From where do the dealers and auction sites get their coins?

I'm wondering how come auction sites and dealers update their inventory every week or even daily with new products? Where do they acquire all their coins that we buyers may not be aware?

 

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New coins are constantly being dug up and added to the market, but the majority of ancient coins are acquired through wheeling and dealing between sellers and from collectors selling their collections.

 

I would think many collections acquired come from estates, people die everyday.

 

Yes,
When I worked in a shop the best stuff generally came from estates usually when someone died.
Also financial hardship. People sell when they have to not necessarily because they want to.
I sold a lot of my personal stuff at shows because I needed the money and a lot of that went to other dealers.

 

I appreciate what @clembo wrote above, and with failing health, I would like to dispose of much of my collection too...maybe just keep my IHCs and Lincolns. The trouble is that there are no coin shops of any size near me so there is no one to contact locally. With my physical limitations, I could not possibly make repeated trips to the USPS if these coins were sold piecemeal, so a shop would make the most sense if there were one nearby. Perhaps I am missing an option?

 

well, I'd say gimme a call, but it is too far to travel to Louisiana, from NY

 

Depending on the quantity and quality of the coins you have, one of the US auctions houses could be an option.

 

Many ancient coin dealers buy at auction. For example, have a look through CNGs "large lots" in any given sale and then have a look through VCoins a few weeks after the sale closes. Dealers also make wholesale deals at major shows, both on and off the bourse floor. Typically the more one spends, the deeper the discount. There's no magic and for the most part, dealers aren't doing anything that a serious collector with time and resources can't do. Don't be surprised if new listings pop up all over the place later this month, after the Chicago ANA.

As far as listing on a daily or weekly basis, it's just good marketing. Listing at least a few coins every day or every week keeps customers coming back to see what's new.

 

So far as options for selling coins or collections go, the last thing on Earth that I would do is take them to a dealer. They make a living by skimming profits between collector transactions, therefore, they have to pay you significantly less than other selling avenues would provide.

With electronic resources and auction sites available in plenty these days, I don't see that dealers have a place left in the world of collectables, at least in the traditional sense. There may be some niche roles left to fill, such as services to top-end, rich folks that want to pay somebody else to build their collection for them, etc. However, there is a reason that we don't see brick and mortar coin shops like we used to, as they've been supplanted by more convenient, cost efficient options for both buyers and sellers.

 

I don't see auction houses as being "cost efficient.". They may buy your coins at a lower price because then they can sell them and tack on a percentage and make more. I bought a Morgan that was priced at $18 on the site, but the auction house cut had me paying $30! Never shy. I have enough physical places l can go to buy and sell coins.

 

Get on facebook, local facebook groups and make a post. State the fact that there is a benefit to cutting out a middleman (pawn shop) because you can pay similarly to the pawn shop by selling directly to collectors who don't have to pay overhead for a storefront, etc. Plus, it's free (unlike the newspaper, etc) and you can renew it anytime by making a new post.

That's if you're looking to scout out things from the community. For ancient coins, which seem to be your thing, I really wouldn't be sure.

 

Well, "efficient" with all of these options is relative. Of course, nothing is as ideal as a face to face transaction with another collector. This is typically not possible though, so we have to evaluate the costs associated with other means.

Auctions are not ideal because they charge fees, lets say 20%. If coin dealers are working on a 20% margin, then taking your coins to a dealer would essentially be the same thing from a cost perspective, but I'm guessing that dealer margins will tend to be significantly more than that.

An example of a problematic scenario, to me anyway, would be a dealer that buy's collections from ignorant people and subsequently makes money by dumping the collection off through an auction house or Ebay. What roll is the dealer playing in that scenario when the original owner could have consigned with the auction house themselves? In my opinion, the only roll being played there is ripping people off.

 

What types of coins do you collect, and in what quantities? Ancients? US? Medieval? World?

 

@Cherd Are you talking about brick-and-mortar dealers, or internet dealers?

 

Either, really. Dealers used to provide a useful service, as they were the primary go between for buyers and sellers (how else could you find coins other than to go to a coin shop?). However, these days, that is not the case. We have electronic tools at our disposal that directly connect buyers and sellers, so why incur the extra cost of an additional middle man?

Considering that these tools are available to everyone, I have to question the actions of people that systematically make a living by skimming money between transactions when it comes to something like collectables. Buy low-sell high is the name of the game in a lot of business, day trading stocks is probably the best analogy. Money can be made by buying and selling stocks...or buying and selling coins...But what is the actual service being provided?

I tend to be overly principled/judgmental when it comes to these kinds of things. But collectables are supposed to be valued based on the desires of collectors. When business interests are incorporated into the system, then the market becomes something that pulls away from the sentimental foundations of the hobbies. Kind of corrupts it in a way.

