What impact would this have on the Market?
tradedollarnut
Posts: 20,162 ✭✭✭✭✭
An interesting assertion was made in another thread that the PNG has a rule that its member dealers provide a full refund upon demand for sight seen certified coins sold to the public for a full two weeks. If this were true [and I still don't believe it is], what impact would this have on an orderly marketplace?
In other words, wouldn't dealers have to wait two weeks before they bought replacement coins for inventory to find out if the coin was going to stick - despite the 'in person' sale? In fact, just to be safe, wouldn't they need to wait even a bit longer just to be sure it wasn't plopped into the mail back to them? Would the coin market grind to a halt? Or would everybody just quit PNG?
In other words, wouldn't dealers have to wait two weeks before they bought replacement coins for inventory to find out if the coin was going to stick - despite the 'in person' sale? In fact, just to be safe, wouldn't they need to wait even a bit longer just to be sure it wasn't plopped into the mail back to them? Would the coin market grind to a halt? Or would everybody just quit PNG?
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Imagine if we all had 2 weeks before each and every transaction became final. Who do you think will bear the burden of that extra time to carry the money while it is in limbo? The banks? No. The dealers? No. Certainly, the burden gets passed onto the consumer. It happens in every industry that the consumer gets to carry this type of burden. This may get reflected directly in the list price of items/service, or you find it hidden somewhere with inferior supplies, parts, customer service, etc.
Somewhere, somehow, there will be an impact. And, the consumer always seems to suffer. Oftentimes, the consumer can smile knowing that many vendors suffer right along with him.
EVP
[Edited to add that I am NOT an expert on pawn shops, nor am I a business owner. Please don't take what I wrote as definitive.]
How does one get a hater to stop hating?
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If the purchaser exercises this right more than once (or too frequently) for the dealer's taste, the dealer has the right to refuse doing future business with that specific buyer.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
What would happen to the dealers if the market started to fall? In 2 weeks, the market can fall quite a bit. Think of how badly a market can fall during, say, a major show. Isn't that what happened in 89-90? Go to a show, and things didn't seem too bad. During the show, panic spread and inventory values dropped. What do you think will happen if the retail buyers decided that Monday morning after the show that their inventory was worth MORE to them if they asked for a refund?
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
If people had 2 weeks to return coins, they might buy them on speculation knowing that if they couldn't make a profit they could return them. Then if things slowed, a wave of returns would hit the dealers. They'd be forced to liquidate a huge amount of coins to honor the returns, impacting the market even further and precipitating another wave of returns. And so on.
No orderly marketplace can afford to have this policy.
i have a better idea, png members can start guaranteeing to buy back any coin at 100% lifetime guarantee. after all, they would only sell quality coins at fair prices, right? & coins only go up in value, do'nt they?
K S
in Ohio the law is 15 days for Pawn Shops and it's really quite a sensible law which might bear some relation to the supposed PNG rule. it's intent is to discourage theft and a quick pawn, it at least gives the authorities a few days to check around.
looking at it from the coin perspective, imagine that a seller arrives at a show on Sunday---because he's done his homework---and makes a quick sale..................
al h.
In a normal market, the rate of returns should be much less than the dealer’s normal rate of returns on coins sold sight unseen. Most collectors, given a few days to mull over the coin, will decide to keep it or send it back within the first few days. Since we are talking about sight seen purchases, the rate of return will be lower since most buyers will have made up their minds firmly before parting with their cash at the bourse table.
The dealer would still be able to decline to sell to collectors who have high rates of return, or they might sell to those customers at higher prices to compensate for the risk. The collectors who are chronic returners will soon wear out their welcome in the business.
And remember, we are talking only about sales to collectors, not sales between dealers where the “done deal” rules would still apply. Since a large portion of many dealers sales are inter-dealer, a large portion of the total sales done at a show would not be affected.
In a market meltdown situation, yes the dealer would have exposure on all sales within the preceding 14 days. Yes it would be exacerbate a bad situation. But in a true meltdown market many dealers’ businesses will fail as the collectors and other dealers sit on their money watching while inventory prices plummet, until some level of equilibrium is attained. Again, the meltdown market is an aberration, one that has happened in the past and could happen again, but it is not the norm.
CG
I also agree with Stuart, this would only affect a very small percent of purchases under normal conditions. The '89 crash did not affect circulated collector coins.
However, I can understand how a dealer in high-end grade rarities would be very nervous as the return policy would force the burden of the risk with the dealer in a market downturn. Kinda like mutual fund redemtions back in the '87 crash.
