Van Simmons on the Collectibles Market Shift Nobody Expected

Key Concepts

• Numismatics: The study or collection of currency, including coins, tokens, and paper money.
• Sheldon Scale: A 1–70 grading system for coins, where 70 represents a perfect, flawless specimen.
• Mint State (MS): Coins that have never been in circulation; the grade ranges from MS60 to MS70.
• Bifurcation: The division of the rare coin market into two distinct tiers: high-end, rare, high-quality items (strong demand) vs. common, bullion-related items (weak demand).
• "Mind Your Business": The original motto found on early American coins like the Fugio cent.
• Melt Value: The intrinsic value of the metal content within a coin or object.
• Securitization: The process of grading and encapsulating collectibles in tamper-evident plastic holders to create a standardized, liquid market.

1. The State of the Rare Coin Market

The rare coin market has evolved significantly over the last decade. Van Simmons notes a clear bifurcation:

• High-End Market: Strong demand persists for "Hall of Fame" coins—items that are exceptionally rare and of the highest quality.
• Common Market: Interest in common, circulated coins has waned. Large "hordes" of coins discovered over the years have increased supply, driving down premiums for common dates (e.g., 1904 $20 Liberty coins).
• Supply and Demand: Simmons references Say’s Law, noting that for rare items, increased supply can actually stimulate demand, whereas for common items, it simply depresses prices.

2. Grading and Standardization

Simmons, a co-founder of PCGS (Professional Coin Grading Service), explains that the industry was revolutionized in 1986 by the introduction of third-party grading.

• The Problem: Before 1986, investors were often sold incorrectly graded coins by newsletter writers.
• The Solution: PCGS introduced hard plastic encapsulation and a guarantee on the grade, which essentially "securitized" the coins, allowing for trust and higher turnover.
• AI in Grading: While early attempts at computer-aided grading existed 30 years ago, Simmons believes modern AI is now thousands of times more capable and will likely play a larger role in the future, potentially creating a wider price gap between "spectacular" coins and "average" coins of the same grade.

3. Real-World Applications and Case Studies

• The "Horde" Discovery: Simmons recounts a massive, multi-billion dollar hoard of US gold coins (fives, tens, and twenties) found across four countries. This discovery proved that even "rare" dates can be found in large quantities, impacting market liquidity.
• The 1952 Topps Mickey Mantle Card: A prime example of extreme appreciation. Simmons bought these for $1,000–$1,500 in the 1980s; today, a high-grade specimen can fetch $15–$50 million.
• The "Forgotten" Gold: A client discovered 767 kilo bars of gold in storage in Hong Kong and Singapore that he had forgotten about for 30 years, illustrating the role of gold as a store of value across generations.

4. Key Arguments and Perspectives

• Currency Debasement: Simmons shares a conversation with Milton Friedman, who argued that because politicians must create debt to fulfill promises, fiat currencies will eventually trend toward zero, making gold a necessary long-term hedge.
• The "Scars" of Investing: Both Simmons and the host emphasize that successful investing requires humility born from "scars"—the painful lessons learned from market cycles and losses.
• Tangible Assets: Simmons advocates for collecting items that are "handmade" and functional (e.g., pocket knives, Winchester rifles, Indian peace medals) rather than just paper assets, as they hold historical and intrinsic value.

5. Notable Quotes

• Milton Friedman (via Simmons): "Sooner or later gold will be a million dollars an ounce and the US dollar will be zero, just like every other currency in the history of Earth."
• Van Simmons: "I’ve been scalped so many times... I can guarantee you that if I buy it today, it’ll go down tomorrow. If I sold some today, it would go up tomorrow."
• On Valuation: "For every buyer, there’s a seller, and they both think they’re astute."

6. Actionable Insights

• Storage: Do not keep high-value collectibles on a kitchen counter. Use safety deposit boxes or secure storage facilities.
• Diversification: For those looking to pass wealth to the next generation, Simmons suggests a "type set" of gold coins (e.g., $1, $2.50, $3, $5, $10, $20 pieces).
• Platinum: Simmons identifies platinum as an undervalued metal, noting it is 80 times rarer than gold and currently trades at a favorable ratio compared to gold.

7. Synthesis/Conclusion

The collectibles market is currently driven by a mix of historical appreciation and extreme liquidity at the high end. While the "euphoria" of 2021 has softened in some areas (like modern watches and sports cards), the market for truly rare, high-quality items remains robust. The overarching theme is that collectibles serve as a tangible store of value, particularly in an era of currency debasement. Investors are encouraged to focus on items with a proven track record of rarity and to maintain a long-term perspective, acknowledging that market cycles are inevitable and that the most valuable lessons are often learned through painful experience.