Comments on: Stanford International’s Pink Sheet Investments

By: Tommy Ezell

Tommy Ezell — Fri, 03 Apr 2009 22:21:12 +0000

Superior Galleries cancelled a multimillion dollar coin auction (and all future auctions) with ONE DAY’S NOTICE. Very unusual and disturbing.

http://www.sgbh.com/Shop/Control/fp/SFV/30298/view_page/AuctionLetter

By: Lawrence Meyers

Lawrence Meyers — Sat, 07 Mar 2009 18:33:07 +0000

I cautioned that the revelations don’t prove anything and that what we see is circumstantial. However, given what we know about Stanford already, the theories presented are certainly as plausible as the ones you present. There’s nothing to say that Stanford didn’t see a business in coins, but at the same time, it is fair to ask what the ultimate agenda was in converting cash into hard assets — especially given the revelations about Stanford.

The acquisition of Superior Galleries was certainly a logical move — and it was also the only way DGSE could hope to grow. They were just plodding along. But to merge with Superior — which had never turned an annual profit in its previous 5 years (as, I believe, before) hardly was a good choice.

Since then, by the way, the combined company either makes little profit or outright loses money on this rare coin business, according to their own SEC filings.

Certainly, with respect to keeping management employed and paid their nice annual salaries, the merger and funding by Stanford makes sense. They make enough to service the debt, pay themselves, and hope that one day things explode. But their history of execution suggests that day will never come.

In the meantime, the company has not said a word about Stanford’s investment in them, and what risk shareholders may be exposed to. If Stanford’s assets are frozen or seized, what does that mean? What does that mean for Texas Capital Bank? What does that mean for inventory?

Too many unanswered questions. Too little transparency. Too much suspicion surrounding Stanford.

By: Greg R.

Greg R. — Thu, 05 Mar 2009 00:34:07 +0000

Someone who does not know anything about the coin business should not make insinuations regarding events in the coin business. 1) Superior Galleries has been auctioning and trading coins in Los Angeles County for decades. The name is widely recognized. It is clearly a company that is in the mainstream of the coin business. 2) Coin markets were beginning to boom in 2002, and an investment in a recognized coin auction firm is certainly defensible. 3) I believe that Stanford sells coins to investors. So, ‘investing in’ and ‘establishing links’ to Superior Galleries could have been mutually beneficial in further enabling Superior to supply Stanford with coins and (plausibly) developing a close relationship whereby Stanford’s clients could consign coins to auctions. I do not know the nature of such relationships, and I am speculating a little. It is likely, though, that those who are knowledgeable about the coin business would see that there could have been a strong case for Stanford Financial investing in Superior Galleries. I do not know most of the details and I will not draw a conclusion regarding any investments in Superior.

As DGSE has expanded their rare coin and rare paper money businesses, and planned to establish a presence on the West Coast, the acquisition of Superior Galleries was certainly a logical move, if the price paid was based upon a sound valuation of Superior. DGSE had more than $100 million in sales in 2008, and has been growing in several areas. Recently, DGSE hired, as CEO of Superior, a respected executive in the coin business, who is also recognized as a sophisticated coin expert. He has a plan to turn Superior around. Clearly, Meyers’ interpretation of the history of Superior Galleries is irresponsible and poorly reasoned.

By: Alex Dalmady

Alex Dalmady — Wed, 25 Feb 2009 18:43:11 +0000

Nice catch.