The Annual "I wanna be a dealer thread"

yspsalesyspsales Posts: 486 ✭✭✭
edited February 13, 2020 10:08PM in U.S. Coin Forum

Thought with all the newbie coin threads, I would pose a few questions and hypotheticals to existing dealers.

Currently there are 121,000 existing Ebay listings on top of the 143,000 sold/completed listings involving just Morgan Dollars. Hard to argue coin collecting is dead.

Recovering from an injured back allowed me nearly a month off to ponder a business plan on dealing coins. Could not walk or sit so spent alot of time researching alot of topics and note taking.

Attended a show where some of the dealers had the same stock as the show I saw from a year ago.

On a whim, purchased and read Q David Bowers "How to be a successful Coin Dealer" from 1988.

As dated as the material seemed it did not stray too far from the heart of the book when it came to the topics of scholarship, quality, honesty, grading, relationships, business acumen etc...

Looking at the ads in monthly publications, I would not say mail order is dead but has evolved or they would not be still publishing. The US Mint has also put a nail in the dealer coffin. Heard on a podcast recently that the Mint mailing list has fallen to less than one tenth the former 2 million subscribers.

Also, my 2020 Coin World Dealer directory showed alot of PM and Pawn Shops, but it seemed a bit light on dealers.

Yes, the internet and TPG's have commoditized and leveled the playing field in favor of the average collector and turned everyone into a internet dealer. Add the fact that price guides, ebay, and auction results and dealers that live by the greysheet can die by the greysheet.

"Thank you Captain Obvious" you are surely muttering...

So, questions for dealers and informed collectors.

Who would you think has a greater advantage?

Small fish... The astute collector building a broad and diverse type set of key dates or the specialist collector of Morgan, Buffs, or IHC's?

Pan Fish... The hybrid Ebay dealer/collector or the Vest Pocket dealer of old toiling on the road looking for fresh material at fewer coin shops?

Trophy fish... Show dealer offering modern world mint and world coins free of the price guides or the traditional show dealer?

Predator fish (as in top of food chain... not nefarious)... Capital rich Richard Nachbar style collection buyer or the local PM dealer?

Thank you in advance for induldging me and please feel free to offer any insights as it helps me formulate my business plan.

"It's the best country in the world, and I am part of it. I don't have to worry about if the Gestapo or the SS going to knock on my door tonight. You understand what this means? I have Shalom - peace- people die for that." Tibor Rubin (MOH - Korea)

Comments

  • opportunityopportunity Posts: 431 ✭✭✭

    Yes.

    Rule of Acquisition #9: "Opportunity plus instinct equals profit."

  • CoinJunkieCoinJunkie Posts: 5,627 ✭✭✭✭

    No way I'd be cut out for it on a full-time basis, but I've never been the salesman type. Not sure any particular type of dealer has a built-in advantage, but rather someone who has good people and sales skills and understands markets and how to value coins will be more likely to be successful.

  • KccoinKccoin Posts: 868 ✭✭✭✭

    I think each Fish above has their edge. The biggest buyers have the greatest overall advantage

  • SmudgeSmudge Posts: 4,827 ✭✭✭✭✭

    I would go broke keeping all of the gold. Agree with @BryceM that the best way to ruin a perfectly good hobby is to do it for a living.

  • yspsalesyspsales Posts: 486 ✭✭✭

    @opportunity said:
    Yes.

    Binged on Star Trek Discovery over a long weekend and have been enjoying the return of Picard !!

    I am about a half dozen episodes into season 1 of DS9 (never watched it more than a few episodes).... and I love Quark!

    Need to study up on the Ferengi Rules of acquisition.

    "It's the best country in the world, and I am part of it. I don't have to worry about if the Gestapo or the SS going to knock on my door tonight. You understand what this means? I have Shalom - peace- people die for that." Tibor Rubin (MOH - Korea)

  • MrEurekaMrEureka Posts: 21,835 ✭✭✭✭✭

    Why limit yourself to one business model? Just pursue every opportunity and see where it takes you.

    Andy Lustig

    Doggedly collecting coins of the Central American Republic.

