Dealers self proclaimed lack of supply! I'm not buying it

nugget369

I am getting a little tired of all the dealers complaining about a lack of coins. On a daily basis I've read quotes like " Lack of material slows Long Beach a little " or " It's getting harder and harder to find quality coins " or how about this one, again in reference to Long Beach " THERE WAS A SEVERE LACK OF FRESH COINS TO BUY " thanks for that LEGEND, but I am not buying any of it. The fact remains that THERE ARE nice coins out there for dealers to aquire.
The real problem is that the dealers are not willing to pay a fair price for the coins. I've carefully watched retail prices steadily rise over the last half year for common date 66 Saints. Some dealers now have them priced at $ 3,000 and above. DHRC currently has a 1927 for $ 3,195 yet their buy price is an austere $ 2,300. That's a whopping 39% markup. Most dealers claim that they operate on a much thinner profit margin, usually in the 7%-15% range??? In fact all the dealers are $ 2,300 or below. I do have a couple of nice 66 Saints (PCGS) which I am poised to sell, but certainly not at
these current low prices.
My advice to the dealers is to pay a fair price or stop complaining about a perceived lack of material.
You can't have it both ways. The nice coins ARE available, just reduce your level of greed and then watch you volume increase.

ksteelheader

Welcome to the board..........Ken

construct

I have also seen complaints about the lack of nice mid-grade circulated type coins for shop inventory. The market for such material seems to be pretty hot. The complaints haven't been only about special, cool coins.

MadMonk

It's been that bad for years in my neck of the wood. The same tired old junk, recirculated, super common, lacking eye appeal. I know exactly what Laura means. As for Dealers trying to spread thier buy/sell prices...
It's always been like that for a lot of dealers. Nothing new.

Fairlaneman

Have to agree that some Dealers just want it all. In the last couple of years I have responded to these "We want your Coins...Fair Prices Paid " statements that are seen on Web Sites. In both cases the coins I had were offered as partial payment for a upgrade coin from the Dealer. Sent the coins to the Dealer for thier inspection so this was not a Sight Unseen deal. My selling prices were inbetween Blue Sheet and Gray Sheet Bid prices. Well the old Email is received and in both instances the offers were under Blue Sheet prices. Guess the coins I had were just Junk. Needless to say I respectfully declined thier, IMO, very Greedy offer. Will add that the coins that were offered were not Common run of the mill stuff that would be sitting in thier inventory for a eternity. I was carefull with the selections just for this reason plus I really wanted thier coin.

A little side light to this is that the coins were taken to a Regional Coin Show and a Dealer was more than Happy to Receive the coins. I was not even buying anything from him, he just wanted coins and was willing to pay a Fair Price for them.

I guess the bottom line is that all Dealers are not paying paltry prices for coins and are square shooters. Problem is you have to go out and find these dealers.

Laura relax a little. You probably got singled out because you will come out and speak your mind and share your thoughts. You do not sit behind a False Facade and make statements that are not carried through with as stated.

Ken

BigD5

There's always demand for the material Laura mentioned. I agree with the comments concerning the Saints too. Certain coins aren't going to garner much dealer interest, if they know it's going to sit in inventory forever.
As far as a dealers profit margin, I bet at the end of the year, most dealers realize the 7%-15% figure.

Pushkin

I've got to agree with What's post. In my limited Indian Head cent experience I have some fantastic, tough date REDs, the dealers I've offered them too are making ridiculously low offers. They're expecting 30% markups or better. These are fantastic coins that will go on eBay or sit in the safe deposit box before I give them away. Nice Registry Set candidates - so, if this seems like dealer bashing, sorry - but they're not going to get this top quality material at 10% below Greysheet bid.

Obviously I can't accuse all dealers because I haven't talked to that many (and there are some great dealers out there- personally), but for a small sample - phooey on you - you want top quality material, loosen your purse strings a little and stop whining!

We'll see what happens in Baltimore.

jbsteven

I sold 2 coins to a national high profile dealer at Long Beach and see they have them on their website for roughly 25-30% of what they paid me for them. They did pay me higher than greysheet on the items. just offering my own experience.

I assume when some dealer offer waaaay low on a coin then they don't need/want it but if you do sell it then it is worth their while. There will always be someone to buy your coins at your right price if you look.

MadMonk

30% mark up is really not out of line. for years retailers of all sorts, groceries include, used a 30 to 33% markup. So if a coin dealer pays 1500.00 and sells for 1950.00, I'm not all that suprised. But, I do concede that the higher the prices, the more wiggle room they should have, and the more you should negotiate. Jewelers are WAY over that. I worked for a retail dept store (mens wear) when I was a kid. They paid 5.00, and sold for 10.00. 100% mark up, or 50% gross, depending on terminology used. So, that doesnt suprise me. When a coin dealer makes a regular practice of offering 30% back of bluesheet (sight unseen garbage prices) and tries to sell at retail, he is greedy. Also, at the risk of pissing somebody off, most collectors are very poor negotiators.

