Financing the Coin Business

As I'm going through the coin cases today one thing that just nags at me because I don't understand it. These guys don't seem particularly wealthy and yet have a ton of expensive coins. I must have seen hundreds of $1000 morgans, Gold everywhere, High Relieve, 1807's everything.

One guy alone in the middle of the floor is quietly displaying 40 plus $20,000 coins, colonials, 179x silvers in near mint conditions, and more. It was like a museum. He had to have nearly 300,000 in stock on the table ... and not that much business at least today


How do these guys finance this?

Ruben

 

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Good question

 

lol

 

I don't really understand. I mean, I don't understand a lot of things and god knows I can't ever seem to make a buck, but this seems otherworldly. A lot of these guys have problems tieing their shoe laces. And I think if you went to a back or even an investing angle and said, "Hey I got this great idea. Let me have half a million dollars and I'll get a bunch of prime time rare coins and then...get this (this is beginning to sound like Bob Newhart), we rent tables from these hotels in the conference rooms, in small towns all across America, another place every week, and we sell the coins to a bunch of geeks. Hey - what a plan! We'll make a future and you have nothing to loose because...look...you have great coins for Collateral.

And then we'll get this website. No --- really, and we'll be great! We'll make a killing and destroy Ebay. You see I have this camera and ..."

And you talk to these people and they say, well first I was a collector and then I sold a few coins, and worked really hard and Hear I Am, and they forget to tell you they're sitting on $300,000 of capital expenditure all in a couple glass cases. They always skip the part that they grew they're inventory.

Ruben

 

I sold my last business and used that, as well as personal pocket money. I also owe Heritage $$$$$.00, but thay have my new coins untill I pay....that will be paid by the next auction in Feb, and we'll start over again.

It's a constant juggling act. If your lucky, it grows as you go.:smile

 

trust funders?

 

I think I pretty much saw that today. This is a big difference between collection coins and collecting Comic Books. There are $100,000 books but nobody carries this much in raw wealth on the table. When Leight whips out all those MS70 ** Gems, he's playing in a field that I can't even look at. All the really interesting stuff that requires serious numismatic expertise is a rich boys game. I don't know even how Bones and Rick do what they do.

These guys don't look to me like they were born independently wealthy. So, there must me some kind of credit market? Dealer to Dealer Wholesale? Just to get Product out there and displayed with some kind of marketing plan?

It just boggles my mind. If I wanted to do this, I wouldn't even know were to begin, even if I had an encyclopedic knowledge of coins, prices and conditions.

Ruben

 

How does that relationship with Heritage work?

Ruben

 

BTW - I've been in Pharmacy for decades but I don't have no million dollar inventory.

Ruben

 

I brought X amount of cash with me, and had been pre-approved for the 6 months payment plan.

20% down and 6 payments. What you don't pay for day of auction, you can " lay-away". I was able to get additional buying power that way, and bought a PCGS 65 SVDB and a cpl others that I would not have been able to afford otherwise, on top of what I brought home with me.

You just need good credit and 3 numismatic referances. It is on their site.

 

Read The Millionaire Next Door. Only a few percent of wealthy people flaunt it. They own trailer parks, dry cleaners and housekeeping companies. Some have crappy jobs just for something to do. Can't judge a book by its cover.

 

I would imagine that it is like anything else, you start small and work your way up. Also, I would imagine that a number of coins are consigned by their owners, or is that not done in the coin trade?

And like anything else, it's a business. I know guys that are plumbers, they have 4 Vans ($25-30k each) loaded with tools, equipment.. that's hundreds of thousands. The independent mechanic who works on one of my cars has about $30k invested in diagnostic tools, a $75k alignment rack, $15,000 in special tools, 3 lifts that cost $3-5k each, plus hand tools, shop equipment, air tools, $10k in tire equipment, etc. And he only works on one brand of car!

 

If he had 40 coins valued at $20,000 each that would be $800,000 just for those coins (well more than $300,000).

I agree. Some dealers sell coins on consignment. They don't have to lay out any of their own money to buy the coins and the take a percentage of the final sale price (or a percentage over a certain price - whatever deal they work out with the owner/seller).

 

GASP!! With armed guards, I hope!

 

Please, the exact numbers aren't important. The point is that it is a LOT of money.

Ruben

 

Its not like the plumbing business. Plumbers are working all day. I can't even get ahold of my plumber.