Margins on High End Coins ?

This was exactly the purpose of my original question.

I am getting a strong feeling from reading a lot of the previous posts that comments that are anti-dealer slanted are not really intended to be against dealers or against dealers making a profit. A post even said (which I strongly agree) that dealers make this hobby what it is. I think those posts really stem from bad experiences with a less than stellar dealer.

I did not intend for this thread to go the course it has, but I am glad it has. It exposes a lot of what people feel inside; it should be noted by every dealer here whether they agree or not. Corporations pay huge money to try and see what their customers think- here it's free!

 

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I don't think I could agree more with any aspect or point of this post. It answers all of my questions very well and straightforward which is what I was looking for.

Thank you very much for the time you have spent communicating throughout this thread. Hopefully others will see it and read through it and find answers that will dissolve some of the negative feelings they may have whether it be from a bad past experience or insufficient knowledge going forward. Hopefully they will become enlightened and it will aid them to make more intelligent purchases in the future. All of this was a goal of this thread.

 

I don't think anyone here (at least of those whose comments I read) adopts that opinion.

 

I have experienced just that, over many years, and on more occasions that I care to remember. It is an unfortunate reality in this hobby.

 

On the other hand, if it is a coin you REALLY want and doesn't come on the market often, you might have to pay some painful premiums.

 

Superb coins can cost real money. Some of the best pieces that I have kept in my own collection were purchased at premiums that would have made many members here walk away from the coin.

 

Your statement is so profound!!
I was almost falling out of my chair laughing. Your understanding of VALUE is the reason we have our collections.

The four coins I've listed in this thread were all acquired in open auctions over the years. Similar specimens are virtually never seen offered today, I believe, because of the prevalent attitude that if it can't be acquired at wholesale, it isn't worth having.

One of the coins I've appreciated most, and acquired at what I consider a "steal" price in an open auction, is the certified "mint state" 1889CC $20 Gold Double Eagle, which is my "Avatar". A coin having less than a tenth the mintage of it's prized Morgan "sibling", that if one waited long enough, at half the price. A coin that has appreciated more than 50%/annum over the last decade.

I have both the 1889CC Dollar , and Double Eagle in similar certified condition, to show others the comparative beauty and values that can be acquired with patience and understanding.

In my opinion, and apparently others, the "working class" 1889CC Double Eagle specimen is far more desirable than its "Irish Twin". I believe an example of a "high end working class coin", which may be yet available as a bargain.

Thanks for your enlightening contributions.

Rich

 

Not if you are patient and know the right resources. I just purchased a Barber half (NGC blast white 1892 PF65CAM) for dealer wholesale. I avoid going to stores if I can, unless I want date fillers.

Also, in response to "a bad experience with a dealer" I have been in this hobby for about 20 years and have had MANY bad experiences. There are also some dealers I like who are honest and I'll generally spend a few hundred bucks with them but I can get the same (if not better) coin by being patient. With something that's several grand I'm not going to take an offer for anything more.

Also, I tend to make deals and sometimes buy in bulk...

 

He is talking about "people who do not know the coin market." He is not talking about "anyone here." Kept in his context, sure, I think I agree with him.

 

I have heard of some distribution companies who can survive on 25% gross margins, but they must have a very low overhead nut to crack in comparison to revenue. From what I have seen many businesses need to get 45% gross just to end up around 10% net after paying overhead and prior to any taxes (YMMV).

I personally have no problem paying a good company profit. I want them to stay healthy if they provide great service, and especially so if they are perform the duty of making payrolls. At the same time, it is a personal duty to my family to decrease the expense of any hobby as much as I can through negotiation. Any information I can get that will help me negotiate a better deal for me is extremely relevant.

 

Look on auction sites and find some good dealers.

Go to shows, know your stuff and find someone who has several pieces you want and see what they can do about the price. Tell them you are looking for nice pieces at wholesale / FMV price. Who knows? They may have some beauties they got for really cheap.

That really depends on what you want; different delers specialize in different things. Most stores don't have much of anything these days, at least around here. Occasionally I'll walk into a random store (antique, jewlery, pawn shop, gold broker, whatever) who has ancients and has no idea what they are worth. One time I was able to score 5 Athens Tetradrachms for 80 a piece when they should have been around 200-300.

There is one dealer in SF I really like who has a good inventory and is very helpful and honest. He DOES know his stuff, too. A handful of other honest ones exist too, but they have almost nothing I'd want. Then you get the ones who tell you there are problems with your coin that don't exist. Most dealers hate me right off the bat anyway, because of what I ask, the resources I have and I even have a loupe on my keychain. You never know when you might run into something.

Also, on sites like eBay MAKE AN OFFER if you don't like the price.

I've gotten 10% on a few high-end coins.

Also, make sure to subscribe to a resource where you can get the gray sheet or wholesale values. The NGC and PCGS price guides are grossly inflated.

The next best resource is auction realized prices. This is all you can really go by for ancients anyway, since you can't get good books written after the 70's but once you focus on an area and look at many auctions you get a sense of what most things are worth (excluding rare varieties and stuff, unless that's your thing).

