I'm not a dealer but just a new coin collector, and was wondering how dealers make a profit off of slabbed modern coins? For example, I have been working on my Jefferson Nickel collection slabbed and raw, but only pay between $3-$5 per graded coin. If they are paying $16.00 per coin they must be taking a loss on them. This thought came up as I was buying them and was wondering if any of you who are sellers or dealers can tell me how you stay in business? Thanks!
They deal in volume. So, bulk discounts on the submission side, and then if you get enough coins that make the grade, you make enough profit on a few coins to pay for the entire cost of the submission and coins. Then the rest can be sold theoretically at a loss but you come out on top overall.
First, were the coins submitted for grading by the dealer or a customer? I'm not a dealer, but I've submitted 50+ modern business strikes of the same date/mintmark on many occasions. As long as I can get a dozen or so to grade MS68, I make a good profit after all expenses including the purchase of the bags or rolls from the Mint. I've used this same process for Sac dollars, Kennedy half dollars and State quarters and it has never failed me. Chris
I bought from a seller on eBay so I'm not sure if he had them graded or puchased them from a previous seller already graded.
I like the idea very much that dealers are selling graded coins for a very cheap price. It keeps my cost down and I don't have to pay to have coins graded, so it is a win, win situation!
The answer is 'it depends'. I am a dealer so I can help out. First off, unless a 'dealer' is a novice or doesn't know what they are doing they wont submit coins to be slabbed at a valued less than the cost of the slab+postage. That simply doesn't make sense, even with bulk discount rates of submission. BUT, it does happen. Sometimes a 'dealer' really doesn't understand what they are doing and will make mistakes. Other times one feels like a coin is a really higher grade, but the slab comes back less so, and they lose. It really is like gambling with US and modern coins and slabs. Nobody understands why grades come back as they do (its really akin to witchcraft). Thus, the whole slab market really is just gambling (one assumes they will get a good grade, and after that they assume they will be able to sell at a premium, neither situations are guaranteed, and thus simple gambles). Add to this the secondary market. One guy pays for a slab, he bears all the cost. But he may put it on Ebay where it sells for 90% less than what he paid.
I was at a dealer table (FUN show) looking at some 'Grant' commems when I came across one that I liked graded MS-63. I asked how much, and he said, "Oh, that coin used to be in an PCGS '64 holder but when I crossed it to NGC it only came back at '63." He still wanted '64 money for it. I politely declined and moved on.......
Anyone who doesn't understand consistently why they get the grades they do the problem is with their own skill not the TPGs. Anyone getting more than the occasional surprise the problem is with their own skill. Simply being a dealer doesn't mean one can grade and in fact the majority can't really grade moderns at all. Even the one's that can grade doesn't mean they can grade every series. Plenty of people understand how things are being graded and are almost always right around the target moderns included. I understand that as an ancient dealer you probably are very against grading as many other ancient dealers are, but you should qualify you statements as for ancients. The way you presented US and modern coin grading is completely inaccurate likening it to whichcraft and claiming no one understands why they get the grades they do
He does have a point though. I'm stymied by some of the grades they come up with at times.........must be the workload for these poor fellows (graders). They're over burdened and the higher ups are preaching 'production, production, production........
It's not like they're working in a sweat shop in Asia stitching together sneakers or anything like that. They obviously enjoy what they do and they basically all could leave their grading jobs and make a ton of money working in the market with their skills so it's not like they're stuck. The true clunker mistakes they make are FAR less than forums make it out to be. It's like a 3 Michelin star restaurant, they can make 20,000 spot on dishes that week but the one that is off is the one where the person is going to make sure everyone knows about it. Satisfied people generally don't take the time for reviews nor do they make threads about hey guys look at all these properly graded coins. It's when there's dissatisfaction that we hear about it the most. That doesn't even get into whether or not they're actually right or just disagree, or grading from pictures to agree etc. So honestly I would say the point was inaccurate and dangerous. It does far more harm trying to tell people grading is akin to witchcraft and that nobody understands the grades is actually harmful as someone may believe that inaccurate information.
Most of the coin dealers I know make a killing off of raw coins, very few in my area send in coins to be graded at all. Sure, they sell them if they get them but usually they buy them graded. It's a lot easier that way!
Not me. There was another one found in another $100 Mixed P&D bag (like mine) by another person. Instead of submitting it for authentication, he sold it raw on eBay for $555. He claimed that his was one-of-a-kind, so I contacted him to let him know that I had one, too, but I had mine authenticated by NGC. He did the right thing and amended his listing to acknowledge this new information. The problem with errors is there is no way of knowing if they have been slabbed or not. Errors do not appear in any census, so there is no record of them. Chris
