The costs of the coin dealer

This thread is for all the members and guests that consider jumping head first into this wonderful coin business.

Now this will not apply to those people who choose to sell their coins on Ebay. For our firm, they are nothing more than any other customer. When they get bulk prices, they have to buy in bulk.

First is obtaining your federal EIN. Then your state wholesale and retail tax id numbers.
Second is getting your company listed in the Numismatic Dealers Directory. This is such an important aspect.

Being a member of the ANA, PNG, and some other organizations will also help you to become recognized. Some of these organizations have very strict guidelines, and even being recommended by other firms.
Next is location. If you choose to operate a website, storefront, or office space, a business location is a vital point.

Advertising: Consider for a moment that these large dealers are spending thousands a week in their placing their ads. They do this because it works.

Insurance: Liability insurance should be a minimum of 1 million. Every dealer in the world will tell you that if you get sued, the amount is always in the millions. If you sneeze on someone and they catch a cold, you can get sued. Not to mention some third party grading services that make a habit of suing people.
Also, the major shipping companies including the post office DO NOT insure coins. Some rare occasions they will pay for a lost or damaged package, but it is not often. Most of the time, you end up losing all the way around.
Property loss and damage. Do not skimp on this. Make sure it includes any transportation. Nothing like having your car stolen with your coins in the trunk.

Safes: Here is another place not to skimp. Big and Heavy are the way to go.

Now onto buying/selling.
This is often where want to be dealers get confused. Buying is often hard work. There are no coin fairies running around selling coins. Join in on the dealer networks. They aren't cheap, but you will find nothing in this business is. These networks allow members to buy and sell coins with each other easily.

Profits: Here is often a subject that is so out of line. I will provide a short example. Everyone is following the metals market so I will use that example.

Take Silver Eagles. Lets say you find them offered for the buy price of $8 per coin. This is the bulk dealer price. Bulk means 500 coins or more. So you buy a tray of Eagles at $8 each, bringing your total to $4000. Once you move these coins at an average of 60 cents a coin profit, you have made a grand total of $300.00
Now if the price drops or raises, the profit goes that way also. Some dealers move only a tray a year, while others move this in a matter of days.
Bullion is only used for quick transactions and customer satisfaction.
You will never get rich selling bullion.
Another important part of selling is who to sell to. Making good contacts with many dealers will assist in this. Sometimes it is not in what you have, but more of who you can sell it to.

Now TraderNick and I are the two most active dealers on this forum, and our abilities to move material will be very different. Knowing who can move the material will often equate into who pays the most money.

In buying, two principles are the most important. Make sure you go through with any deal you strike. Do not ever back out of a deal once the numbers are agreed upon.
Second, make absolutely sure your payment is good. Writing a bad check will spell doom quick. All dealers talk to each other on a regular basis, whether it is at shows, online, or over the phone. If you can't make your paper good, you will not survive.

Customers. These are the people who keep you alive in this business. Whether they are retail customers or other dealers, make sure you let them know that you appreciate their business. Customers buy out of want. As a dealer, you buy and sell out of need. There is a huge difference. A thank you will go such a long ways. Always leave a little meat in the deal for your customers.

The most important aspect is honesty. Nothing in life means more than your word.

Take into consideration that being a coin dealer is more than just selling coins. Many people will never understand the time and effort put into making a living in this business. Everything you do, will have a small effect on the rest of us. Just look at the customers of the TV shopping shows. How do you think they view the rest of us dealers after they learn they just paid 400% of retail.

So many other costs go into this business. Employees, supplies, and the traveling. Finding good help is next to impossible. So make sure you take care of your people well.

A line of credit: Make sure it is a good one. You never know when that monster deal walks in the door. Don't let your customer take his coins to another dealer. You may never get them back.

I know that this thought doesn't exactly follow in order, but it is the basics of this business. Profit is made on volume. Customers keep coming back because of service. Deals are made because of your honesty.

Now I am sure many will not agree on these things that I have listed, but I can only offer the opinion by doing this everyday.

 

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ND
Can you go into one part that I'd like to know about???

Lets say some guy has 50 silver dollars--G-4 list for $10.00---1921.
How do you make an offer and still make a profit???

Do you offer $8.50 and sell for $10.00 and make a $1.50??

In this hoard I'm going though, that's what I'm up against.

I give $2.00 for half dollars where my dealer sells them for $2.50-$3.00.

