Becoming a coin dealer

Until this weekend I have been working a tremendous amount of hours over the last few weeks. I didn't have the opportunity to do anything but surf CT occasionally to keep up with what is going on. One was a thread by someone asking about how to become a coin dealer. As always many great comments and advice were given. One in particular I remember was regarding having an inventory. It gave an example of something like if you were selling shirts and one was really a big seller, you just order more from your supplier. With coins you have to go hunt for your inventory and hope you can find them at a price you can make a reasonable profit on. The other thread was from Arizona Jack's first year in the coin business to include expenses incurred going to shows, networking, and etc. Very enjoyable reading. I thought alot about this and if I had the time or desire to be coin dealer here is how I would do it. I would take several hundred or a couple of thousand and buy an assortment of all kinds of mint sets. I would sell them as individual coins after cracking them open. Of course you would have to capable of not feeling guilty for doing this, personnally I think there are enough to go around. I would also do it on ebay and possibly coinbug also. To me there are several advantages to doing this.
#1-Your initial investment would not be that hudge while giving you an opportunity to really see if you like it, can fit it into your schedule, and learn how to operate a business if no prior experience. #2-The supply is there whether buy yearly from the mint, the secondary market, or a combination of the two. #3-The demand is there. Several dealers do this on ebay and have been doing it for years. They sell a high volume and actually their ROI appears to be quite good. They also make some profit in their S/H, but be careful here and don't get greedy IMO. #4-Since you are selling coins from various types of mint sets your feedback should remain high. I would think the main thing you would have to be on the watch for are cloudy/hazy proofs. #5-I'm positive some of these dealers have stock photos they use to save time and expenses. With the type of coins you are selling I'm not so sure this is all that bad especially if you mention it. #6- It goes along with the feedback, but I would doubt you have hardly any returns, yet I also think you could be very customer oriented in this area, and be safe doing so. #7-All the while you are gaining experience and hopefully making some money. You could use the profit to SLOWLY start to add to your product line the "rare/highly collectable/whatever you want to call them" coins. I would make sure as I do this I was well read on the coins I'm about to venture into. One of the things I remember that Jack said was to keep ypur emotions out of it. #8- If it works great. If it doesn't you aren't in debt over it and your losses will not be hanging over you for years.

 

Log in or Sign up to hide this ad.

Bad idea!

In your scenario you are selling high grade coins so bidders will be relying heavily on the pictures.

• Not mentioning that they are "stock" photos would be a form of fraud
• Mentioning it would probably steer many potential bidders away, and
• Mentioning it would also generate many requests to email photos of the actual item being sold.

 

Or you could just buy out a shop. Or just put an add in the paper saying buying silver haves at $X, etc... You've got to think buying all those sets & breaking them down is a lot of work. Not to mention all the supplies you need. 2x2's, tubes, The correct kind of stapler etc... I know that mentioning the stapler sounds silly but most staplers do not make the staple flat in the back this damages coins, unless you invest in a pair of pliers to crimp it down.

I honestly don't know how my parents got into coins. You can always start off small & set up at Flea Markets as a great many dealers do. You can also focus on an area.

A lady I know Harriet only looks for errors. She buys tons of coins from the mint & sells the rest to other dealers at Bid or just below bid.

Other dealers I know only deal with High end.

As an FYI each state has different laws. Some states charge sales tax on coins. (Silly right but FL doesn't) Also many think it's no big deal buying silver & gold. In FL you must have a license to buy gold & silver unless it is a coin.

Oh and Hon made a good point if you do ebay you will need to invest in a good camera. So it's not just about your stock. We've spent hundreds of dollars over the years for trying to find a good one.

 

I certainly respect your view, but yes they should be high grade coming directly out of a mint set or proof set, but I don't see people asking for additional photos and the people that do this don't even offer additional photos. Your going to ask for additional photos from someone offering a 2005 dime proof taken from a prooof set or a 2006 lincoln cent taken from a mint set. And they have some of the highest sales volumes on ebay. I don't think it would be fraud or the problems you mentioned if you used stock photos for these coins if that was pointed out. It does turn me off to see stock photos and it not mentioned. I, for whatever reason, see this more often by people that sell Eisenhower dollar sets.

