, I'll share the most famous Van Simmons story... Years ago, he brought a 10-foot, stuffed Bengal tiger home to his wife. He bought the tiger for $2,000 from the trophy room of a southern California museum owner. He then sold the tiger for $10,000. A year later, the same stuffed tiger sold at auction for $50,000. You can read the full story here.
Van's favorite deal today is more common, collectible gold coins – including "extra fine" $20 Liberties and "brilliant uncirculated" $20 Saint Gaudens. He said the premium over the spot price of gold is near the lowest he's seen in 50 years – around $100. With gold bullion selling for around $1,500 an ounce today, these coins would sell for around $1,600.
Gold stocks are also cheap compared to the price of gold. We've written about several hedge-fund managers selling bullion and converting the cash to relatively cheap gold stocks.
As Porter noted, the fact that gold stocks and rare coins are near record-cheap compared with the price of gold means one of two things... Either those two assets are actually cheap, or gold is overpriced.
"This is not what a top in gold looks like," Steve Sjuggerud interrupted. Steve said at the top of a bull market in gold, we'd see the premium for numismatics soar. And gold stocks, especially junior mining stocks, which have been stagnant, would rally.
"Let me tell you a story about what the top in the gold market looks like," Van said. In 1987, when gold hit an intermediate peak, Van was working from 2 a.m. until 7 p.m. He had stacks of cards on his desk with names of people who wanted to buy rare coins, sorted by their time zone. He spent all day catching up on his leads.
"Hello, this is Van Simmons from David Hall Rare Coins. I believe you'd like to buy coins?" he would say. When the person replied yes, Van's script went like this...
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OK. Send me a check for the total amount you'd like to purchase. I'm going to deposit that check, and you won't receive any interest. In four to six months, you'll receive your coins. And I'm going to send you whatever I choose. |
No one flinched at Van's demands at the time. But after 1987, gold prices fell for more than 10 years. Today, people are selective with their rare coins, Van said. They only want top quality.
Gold prices can't go up forever, as they have for the past 10 years. But we've got some time before the top.
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New 52-week highs (as of 6/7/11): Forest Laboratories (FRX).
Want to know where you can find the best steak in Baltimore? Then read on. And send your feedback to feedback@stansberryresearch.com.
"RE: ... it's hard to be contrarian when you're popular. Just because everybody aboard the once U.S. Dollar Titanic believes the popular notion that the U.S. Dollar Titanic is doomed doesn't make it not so." – Anonymous
Goldsmith comment: True. But it also means the dollar could enjoy a major rally in the short term.
"I really appreciate your emphasis on following trailing stops to prevent catastrophic loss on a position. What is the next best reason you have to close a position?" – Paid-up subscriber Jared Sorenson
Goldsmith comment: To take a large profit... or if you need the cash... or if the reason you bought the stock no longer applies. There are lots of reasons to close a position.
"My son is going to Loyola in Sept and I will be visiting on june 27, looking for a good wine bar/steak house. Staying at Admiral Fells Inn, any suggestions? PS I am a 20-year member of FDNY, and I'm buying courtesy of New York City taxpayers. BTW let me know if ur interested cause ill bring some t-shirts for ur kids." – Paid-up subscriber Tommy O
Goldsmith comment: The best steakhouse in town is The Prime Rib. It's old school. It has black walls and leopard carpet. The staff wears tuxedos. There's live piano and stand-up bass every night. Up until recently, the restaurant required jackets. It's since relaxed the dress code, but I still wear a coat.
If it's the two of you, ask for the "cappuccino deuce" table. Start with the potato skins. Order the "Prime Rib" steak with steak fries on the side. If you're a dessert guy, try the cheesecake.
Regards,
Sean Goldsmith
Farmington, Pennsylvania
June 8, 2011