Featured Do 21st Century Coin Collecting Methods Drive Prices Down and Hurt our Hobby?

And if you can see that a seller is charging $X to a dealer, but $1.5X to you, wouldn't you want in on the lower price, too?

My father spent most of his working life at a plumbing and heating wholesaler. He used to get annoyed at the people who walked in off the street and wanted to buy supplies at the same price contractors paid.

But then Lowe's Hardware came to town, offering those low prices to everyone. Not only did the public stop bugging my dad's company, but contractors discovered that they could often get stuff cheaper at Lowe's than from the "wholesale distributor".

Disintermediation is terrible for the people who make their living as "the man in the middle" -- industrial distributors, travel agents, and perhaps coin dealers. And it can produce lower prices, because the cut(s) that once went to middlemen no longer get added to the price.

On the other hand, since more sales are direct, the seller is getting more of the sale price. So "falling prices" at retail don't necessarily mean falling values for what you already hold.

 

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The auctions I've attended have been at shows and sparsely attended, and a great many of those in attendance appeared to be dealers. Not surprising. After all, the dealers were already at the show, so it was a pretty good use of their time. However, the vast majority of coins sold were not to the floor but to internet, phone, fax, or mail bidders. So how is it you know that most of these coins were bought by dealers?

Now if you meant to say that most of the bargains at auctions are won by dealers, I won't argue. They do know values better than collectors though they may or may not determine those values. And they likely have bigger buying budgets than the average collector as well.

I know execs at a couple of the big auction houses. When I'm at Long Beach next month, I'll try to remember to ask their opinion on it.

Cal

 

I wouldn’t either. On most material they stop bidding when their profit margin would no longer be there so once things reach their real value they’re out. Some top pieces some of the dealers will “stretch” on as they’re more than happy to show off the trophy win that brings attention to their tables and sites, but even most of those end up selling

They’re just not going to bid higher than they think they can make money on if it’s for their inventory and if they’re bidding for a collector I wouldn’t count that as a dealering buying it anyway.

 

I think I get the general drift of what you're saying, although I'm sure there are people out there trying (to make a living only by buying and selling coins) while being woefully ill-equipped for the job.

I like trawling for treasure on eBay, but it would take more than 24 hours a day to replace the income from my day job. I think @C-B-D spends a lot more time there than I do, and thanks to his good eye and specialized knowledge, he's likely to catch a lot more good stuff than I would even if our time were equal -- but even for him, I don't know if eBay-camping turns out to be a tenable full-time gig.

A "dealer", as I imagine you imagine one, can't afford to wait for lightning to strike; he has to have dependable traffic into and out of his inventory. And the only dependable thing on eBay is overpriced good stuff, cheap bad stuff, and, oh yeah, overpriced bad stuff.

But the surprises are entertaining, and sometimes lucrative.

 

Remember, a hobbyist is looking for ways to spend time. You're using the wrong metric.

Businessmen want to maximize dollars earned per working hour; hobbyists want to maximize enjoyable hours per dollar spent. And there are plenty of us who enjoy the hunting more than the having.

 

Thanks for your reply, Doug. I don't dispute what you've written except the last sentence. Not really dispute ... don't yet accept. I'm still not convinced that most coins at auctions are bought by dealers; however, I can't provide data at the moment to prove otherwise. The auction companies have to be the best source of info on this question. They know which customers are dealers.

I have observed coins being sold at auction and then appearing in a dealer's inventory in short order. I'm often aghast at the asking price compared to what it sold for in the auction ... often twice the price. I'm sure they would accept less, but the eventual purchaser probably paid significantly more than the auction price. Some of these coins were ones I was considering or bid on, but quit when I thought the price became a poor value. A common trick is for the dealer to "launder" the coin by having it regraded or crossed. Therefore, it's in a different holder and harder for prospective customers to trace back to the auction and find out the dealer's cost. And if the dealer is lucky or astute, the grade may go up as well (usually not though).

With regard to the "Make Offer to Owner" feature of Heritage, that's the default profile when one signs-up for a Heritage account. I'm not a dealer, but get offers on coins I've bought via Heritage.

Cal

 

That feature has nothing to do with a dealer winning it and putting it back up for sale. Countless people don't even know that feature is on for the coin they won and people report all the time that when they inquired on one it either wasn't for sale or got no response. Its just Heritage saying they'll reach out to the owner for you if you want to make an offer, it doesn't mean anyone is actively selling anything. That's not evidence of anything.

