THE PITTMAN PROOF GOLD COLLECTION by Silvano DiGenova
Posted February 15th, 2013
THE PITTMAN PROOF GOLD COLLECTION
PERFORMANCE PLUS … PLUS!
By Silvano DiGenova
Van Gogh, Tiffany, Rolls Royce and Chateau Lafite Rothschild are designations evocative of the world’s finest and most desirable commodities. Each is peerless in their respective categories as a result of years of proven rarity, quality and desirability. When one casts the same discerning eye toward U.S. coinage, the single group of coins universally bestowed with this preeminent status is absolutely, without question, Proof Gold. These issues are not only the most aesthetically appealing examples of the coinage art form, but are quantitatively both rare and highly esteemed. As an overall series, Proof Gold struck from the 1840s to 1915, was produced in such limited quantities, no other group of coins can rival their scarcity.
I deal in numerous fine art areas (outside of the numismatic marketplace) and one thing has become profoundly obvious to me. The same essential truths which apply outside of the rare coin market, regarding value and desirability, apply within the numismatic marketplace as well. To cite a laudable comparison: A lamp purchased at Sears Roebuck & Co. in the 1880’s from between $1 and $5 has limited antique significance today, with current valuations ranging from $100 to $500. Though a huge multiple of what they originally sold for, there is no comparison to a lamp produced 50 years later by Louis C. Tiffany. Lamps by Tiffany, which originally sold for between $10 and $20, presently start at the $10,000 price range! Moreover, a Tiffany lamp recently sold for more than $1 MILLION! Its original cost, you may ask? Try FIVE HUNDRED DOLLARS. As you can plainly see, age is totally inconsequential. Long term capital appreciation is dependent upon rarity, quality and desirability.
Where is this leading? Numismatics has an unmatched record of capital appreciation, having outperformed virtually every other investment medium over the long term. Recently, we were blessed with a thoroughly documented example – The John Jay Pittman Collection sale!
Before I begin my analysis of the auction results, I would like to present a number of key issues for your consideration:
1. This analysis is a study of every Proof Gold piece offered in Part One of the Pittman sale, which includes not only his shrewd deals, but the unfortunate ones as well. Due to the fact that not all of the coins were of exemplary quality (the type of which, over time, have proven to be the best investment), the figures represented become even more conservative.
2. John Pittman was a retail buyer. Though a sharp buyer … he was nonetheless a retail buyer. M any of his coins were acquired at very hefty premiums considering the era.
3. The prices realized do not include the 10% buyer’s premium. Therefore, the net proceeds to the family represent 90% of the actual sale price.
4. Coin dealers purchased many of the coins sold; in fact, I specifically purchased more than 10% of the entire sale and have been reselling these coins at a brisk pace (the point being the prices realized were very conservative net sales prices).
5. One final noteworthy point is: The contents of the Pittman portfolio remained constant throughout the years. In other words, the exact group of coins which Mr. Pittman originally acquired is the very same coins, which were recently sold at auction. Conversely, the S&P 500 has been modified a number of times over the years to remove inferior stocks. Therefore, it is clearly overstated as it is represented today.
THE PITTMAN PROOF U.S. GOLD PIECES YIELD AN ASTOUNDING 300.65% AVERAGE ANNUAL RETURN! In contrast, consider the performance (on a total return basis) of the following benchmarks for Mutual Fund Investors (see Chart A, first page).
Although this comparison isn’t exactly apples to apples (the overall average holding period for the Pittman coins was 40 years) – the last ten years have seen the greatest bull market in the history of Wall Street, with stocks now trading at an all-time high – while the Pittman coins were sold near an eight year cyclical low in the numismatic market. However, the profundity of the yield earned by the Pittman Family cannot be denied by even the most cynical investor or rare coin antagonist.
The four accompanying charts represent an in-depth date by date analysis of the performance of the John Jay Pittman Proof Gold coin collection.
These results are nothing short of incredible. Mr. Pittman’s original investment of $31,651.25 returned a total of $3,838,000! The total percentage return was 12,026%, which when annualized over a 40 year holding period, yielded an average annual return of 300.65% … most impressive by any measure, particularly when compared to the performance of the S&P 500 over the same period of time.
At year’s end in 1957, the S&P stood at approximately 42 (averaging 42.5% throughout the decade of the 1050’s). Based upon the current S&P of 950, the total percentage return is 2,175%, or an average annual return of 54%.
Pittman’s Proof Gold coins were originally purchased on a retail level and subsequently sold on liquidation basis (instead of earnestly working the coins into the market). Yet, he achieved a return of nearly six times that of the S&P 500 … at an all time high in the stock market.
In conclusion, acquiring and holding rare U.S. coins (particularly Proof Gold) over the long-term can be an immensely enjoyable pursuit as well as a richly rewarding investment. It provides the ultimate store of wealth and privacy.
1 Sell prices were net to the family – Coins actually sold for 10% above these prices.