How do coin dealers make a living?

I, for one, do most certainly not make my living by taking advantage of other people but I have a feeling that you have little knowledge of the automobile business and therefore lack the ability to make such statements with any sort of veracity.

Anyhow, there's a number of coin stores within about a 20 minute drive of where I live. The one that I go to regularly I have found to be quite honest. I was in his store the other day and watched people who were clueless come in to sell a bunch of silver dollars. He pointed out a 34-S IIRC that was worth about $100 and a Common CC that was worth $100ish as well. These people had no clue and had been offered $8 each elsewhere.

Like anything else, there's good and bad in any industry, there's dealers that I have met who are absolute crooks.

As far as how do they make money? Well they buy low and sell high, like any other business.

 

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Self, I am trying to be a nice person, and not share my frank opinion of many coin dealers. So endeavour thus though I must, I canna offer my opin of said profession which I think not befitting for the vernacular of said discussion.

 

coin shop

 

I am going to play a little devils advocate here. I like most here tend to view dealers skeptically until they prove me wrong. But, I have to admit that some of this might be because of my own inexperience and insecurities.

On the reverse side of this debate is the idea of cherrypicking dealers. This seems to me to be similar to a lot of sentiments here that coin dealers shouldn't low ball offers to sellers. Do you feel that cherrypicking is different than this? If so, why?

 

Yes, I do! As Ben stated in his posting, most Coin Dealers do not know Doubled Dies unless they are listed in the Red Book. I know for a fact, that many Coin Dealers do not have the time, the patience or sometimes even the eyesight to search for variety and error coins. Some will even tell you that they don't mind if you Cherrypick them, while some other Coin Dealers won't tolerate someone going through every single coin in every coin box or coin album they have. I know some Coin Dealers that only sell the basic, hot Variety or Error coins that are listed in the Red Book or Coin World and a few others Dealers that are very old and set in their ways, that won't buy or sell any type of Variety or Error coin whatsoever. Therefore, if certain Coin Dealers could care less if I Cherrypick them or others don't regularly deal in variety or error coins, then why should it bother me to Cherrypick them!!??
Also, I am paying the prices noted on the 2x2's or quoted by the Dealer so they are apparently making money on the coin(s) and feel that I am not under any obligation to inform them that the coin(s) are varieties or errors worth much more.


Frank

 

As one of the dying breed of brick and mortar coin dealers I will tell you that it is all about marketing, volume, and taking chances. I make the most money at shows buying raw coins from dealers and then having them graded. You would be surprised how many dealers are unable to recognize a raw 64 Morgan from a coin that will holder in a 65 or higher holder. You can also make money filling want list for customers as well as selling coins from your table (or suitcase if you are me). I personally don't buy tables at the larger shows but prefer to walk the floor. I'm not tied down to a table and can do the same things for the most part on the floor.

For coin dealers being compared to ambulance chasers and used car dealers... There is some truth to that. I have met some very slimy people in this business, but I have also met some very honest and trustworthy people. Every coin has 2 sides.

I will tell you that at the shop I usually work on about an %5-%15 total margin of profit depending on what I'm buying and selling. I personally spend almost 20k a year on just advertising. The phone book is still the #1 provider of our phone calls but I am getting more calls from the website and Google listings. If your going to go the store route it is definitely advised. It is also advised to be as completely honest as you can with people. People talk to their friends about your business and if you treat someone right and fairly then they will definitely tell their friends. On the flip side if you are a jerk, or rip someone off they will also tell people.

I recommend setting up at some smaller local shows until you get comfortable with the etiquette of the coin business. You can also use this to make contacts with other local dealers and collectors. Depending on how advanced your skills are you might need to use this time to refine your grading and pricing. Im sure there are a lot of things I have missed... but off the top of my head... thats what I came up with.

 

I look at it like this.... take it how you want to.

At a show it's all about knowing more then the guy your buying the coin from. If he doesn't take the time or effort to learn the valuable varieties and you did, capitalize on that. If you are in your store, it is in your best interest to inform people of what they have and pay them a fair price. A dealer should know better.

 

Yee Haw, right on Peter

 

I think handling the business part is only a small portion of running a coin shop. Spotting trends, market speculation, and detecting counterfiets are also important traits to have as a coin dealer. Immagine buying an older gentleman's Morgan dollar collection and finding out four of the keys happen to be fakes.Or worse yet, you've sold these and a long time customer sends them in for a TPG. I believe you have to have it in your blood to be a dealer, like so many other professions.

 

Definitely agree with all of that. Keeping your fingers on the pulse of the market is definitely important. I don't necessarily speculate because for me there is too much risk involved but i know a lot of people who do.

Another thing I was thinking of was, a dealer is only as good as his reference library. Detecting counterfeits, identifying rare die varieties, and key date diagnostics are all things learned from reference books... not to mention being out in the trenches with this stuff.

 

I would have to agree with you that yes, there are folks in every proffession who are looking to make a fast buck off someone elses ignorance. I'm not sure where you live but I take a lot of taxi's. I know that from 14th & Gst to the Capitol is $8.50 and now that DC has meters in their cabs, it's much easier to police that. Tourists in DC don't take taxi's. Taxi driver's like coin dealers can smell a novice and sure they might take him for the scenic route.

I know that a taxi from Laguardia to Midtown is $30 if you take the midtown tunnel and $35 if you take the tri-bourough bridge. While the cost is more, often the bridge is the quicker route to Times Square.

Like with everything in life. Education is the key. Those who know more have an advantage over those who know less. the only way to not get ripped off is to know your coin series and not get swindled.

Sure there are a lot of honest shop keepers and taxi drivers but you need to keep them honest buy knowing your hobby, your cars or your city.

Your book analogy was quite humorous...charge us for ink and paper. I could envision you slamming your fist on the counter at Barnes & Noble as you huffed and puffed.

 

I'm not a dealer, but your answer rings true.

 

Key phrase: Spotting a novice.

Thats takes a predator of a person in any situation. To prey on the novice, shame shame.

Most dealers I know are the " all around and everything that crosses the table " guys. Yes, they have the biggest signs at the coins shows WE ARE BUYING ( everything )

If a guy comes to me with a dansco type set, I'll send him to my buddy Jeff, if a guy comes to me with scrap gold jewelry, I'll send him to David, the end buyer at all our shows for that stuff. Paper? Barbers, Seated, etc etc

It pays to have a reputation, and lowballing will sure get you one, quickly. Not one that I would want tho.

 

Why not learn them and buy them yourself? haha!

 

I am working on that, but as a buyer, I do not have customers. I would be a lowbal buyer to only flip to a wholesaler. I have done it, but prefer to be known for what I do best. I'd lowball a dealer in a minute, but not the public.

 

It might seem kind of blunt... but I would just ask your friends what they do with them... You might be surprised how much they tell you.

 

I know I know, lol. I see it every show I attend or set up at.