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Are there just too many dealers today and have prices suffered as a result??
keets
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It seems that there has always been two basic types of dealers. The core group that derives their primary/total income as retail Coin Dealers, have a storefront of some type, set-up at shows and sell via publications. The second group has always been serious dealers who mainly operated out of there homes and ran the weekend show circuit while they held down a "regular" job. Now we seem to have been afflicted with a third type of dealer who neither has a storefront or does shows, but instead works from some location via the internet while another group of wannabe dealers tries to enter the local smaller show circuit to take advantage of the growing market.
It can be humorous at times to walk the floor at local shows with 30-50 tables. Sometimes the impression I get is that some of the "dealers" have simply plopped down their table fee and hauled out the collection for a Sunday afternoon. It happens similarly at local clubs where some of the more enterprising members will arrive early and grab a table for their folders, flips "coin wallets" in hopes of turning a few dollars.
Recently another member remarked that it takes 3-4 transaction for a fresh, new coin to find a home in a collection. That seems to bear itself out in some of what I see with the third group I mentioned above, not so much because they're buying, just due to their mere existence. Increased competition from below for nicer coins gets added to a greater proliferation of "Weekend Warriors" as the primary causes I see for the steeper than usual increases we're seeing. The funny thing is that I don't see the core group of dealers that the hobby needs to survive on the increase, that being dealers that derive their primary income from the hobby and have a storefront.
Here's an example of what routinely transpires around my neck-'o-the-woods and probably around the country: One of the larger dealers in the area, we'll call him Bill, also happens to be the only guy with a shop in the county. Everyone knows who is and where he's at, so his business is steady. He does wholesale/retail/mailbid/auctions/shows/clubs and is pretty well rounded. Another local guy, we'll call him George, is a business owner who regularly does shows and will set-up at Baltimore, FUN and other large regional events. George visits Bill weekly and will spend a tidy sum on material bought from locals and whatever walks into the shop, all stuff bought at a discount from mainly average collectors or other dealers. That's mark-up #1. George now goes to a Sunday show---ironically sometimes with Bill!!!---where he gets picked over before the doors open for the public. That's mark-up #2. Finally the coin gets sold to a collector as mark-up #3 and the cycle is complete!!
This doesn't just happen with junk coins, either. I've seen nice material float around in this fashion. The kicker is that Bill sometimes winds up with the same stuff he's sold years before. He brought a coin to a club meeting a couple of months ago that was still in the 2X2 as he'd sold it about 5 years earlier, complete with his writing!! Now that was funny.
My point to all this, cause there's always a point, is simple. My perception is that increased competition from dealers is affecting prices perhaps more than competition from collectors. The show dealers and internet dealers are also, I believe, a good guage as to when prices are really starting to drop and not just sag slightly. They're probably the first to cut-and-run since they were the last to attempt a profit off the hobby. The die-hards and lifers will stick out the rough spots because the hobby is their life's blood. And when the cycle is complete, and Coin-a-lot returns to normal, these guys will still be with us. Oops, sorry Laura, these guys and gals will still be with us!!!
Al H.
It can be humorous at times to walk the floor at local shows with 30-50 tables. Sometimes the impression I get is that some of the "dealers" have simply plopped down their table fee and hauled out the collection for a Sunday afternoon. It happens similarly at local clubs where some of the more enterprising members will arrive early and grab a table for their folders, flips "coin wallets" in hopes of turning a few dollars.
Recently another member remarked that it takes 3-4 transaction for a fresh, new coin to find a home in a collection. That seems to bear itself out in some of what I see with the third group I mentioned above, not so much because they're buying, just due to their mere existence. Increased competition from below for nicer coins gets added to a greater proliferation of "Weekend Warriors" as the primary causes I see for the steeper than usual increases we're seeing. The funny thing is that I don't see the core group of dealers that the hobby needs to survive on the increase, that being dealers that derive their primary income from the hobby and have a storefront.
Here's an example of what routinely transpires around my neck-'o-the-woods and probably around the country: One of the larger dealers in the area, we'll call him Bill, also happens to be the only guy with a shop in the county. Everyone knows who is and where he's at, so his business is steady. He does wholesale/retail/mailbid/auctions/shows/clubs and is pretty well rounded. Another local guy, we'll call him George, is a business owner who regularly does shows and will set-up at Baltimore, FUN and other large regional events. George visits Bill weekly and will spend a tidy sum on material bought from locals and whatever walks into the shop, all stuff bought at a discount from mainly average collectors or other dealers. That's mark-up #1. George now goes to a Sunday show---ironically sometimes with Bill!!!---where he gets picked over before the doors open for the public. That's mark-up #2. Finally the coin gets sold to a collector as mark-up #3 and the cycle is complete!!
