Margins on High End Coins ?

A good number of dealers, or at least those I have dealt with, acquire coins from auctions where the price realized is public information. In those instances, I absolutely think the buyer should be informed, and I see nothing wrong with the original poster's question or Caleb's comment. For instance, take hypothetical coin "A" that sold at a major auction - one of Heritage's Signature Auctions such as Long Beach. The coin has been seen by hundreds of knowledgeable numismatists, collectors, and dealers; thus, the price realized should be representative of the coin's true value (within a reasonable range). This is not to say that the dealer shouldn't make a profit. To be sure, there are market fluctuations and I have no problem with the dealer making a profit. With that said, I wouldn't be willing to pay an outlandish premium over what it already sold for at auction. So if dealer "X" offers me coin "A" for 3x the Heritage price, then I do not think that is a reasonable price or a reasonable mark-up under most circumstances, and I would walk. Depending on the coin (and how subjective the pricing of the issue is), it might be enough to preclude me from doing business with that dealer again. The dealer has a right to ask whatever he wants, but a collector also has the right to go elsewhere. And the collector has the RIGHT to use whatever information that may be available to him in the public record to make that decision.

On another note, many of your posts seem to have missed the original poster's intent in my opinion.

 

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I commend Vegas Vic for his patience and efforts in documentation of legislation that is believed will eventually be implemented through-out the U.S..

I believe the more onerous Minnesota Statutes have been
well documented and discussed in this venue which defines the qualifications and actions required to be licensed as a dealer.

It's hoped by many that the Minnesota standard, which was necessitated by egregious actions, similar to those discussed in this thread, will with more definitive modifications, become national legislation. It's believed that like used car salesmen, repair "technicians", etc.., that there should be requirements for transacting in what has been declared a very lucrative field of endeavor.

The Minnesota statutes appear on the surface to be "over-reaching" in defining inter-state commerce transactions, but have allowed a remedy for out-state entities acquiring the wealth of residents by unfulfilled promises.

I cited, in this venue, a personal experience of a believed attempt by an internationally renown firm, to acquire personal wealth through unfulfilled promises, in violation of current statutes. The items desired, and promised to deliver, were all certified numerous dates/mint-marks, classic $10 Gold (.4829 oz.) coins. The majority were in certified "mint state" condition. All were certified by either NGC or PCGS. The mixture included low mintage dates (e.g. 1897-O, 42500).

Although a personal meeting was promised for a stated assessment of value by a knowledgeable representative, I was ultimately told to send the "lot" out of state into the firms possession, before an offer could be submitted.

A portion of the coins were offered "sight unseen", without any photos on craigslist, rapidly receiving several offers in excess of Grey Sheet bid and ask. The low mintage or "tough" dates, were not included, and the buyer paid in advance before viewing or receiving the coins. This process of transfer verified that even an inexperienced "layman" knew the value of these coins.

The aforementioned exercise was deemed necessary to establish the value of content in the current statutes, where assets are confiscated through unfulfilled promises or duressive actions, by out-state entities.

I believe if you read/digest the published Minnesota Statutes, you'll realize an answer.

 

No it's not. The only business of yours is how much you are willing to pay for the coin and if you can get it for that price. The profit margin (and how much the dealer paid for it) is none of your business.

 

Actually I did , with an answer to what I thought the law meant , but since Vic answered a second before me I edited your quote out .

 

I believe you've probably asked a question for which there lacks a definitive answer.

I really can't define "working class" so I'll attempt to answer from my personal perspective as an aged individual who still crawls around on the floor of a local hardware store for a net amount less than federal current minimum wage to repair utility vehicles. Also one who supplies "Pro Bono" efforts as an Ombudsman for the disadvantaged, including maintenance to local "Senior Centers".

I've spent a significant portion of my life locating keys and semi-keys of the classic U.S. Gold coins for associates who desire same, but haven't my talents for location/negotiation. I've spent decades searching and acquiring some of these "treasures" which I often use as an honesty benchmark for individuals advertising to assist us "unenlightened". An example of these efforts was previously explained in this thread, while testing the integrity of a world renown numismatic firm.

My found "treasure" coins are normally given to others at less than a "fair market", even occasionally less than my acquisition cost.

As is the case in determining criminal culpability in statutory violation of "bullion laws", a fair market price is often elusive, but generally must be established for prosecution or defense completion. Usually auction sales records and Grey Sheets are adequate to establish general upper/lower values for Numismatic Worth, and prosecution wouldn't be attempted for publicly unvalued items.

When establishing violations of code, some coins are easy tools. Four that I can use are TPG MS63 certified Gold $20 Double Eagles, which I believe can be considered "Working Class" coins. The dates are 1907 High Relief, 1908-S, 1909/8, and 1913-S.

Sales records for these high end coins are scarce, what are their values? The only 1908-S "mint state" I believe auctioned by Heritage is an MS62, sold in 1905. What is it worth? I usually use PCGS values as the high end, and Grey Sheet ask as the low end of values.

I've individually placed these four coins with others for an offering to buy by local "dealers". The process/ritual is virtually always the same, where the GENERIC "grey sheet" is produced, and GENERIC (i.e. currently ~$1500, for any of the 4 having a value of 3-15+ x greater) bid price or less is offered for all. This is normally followed by a thanks for the effort, and a subsequent reporting of the transaction. As in the case reported earlier in this thread, I would have sold at Grey Sheet ask price, if dealers were more honest. I expect to retain possession of my four treasures, and many others, until I place them on eBay some day.