I need to make a good deal to make it worth my time but don't want to rip this guy off.

Any help would be appreciated.

Speedy

 

Well lets start with the 1921 Morgan Dollar. In G-4 I would offer melt. In VG the current bid is only $9.05
After the purchase, I would give these coins away for promotions in a 2x2 with the company name placed on the holder. A Morgan Dollar in any condition makes a great impression.

As far as Halves go, it all depends on the coin. Buying at $2. and selling for $2.50 sounds pretty good.

As a standard, I pay 10% back of current bid of common material. For tough dates or keys, I pay over bid. Sometimes over ask. It all depends on our current needs and our ability to move the material. Many dealer around the country will tell you of our bidding wars over the right coin. I have very good customers that will step up for the right coin. Some coins do not get reflected well in the greysheet.
A perfect example, today we aquired a PCGS MS-63 1921-S Walking Liberty for 15% over ask. This is the first coin I have seen available in two years. Sometimes it is necessary to make a judgement call.
When placing a value on your coins, take into consideration the customer who will eventually purchase the coin.
A large part of our current line is geared towards the registry sets. These coins are far too advanced for average collectors. Just remember that you have to sell what the customer wants. Let them decide on what value they will place on it.
I hope that makes sense.

 

ND
Thanks for your help.....I know what you mean about paying over "ask" price--I've had to do that.

"Just remember that you have to sell what the customer wants. Let them decide on what value they will place on it. "

I also know what you mean there...As I've said I would like to start a shop someday so I buy coins sometimes at a good price that I might have not bought.

Like a MS-65 FB mercury dime....that doesn't go with my coins that well dimes aren't my favorite but FB I know are good and have a potential so I got it.

I went in one week and it was marked $30 and the next week it was $20 because nobody was wanting to pay $30

Thanks

Speedy

 

You are very welcome sir;

I have made a profession at this for 12 years now. I personally feel as if I have never worked a day of it. I absolutely love what I do.
I still get a great feeling in helping others learn about this hobby.
My greatest customers are the young kids that I educate through our coins in the classroom. They buy coins because they love coins. No more, no less. They are as proud of their Indian cent that they spent a dollar on, as anyone who has spent a million dollars on a coin.

 

Hey ND send me some of your promotional Morgans

Nice thread. I'd like to weigh in with some thoughts, too.

They say with real estate the key is location, location, location.
For coin dealers the key is experience, experience, experience. If you don't know coins intimately you'll be in trouble fast. There are more ways to lose money than you can count. Fakes, theft, market fluctuation, high overhead...there's a lot of demons waiting to dance away with your money.
The biggest asset to anyone dealing in coins is KNOWLEDGE. Knowledge is power. Knowledge of current prices is important but not everything. All too often I buy something from another dealer who says "Bob had this at the show and only had it graded vf", or "I cherried this 72 doubled die lincoln out of someones junk box", or something similiar.
The general more numismatic knowledge you have, the more you can buy and sell.

There's a Florida coin dealer that I truly respect. He's been in the business forever, he's constantly surrounded by customers at shows asking his buy prices, handing him coins, etc. There's always several people at his table looking through boxes of coins. He's just one of the busiest people you'll ever see.
This dealer knows how to buy coins, currency, bullion, diamonds, sterling flatware and tea sets, wristwatches, pocket watches, scrap gold/silver...it goes on and on. I heard once he even bought a trailer park in Texas...just because he thought he could sell it at a profit.

Knowledge.

Dealers can have specialties, sure...cents, dollars, calif fractional gold...whatever. We all have our favorite (and not so favorite) stuff. But if you're going to have a shop you need to know you're going to be asked to buy all manner of coins, 90% silver, scrap gold, foreign coins, jewelry, gold/silver bars, etc, etc, etc. One person may have 30 Krugerrands and the next person may have a 1943 steel cent in ag. You could look at some certified saints one minute, then a holed buffalo the next minute. The more you know how to buy and sell, the more you'll be able to buy and sell.