 

I talked with a gentleman one night in the Tampa area that had an ad running in the paper for almost 2 months. He said he would never do it again. He had gotten very few calls, and the visits he did make to the few appointments he made were a total waste of time. This is in an area of 3 million+ people. I'm sure this must work for some people and maybe he didn't do a good job of it or gave up too quickly. I would think you would also have to be caeful of where you are going, some people one doesn't need to meet. I also don't think I would want my phone number published I was buying gold and silver. The stapler you are totally correct if a stapler is needed. One dealer on ebay ships all their coins in airtites, but their S/H is a little more costlier. I don't think one would have to go any further than Coin Talk to find out what type of camera to purchase. I should have mentioned that of course there would be some other startup costs, but I thought it would be stating an obvious. As for fleamarkets I've been to two in the area because of seeing them mentioned here on Coin Talk. I did not see any coins being sold and the customers present did not appear as though they would be interested in purchasing coins. I don't mean anything bad by that, just a fact as I saw it.

 

I just see them all the time in the paper. We don't normally list that we are buying.

 

Mr. Coin Lover - I like the minimum commitment strategy, but I wonder if the presumably low profit margin for moderns is worth the trouble of doing this in sufficient volume.

 

You can give your plan a try, but it doesn't sound very hopeful to me. I doubt the profit margin and volume will compensate you for the time involved in that sort of approach.

 

Well i'm starting to have a mail order coin bussiness/ I will give it a shot and get a web page too. i think now is a good time since the lLincoln cents with the new designs and the statehood quarters etc is booming the hobby up alot. The younger kids are getting into it and are showing interest perfect timing i would say. the name of my site will be Just coins .


JC

 

Cat- It must be because two dealers in particular I looked at when I got this brainstrom are the biggest I could find and have sold tens of thousands of coins. , and have been in business for years. It would definitely take a high volume, but they have it. Even on television last night they were selling 40 years of proof sets for either $599.05 or $699.95 and we all know about their prices. I don't have red book, but looking at prices in one of my coin magazines the ROI appears to be very good. I do wonder about the time commitment for needing a high volume while one still has their "day job". Personally I wouldn't want to be a coin dealer, but IF I was going to try it I still think this is the way I would do it.

 

I'm not going to give it a try. I think being a successful coin dealer would be an extremely tough business, you know like selling snow tread tires in Florida. This is only an idea thinking about what I read elsewhere. Pro and con comments are certainly welcome. I'm not trying to give advice here, only exploring an idea with others that certainly have more insight than me. But, the gentleman that started Littleton Coin Company (actually started with stamps after WWII) was told by many his idea would not work.

 

I'm not sure I follow you but,,,

The supply is there whether buy yearly from the mint, the secondary market, or a combination of the two.

I know many, many part time and full time coin dealers and none of them do only what you suggest. The market for mint and proof set singles is not that great to say the least and coins from these sets are often ruined.
The way the most successful coin dealers I know do this:

1. They have a lot of different items including all aspects of collectible coins, such as, mint and proof sets, mint state and circ. examples of all series, graded and raw coins, key in many grades from each series, rolls, paper, bullion. With all this variety if one thing is not selling they have many more things to offer.

2. They network a lot - they get to know people, make contacts, become an outlet for items from other dealers even before they buy them. Reputation is eveything in this hobby - a handshake is all it takes to insure complete trust from a good coin dealer

3. They make their money buying coins. Time and time again I've heard it said that "we make our money buying not selling coins". For a long time I was confused about this because it does not seem to make any sense but the knowlegable, profitable coin dealers always say the same thing. We make our money buying not selling. This is especially true in a retail shop as coins walk in to you - you don't have to pay retail or even wholesale just enough to satisfy the customer and secure the coins for future sale. After all the may sit there three years before they are sold so you must insure a greater margin.