I suggest that you use Grey Sheet ask as the low bid, and established archive net prices as the high end.

JMHO

 

Please correct me if wrong, Rich, but you "reported" these people for not offering you straight ask for a would-be wholesale transaction?

 

I don't understand what he said.

 

I apologize for any confusion, as I'm assuming that most know how the Generic monthly Grey Sheet prices coins. I was trying to reduce the explanation by not expanding on the normal generic versus specific coin pricing schedules of the C.D.N. publication. Specific date/mint-mark prices for singular date Double Eagles are burried in a supplemental brochure, where the list of generic coin pricing is on the front page of the newsletter.

It's believed that any reputable coin "dealer" would recognize a cc, svdb, 1916d coin, or any other "key" which has an extraordinary value relative to the other coins of the series.

I've elaborated in my post, which I hope provides a clearer understanding, analogous to finding an 1889CC MS63 Morgan in a hand full of "dollars".

I should have included the current relative values of a Generic MS63 raw Double Eagle versus a 1908-S Double Eagle. The current bid value of a MS63 raw Double Eagle is ~$1500, while if you could locate a MS63 1908-S Double Eagle, the Grey Sheet dealer raw ask value is in excess of $20000. PCGS Price Guide value is $22000. A MS63 1907 High Relief Grey Sheet dealer raw ask value is greater than $23000. PCGS Price Guide value is greater than $27000.

Thanks for the query!!

 

Who are you trying to kid? The power of the purse belongs to the collector.

Two scenarios: First, I have a $600 coin that a dealer is offering me $45 for, I tell the dealer no thanks (I don’t have to sell at his price). Second, a dealer offers a coin to me for sale and because of the way I “Judge” their reputation I decide not to do business with them.

If you want an example of the second scenario, recently there was a couple of dealers buying gold Kennedy half dollars at the ANA show and supposedly found a ‘mark’ for one of the coins at the $100,000 level; after judging these two dealers for their conduct, I choice not to do business with them even if they offered to sell something I was looking for at half price.

 

None of what you posted has anything to do with the dealers margin. You don't know what he paid for it or what his margin is. What you would pay has nothing to do with it.

 

Exactly.

 

Dealer markups are ridiculous. Expect to pay 25-50% over wholesale.

I think the ask and bid spread are one of the reasons people avoid coins as an investment. I'm hoping the internet and sites like eBay will help fix that.

I will hardly ever pay anything above wholesale prices for coins.

Only if it's something I REALLY want.

 

Doesn't that kind of limit your choices of Choice/Gem material? I don't know of anyone selling choice/Gem coins at or even near wholesale.

 

I sure as heck HOPE they avoid coins as investments. Coins should be your hobby, not investments. Junk silver can be an investment, but not collectible coins.

Btw, Doug is right. 25-30% markup is actually very cheap versus most other products. Almost any other $500 item in the store the manufacturer at most got paid $200 for.

Dealers in reality allow this hobby to even exist. Dealers have been the backbone of this hobby, acquiring coins, researching and publishing books, educating collectors, for as long as there has BEEN coin collecting. Not one word from me in this thread has ever been anti-dealer, and I hope dealer friends here have not taken anything I have said that way. Good dealers should thrive and make a good living. My only issue in the entire thread has only been to disagree with Doug that I have no right to judge a dealer's buying price once I know all of the facts. I think I do, (not that it would be an issue with any good dealers here). Profit percentages and ability to make a living has never been an issue for me, nor should it be.

 

One potential distinction is that coins are luxury items whereas food, shelter, medical services, and legal services are not. And while I don't believe in regulating the coin industry and don't believe in price fixing, I believe that buyers can and should use any information available in determining whether to purchase the item, including but not limited to the cost of liquidation in the event of an upgrade or other circumstances that require liquidation. To this end, a dealer's margin is relevant. Coins with a smaller spread between wholesale and retail are less risky in a sense than those with huge spreads. It all depends on the coin.

And while I don't haggle with dealers, I have been to a good number of coin shows and (long, long ago) brick and mortar shops to hear negotiations between dealers and collectors. Ironically, dealers who argue that their margin is irrelevant when selling coins for a large markup are often the same ones that are quick to bring up their margin and cost when it comes time to break even or take a small loss even when market conditions might be lower than when the dealer purchased the piece. If collectors shouldn't care about margins in the view of dealers, then it is hypocritical of them to bring up margin when it is conducive to them.

 

Oh, come on, that is just salesmanship. Every seller of an item will use about anything they can to convince you to pay their price, not yours. Why is it they raise gas prices immediately upon oil going up, but they come down so slowly? They wish to have it both ways. I am not saying to buy whatever argument they are using, but if you are saying this is hypocritical in coin dealers, then you might as well say every salesman in history is a hypocrite.

 

For a good number of them, your last line is a true statement. This doesn't make it any less hypocritical.

 

I have no issue with buyers doing their homework to figure out what a coin should cost, what wholesale is, ect. In fact, I think they should do that...it's part of making an informed and intelligent purchase.

However, the exact amount that the dealer bought a particular piece isn't information needed when making a purchase. It's none of the sellers business. Comparables...sure, but the exact overhead is irrelevant.

Plus...the buyer has no knowledge of the dealers overhead costs either...his rent, utilities, employees, benefits, ect. The "profit margin" is more than the cost of the coin deducted from the sale price. All that has to be paid with using sales revenue...do you think the buyer should have all that information too?