Another thought before I close...this post is already much longer than I intended. You'll need an undying passion for coins and for PEOPLE. If you don't like talking with other people you're in trouble heh heh. Believe me this hobby has some wonderful people, but there's some real cheeseburgers out there, too! Many silver/gold bugs are convinced that the world is going to end, lots of people think that you're out to get them, others expect you to pay "book price" for coins, and still others want you to sell for nothing. You'll hear a million stories about the marvelous and stunning collection that they used to have before it was stolen, lost at sea, buried by their crazy uncle, eaten by their dog...it's endless. But you have to love them cause they're people just like you. It helps to succeed in this business if you're chatty. Don't pre-judge people. Last year I bought 24 saints from a man who was so pitiful looking I thought he was a beggar.

I'll post more later if I get the chance. I'm out of time and didn't get to talk about the money aspect.
Hope you all have a great day.
Nick

 

Great Post!

You just reminded me of another regular occurrence.

Every tenth customer will have the magic coin. This is a coin with two heads or tails.
Every thirtieth customer has a copper 43 cent.
Every hundreth customer has an aluminum cent.
Every month you get the call about the missing 1913 nickel. Even though all five are accounted for.

I do love these people though. I love talking coins and currency. I still learn something everyday. I still get exited about coins. Whether we buy an expensive coin or a run of the mill coin. I love the history. This mornings exciting coin... 1904 Indian in VG.

As a dealer you have to take into consideration that these coins your customers bring to you are valuable to them. Too often I hear dealers tell someone their coin is worthless.
Every coin is valuable to someone. Even if they can only be used as a gift to a child.
Give an Indian cent to a ten year old and watch their eyes light up.

Todays pocket pieces.

1885-O and 1921-P Morgans. These coins will be used as tips at a local restaurant very soon.

 

Todays pocket pieces.

1885-O and 1921-P Morgans. These coins will be used as tips at a local restaurant very soon.

Great idea....


Another thing I might have to think about if I ever start a shop is how many coins will I be able to keep for my collection???

How do you put a stop to keeping them all??

Speedy

 

Well let me tell you this. Most dealers are not collectors. My collection consists of what is in our inventory. All are for sale any day of the week. It is hard sometimes, yet that is what we do.
I do have a half full state quarter map hanging on the wall of my office. I haven't taken the time to put one in since mid 2002.
And we sell a ton of quarters. Just goes to show you how well I take care of a personal collection.

 

Thanks for your comments ND and tradernick!!

That is the same thing my dealer said.....he still keeps a few but not like he used to.

I got to hold a 1909 S VBD is MS-64 R...I think it was MS-64 for $3,000,000.

He says that when you have to make a living you have to sell not hoard.

Speedy

 

I will let you in on one little secret. Now I take photos of the nice coins when we get them. This way, they will always be a part of the collection. Most dealers I know wish they would have done this throughout their career.

 

I don't keep anything...I can't. I made the decision when I became a full time dealer not to keep anything.
1. It's not fair to the customers if I keep the cherry stuff for myself.
2. I can't afford to fall in love with these...I have bills to pay and this is my chosen career...so it all gets sold.

I have some photos of rarities that I've owned but likely will never own again...it's a great idea and keeps the passion alive.

 

I know what you mean when you say it would not be fair to the collector to keep the best coins.

I don't think I could bare to part with some coins though.

I'll just have to wait and see

Speedy

 

What is the coin book you use? For collecting and for selling? What is the best?
thanks

 

For buying and selling the only thing I personally use is the Greysheet for coins, and the greensheet for currency.
As far as books on collecting, there are books for every series.

 

What is the gray sheet?
thanks

 

The greysheet is officially called the coin dealers newsletter. It represents the sight seen market on coins. These are national wholesale prices offered by dealers to dealers. They DO NOT give retail prices. So if you look at the bid price this will represent close to what you will get when selling to a dealer. The ask price is based on the price that we sell to each other. A percentage is added for retail sales. This percentage is based on each particular coin.

http://www.greysheet.com

 

Do you ever go to coin shows just to buy coins? If so how do you buy enough to make your travling cost worth it? Also if you go to sell do you make enough to cover your travling cost? As a coin dealer do you have to go to coins shows? Is that how you make most of your money?
thanks

 

For the graysheet, how do you find what the retail price is? What is the difference of the retail price to the dealer price?
thanks

 

If you mean which price guide dealers use, it's the greysheet. Books are printed once, or in the case of the redbook they are printed annually but they can't hope to keep up with the ever changing market. The greysheet is produced weekly and often it doesn't keep up with price changes. Many dealers subscribe to online services like coinnet or certified coin exchange but you must be an established dealer with references to be accepted there....not to mention that they're fairly expensive.