    Visit the Society of US Pattern Collectors at USPatterns.com.
  • jmlanzafjmlanzaf Posts: 11,774 ✭✭✭✭✭

    @PerryHall said:
    I have several dealer friends that were collectors all their life while also being successful professionals. After they retired with good pensions and financial security they used their collections as inventory to become coin dealers. Some had coin shops while others did the coin show circuit. They really enjoyed it and they all had good backgrounds in coins. They fact that they were already financially secure took a lot of the pressure off of them.

    That's the thing. Margins are so bad on coins, you really can't easily make good money on just coins. Even full-time coin shops probably make most of their money from bullion and scrap.

  • rickoricko Posts: 71,709 ✭✭✭✭✭

    I have never been tempted to be a dealer.....I have always enjoyed the hobby, but it was a diversion from my professional business career. Never sold coins because I like the one's I have found or purchased....they are mine!! :D Reading this thread, I am convinced, that, for me, I traveled the right road. ;) Good luck to all those who are, or will become, dealers....collectors need you...Cheers, RickO

  • SonorandesertratSonorandesertrat Posts: 4,886 ✭✭✭✭✭

    @jmlanzaf said:

    @PerryHall said:
    I have several dealer friends that were collectors all their life while also being successful professionals. After they retired with good pensions and financial security they used their collections as inventory to become coin dealers. Some had coin shops while others did the coin show circuit. They really enjoyed it and they all had good backgrounds in coins. They fact that they were already financially secure took a lot of the pressure off of them.

    That's the thing. Margins are so bad on coins, you really can't easily make good money on just coins. Even full-time coin shops probably make most of their money from bullion and scrap.

    This---bullion trading (making 4% each way from walk-ins) kept a lot of small B&M dealers in business during the last recession. Even now, many small dealers also offer another line of collectibles (stamps, fossils, autographs,...). Many of the nice classic coins that most dealers get here in Tucson from walk-ins are later taken to Long Beach to be sold, mostly to other dealers.

    Member: EAC, NBS, C4, CWTS, ANA

    RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'

    CJ: 'No one!' [Ain't no angels in the coin biz]
  • JimTylerJimTyler Posts: 845 ✭✭✭✭

    No NO NO NO

  • savitalesavitale Posts: 803 ✭✭✭✭✭

    Coin dealing for a living sounds like a lot of hard work for modest income, especially if you are not a natural salesman type. I agree with what others wrote though, if you’re doing it part time or as a retirement job and you don’t need the money it could be fun. Unfortunately I suspect the folks in the latter category make it even harder for the folks in the former category.

  • hvellentehvellente Posts: 64 ✭✭
    edited February 14, 2020 6:25AM

    Right now, I see some opportunity in on-line sales if you specialize in a few types, especially in mid-range pricing. For example, you might specialize in Morgans or Buffs etc but only in the under $1,000 category. The cost of entry is low so you can have a sizable inventory and there's a constant market for those pieces so high turnover is likely. You could build a small on-line business that way, but you'd have to make yourself an unimpeachable expert on varieties and counterfeits etc etc. Don't forget, if you can do it, so can someone else, so expect competition.

    The idea sure is intriguing, but I wouldn't want to be a full-time dealer for many reasons (margins, competition, risk, etc...). Instead, I always wanted to set up a table at a show, just to see how it felt. I thought I could use my personal collection as inventory and see what happens. Not looking to get rich, just wanted to have a fun weekend selling and buying some pieces.

    The one time I looked into this - just last year - the show sponsor wouldn't let me rent a table. Said I needed tax info etc etc,

    Not worth the trouble for me as a one-time dealer.

    Any other amateurs here ever test the water at a show?

  • Cougar1978Cougar1978 Posts: 4,339 ✭✭✭✭✭
    edited February 14, 2020 7:56AM

    The coin biz is one last bastion of free enterprise. It has been under assault on eBay under the absurdity that states other than the sellers home state can collect sales tax on that sellers sales.

