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

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Startups are tough ! Don;t let anyone fool you. You can start the business easily enough, but there's a couple of snags you are going to hit. First, you need adequate capitalization without borrowing ! A loan will eat you up. There is no way to accurately predict the volume you will do. You will be buying and selling, I assume as to not deal with the red tape of being in a lending business. That means cash.

OK, so you start small and get an inventory to sell. Now there's the security issue. Frankly, you are a better target than a liquor store, because you have less security. You must have either the metals or cash on you every transaction. This sets you up as a potential "target" every transaction.

The margins are going to be less than the 17% your friend makes, generally. An example is that at the last coin show I attended, a dealer was buying junk silver at 23x, selling at 25x. That is a lot closer to 10% margin. At shows, he does have overhead

I hope you do well at it. Just, before you start conducting transactions, make sure it can be done safely.

You are on a good track, getting as much info as you can before putting your capital and yourself at risk.

Best of luck !!

 

It's not as much about economics as much as it's protecting yourself against being the victim of buying fake coins or gold jewellry with fake hallmarks. Unless it's an old collection being offered for sale, most every coin or coins being offered to you, will have to be looked at carefully before you take it as inventory. Counterfeit key date Morgans are now being made of real silver thus making detection almost impossible.

 

or even better worked for one for at least one season.

or start small with a 2 man operation using portable sluice boxes designs before sinking hundreds of thousands into equipment.

Reminds me of my friend that had 0 experience, but used his and his family's money to open a cell phone shop. 3 months later, it was bankrupty.

 

They didn't actually sell silver. They too thousands of tons and shipped it out of the country on freighters. Then, they started buying and selling commodity contracts. Theirs was a "paper" deal. But they do know how to set up businesses.

 

The thing is, **** tends to happen when you least expect it. A criminal has the luxury of choosing the time and place of the attack. Even if you have security measures in place, you could still get robbed/assaulted. What if he finds out where you live and choose to hold your family at gunpoint instead of breaking into your store?

Unless your plan is to have someone hold all your customers at gunpoint while you transact, you will always be at risk. Security measures can decrease the risk, but it is always there. Precious metals and coins are always going to be high risk because they're so easily convertible to cash whereas if you operated a boutique toilet paper store, you'd have much less to worry about.

 

I'm not even going to respond to this. I have to question the movtives of such negative responses from somone with the name of "buying silver." As a two time Combat vet who spent a year in Fallujah as a machine gunner in the infantry, id say my odds of providing proper security are slightly higher than your average joe shmow dealer carting his hual back and forth to the coin show.

 

I'm sorry if you perceive my posts as being negative, but a dose of precaution upfront can prevent a lot of headache later. And no one in thread even mentioned security risk until I showed up with my "negative posts". All I'm saying is that you really need to be careful and to realize the risks. As a "machine gunner in the infantry", you should be well aware that an attack can come when you don't expect it right?

PS - you just responded to this.

 

I didn't find his comments out of line. He was just telling you what to expect when you are dealing with high dollar items. A coin shop or jewellry shop, doesn't matter, they are both targets of thieves and owners are aware of this 24 hours a day. Your combat experience isn't going to make you more or less vulnerable than any other coin or jewellry shop owner.

 

Sure, you could get robbed. You could also get squashed by a truck on the highway too. The point being is you don't let the fear of things that may never happen keep you from your plans or even walking outside. There is business insurance if you think you need it and IMO, the kinds of robbers that are running around doing armed robberies are going to hit a convenience store before they bother with a coin shop. No hit and run crook wants booty that is difficult to unload.

 

It would be silly of me to ask questions on this forum, and get angry with responses of a different opinion. I apologize. With that being said, I believe that there is a fine line between fear and respect. I don't believe you'll necessarily shoot your eye out because you got a red rider BB gun for Christmas, or that Joe shmow's 18 wheel tanker is going to blow up because one did in never never land. I've been playing in underground high stakes poker games for years, and not a single one has been robbed. And like the man said, there is a reason they invented insurance. I appreciate the concern though.

 

Have you given it a try yet?
For example before opening a BM have you dealt in scrap, or junk silver, numismatics? Paper money? Watches? Stones? Silverware? Dental scrap? 40% junk? 35% junk? 80% junk? 50% junk?
Ive been doing side business for 7 years now largely cherrypicking. Three years ago i got into 90% junk. A couple months after that i decided to do scrap gold. Another two months later I started hoarding all the stones. After that I webt into the 40% junk game did 3 $1000 fv bags and made a small profit. The past 6 months I went into numismatics, and am still learning about watches.
Overall its been a great experience, within the next 12 months ill start dealing in .999 gold, silver, platinum and palladium. With my experience now, i can fairly say that $1 million hard cash is necessary, and realistically $2 million will be better.

 

On the matter of security, many years ago when I was in college, I went to a coin show and was talking to one of the dealers at his table. It was a slow time, and I asked him what they did about security at a show. He was a little taken aback, but finally answered me, saying not to ask that question since it seemed to be a sensitive subject. He told me that at that time, if he thought anything was hinky about me, there were plain clothes cops in the area that he could give a signal to and I would be followed through the rest of the show. Additionally he said he carried a .32 with him at all times and knew how to use it. Selling anything to the public is a hard task, but if you enjoy it, give it a try.

 

That's a great idea. I've seen ads in the newspaper for guys I assume are doing something like that. And of course Craigs list.

 

The dealers that I know personally around my area have a $1-$2million line of credit. That doesn't mean they spend that much. It's what they have available in case they need it especially when buying large collections or bulk. Cash talks.

 

Yeah, asking about the security is about as red a flag as you can ask. You are lucky he replied to you at all. It will depend on the show. A small show maybe won't have plain clothes cops, but there usually is only one entrance in and out, and have volunteers from the show sponsors like me manning the exits. I would be sitting at the desk at the entrance nominally advertising our club and collecting email addresses, but also had a carry permit and a 45 on me. Also, most of the dealers themselves had carry permits. There is a reason why shows do not get robbed, (except for maybe shoplifters), and almost any robbery you hear of is before or after the show. Trust me, if something happened, there are dozens of guns in that room.

Larger shows will have plain clothes around, as we did when we hosted the larger state show one year.

Please guys, unless you want tailed, or get a bad reputation and make dealers extremely nervous, never ask about security, especially while you are AT the show. Dealers remember guys who ask questions like that. Even those who are involved with security never talk about it at the show in front of the public, if a dealer had a question we would go off away from others to discuss it.

Chris