Zillow, (an internet site re: home valuations, data, and a marketplace), was so enamored with their valuation algorithim, that they started buying houses to flip. It's not going to end well as the market is dropping and slowing. What I've noticed at coin shows is that when asked a price of an item, the dealer usually turns to grey sheet, bid, and says, "That's it". While many items are priced, I'm guessing the high velocity items to avoid concerns about repricing, would it not make sense then to discount things from grey sheet that have to be looked up? Or is there something I'm doing wrong?
Actually, Zillow got burned on this over a year ago and has exited this line of business. It worked well when rates were low and housing prices rising 15-20% a year. Doesn't work as well when the Fed is hiking and housing prices are flat or falling. Other pure-plays on flipping are still doing it and are publicly traded. I've noticed that too for many dealers. I'm a bit surprised because I usually ask it for a pretty well-known coin like a Mint State Saint-Gaudens which you would think most dealers -- even PT dealers -- would know. I guess many don't. Then there are folks who you can tell are doing this FT....they are active....and they can give you a quote on most anything you take out of their case within 2 seconds. Same with my LCS -- never seen him goto the sheets.
Most of the coins I like to stock are somewhat less frequently traded, and the CDN is usually not a very accurate indicator of value, but is just one of many factors I use to arrive at a value I think is fair at the time of purchase or sale. The Grey Sheet is far better suited as a go-to reference for buying and selling that which I do not don't want in stock . . . Common dates, mint sets, proof sets, ASE, AGE, modern commems, completed sets, etc.
Do coin dealers do business based on replacement cost? That’s always been my business model but I don’t have all my cash tied up in inventory like I most imagine a coin dealer does.
That's a really good question Randy. I think it depends on the dealer, but my outlook is as follows: For readily available coins, replacement is easy, and can usually be arranged with little more than a phone call or email. I don't think most dealers tend to replace upon sale, however, unless demand is very predictable, as it tends to be for Silver Eagles. Other than that type of inventory, I think dealers buy a bit lower than Bid, and then hold longer term for the sale, not planning to replace when sold. For coins which are much harder to come by, selling based on anticipated replacement cost is much less reliable, as the replacement is usually not available when one needs it, so the price has a lot more time to move before the replacement can be found.
Most of the dealers that I buy from already have their material priced. It's usually less-common and harder, if not impossible, to replace coins. Pulling out a Greysheet on them usually gets a sneer, or the polite equivalent. Besides, for what I'm buying I already know what it's worth and what I'll pay for it. That said, I bought an early type coin from a dealer who asked me what Greysheet quoted and I had to look it up for him in my copy. Then I paid him Greysheet. Go figure.
I guess I'm not following your reasoning as to why a dealer having to look up a given coin in Grey Sheet would justify or mean that that coin should be discounted in price. Would you, or do you, treat coins he doesn't have to look up in the same manner ? Or do you just accept the price he quotes on coins he doesn't have to look up and let it go at that ?
I think MKU was talking about was that if a dealer has to consult a price guide for a non-obscure coin that the price should be lower than list because it's inactively traded. You COULD make a case for that on certain coins. Then again, I could see a case for quoting a premium !
All I know is the MK Ultra Program was very expensive without justification of the price, and the OP may be seeing the long term effect of the Program in the coin pricing market, which on many occasions does have the appearance of being the result of biochemical Mind control.