The PNG and ANA rules should be clarified for sight-seen purchases. If caveat emptor is the way business should be conducted, with market risk shifted to the collector, then their "rules" should state this.
Louis
Real collectors will not return coins, if they "think" the market is going down.
To prove my point, how many real collectors will return a coin, because of price, rather than quality?
I do not want to stick anyone with a coin that they do not want. They can have buyers remorse, or whatever.
The very best dealers will accept coins back from any of their customers, within a reasonable amount of time.
Remember that numismatics is a hobby. No one has to collect coins.
I choose to make the collectors as comfortable as possible.
I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
eBaystore
<< <i>sounds to me like the png is pretty far back if they're demanding a (gasp) whole 2 week notice. aren't quite a few dealers offering a month or more? >>
Please provide me a list of all dealers who provide a month return privilege. I'd also a list of all generic gold coins they have for sale. I have $100,000 ready to buy with today. Actually I just need one name now and I will need another name a month from now.
however if you find some with
<< <i> png members can start guaranteeing to buy back any coin at 100% lifetime guarantee >>
I might be able to come up with some more money.
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EVP: Everyone is subject to market risk in a rapid downturn -- collector and dealer. It's up to you as a dealer to properly manage your business, the way that I manage risk in my International Sales (day) job (not coin related).
You may choose to run your business the way you want to. If you are a dealer member of ANA and/or PNG, you may have certain guidelines that you agree to operate under. It's your voluntary choice if you want to continue to be a dealer member of those trade associations.
I suggest that you clearly inform purchasers of your coins what your sales and return policies are prior to closing the transaction. If your policies are clearly understood, then there should be no after sales surprises.
I personally agree with Julian's sales philosophy, and would prefer to purchase coins from a dealer who would offer a solid return policy if the purchaser gets a case of "buyers remorse" -- as I previously mentioned you can choose whom to do business with and whom not to do business with.
You may be able to make a solid living selling coins without sight seen return policies. You also may find out that you could lose some potential return customers by not offering such a policy.
I think that you are making a bigger deal of this than it warrants... and that this hypothetical case is being inflated way out of proportion to reality... (Just my opinion...
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
TDN is absolutely correct in thinking that this "rule" if implemented would destroy the coin market. Not all dealers can keep the money from a sale for two weeks before needing it to buy more inventory.
However....some dealers....and we know who they are....sell coins for retail PLUS (the plus being the imprimatur of the coin being on an invoice from....T-H-E-M !! Ta-daaaaa!
As far as coin or pawn in California, COIN purchases (not identifiable jewelry) are EXEMPT from any holding period specifically because CLSDA demonstrated the chaos that would erupt if coins or bullion had to have a "holding period."
But the length of time .....a l l o w e d.........would depend a great deal on how much "prestige" the buyer paid for. In my opinion.
THEN they come back and say you should be able to buy something and return it for the same price 30 days later.
Gimme a &*%#*^ break!!!!
Try walking up to any stock broker and and "undoing" a deal you did 30 days ago.
Good grief.
Stuart,
I think just about 100% of the full-time dealers would NOT want the coin/collectibles industry regulated the same way as the securities industry. The differences are too numerous to name.
Besides, this isn't a simple issue of market risk. Everyone has to deal with that. The issue is how a certain particular hypothetical regulation might affect the industry and, perhaps, our way of managing market risk.
IMO, the collectors who want this regulation will simply end up bearing the burden of how the dealers will manage the risk. The dealers, being regular people, will adjust to the situation by passing -- somehow -- to the consumer. The cost of carrying the extra funds will simply get passed on to the buying public. This isn't the same as where there are only a few select inter-broker dealers of US Govt securities, and all the other boutiques struggle to compete. In this case, this hypothetical regulation applies to the entire industry en masse. And, the members within the industry will find their own competitive ways of passing the cost onto the consumer.
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
I don't wish to hijack this thread with talk about how the securities industry work, but this comment is too simplified...
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
Craig,
My take on this thread is that it's more about how to regulate (or, settle transactions in the legal arena in) this industry than it is about ethics, morals or other forms or professional and humanistic ideals -- however important they may be.
To me, this thread is an intellectual exercise in the business ramifications of a hypothetical regulation.
I say this not to imply that your take is any less correct or worthy than any other take. Rather, I mean to say that just because someone is debating the issues based on my take does not imply that the same person is advocating any unethical or immoral conduct.
