Is now the time to start my Coin and Silver business?

So, I've been giving this a lot of thought for a couple of years now, and I feel like it is time to make moves. I'm currently 28 years old, and not getting any younger. I have an econ internship in D.C. next summer, and everyone expects that I am going to become an economist. My dream on the other hand is to start my own business in U.S. Coinage, and Silver. I am in the process of creating an extensive business plan, and have hopes of submitting it to a funding analyst within the next six months. I live in Southern Maryland, and there is a lot of old money. Silver flatware, silver jewelry, junk silver, you name it. Believe it or not there are no coin stores, or gold/silver scrap that I know of; just jewelry stores. I can only find one pawnshop, and they have high turn-over in inventory. This county supports a population of 75,000. On another note, a friend of mine went into the business kind of blindly starting "Virginia Prospector," and he's been operating at a 15-17% profit margin for going on three years. I have been experimenting with putting different models together to submit in a presentation with my business plan. I feel like now is the time to start investing in silver. JCB Coin & Silver will primarily be scrapped metal, investments in bullion, and buying coins + collections. I plan on accumulating as much physical silver that I can in the next 15 years, and then start moving more into U.S. Coins (more of a buyer’s market). I would highly appreciate any comments, complaints, warnings, or advice of the primitive information that is stated above.


Respectfully,

~Jason

 

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It's encouraging to hear that there are still entrepreneurs out there willing to take a chance. It sounds like you're on the right path. Market research, business plans, knowing your area's demographics are key to a sucessful business. I also learned that the other most important basic requirements are a good banker, a good accountant and a good lawyer.

Silver buying (or precious metals buying) is speculative at best. If you can ride the highs and lows, you should do okay. 75,000 pop. to me sounds like a very small marketplace for a long-term business of your type but íf you have studied this or have taken this into account then all the best to you.

 

Make sure your business plan includes what you will do if/when the gold and silver bull market ends and prices drop a lot from whatever the high is at the time. It isn't like you will be starting the business at a low point in the business cycle for bullion.

 

For many brick and mortar coin shops in this country, especially ones not doing a lot of internet sales or in a large population zone, "buying right" is the keys to profits. Learning how to analyze items brought in, identifying fakes, sorting out collectible versus bullion value, etc. will be key if you are concentrating on buying bullion and coins.

You say you have an Econ internship in DC next summer, I would look to see if there is a local coin shop you can work at Saturdays, nights, whenever you can. Even if its unpaid. I think physically being in a business location that you wish to own can teach you so much that its hard to overemphasize. You are wanting to go into business that has been done 1000 times before. Trust me, there is a ton of expensive lessons they have already paid for and you can learn for free. Even working for them for free will more than pay for itself if you wish to open up a similar business.

Chris

 

Fantastic suggestion!

 

It seems like gold & silver buyers are popping up everywhere.

 

To be perfectly honest, I wouldn't really want to get into gold...

 

Well if you're model works during times of boom and bust, then go for it. I assume you've applied it the data for the past 30 years (since the last great silver bubble).

 

I understand Jason, but if I understand your business model correctly you would want a brick and mortar shop that would buy bullion and coins, and resell them. There is a reason why many shops like this also handle jewelry, and all will buy gold as well as silver. Making your monthly rent and having something to live on requires volume. You will need to be able to do enough business, at enough profit, to generate this profit stream. Most stores find they need to be knowledgable about collectible coins, all PM, and some even do jewelry as well. If you do not want to do jewelry, (which I would understand), I would strongly encourage you to make friends with all of the jewelers in town and let them know you will direct any customers to their stores if they come into your business, and ask if they could direct any coin customers to your store in return. At your store, though, I sincerely believe you shoul be willing to buy, (at a profit), any gold that comes in. Even if you would just turn around and wholesale it out to other dealers, a buck is a buck, and especially starting out you need profits.

Who knows, maybe you will start liking gold more than silver. Even if you hate gold, (I am not terribly fond of it, I prefer silver and platinum), like I said, money is money.

Just a bit of unsolicited advice, worth as much as you paid for it.

Chris

 

I see you printed some graphs. You are ready for business!

But seriously. Be sure to cover all of your bases.
A few things I would worry about if I was going to try something like this:

-Do I have enough working capital to purchase large amount of silver or items?
-Security/Storage of my silver and coins.
-How much profit do I have to make each month to keep the rent paid, lights, on, and earn a living?
-How would I even make money if all I am doing is buying?
-If I am going to get 'junk' coins melted...what are all the costs involved with that?
-Can I really deal with crackheads, on a daily basis, coming in trying to sell stolen jewelry, coins, etc..


You say "I plan on accumulating as much physical silver that I can in the next 15 years, and then start moving more into U.S. Coins (more of a buyer’s market)"

My question to is: Where does a store come into play? Why wouldn't you just buy silver from other sources? Doesn't sound like you are even offering anything as a seller? Seems all the money you would use for a B&M shop would be better used towards more purchases.

Silver as a long term investment?

Is silver really the best place to put my money as an investment? My gut feeling is no. I would be snatching up houses and land (at least in MI where I live) for 1/8th of their previous values. When the economy is in the crapper, and you have money to spend....there are better investment opportunities.

Also, you mentioned your buddy runs on 15%-17% profit. Do you think that is good? Doesn't seem like it to me unless he's doing millions of dollars a year in business.

Anyway, not trying to be negative. Just trying to give you some things to think about.

