I am not comfortable letting coins go for less than the replacement cost. Which I believe could happen more than not.
If you don't like a group of coins that have gone down in value, take the loss and use the money to buy better coins.
A capital loss is the difference between your purchase price and the sale price is lower than the purchase price.
For the purposes of personal income tax, capital losses can be offset by capital gains. Net losses of more than $3,000 can be carried over to the following tax year to offset gains or directly reduce taxable income.
At death, heirs lose the capital loss deduction and their cost basis becomes the value at date of death.
@jshaulis said:
In normal situations, what amount of capital is required to be successful, without having a physical storefront (online only)?
That would be directly proportionate as to what market you are trying to enter, in other words, what grade and type of coins are you looking to inventory and how large an inventory you plan to attempt. Good luck.
Jim
And, of course, how quickly you need to turn it over. Essentially, the amount of capital is related to the amount of profit you need to make.
I think less the profit and more the turnover. Obviously, if you need the money to live, the profit matters. But you can only buy so low and sell so high and be competitive. But if you don't have cash reserves, you are forced to flip quick or you can't buy the next deal that comes through.
That really becomes the difference between the hobbyist and the dealer. The hobbyist is seeking one coin here or there and maybe buying one coin here or there. A "dealer", though the term is broad, in my mind needs to buy and sell regularly. That means buying things you have no interest in but that you know you can sell. It means buying things you're not interested in because you need to buy the whole collection. That takes money and that takes time, and the trade off tends to be between the two.
I tell people all the time. You want to be in business, consider anything but coins. They are fairly liquid but the margins suck. And low margins require high sales volume. One year when I was between jobs, I decided to try dealing full time. I quickly discovered that I could make money easily enough but it was hard to buy enough to make it equivalent to a full time job with benefits. You have to do every show, beat the bushes constantly and have enough capital to keep buying while you're selling. I decided it was easier to go back to work and stick to part time dealing. Lol.
If you want to be a dealer in retirement, you really need to spend the 20 years before retirement building relationships and identifying sources and she's venues.
This post kinda nails why I haven't made the jump. Although I still have the desire to try. The vest pocket thing sounds like it could work for me. The problem I see with that is I do have a lot of sub $300.00 value coins. I would need a fairly large pocket.
For the vest pocket dealers how many coins will you bring to a show? I would imagine you use a briefcase to carry the coins around. How much value would you carry? I also see security as an issue which has been pointed out frequently in many posts. Curious if anyone would share what they do or what they have witnessed with this type of dealer.
Bring what you have, but more than 2 or 3 double row boxes many dealers will lose interest.
I recommend you have prices on all your coins, or the very least, keep an inventory sheet that you can get prices quickly.
Walk around for a bit and get a feel for who is selling what. Find dealers that seem to have similar inventory and start with them first. Ask them if they are interested in looking at some coins.
Where do you get your inventory. Buying retail and trying to turn a profit does not seem viable.
You're right, that is why I deal with people that I have spent the decade or more building buy/sell relationships.
Most shows have early bird or "dealer' days. Pay the extra to get in the show early, and many dealers will give you a better price than if they think you are a collector. Not all, but since I have been setting up at shows off and on and walking all my local shows for years, I know many of them now. Deal with them regularly and build relationships. This all takes time, and it is a two way street. If you have coins they want, you have to show them you are willing to deal.
Which makes buying right much more important. As many have posted above, being a dealer requires that you purchase just about everything at some point. Not all dealers have the time to research every variety or new fad in coins. Or, know the price some items sell for online vs at a show. Knowing what things are actually selling for and being able to adapt is key. This is where a niche comes in handy. The problem with having a niche is that when others find out it's profitable, everyone is doing it.
I'm sure my coins get cherrypicked from time to time, or I sell something for less than actual value. It happens. Every time someone hits Buy it now on one of my coins instead of hitting make offer, I wonder.
Thanks for your insight. I find it extremely helpful. The same goes to all who are posting to this thread.
I once asked longtime and big time dealer if he collects and his answer surprised me. He said he collects information not coins. It made a lot of sense after thinking about it for a while. He is able to hold some of the best coins known in his specialty for a bit and then pass them along. Rinse and repeat. He has owned most of the finest known some times more than once. Pretty cool. Although I realize this model is not possible for me. Maybe on a much smaller scale which is what I would like to do.
I am not comfortable letting coins go for less than the replacement cost. Which I believe could happen more than not.
If you don't like a group of coins that have gone down in value, take the loss and use the money to buy better coins.
A capital loss is the difference between your purchase price and the sale price is lower than the purchase price.
For the purposes of personal income tax, capital losses can be offset by capital gains. Net losses of more than $3,000 can be carried over to the following tax year to offset gains or directly reduce taxable income.
At death, heirs lose the capital loss deduction and their cost basis becomes the value at date of death.
And, of course, please consult your tax professional before trying this.