 

I had suspected that for a long time that it had been a decade or so

 

Replying to the OP;
Do 21st Century Coin Collecting Methods Drive Prices Down and Hurt our Hobby?
I believe that they can. I'll share my perception and an experience which led me to leave US coin collecting.

I love US Liberty Seated coinage and back years ago in the 70's and 80's found virtually every denomination while in high school (including a 20 cent piece: bought for $1.35, 75-S, vg). After finishing grad school I decided to work on a ms type set & really wanted Seated Dollars (reg issues 1840 - 65/ with motto 1866-73).

I recall Proof seated dollars being very available but true unc business strike ones were hard for me to find except for low end uncs of the hoard years: 1859-O and 1860-O. I was able to buy other coins in slabbed 64 but I believe that every NGC or PCGS-63 Seated Dollar that wasn't downright ugly was cracked out and resubmitted endlessly to the grading services until it could make a 64 slab and a $20K price tag. As I posted elewhere, I did find One attractive raw specimen in the late 80's or early 90's (an 1844) but the relatively high price tag for the time scared me too much.

Also I noted that a large fraction of the Seated Dollars I ran across had been "dipped" by the crude methods of the 80's or seemed cleaned.

Once I even was trying to evaluate a piece in an auction and they passed me off to a "coin expert" to help answer my questions. It was Q. David Bowers in person. We talked for 20-30 minutes and he tried to help me grade seated dollars.

I think a trend like this may exist for any US coin type characterized by a sharp gradient and higher prices between grades. Also there wasn't a real community like there may be for Colonials or for early US copper which can have a similar price vs condition gradient.

Thus the dealer practice of constant reslabbing or cleaning in search of a better slab grade led me to not buy any Seated Dollar. I really wasn't looking for a particular slab grade but was looking for a particular appearance in the coin. Disappointed I eventually left US coin collecting as it involved too many years with too little reward (not one single coin).

I ended up moving to more appealing World Coins of certain countries and Ancients which are a much smaller and less expensive market. However, I am happy to see the weakening in prices in USA coins and while I'll never be a big buyer of such, if I ever have a lot of surplus money, I might try to pick up a few nicely appearing US pieces.

 

That wasn't unique to Seated Dollars at the time, it just was the practice of the day and one of the reason why so many coins have been dipped. Fortunately it isn't that reckless anymore

 

Those are what statisticians call outliers. And on the other side, there are coins that sell for waaaay below value. Just take a gander at the $50 or less thread. Being able to differentiate between the outliers and the sales that set a general trend for a market price.

If it is cleaned/counterfeit/has deceptively-hidden damage and it still sells for a lot of money, they can be ignored (unless of course it is a rare variety). If it sells for way below the going rate, it might have had problems, was listed at a bad time, or had bad pictures. Those data points should be ignored. So when I go to eBay to determine value, I look at the listings of problem-free (or “market-acceptable”) coins with good pictures and use the middle 50% of sale prices to detwrmine the “going rate” for a coin.

 

To answer the OP question:
In my area more B & M LCS's are closing, than opening. And blaming EBay.
It has hurt the B & M dealers, but it hasn't hurt the hobby.
But the hobby seems to be in decline. Less young people are interested as we move toward a cashless society. Coins are just clutter for them. You can say, "My son is interested, etc." But I am talking about all of the young people in general. They are not interested.
The last 2 coin shows I attended some of the dealers were dinosaurs sitting around in chairs uninterested in business and their coins were over priced.
When I asked about some notes, the guy didn't even know the prices of his own inventory, had to consult some generic listing, and then gave me a ridiculously inflated price. I did do business with a few people who were personable and willing to deal. I haven't gone back the last 2 years, because the 2nd year I went it was all exactly as the year before. And it was not as exciting for me as the previous year.

 

Do you honestly think that the old dinosaurs as you call them are responsible for eBay sales or the rising popularity of moderns and world coins? Collecting has never been a teenagers hobby but it’s a fallacy to say younger people aren’t interested.

 

I agree. But it's not just coin collecting. Look at what the Internet (e.g. Amazon) has done to so many brick and mortar type businesses.