In the end, I would like to add that in any successful free-market system, the end result is always dictated by greed and the almighty dollar. During the Cold War, our industries proved better than the Soviets because our greed pushed us collectively to produce more and better than the Soviets.
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
To put it simply this is about a client/dealer relationship, and under what terms you (the dealer) choose to conduct business. It is also about consumer (client) choice of whom we prefer to do business with. There are a lot of coin dealers out there competing to make sales to collectors.
I personally will pay a bit more to do business with someone whom I trust, with flexible terms, and whose coins I know are typically high quality for the price and grade.
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
First of all, these policies would have little impact on the market. Yeh, dealers may have to put a few dollars aside to cover returns. Show me another business that doesn't have to tie up capital to protect cash flow and I will cry a few tears here for the dealers.
Second, we are not talking about government regulations here. We are talking about industry organizations that are trying to bring some standards to an industry running rampant in fraud. This is a simple matter of choice for the dealers. If you don't want to operate within the standards set by PNG and/or ANA, then don't be a member.
Come on here. Whats the big deal. Honor the returns that your member organizations require. If a customer returns a coin for the wrong reason its no big deal. Once again you are in control of the future situation. It again is a matter of choice by simply refusing to sell to him in the future.
My point is, that just because a coin is returned, does not mean it isn't nice for the grade or priced fairly. Conversely, just because a buyer doesn't exercise a return privilege (whatever its length), doesn't mean he's not burying himself. You need only view the wonderful feedback of some Ebay sellers who are burying unsuspecting buyers in all types of horrible deals.
So I guess I'm saying that a 3-day return privilege sight seen or otherwise would be more than fair, unless prior arrangements were made.
I've probably sold over 300-350 Morgan dollars on the BST forum here since 2001, and I've had 4 or 5 coins returned to me, and 2 of them were raw coins and subsequently graded a point higher at PCGS than my raw grading. I've never considered returns much of an issue, but I'm definately not a dealer either.
dragon
Well, then, this has evolved from the point that I think TDN was trying to make: someone abusing the concept of the return priv., and if a return priv. covers show purchases as an industry-wide practice.
It isn't about return privs in general... Of course, no one will disagree with the notion that returns are very important. I thought the original debate was whether the person was being a jerk, and whether returns are available in the narrow circumstance of a show purchase as an industry-wide practice.
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
John Maben
PNG 363
John Maben
Pegasus Coin and Jewelry (Brick and Mortar)
ANA LM, PNG, APMD, FUN, Etc
800-381-2646
If you feel the need to have a return privilege when buying a coin sight seen, simply ask for it - it may be immediately granted. But don't assume....
<< <i>I believe that John has it right - no return period mandated for sight seen certified coins. I also believe that PNG will never change that to require a return period for a sight seen certified coin. It simply isn't necessary to do so. In fact, it would be detrimental to the marketplace in general to do so [Julian's arguments notwithstanding]. If you feel the need to have a return privilege when buying a coin sight seen, simply ask for it - it may be immediately granted. But don't assume.... >>
I do not believe the fact that "it would be detrimental to the marketplace in general". has been established.
JohnMaben states "I believe the mandatory return was intended for raw coins as it was in existence before certification came along." So why was it not detrimental to the market at that time?
What is a Fact: every dealer at the ANA signed the Dealer Application with this stated directly above the signature box in bold type.
"The undersigned, in submitting this application, acknowledges receipt from ANA of copies of all bourse rules and requirements and the ANA Dealers Code of Ethics, and hereby agrees to comply with all of the provisions thereof."
Here is the Application. see page two.
Code of Ethics is included on last page of application stating required return priviledges.
"Done Deal" is not the rule. At least at the ANA convention.
So why was it not detrimental to the market at that time?
The size of the market has increased dramatically since the days of yore. And thus the impact has as well.
Fatman: So why was it not detrimental to the market at that time?
Before certification, there was no independent third party opinion, thus the potential for over grading was far greater.
As for the ANA, I believe though not stated, this too is inteneded for raw coins as it specifically mentions the provisions if the coin is submitted to a grading service.
TDN is on the mark. If you need a return option beyond what a dealer offers, ask. If he says no you then must decide if you want to buy the coin anyway or go somewhere else.
The coin business/hobby really isn't a retail industry like Wal-mart or Macy's and due to the nature of the product you can't hold the dealers to those standards of return periods. The margins are thinner, the prices fluctuate, and the dealer has no supplier to return the item to himself.