I just have this vision of someone collecting coins patiently for 20, 30, maybe 40 years with a bunch of really nice coins, and, of course, the widgets and dreck that we all acquire over the years. You know, a coin you don't really want and doesn't fit your collection, but you buy because it's too cheap not to. Anyway, the collector decides to try out dealing, so he sets up at a show and a sharp dealer walks over and after a few minutes makes a deal to buy all the good coins for 10% under wholesale (because it's a big deal). So in ten minutes he's liquidated all his "good" coins with no real idea how to replenish his "inventory" and done so far too cheaply.
@daltex said:
I just have this vision of someone collecting coins patiently for 20, 30, maybe 40 years with a bunch of really nice coins, and, of course, the widgets and dreck that we all acquire over the years. You know, a coin you don't really want and doesn't fit your collection, but you buy because it's too cheap not to. Anyway, the collector decides to try out dealing, so he sets up at a show and a sharp dealer walks over and after a few minutes makes a deal to buy all the good coins for 10% under wholesale (because it's a big deal). So in ten minutes he's liquidated all his "good" coins with no real idea how to replenish his "inventory" and done so far too cheaply.
It makes me sad.
I cringe to think of that scenario but I bet it does happen.
@daltex said:
I just have this vision of someone collecting coins patiently for 20, 30, maybe 40 years with a bunch of really nice coins, and, of course, the widgets and dreck that we all acquire over the years. You know, a coin you don't really want and doesn't fit your collection, but you buy because it's too cheap not to. Anyway, the collector decides to try out dealing, so he sets up at a show and a sharp dealer walks over and after a few minutes makes a deal to buy all the good coins for 10% under wholesale (because it's a big deal). So in ten minutes he's liquidated all his "good" coins with no real idea how to replenish his "inventory" and done so far too cheaply.
It makes me sad.
It is possible. However, I'm not sure there's any reason to be sad. The collector agreed to the price, after all.
@daltex said:
I just have this vision of someone collecting coins patiently for 20, 30, maybe 40 years with a bunch of really nice coins, and, of course, the widgets and dreck that we all acquire over the years. You know, a coin you don't really want and doesn't fit your collection, but you buy because it's too cheap not to. Anyway, the collector decides to try out dealing, so he sets up at a show and a sharp dealer walks over and after a few minutes makes a deal to buy all the good coins for 10% under wholesale (because it's a big deal). So in ten minutes he's liquidated all his "good" coins with no real idea how to replenish his "inventory" and done so far too cheaply.
It makes me sad.
10% under wholesale? Is that bad? Would he have done better just taking it to a local dealer? And the rest he could take to a local dealer and sell for whatever.
I knew four coin dealers that started late in life. They were all professionals who retired with pensions when they became coin dealers so they had sufficient income to indulge their passion. One was a Civil Engineer, another was a banker, one was a retired high school history teacher, and the last one was a retired army officer. In every case they used their coin collections as their inventory and their many decades of knowledge and experience as serious coin collectors. All four were passionate about coin collecting and thoroughly enjoyed what they did.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I’m not a dealer. But I’ve made friends with one. He has a few million $$$$ in inventory. Most of his sales are low margin bullion. The average sale is around $300. He has a few regular customers like me that spend more during the year but our average is less per sale. I may just go by to get a silver bullion coin or a graded IHC. Most of the collections he gets, he separates out and wholesales. He makes more whole selling then retail. But he is on a busy highway with a large store.
You also need lots of cash when the V75 gold came out he was able to get 3 and another 4 came in, that was $50k he needed right there. Yes he wholesales the stuff but payment takes time.
And the vast majority coming in is constitutional silver coins. Sometimes he takes stuff he know he can’t make money to get the good stuff.
What to do with the bad stuff (common poor condition coins and currency), sometimes you give it as change. Lots of people are happy to get circulated silver certificates, red seals, state quarter and dollar coins.
Can you lose money on some sales to get items you can make money on?
Do you have wholesellers that will take your thousands of wheat cents, us commemoratives?
What’s your plan to get rid of the low grade/low value stuff?
@hfjacinto said:
I’m not a dealer. But I’ve made friends with one. He has a few million $$$$ in inventory. Most of his sales are low margin bullion. The average sale is around $300. He has a few regular customers like me that spend more during the year but our average is less per sale. I may just go by to get a silver bullion coin or a graded IHC. Most of the collections he gets, he separates out and wholesales. He makes more whole selling then retail. But he is on a busy highway with a large store.
You also need lots of cash when the V75 gold came out he was able to get 3 and another 4 came in, that was $50k he needed right there. Yes he wholesales the stuff but payment takes time.
And the vast majority coming in is constitutional silver coins. Sometimes he takes stuff he know he can’t make money to get the good stuff.
What to do with the bad stuff (common poor condition coins and currency), sometimes you give it as change. Lots of people are happy to get circulated silver certificates, red seals, state quarter and dollar coins.
Can you lose money on some sales to get items you can make money on?
Do you have wholesellers that will take your thousands of wheat cents, us commemoratives?
