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The world is a small place indeed and the biggest financial scandal of the week (only $8 Billion, so it barely registered on the evening news…ho hum) touched the coin industry directly thanks to Stanford Coin & Bullion, which was directly owned and operated by the now-defunct firm. As I write this, the entire Stanford family of companies is in receivership and Mr. Stanford himself is on the lam…

Personally, I don’t think SC&B’s demise will have any effect on the coin industry. SC&B was primary an investment-style broker of coins to non-collectors and, while, we will miss any firm’s ability to place overpriced five- and six-figure coins to unwary buyers, I’d much rather see rare coins sold to true collectors, who love owning them and don’t buy and sell on a whim.

In general, Stanford maintained a very small quantity of coins in stock, so the removal of such coins from the marketplace (it could take months or years for the Feds to step in to settle this mess!) won’t have any direct effect. Sadly, I have heard of a few dealers who were holding debt from SC&B transactions that occurred over the past few weeks (namely the Long Beach Show where Stanford sent a buyer). Amounts range from $3000 to well over $100,000 in a few cases, so we wish these dealers the best of luck in the recovery of their inventory.

It is also clear that news of scandalous acts in the financial sector is far from over. From a coin dealer’s perpective, this only reinforces the fact that a return to hard assets might be a very wise move for investors. I shudder, for example, to think of the “clawback” laws which allow the Feds to recover past earnings from later-to-be-found-fraudulent investments such as the Madoff scheme. If the government can claim an innocent investor’s earnings from 5 years ago in such a situation, I have to beleive that investors will grow to fear any such “paper” investments. At what time are you actually claiming a profit????

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