This New Edition of Tales from the Bourse is published courtesy of David Lawrence Rare Coins….
A Look Back: The Hunt Brothers Stir Things Up
In 1979 the Hunt Brothers — wealthy oilmen from Texas — thought they could take control of the worldwide supply of silver bullion by buying and taking possession of all they could find. The ploy failed and they lost billions, but not before sending prices of all coins on a wild ride skyward.
I had just started David Lawrence Rare Coins as a part-time business and these rocketing prices insured its success. Silver, which began at perhaps $3 or $4 an ounce, would sometimes rise its limit of $2 in the opening moments of the commodity exchange (the limit imposed by the exchange for a single day). This continued until the priced reached about $50/oz, sometime in 1980, at which point the brothers ran out of money. I’m not sure why, but gold bullion took off as well, climbing to around $850/oz. Wall Street pundits were sure it would break $1,000 by year’s end.
U.S. coinage, dimes through dollars, was made of 90% silver until 1965. Common dates are typically sold for a multiple of face value, based on the price of bullion. As this multiple climbed to 10, 15 and 20 times face, all types of coins were sent to the smelters. No circulated Washington quarter was safe, save the ’32-S&D. The same for all Walking Liberty and Franklin half dollars after 1933. Low-grade, early-date Walkers, low-grade Barbers and even some Seated coins were also melted by the thousands (millions?). Dealers who specialized in bullion were so busy, they often didn’t even bother to look over the coins for better dates, so these too were destroyed.
The value of collector dates and grades also rose dramatically as everyone became caught up in the excitement of the times. The “gray sheet” (Coin Dealer Newsletter) came out weekly and routinely showed pluses across the board. As a dealer it was impossible to pay too much for coins, because the next week they would be worth more.
I was doing a coin show in a shopping mall in South Florida every Sunday. As the market heated up, the crowds around my (and every other) table became bigger and bigger. During the week, folks lined up outside coin shops carrying candelabras, tea sets — anything made of silver. Most were sent off to be melted, no matter how nice. There was simply too much coming out of the woodwork.
The key to success was turnover. As a dealer you had to fight the temptation to hold on to coins that would be going up the next week. It proved better to take your profit and use the money to buy more coins — even at higher prices — and sell those coins the following week. Thus, turnover was terrific and each time you had a small profit, which added up.
A small-time dealer I knew didn’t do that and paid the price. He had a fairly nice set of uncirculated Franklin halves that everyone wanted to buy. But each week he wouldn’t sell, preferring to sit tight and watch its value increase steadily. The set was the main part of his inventory and, because he wouldn’t sell it, he sold little each Sunday. He also bought little because his money was tied up in the Franklins. When the music stopped, his set dropped in value, like everything else. He had nothing to show for his efforts.
Early in this bull market a local dealer offered me an “original” roll of 1942 half dollars he had just bought over the counter. The coins were not particularly well struck, but they were “fresh” and had obviously come from the same mint bag. I paid gray sheet bid, about $600. Each ensuing week, the value of the roll rose about $200. I put it up for sale the following week at 5% back of bid and continued to offer it every Sunday at the same rate. The roll didn’t sell.
Then one day a big show came to Hallendale and I had a one-case display on a friend’s table. The roll was laid out on a velvet tray and sold at about noon to a Pennsylvania dealer. Bid was $2,000 by that time. The wholesale value continued to rise each week, finally peaking at $3,600! I watched this wistfully. But how do you know when the zenith has been reached? Today, as I write this, the roll only bids at $575.
I frequently purchased bullion coins and common silver dollars at the going rate and would pile them loosely in a mound in one of my cases. Sometimes someone would ask, “David, how much for the case?” and, taking out a wad of bills, offer $2,000 (or more). I always wanted to count the contents first, but they would never allow it and even when the offer sounded about right, I wouldn’t take the gamble.
Yes, those were heady times.
Despite my cautious approach, I still got caught when the fun stopped. On that last Thursday, I got a phone call from an older couple who had met me the weekend before at a show. They had decided to sell their coins and I agreed to meet them at a mall the following Saturday. There, at the very peak of the market (I was to discover), I purchased two rolls of 1964 Kennedy half dollars for $250 a roll (25 times face) and a bunch of polished Morgan dollars for $29 each.
When the market turned around it fell like a rock dropped into a canyon. You couldn’t sell at some slightly lower price. There were no buyers! As I watched bullion prices fall, I felt sick to my stomach. A few months later we moved to Virginia. As soon as we bought a house I buried all the bullion coins I still had in PVC pipe in my backyard. They lay there for 19 years. Recently a friend dug them up and I sold them for about four times face value.