What’s your plan to get rid of the low grade/low value stuff?
Many questions.
Would much prefer to deal in certified coins in uncirculated condition. Do not think I will ever try to open a storefront as it really makes no sense for what I would like to do. After many replies and a lot of consideration I feel the best way to proceed initially is the vest pocket thing. Although not sure when I will try it.
In any case I will continue to collect acquiring things I find interesting and attractive for a wide variety of reasons. I have quite a few recent purchases that I am very happy with. I will post some over the next couple weeks. The 1895 post I have is one of those recent purchases.
Thanks to all for the awesome discussion and please keep posting if you would like. I really enjoy the back and forth!
Comments
If you don't like a group of coins that have gone down in value, take the loss and use the money to buy better coins.
A capital loss is the difference between your purchase price and the sale price is lower than the purchase price.
For the purposes of personal income tax, capital losses can be offset by capital gains. Net losses of more than $3,000 can be carried over to the following tax year to offset gains or directly reduce taxable income.
At death, heirs lose the capital loss deduction and their cost basis becomes the value at date of death.
Bring what you have, but more than 2 or 3 double row boxes many dealers will lose interest.
I recommend you have prices on all your coins, or the very least, keep an inventory sheet that you can get prices quickly.
Walk around for a bit and get a feel for who is selling what. Find dealers that seem to have similar inventory and start with them first. Ask them if they are interested in looking at some coins.
My Ebay Store
Thanks for your insight. I find it extremely helpful. The same goes to all who are posting to this thread.
I once asked longtime and big time dealer if he collects and his answer surprised me. He said he collects information not coins. It made a lot of sense after thinking about it for a while. He is able to hold some of the best coins known in his specialty for a bit and then pass them along. Rinse and repeat. He has owned most of the finest known some times more than once. Pretty cool. Although I realize this model is not possible for me. Maybe on a much smaller scale which is what I would like to do.
And, of course, please consult your tax professional before trying this.
I just have this vision of someone collecting coins patiently for 20, 30, maybe 40 years with a bunch of really nice coins, and, of course, the widgets and dreck that we all acquire over the years. You know, a coin you don't really want and doesn't fit your collection, but you buy because it's too cheap not to. Anyway, the collector decides to try out dealing, so he sets up at a show and a sharp dealer walks over and after a few minutes makes a deal to buy all the good coins for 10% under wholesale (because it's a big deal). So in ten minutes he's liquidated all his "good" coins with no real idea how to replenish his "inventory" and done so far too cheaply.
It makes me sad.
I cringe to think of that scenario but I bet it does happen.
It is possible. However, I'm not sure there's any reason to be sad. The collector agreed to the price, after all.
10% under wholesale? Is that bad? Would he have done better just taking it to a local dealer? And the rest he could take to a local dealer and sell for whatever.
I knew four coin dealers that started late in life. They were all professionals who retired with pensions when they became coin dealers so they had sufficient income to indulge their passion. One was a Civil Engineer, another was a banker, one was a retired high school history teacher, and the last one was a retired army officer. In every case they used their coin collections as their inventory and their many decades of knowledge and experience as serious coin collectors. All four were passionate about coin collecting and thoroughly enjoyed what they did.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I’m not a dealer. But I’ve made friends with one. He has a few million $$$$ in inventory. Most of his sales are low margin bullion. The average sale is around $300. He has a few regular customers like me that spend more during the year but our average is less per sale. I may just go by to get a silver bullion coin or a graded IHC. Most of the collections he gets, he separates out and wholesales. He makes more whole selling then retail. But he is on a busy highway with a large store.
You also need lots of cash when the V75 gold came out he was able to get 3 and another 4 came in, that was $50k he needed right there. Yes he wholesales the stuff but payment takes time.
And the vast majority coming in is constitutional silver coins. Sometimes he takes stuff he know he can’t make money to get the good stuff.
What to do with the bad stuff (common poor condition coins and currency), sometimes you give it as change. Lots of people are happy to get circulated silver certificates, red seals, state quarter and dollar coins.
Can you lose money on some sales to get items you can make money on?
Do you have wholesellers that will take your thousands of wheat cents, us commemoratives?
What’s your plan to get rid of the low grade/low value stuff?
Many questions.
My current registry sets:
20th Century Type Set
Virtual DANSCO 7070
Slabbed IHC set - Missing the Anacs Slabbed coins
Would much prefer to deal in certified coins in uncirculated condition. Do not think I will ever try to open a storefront as it really makes no sense for what I would like to do. After many replies and a lot of consideration I feel the best way to proceed initially is the vest pocket thing. Although not sure when I will try it.
In any case I will continue to collect acquiring things I find interesting and attractive for a wide variety of reasons. I have quite a few recent purchases that I am very happy with. I will post some over the next couple weeks. The 1895 post I have is one of those recent purchases.
Thanks to all for the awesome discussion and please keep posting if you would like. I really enjoy the back and forth!