John
John Maben
Pegasus Coin and Jewelry (Brick and Mortar)
ANA LM, PNG, APMD, FUN, Etc
800-381-2646
Craig, that's a funny statement considering the issue at hand is returning a coin sold sight seen simply because you change your mind and want out of the deal. And what's with all the vitriol about collectors getting screwed? Buying a nice coin at a decent price and then being told 'no, all sight seen sales are final' several days later is not getting screwed.
I personally believe that John is correct again in that the ANA rules apply to mail order or raw coins only. No organization is going to mandate a return policy for sight seen certified coins bought at coin shows. It simply is NOT in the best interests of the hobby for this to occur. The financial ramifications to the industry far outweigh the occasional valid concerns of the collector - most of those are handled appropriately anyway. And simply "changing your mind" is not a valid concern!
Certainly, it is an issue that is between the dealer and the customer. If you have any doubts at all about the coin you are purchasing, then simply ask for the return privilege. Is that so difficult?
BTW - the point of these threads [yes, there is one] is that it's obvious there are different attitudes prevalent in the industry regarding the ability to return coins. I'm preaching "when in doubt, ask".
Nope. Two totally separate orgs that occassionally are at odds with each other.
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
Fair question.
Craig, why are you so passionate with your posts on this matter? If you look at this objectively, you'll notice two things: this is merely a discussion thread, and a goodly percentage of the respondents disagree with you.
In other words, this is merely a discussion about an issue over which the industry has very mixed opinions.
EVP
How does one get a hater to stop hating?
I can be reached at evillageprowler@gmail.com
To have 2 weeks to decide if you wish to keep a SIGHT SEEN coin is a ridiculous benefit for the buyer, and negative for the dealer. TDN is exactly correct. Ask if you are unsure of your purchase for flexible terms, or if you are not sure, DONT BUY IT. I really dont even know why this needs to be addressed. It wouldnt be fair to a dearler, for you to DICTATE the market in 2-4 weeks, then stiff the dealer just because you feel the market is going down, or you just dont want it anymore.
Each party is entitled to be able to rely on that knowledge, as it can affect their subsequent actions in a myriad of ways.
I can only speak for Pinnacle, but I suspect our overriding "company policy" is shared by nearly every other successful dealer who wants to stay in the rare coin business for the long term. In simplest terms:
We just try to do the right thing . . . . every time.
Naturally, we clearly state some Terms of Sale on our invoices, etc. But there are exceptions (some more legitimate than others) that we feel requires special consideration and my firm makes every effort to make a reasonable customer happy.
Further, we believe the numismatic community is predominantly composed of good people. We believe 99.9% of our customers would NEVER intentionally do something dishonest to us. Through the 17+ years I've been trading, I can only think of a couple instances where I feel a customer really put the screws to us with less than honorable intentions.
Partner / Executive VP
Heritage Auctions
Excellent response...and exactly what I would have expected.
I personally think hard before returning a coin. I think I understand the economics involved and prefer that no one gets stuck holding the bag. I especially do not want someone to take a hit because I was wishy-washy, impulsive, or downright ignorant.
A recent example from my own experience:
A brought a half-dime that I purchased from Pinnacle several months ago. It turns out that, while the coin is very nice, it does not fit in with what I am presently trying to do. Clearly, my mistake. At the ANA, I showed the coin to Doug Winter and asked them what he recommend that I do. He said he would buy it back for what I paid for it. To me, that did not seem exactly fair (to him), so I instead suggested that we apply it toward a more expensive future purchase, which seemed more reasonable. If he had told me he would buy it back for 15-20% less than I paid for it (cash), that would have been reasonable. If he had told me to sell it elsewhere, I would have been a bit disappointed but totally understanding.
...my firm makes every effort to make a reasonable customer happy.
Bottom line is that is probably a good policy.
<< <i>An interesting assertion was made in another thread that the PNG has a rule that its member dealers provide a full refund upon demand for sight seen certified coins sold to the public for a full two weeks. If this were true [and I still don't believe it is], what impact would this have on an orderly marketplace?
It would resemble a sweater or other type of dry goods/etc marketplace like Sears.
Fortunately the PNG's relevance to the coin business is so minute it doesn't matter one way or the other. But if some weird government type intervention were to occur requiring dealers to treat coin sales as though they were a pair of socks, then premiums would reflect that and the really good stuff would hide into even smaller circles than they are now.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I respectfully disagree Tom. I won't turn the subject of this thread into a PNG issue, but suffice to say that PNG is a group that includes our industry's most respected dealers and a lot of great discussions and policies emerge from this group that positively affect the numismatic community.
Partner / Executive VP
Heritage Auctions