4. When doing appraisals be fair. Sometimes you have to pay more to get "everything" that is in that collection. You also need to be more generous especially if you think that customer may "shop it around" before they decide on you to sell it to.

5. Most all dealers do shows regularly where they have an additional outlet to buy and sell, meet new customers and cater to existing ones.

6. They all work very hard and long hours to put up coins, label and price them while tracking inventory and their expectations are not so great as to be unreasonable - they want to make "overall" about 10 to 15% and they keep it consistent. In other words they are more willing to move many items at less profit than a few items at a greater profit.

7. Good dealers buy very little from the mint other than some bullion and current year sets. They don't need to most of that kind of stuff will always be available cheaper in a couple of years, often much cheaper.

8. This is so often overlooked as if it should be a given but good dealers must learn to grade and know the diagnostics of key date coins. Instantly a good dealer will know small dates, true 09-s mint mark styles, clear "S"'s, 22 no "D"'s, doubled dies, over mint marks, Morgan & Peace Vams, over-dates, condition rarities, whether a coins been cleaned or not and the most counterfeited coins. If you do not know all this and much more within 1 second of gazing at a given coin your already behind the curve. You also need to have looked at many hundred of thousands of coins over and over again to be proficient.

There is no other way that I know how other than that mentioned above that any coin dealer will need to know before they ever start to become a "coin Dealer".

 

My way of thinking about becoming a coin dealer is similar to what happened to all those stores that popped up selling or renting VHS tapes not long ago. At first and naturally the first of anything is usually, not always, the best. With those VHS tapes, soon every grocery store, Kmart, Walmart, were also involved with them and then came those DVD's. And those two are soon going to be replaced.
What I mean is due to the recent boom in coin collecting, more and new dealers are going to find a saturated market soon. Only so many coins and only so many collectors and many, many dealers.
From personal experiences lately I would stay far away from flea markets unless you are in this buisness with others. To many thefts there and no way to chase after a crook. To many people at one time and your stock vaporizes.
Naturally a coin store is relatively safe but you should consider numerous products to sell also. A little variety to attract people. All coins will only attract a small amount of people. Naturally items like Albums, plastic rolls, 2x2's, the next smaller sized ones too. All this means a lot invested and if in a bad area, no buisness, then what?
Coins shows are poping up all over the place and I see more and more dealers there than ever before. One of my favorites is a man and his wife. They order piles of Proof and Uncirc Sets from the Mint. They also have someone in a bank that gets them lots of new coins. Those are thier MS grades for sale. They have many 3 ringed binders and are full of 2x2's and all from those coins from the bank. Pennies and Nickels are $1. Dimes are $2 or $3. Quarters are $5. Proof and Uncirc sets go for a little more than they paid. They have a really small assortment of other coins. The lady also has a stand of Jewlery for sale. Thier table is always full of customer and they make enough money per one or two shows a month to consider not doing much else.
I guess to sum up what I'm saying is probably coin shows, if in the right areas, are the best way to make money at this hobby or buiness.

 

That's probably the best way to get started. B&M stores cost too much until you are established, and internet sites don't generally get enough hits. Finding a source and bringing coins to prospective buyers is a better business model.

 

Coin show are a lot of fun but you do lots of traveling & packing. It does get old quick.

Although we never did one out of the state there are some dealers that do.

All those travel expenses are tax deductible.

By the way any one can alway pick up BU coins from the bank, if they have them. When I lived in KS I'd be up D mint mark ones & ship them to my parents as it was cheaper & faster than ordering from the mint.

 

Paragraphs are your friend.

 

With this thread I wrote I thought I save the paragraphs so I would still have some friends left.

 

I was going to be nice & not say anything cause it was hard to keep my place.

 

Bhp said it very accuratly. Good post Ben.

 

I've heard it phrased "You make your money on the 'buy' side." That clarifies it for me. And it makes sense, too. It's almost impossible to ethically get over on a deal if you dramatically overpaid.

But if you got a great deal on the buy side, you can offer a great selling price, make some jack, and your customer is happy.