This doesn't just happen with junk coins, either. I've seen nice material float around in this fashion. The kicker is that Bill sometimes winds up with the same stuff he's sold years before. He brought a coin to a club meeting a couple of months ago that was still in the 2X2 as he'd sold it about 5 years earlier, complete with his writing!! Now that was funny.
My point to all this, cause there's always a point, is simple. My perception is that increased competition from dealers is affecting prices perhaps more than competition from collectors. The show dealers and internet dealers are also, I believe, a good guage as to when prices are really starting to drop and not just sag slightly. They're probably the first to cut-and-run since they were the last to attempt a profit off the hobby. The die-hards and lifers will stick out the rough spots because the hobby is their life's blood. And when the cycle is complete, and Coin-a-lot returns to normal, these guys will still be with us. Oops, sorry Laura, these guys and gals will still be with us!!!
Al H.
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Comments
When we are planning for posterity, we ought to remember that virtue is not hereditary.
Thomas Paine
A very high percentage of these third string dealers are retired from government jobs. As a result, they just tend to stick around in good times and bad because they always have the reliable pension and health care coverage.
Many of those in the Detroit market have been around for decades. While I have seen many of them at shows since the 70's I have never bought much from them. Apparently someone is buying from them.
Don't you just love capitalism?!
Smart collectors realize that they will have to pay strong prices to get really nice material. And there are a few street level stores, like JJ Teaparty in Boston, that provide that service. But they do charge strong prices, and I can tell you from experience that they pay strong prices for nice material. Ditto for the old Bowers and Merrna and the new Bowers company. I have not had much contact with the "new" Bowers company without Bowers.
Having a street level coin store is not all that it is cracked up to be. The overhead is high, and it's hard to make a go of it. In the old days (the 1960s & '70s) a lot of street level guys made a living by ripping the "little old ladies" who walked through the door with some coins. Today the supply of little old ladies with worthwhile coins is pretty thin.
The best dealers I have found are on the show circuit and often have "office" type shops that mostly cater to people who make an appointment to see them. They have their overhead costs under control and can often provide the best coins and service.
Now, what would have happened if instead A sold to C for $100, cutting out B? Answer: C would still sell it to D for $125 because HE CAN. His cost is irrelevant.
In other words, intermediaries don't affect market values. They provide liquidity and intelligence to the marketplace, speeding the pace at which coins find the highest buyers.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Tyler
This is a good one, and I also think you are right on many of these points. Here is my story to add to your speculation. I bid on a coin on ebay and win, but don’t break the reserve. When I contact the selling dealer, who turns out to be a long time heavy weight in CA, he says it has gone to another dealer. That’s no big deal, but what happens next relates to you post. He ask what I am interested in and starts sending me emails. I start looking at the coins, and several I have seen before on Heritage. I do a search and sure enough all of these coins have been passed from dealer to dealer. From Ebay dealers to Heritage auctions, to the CA. dealer then offered to collectors, except in the case of the coin that did not reach the reserve, which went to another dealer!
Absolutely, the dealers are a big part of moving the market in the very way you described.
This is one on my complaints about shows, why is it that every show has dealer day before the opening to the public?
Jerry
Few of the storefront operators play in the big leagues, and make serious money. There are some exceptions. Back in the 80s silver rush, Joel Rettew made a fortune out of a store front in Orange County CA buying and selling silver fron and to the public. Heck, at the peack of the Hunt brothers fiasco (don't misinterpret me, Bunker and Hurbert are fine folks) Joel had 'em lined up in front of his store and the fire marshals controlled the number of pepole who could be in the store at one time! But I degress.
Botom line, the market "is what it is" , and supply and demand are the driving forces, plain and simple!
I think the answer is: Like it or not, you always need to keep up with the technology. I feel bad for all the little store owners in local towns around the Country. It's the same old story, Mr. Peabody is a very nice old man and runs a very tight honest shop downtown. The problem is that he is, or will be shortly, he is going to be put out of business. Just like the little corner meat market 20 years ago. When the big Super Markets came into play.
One of the comment above hit the nail on the head. If I have a coin to sell, am I going to go to Mr. Peabody and sell it for $100? Then He can in turn around sell it for $125. OR in today's technology, am I just going to list it on Ebay and get $125 Myself.
I am affraid the answer is obvious. The little Mr. Peabody is eventually going to die off. Not, to say the fiesty little guy won't go done kicking and screaming.
My Ebay Sales
that's the main point i was hoping to make. i don't necessarily subscribe to Mr. Eureka's premise that the coin will be sold to a non-dealer at the highest price it could ever attain with each additional dealer add-on cost. the repeatred dealer transactions add cost to the coin, i've seen it happen too many times.
............an aside to GoldSaint---i actually did consider this line of thought late last night. the only thing is that it while at work, the 6 P.M to 6 A.M. shift!!
al h.