    I enjoy the biz and Bowers book is a good start. Once one gets out on the bourse setting up seeing what’s involved things will click. You will find that 10c on the dollar does not cut it in the coin business especially in a stagnant market like the current one. In my view minimum 25-30 pct margin is what it takes. You will see it’s easier to buy than to sell and only a few coming in the bourse room can afford coins over $300. Your true test will occur when you have your first bad show Where expenses exceed gross margin on sales. I do both shows and online. For starters It takes big money be in the biz full time. Don’t quit your day job. When the 89 market crash occurred many dealers went bankrupt.

    With prices really low this may be good time start setting up. It helps do your first show sharing a table with an experienced friend. With the market where it is it will be good ole buy low sell high smash mouth ball. You will be competing against rich big gun millionaire dealers selling stuff at wholesale or 5 pct over bid. They will be coming around to pick you off. If can move something at a show even if it minimal profit that may be good vs sitting on it for a long time.

    Take a red book, blue book, CDN if have. I have CDN, TPG Cert verify, CF, Kitco, on my phone. I try to travel light. Keep fixed overhead expenses as low as possible.

    Creekside Tangible Assets: cta-coins on ebay
  • TurtleCatTurtleCat Posts: 426 ✭✭✭

    Years ago I thought of being a vest pocket type dealer. I was definitely trying to sell more in those days. I think I learned that I’m not a salesman. I still sell a couple of things but mostly as part of a trade if I can. Life’s already stressful enough without adding more things to take care of (coin sales taxes, ledgers, CPAs, etc.)

  • ErrorsOnCoinsErrorsOnCoins Posts: 10,816 ✭✭✭✭✭

    I for one really enjoy being a coin dealer because I get to play with really cool coins.

    Work is not work if it is fun?

  • mustangmanbobmustangmanbob Posts: 1,811 ✭✭✭✭✭

    So, rephrase the question:

    What is the business model of dealers that have been in the business less than 20 years?
    What was the business model of dealers who bit the dust in the last 20 years, other than from the reaper?

    The asterisk would be a true STAND ALONE dealer, not one who gets a retirement check, trust fund baby, has a medical plan from a past job, part timer, etc. (different class ) but a person who has to make it, sink or swim, just on the coin business.

    Not coins, but I took a hobby and turned it into a business. I agree with JMLANZAF that coin margins are terrible. In my hobby to business, (starting in 1982) it went from primarily a local, little small time, face to face, to mostly internet international sales. I even went to work for Amazon for a year to learn all I could about ecommerce.

    One of my biggest takeaways: I know I have bought out at least 37 dealers. Some were just done, aged out. But most bellied up, buried in dead inventory, following the "old way" of doing business, with a crash in sales. I recently bought a portion of a company that had been in business 40+ years. The auction listed $700,000 in inventory. it sold for just over $31,000. I am "assisting" another dealer, who has been in the business for over 50 years, and as a business owner for over 30 years. He is set in the past. He spends way too much purchasing a large number of spaces as a show, brings a ton of inventory (that hasn't changed much in years) and is too tired to actually set up, by the time he drags in tables, chairs, boxes, totes, drinks, etc. He also likes to talk and talk and talk. Potential customers get antsy when he talks and talks and talks as they want to check out the whole show, not talk to someone for an hour about whatever.

    But he is chained to his business, needs the $$ to survive, but has no money to get new stuff. He does not use the internet, still uses a flip phone, advertises in a newspaper (what is that?), etc. and does not understand why a show 25 years ago that brought in $20K+ now brings in less than $1000. Many times, he loses money after the show costs are paid. Sadly, he is trapped in his model with no way out, so it will either be his widow or the bank that sell off his stuff. He has tried to get me to buy him out, but it is old inventory, over priced, and not in demand.

  • OuthaulOuthaul Posts: 6,871 ✭✭✭✭✭
    edited February 14, 2020 7:28AM

    @mustangmanbob

    "...he talks and talks and talks..."

    There is nothing worse than a bullsitter at a coin show. Please move out of the way and let people with money in their pockets do their thing. No one is interested in what you paid for something or picked up 30 years ago.