Someone has to play devils advocate!


Either way, I certainly hope for the best and wish you luck!

 

ask the hunt brothers for advise ???:devil:

 

IMO OT only way Land and Housing values can go up is if we create another mortgage bubble why? because most household own a house ( US enjoy one of highest home ownership rate in the world), couple that with an aging population of baby boomers/decline in immigration and population growth. Future is pretty grim for real estate. What happened to Japan after 1990 is happening to USA currently aka Lost Decade.

Anyway you made some points i myself starting a small online business to sell some foreign coins. Just haven't had the time for it.

 

Well here is my thinking on all of this. A shop is not really necessary. If I were in a metropolitan area I would open a shop. I believe with heavy advertising, I'll be able to pull in the clientele I need to do business. The coin side of the business would be strictly for grabbing up U.S. coins + collections at cheap prices, and turning them around online. I would anticipate that 80% of my business would be via eBay, or via my website. It truly would be more of a long term investment. I would rely on buying scrap silver/flatware, and coins for cheap for my overhead. I started studying the history of the last 100 years involving the prices of gold and silver. Then I started looking at world events, and the correlation between the two. One thing that I found is that Silver tends to follow the trends of gold, and historically has maintained a pricing ratio of 1:16. Gold has been heavily marketed the last couple of years, and has a current price ratio of 50:1 to silver. With this being said even if the market for silver corrects itself slightly, and moves to a ratio of 1:25, than silver prices would double. Enough with the speculation on silver. Let's just say I've given it a lot more thought than a couple of graphs. As for investing in housing I tend to disagree. IMHO lower end houses might maintain their value, but there is at least a 15-20 percent bubble in the housing market still. My larger long-term goal in all of this is to use a low interest SBA VA loan, or other low interest loan to establish a good credit line with the bank. If I can establish good credit with the bank than I see some great long-term potential. I have a lot more research to do regarding these issues, and I appreciate your guys input. It really raises some key questions that I need to examine seriously. On another note, I do have a lot of confidence in myself, and I truly believe if somebody else can do it... I can do it.


Gbroke just one more thing.. How many people our age know anything about coins, or Silver? What is the average age of the collector? I hate to be harsh, but in 20 years there is going to be a massive overflow of coins that find there way into the market. Massive amounts. There is no doubt in my mind that prices will go way down, or at the bare minimum we will have the ability to sweep up coins at prices we would dance to today. I see a buyers market in coins from 2020-2040. The real question is, will the price of coins go back up in our lifetime? I believe so, but that is just my personal speculation. My entire goal is to get outstanding credit with the bank, build up on physical silver as a hedge against inflation, and put myself into a position where 20 years from now I can buy much of these collections that will make it into the market. K sorry for the rant.

 

I certainly applaud your entrepreneurial vision. Sounds like you have done some research and are excited about the possibilities. I don't mix business with pleasure, so it wouldn't be for me. But I do enjoy success stories!

 

JCB1983, IMO, if you are passionate about it, willing to put in the hard work of starting a business, and have done your homework (only you can judge that) then it's my opinion, since you are asking, that you should go for it. If you don't you might regret it for a long time and the younger you are, the more time you have to recover if something goes wrong. So I say go for it and good luck.

(I don't feel qualified to give you business advice beyond this.)

 

Thanks, It's going to be a while out. I'd say right now I'm probably overly optimistic. I completely understand not mixing business with pleasure. I gave that a lot of thought when it came to poker and when I started playing for a living, I never lost the pleasure. I also look at people like Charmy and she seems like the business side of things hasn't taken away from the pleasure of coins in general. I do worry though.

 

That's natural. If you end up with a job working for the "man" you will worry there too as they give you plenty to worry about. In the long run, working for and worrying about your own business, is far more satisfying than doing it for someone else.

 

Worrying breeds caution. That's a good thing. If there were certainties, we wouldn't even have to have these conversations, right?
You know, I sometimes think..why didn't I buy silver or gold 15 years ago. Hindsight is 20/20. Then I think, well I would have been better off buying Microsoft stock, or Apple, etc.. But 15 or 20 years ago, I never asked myself the question...What should I invest in that will really help me out in 20 years?
When I was in my 20's, all I invested in was partying, motorcycles, and fast cars. Now all that remains is my high tolerance for alcohol and a bad back from a motorcycle accident.
So you are definitely thinking the right way. :thumb:

 

Well there are younger generation like myself who do buy silver,gold coins but most of these are bullion buyers and fall into libertarian population. How well your coin collection does 20 years down the road will depend on whether our coins start appealing to foreign coin collectors.

 

I will give you my opinion as someone who does this for a living. You need to find what is going to be your bread and butter. For us personally US coins, US currency, bullion, and scrap are what pay our bills and puts a little in the bank. There are however a hundred different things I get presented with from high end watches to old cameos and costume jewelry. I personally got tired of seeing money walk out the door because I didn't know enough to buy something so I took the time and learned the market.... I have really expanded the things I'll buy. Most of it goes straight to the internet... but it's still a sale. Limiting what you buy is not a good idea. Gaining the knowledge is the hard part. The best laid plans are only as good as their execution.

I have found that being active in your local coin clubs is also a great idea. Not only do you get to enjoy the club and it's benefits... but when the members need something they will come see you.

I'm not going to give away all the secrets... bu I have entertained the idea of doing consulting for people who are thinking about opening a shop