Funny thing, in Chinatown they were selling Morgans and Trade Dollars for $10 a piece but they were all counterfeits. I could tell just by holding one. Otherwise I would have bought the lot XD

 

I don't really understand "retail buyer," "has ittle, if any right" or "earned the right to go through wholesale channels." Don't get me wrong -- I realize in any profession people have to mke money. Even most of the auction houses chrge buyer's premiums. But on a lot of these lots (which *can* be nice coins) the 14% or whatever still puts the high grade coin (in the thousands) at or possibly even below wholesale depending on the consigner. The secont-to-last lot I won (1892 PF65CAM 50c) had a premium on it and I lowballed it knowing it would probably never meet the premium. It didn't meet it but I guess the consigner needed the money so they accepted my bid anyway (which was about half what NGC price guide shows, about wholesale maybe a hundred or two less given the CAM designation). I cant wait to get this one!

Dealers should definitey make money but if I'm buying something that expensive I think it's ridiculous to pay that kind of spread. The dealer should still make a good profit off the sale, especially if I'm buying in bulk and I know many dealers and have established a reputation with many auction houses.

If we are talking about a handful of good+ Indian cents and there is a 50% (or 100%, I have seen bags but I don't know what shops are paying for bulk) markup that makes sense. I have seen thousand+ coins that sold for over 100% ask, which is ridiculous. I don't care if it's an BU MS Mrgan with DMPL frost and perfect rainbow toning. Unless we are tallking about an untra-rare one-of-a-kind piece where the numbers always fuctuate like crazy this kind of behaior is going to turn people off to the hobby. They will reailze they are losing a ton of money and it would probably take many years for the value to recover (if it even does seeing how stagnant the coin market is at the moment but in my opinion it has nowhere to really go but up. Especially if silver falls more and the common stuff is a lot more affordable for many people.

Gold, too... I've been avoiding buying gold because of the bullion vaule but if it goes down a lot I'd ike some pieces (like the St. Gudens or a Persian daric from Xerxes (and of course a trite once I run into something NICE). They are very ommon; I blieve the lowere denominations are a lot more rare but I gues they lack the historical value because they go for less (well, lower denominaltion almost always o for less). I aso have to finish my proof/MS 20c pieces and 3c Nickel proof 65+ CAM (I figure that should only take one or two hundred years).

Then again, I payed a lot for a Lydian sigos yesterday from a local dealer but I never see them that nice so I had to. I was going to buy some Aegina turtles but even though the prices were reasonable they were not anything supurb and I have resources I can get them for better and cheper.

As you can see, I'm all over the place which makes the wholesale buys easier. I have a general idea of value and know how to grade but if it's a specific date I have to look it up. I'm a member of Numismedia though, and despite the lack of CAM prices the FMV nd PCGS/NGS sight unseen wholesale prices seem pretty on par.

Then again, if I remember correctly eBay charge about the same to the seller. It would be interesting to hae collector-to-collector site without any buyer's remiums. I'm a web/eCommerce developer (with extensive securty testing and auditing for PCI compiance) and could build one with nice transactionl frameork for last-seond bids on popular items but this would be out-of-pocket. As long as the site doesn't generate a TON of traffic (which I do not expect anytime soon) the charges would be ery minimal. Would robably take several months to complete though (and test, but I might pay someone to do that because a.) I hate QA and b.) Testing my own code is pointless. I could think of countles fetures and maybe even have an API where other sites could integrate with us and bump up the profit margins.

EDIT: I also see prolems with damaged coins (cleaned, dmaged rims hidden in the picture, environmentall damage that doesn't reallt show, etc.) since it' sometimess very hard to tell in pic. Maybe that's just poilcy.
i could always do appraisals if the byer will pay for the shipping.

Sorry for the rant, I'm procrastiating

 

A reasonable profit for the high end coins and currency would probably be 5%-10% after expenses at most. This guy seems to be running a major money making machine: http://www.coinraritiesonline.com/

Then there is Mr. Winter now married to Irma Kane one of the former heads of Teletrade: http://raregoldcoins.com/ Huge money is getting made.

I would not be surprised if they have 20-50% profit transactions after re-grading, grading of raw coins they bought as lower grades, CAC submissions where they can tack on an extra 10% as a "premium" fee based on their success and expertise. They have many business expenses, professional memberships, ads, shipping and insurance, travelling and security expenses.

Ethical? At a certain point greed justifies profits as long as one has a charity or pays lots of taxes. Some dealers may have ex-wives and child support. The state and federal tax authorities have a right to know every basis for tax filings which gets scrutinized in "examinations".

I would guess only the top 10% of dealers are making enough to live on in this economy and state of the coin market. And the top 1% are doing quite well.

 

Sorry Owle, but 5-10% margin on retail items is far too low. It would be difficult to stay in business.

 

Please define high end coins. Are we talking >5 figures? Than maybe. But for coins <5 figures, I stand by my previous statement.