 

You make some interesting points.
I'm not an expert, in ancient coins, or any other types of coins. I'm just an ordinary collector of ancient coins, and a few other types of coins.
What you say, seems like it may be especially true for NGC slabbed ancient coins, to a certain extent. And maybe even for raw coins, to a certain extent.
In my opinion, for raw coins especially, and perhaps even for NGC slabbed ancient coins to some extent, some dealers, the dealers who are very knowledgeable about the types of coins they sell, and who are honest, and who care enough to carefully check the coins they sell for authenticity, provide the additional service of authenticating the coins, that they sell. Certain internet dealers who sell ancient coins on Vcoins, for example. And other internet dealers, who are known to be honest, and knowledgeable about the coins they sell, and who care enough to carefully check the coins they sell for authenticity. My local brick-and-mortar dealers seem to be knowledgeable about the US coins they sell, but not so knowledgeable about ancient coins.
Other dealers seem to be either dishonest, or are not very knowledgeable about the types of coins they sell, or don't care enough to carefully check the coins they sell for authenticity. For those dealers, perhaps I tend to agree with you, that they don't provide a useful service, other than acting as "coin brokers".

 

P.S. : Also, if a dealer is honest, and if the dealer is knowledgeable about the types of coins they sell, and if the dealer cares enough to carefully check the coins they sell, and if the dealer is known for having good customer service, then I would be more likely to buy from that dealer, rather than buying from someone whom I've never heard of. In my opinion, there seems to be a greater risk, that such a person wouldn't mail the coin. Or perhaps such a person wouldn't accept a return, if the coin is proven to be a fake.
Also, I wouldn't buy coins from someone on Facebook or a coin forum, because I like to remain as anonymous as possible.

 

Most markets have some inefficiency, and many markets exhibit moderate to large inefficiencies (just Google "market inefficiency studies" to be overwhelmed by the amount of research on this topic). The ancient coin market is no different. Even with the Internet and independent auction platforms like eBay, there is no certain way to efficiently find buyers for those coins that no longer fit your collection.

Consider, for example, a nominally valuable $250 late Roman bronze that you might want to sell. How do you go about doing this? You of course want the best price you can get for the coin so maybe eBay will work for you, but even this approach takes time and effort (packaging, shipping, verifying delivery, etc.), and doesn't scale well to a larger collection of, say 100+ coins that a collector might want to sell.

This is exactly the service that dealers offer, albeit at a discounted price that might not work for you. Reduced to the most basic business premise, it boils down to a collector's personal effort and time (for a greater return) vs. the simplicity and timeliness of selling to a dealer. I wouldn't apply the pejorative "... make a living by skimming money between transactions..." to most dealers, although it would certainly apply to a minority.

I'd be interested in reading responses on this topic from some of the dealers who frequent CoinTalk.

 

Thanks! Seems like all you get around here is push back and criticism. Nice to get some positive reaffirmation every once in a while

It's hard to talk about this type of thing without throwing an unfairly wide net, and I'm not trying to be critical or insulting towards any individuals. I'm also not saying that there aren't good, honest people out there in the coin business that actual provide services that people truly value.

However, the nature of the business, unfortunately, puts it into the same negative categories as, for instance, used car salesmen. There are some good, honest used car salesmen out there to be sure. However, a large enough percentage of them are willing to sell you a lemon that it would be in your best interest to assume that they are all out to rip you off. That's the reason for the stereotypes, and stereotypes tend to be useful in application for most purposes.

 

Not everyone has time for the auction consignment process. It can take 6 months or more from the day you decide to consign your coins to the day you get paid and there's also always some amount of risk. The coin market goes up and down like anything else, locking in a specific price one day could turn out better than putting everything up at auction in some cases for instance, and it's certainly not unheard of for dealers to lose money in that regard. Plus, not all dealers buy collections to put up at auction, many of them buy collections to sell retail or they'll just take coins on a consignment where you pay a pre-arranged fee and consignment can for some coins get a collector more than they'd get at auction even after fees. Some dealers I've spoken with offer lower fees for selling than auction houses too, which can be especially good if you have a lower value consignment since auction houses aren't usually willing to negotiate fees for those.

You could sell the coins yourself but you'll need, at a minimum:

• Photography, self explanatory. Better photos mean more money. Most eBayers suck at photography. I'm not good at it myself, but my coins usually sell with my photos
• Ability and willingness to ship quickly and efficiently, even for lower value shipments. Are you willing to run to the post office every other day to ship out the latest coin you made $3 on? You can wait until you've got a few to sell but buyers have limited patience
• Ability and willingness to deal with fraudulent buyers, returns, buyers who freak out because the shipping takes 2 days longer than USPS estimated, etc.
• Accurate descriptions of the coins. Again, better descriptions can equal more money - a lot of people leave money on the table here by not accurately identifying and describing all the coins they sell(and I love those sellers)

I'd also point out that dealers buying group lots at auctions and breaking them up provide a pretty valuable service in my book. A couple years ago a large Roman Republic collection was sold at auction as a single lot for several thousand dollars. Most of the coins were junk, honestly, and that's why the collection was sold as one big unphotographed group, but perhaps 10% of the coins were worthwhile and there were a few real gems in there. A few collectors who saw it in-person bid pretty aggressively, but they were all bidding basically what the worthwhile 10% of the coins were worth and ultimately got beat out by a dealer who was willing to buy them all and try to sell the whole thing retail. I managed to later buy one of the most desirable coins in the collection, along with a couple really nice bronzes, for a few hundred dollars straight from the dealer and several other collectors managed to pick from those coins as well at decent prices. That dealer is still trying to sell the dregs of that collection and has had the work of photographing and cataloging every single coin.