    The other thing that pisses me off is when I want to see what a dealer has in his/her case but there's a customer sitting in front of it with his want list and two boxes of coins sitting on top of it.

    Cheers

    Bob

    Never take a front row seat at a Bris.
    Proud recipient and founding member of the "YOU SUCK" Club since 8/31/04 - USAF Retired: 1974 - 1994

  • oldUScoinsoldUScoins Posts: 105 ✭✭✭
    edited February 14, 2020 7:33AM

    @mustangmanbob said:
    So, rephrase the question:

    snip

    The asterisk would be a true STAND ALONE dealer, not one who gets a retirement check, trust fund baby, has a medical plan from a past job, part timer, etc. (different class ) but a person who has to make it, sink or swim, just on the coin business.

    snip

    Wow - looking back over my life, kids, family, medical expenses I couldn't imagine trying support all that from a "stand alone" coin business. Especially in today's internet and ebay climate.

  • ErrorsOnCoinsErrorsOnCoins Posts: 10,816 ✭✭✭✭✭

    @oldUScoins said:

    @mustangmanbob said:
    So, rephrase the question:

    snip

    . Especially in today's internet and ebay climate.

    That is where the market is today and it is very robust.

  • yspsalesyspsales Posts: 486 ✭✭✭
    edited February 14, 2020 8:13AM

    I get a rush out of hunt and dealing, whether it is baseball cards, coins, or a yard sale.

    All of these comments are very helpful.

    Four scenarios/crossroads were given to fill in various few viewpoints.

    There are other sources of income but more is always welcome.

    2020 is a year of becoming completely debt free.

    Beyond that... a 5 year plan of reinvesting existing money, found money, and profits into more coins.

    Predator money will be available when needed, but not until reaching goals and expanding my numismatic skills in grading, counterfeit detection.

    Making connections is a big part of the plan.

    My reasoning, if as a minnow, I can't turn $1000 at a show this weekend into at least $100 profit cherrypicking for grade and market price efficiency then I am just baitfish.

    In the short term, evaluate one deal at a time... as they come.

    "It's the best country in the world, and I am part of it. I don't have to worry about if the Gestapo or the SS going to knock on my door tonight. You understand what this means? I have Shalom - peace- people die for that." Tibor Rubin (MOH - Korea)

  • Cougar1978Cougar1978 Posts: 4,339 ✭✭✭✭✭
    edited February 14, 2020 9:26AM

    When you have somebody for real buying or selling (tally sheet) give them your full attention. Don’t let somebody else disrupt the process as they may be trying horn in. If Multiple items somebody don’t know usually do tally sheet for a few pay them or collect money then start new tally sheet. What’s important is getting the retail money (this is your lifeblood) or consummate buying deal.

    Creekside Tangible Assets: cta-coins on ebay
  • VeepVeep Posts: 1,216 ✭✭✭

    A dealer on his own lives by his wits. If you don’t have them, don’t even try. You have to be able to size-up an opportunity quickly and determine a fair price to pay based upon your prior knowledge of where the stuff can be sold and at what price and cost.

    "Let me tell ya Bud, you can buy junk anytime!"
  • ErrorsOnCoinsErrorsOnCoins Posts: 10,816 ✭✭✭✭✭

    How many old school dealers are on Instagram???

    :D;):oB):#o:)>:)

  • BaleyBaley Posts: 21,483 ✭✭✭✭✭

    @PerryHall said:
    I have several dealer friends that were collectors all their life while also being successful professionals. After they retired with good pensions and financial security they used their collections as inventory to become coin dealers. Some had coin shops while others did the coin show circuit. They really enjoyed it and they all had good backgrounds in coins. They fact that they were already financially secure took a lot of the pressure off of them.

    That's me (minus the "pensions")
    Collected and pruned a nice inventory (aka, the sets of my (reasonable) childhood dreams) from age 10 to 49, taking my 50's off -- only buying a mid 4 figure coin a year or so..
    At around 60, I expect to leisurely sell them off a little at a time, and might even gather enough to finally spring for the 1796 quarter and half.