MacCoin

I don't think there is a lack of coins just a lack of coins in plasic. in Maine there is a lot of nice stuff in the shops and at shows just its hard to find anything in plasic. I tryed to sell pcgs coins at the coin shop and he said he didn't want any graded coins. maybe it because I had a gray sheet sticking out of my back pocket.

RKKay

I can't speak for dealers of regular issues, but even as hot as patterns are, I frequently see many of the hot R7s, even high R7s, whether it be from a dealer, auction or private party. If I get a good price, I pass it along and am 7% to 15% range. I also agree with the posts to the effect that, if you find the right dealers, they will work with you on the level.

Edited to add: Following up on MadMonk's comment, if you pay a 30% markup (or any markup for that matter) without attempting to negotiate, you are making a mistake.

MadMonk

<< <i>Edited to add: Following up on MadMonk's comment, if you pay a 30% markup (or any markup for that matter) attempting to negotiate, you are making a mistake. >>



What do you mean? I'm trying to say, the more the percieved mark-up, the more you should try to negotiate the price down. If I make 1.00 on a coin at 30% mark up so what, If I'm going to make $1500.00
on a coin, and I'm offered a price that is $1000.00 over what I payed, I'm still getting a chance to make a decent profit. It almost soounds like your saying not to negotiate, either selling or buying (sight seen, not an email done deal?

RKKay

That's what I'm saying, maybe in an inarticulate way (to negotiate). It's important to try to negotiate, especially if the buyer feels there is a large markup. When there is, it is often because the dealer assumes there will be negotiations. In no way am I implying a dealer should not get a decent profit.

Edited to add: No more done deals.

MadMonk

O.k., So I guess we are agreeing. Too many collectors give up after the first numbers. You have to try to read prople as well. How much is the dealer trying to compose himself after looking at your high grade 89cc morgan? Collectors usually have misplaced expectations when selling from thier collections. They are very likely to TRY and sell thier junk too high, and thier premium stuff too low.

RKKay

I think the most important thing to do, whether buying or selling, is research the market to the best of your ability. Knowledge goes a long way in negotiating...unless you have a done deal.

MadMonk

Yea that's for sure. It's a shame that a lot of YNs research books written by Market Makers. It's tricky footing doing research. determining market psychology, etc.. Where do they turn?

MrEureka

DHRC currently has a 1927 for $ 3,195 yet their buy price is an austere $ 2,300.

That could mean a lot of things. Most obviously, but unlikely, it could mean that those are his firm prices. More likely, both prices are negotiable. Also, keep in mind that if the $2300 bid is a sight-seen price, it could mean that you might have a hard time getting DHRC to pay even that much for another piece. (Not to worry, dealers are bidding at least $2100 sight unseen, so DHRC's $2300 bid sounds legit.) Things are rarely as simple as they appear.

As for the "lack of supply", yes, there are plenty of coins available if you don't mind paying a price above current market levels. It should always be understood that "lack of supply" is shorthand for "lack of supply at current levels", and it's usually indicative of an increasing market. Conversely, if there was an excess of supply (at current levels), you would expect the market to move lower. Pretty basic stuff, eh?

MadMonk

<< <i>...... As always, please feel free to call to talk about this or anything else. We look forward to hearing from you!" >>



Anything else???

Good post Mark. Well written.

njcoincrank

Interesting,

I sell many coins each month to the retailers. I get REAL money for those coins.

I also sell many coins to other wholesalers. For these coins I get much less. Sometimes less than Bluesheet.

I buy many coins each month. Sometimes I buy them super cheap because they are nothing special. ei: a correctly graded, but low end (MS64.1) coin with no exciting qualities about it.

Sometimes I buy coins for stupid prices ( please coinguy1 no comments on that), but guess what? THEY ARE THE FIRST ONES TO SELL!

EDUCATION, EDUCATION, EDUCATION, a little common sense, and market dynamics will go a long way in this business

njcoincrank

roadrunner

Current levels is the key. It's basically the level for the dealer to make a good profit at. If I show a very nice MS65 19th cent. silver type coin to several dealers the majority will want that coin at around CDN bid or lower. You will have to work at finding a buyer at above grey levels. Many will want to be between blue and grey.

We all want something for nothing and hence the drive to find PQ or upgradeable "fresh" coins popping on the bourse floor or appearing at auctions. Old holdered coins often meet this requirement and usually realize top or "nutty" prices. There is some safety in knowing you bought a nice coin, "probably" not screwed with to the max or resubmitted 4 times in the past 6 months, and potentially upgradeable. Of course solid or PQ coins in new holders do bring strong money at the sales too. Anything else seems to go begging.

The crazy action seems to occur primarily in the auctions. Put the same coin on the bourse floor and interest wanes rapidly. The thrill of competition and "winning" certainly does drive auctions.

RegistryCoin

Perhaps we need an auction forum for the dealers to bid on our stuff???

Pushkin

<< <i>Perhaps we need an auction forum for the dealers to bid on our stuff??? >>


That would sure separate the strong from the weak!

If I were a dealer I think I'd rather chew barbed wire while walking on ground glass than bid. Why, in such an auction forum the toughest flame suits would disintegrate into dust in a matter of minutes!