    Liberty: Parent of Science & Industry

  • JimnightJimnight Posts: 3,747 ✭✭✭✭✭

    I'm retired :)

  • blitzdudeblitzdude Posts: 2,277 ✭✭✭✭✭

    I'd rather deal chicken eggs than coins. Semper Fi!!!!!

  • PocketArtPocketArt Posts: 1,177 ✭✭✭✭✭

    If I made my hobby a profession; I'd be compelled to collect something else probably...why ruin a good thing? I want to keep what I have. <3

    If I did feel drawn into this line of work; I'd look into developing a niche market, similar to what @ErrorsOnCoins has, or, what @EagleEye Rick Snow has developed, or, Penny Lady. Focus on one series, category, and drill down like there's no tomorrow. Specialize. I wouldn't want to be in a position where I had to compete with others offering everything, to everyone.

  • SamByrdSamByrd Posts: 3,086 ✭✭✭

    great to sell on a small scale but being a coin dealer is not what it seems. try 100 k in inventory at minimum (most have more ) try 5% net profit (margin less margin if your mostly precious metals). after cost and fees and taxes and accounting for risk and simple effort to make that. Turning your 100k inventory 10 times a year makes you 50k lots of shows , ebay and whatever other arena to sell in. You will have bad years where there is a loss as the market changes faster then inventory turns. If I wanted to be a coin dealer I would contact everyone in the business in a near radius and work for free for a while and learn the nuts and bolts of the business. Set up your accounting and front end first before any ebay or coin show presence.

  • sellitstoresellitstore Posts: 1,262 ✭✭✭✭

    I have found that the money is to be made on the buying side. Finding enough to buy at the right price is the difficult part but can be done given enough thought and effort. Buy right and you don't have to worry about being able to sell "at your price". Sell at what the market pays and buy for less.

    Collector and dealer in obsolete currency. Always buying all obsolete bank notes and scrip. Ebay listings
  • Downtown1974Downtown1974 Posts: 4,923 ✭✭✭✭✭

    Like Smudge said, I would be belly-up in a month because I would keep all the gold that walked in the door. Wouldn’t want to deal with coins in that capacity anyway. Sounds too much like work. That would suck the fun right out of it for me. I already have a job that isn’t fun.

  • WildIdeaWildIdea Posts: 1,589 ✭✭✭✭✭

    I’ve often thought about entering the market as a dealer. I’ve even nibbled around the edges some a time or two. Moonlighted at a local B&M and set up at some shows and made some local buys, stuff like that. It really helped me have a clear understanding on what the self interest of a dealer is and that has helped me tremendously as a collector. I feel it’s the full time guys that will always have the advantage so wouldn’t even try unless I could go seriously all in full tilt. It’s why I’m successful at my day job now, full time at it. Dealing is a bust your hump career.

    Thing is, the longer I’m into coins, the less I’m interested in common stuff and it takes an increasingly rarer more fantastic piece to get my blood moving. Well, when that piece finally comes around, I feel too much time, money and energy is invested to simply flip a coin like that. There is simply too much collector in me to make a good dealer.

    Just yesterday, I looked at persons inherited collection of full Danscos mostly circulated US but complete and was just totally uninterested in buying any of it or tying up my money or worse yet working to sell them. I encouraged him to keep them and cherish them as they were his Dads. I think I can get this guy stoked about coins and that’s more fun to me than just buying his stuff. I said his Dad already paid full admission for him to enter the hobby and all he has to do now is learn and research and that’s the funnest part. I’ll make a crappy dealer, haha.

  • jmlanzafjmlanzaf Posts: 11,774 ✭✭✭✭✭

    @yspsales said:
    I get a rush out of hunt and dealing, whether it is baseball cards, coins, or a yard sale.

    2020 is a year of becoming completely debt free.

    Beyond that... a 5 year plan of reinvesting existing money, found money, and profits into more coins.

    I wouldn't even consider this unless you've completely maxed out your 401k/IRA. If you're doing that, I still don't recommend it.

    When margins are thin like on coins, the key is the velocity of the rotation. If you are accumulating inventory over 5 years, that's not an investment or a business, it's a hobby that will likely be losing money.

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