Is selling to a certain dealer (almost) as good as buying from him/her?

Longacre

Let me explain my question. Suppose, someone only collects a particular series (such as Morgan dollars), but he happens to have a $10 eagle that he wants to sell (in order to make more Morgan dollar purchases). He is friendly with Dealer #1, who only sells gold coins (and thus the Morgan dollar collector has never made a purchase from him). If he wants to "do some business" with his friend, Dealer #1, the gold coin dealer, should he sell the coin to him, even though both parties know that the Morgan dollar collector will never buy anything from Dealer #1 in the future?

The gist of my question is-- I assume that any dealer who purchases a coin can sell it for a profit (eventually), so a collector should not "feel bad" about selling to a particular dealer even though the chances of the collector ever buying from him are remote. Therefore, teh collector can give some income/profit to his friend, even though it's a sale to such friend.

Does this make sense? Any comments??

dthigpen

Why would anyone feel bad about selling coins to a dealer? Regardless if they were ever going to see, talk to, or deal with that dealer again?

RYK

It does make some sense, but it is a difficult point to articulate. I will assume that the eagle is a better date gold eagle for the purpose of discussion. If it is a generic, it probably matters a lot less.

My opinion (right, wrong, or otherwise) is that you probably get the most when you sell the coin to a dealer who makes a two-way market in the coin in question. Dealer #1, the friend, buys and sells gold eagles and is most likely to give you the most for the coin, friend or not.

If Dealer #2, the Morgan dealer, buys the coin, he may not know how much it is worth and may end up making a lower offer as a result. He might also be less comfortable with the coin as when he goes to wholesale the coin, he does not know how much he should get for it. If he is your regular dealer, he might feel obligated to buy the coin from you as a service, but if he is also your friend, he might advise you to sell the coin to Dealer #1, where you will likely get a better price.

A good dealer will become a good friend over time and will help you make decisions that are in your best interest, even when he or she may have nothing (immediately) to gain. Similarly, once this relationship is established, you will want to give the good dealer your business (and referrals) because it is comfortable and natural to do so.

RYK

Okay, I missed the point of the question. For a market maker, a buy can be as good as a sale.

beartracks42

I with RYK. I have one dealer who is perfectly described by your Dealer#2. He sells me coins, buys my coins and gives me very good advice on coins that he either does not handle or prefers not to quote a price. He will point me towards another dealer and tell me to come back, if I do not make a satisfactory deal. I consider him a friend and my prefered dealer, even though we live 100+ miles apart.




Edit for spelling.

michael

ttt

nederveit

To gauge how "bad" you should feel, why not let Dealer #2 make an offer on the gold coin first?

You could offer it to Dealer #1 at that same price, because Dealer #2 offered that much.

Then you can tell Dealer #1 you need that much, and if he wants to pass, no problem because you have a standing offer?

jdsinva

My thinking is if one were planning to dispose of the gold coin in order to facilitate the purchase of Morgan dollars, why not approach dealer #2 (the Morgan dealer) to see what kind of trade could be made. Selling a coin to a dealer might not realize as much of the coin's value as a trade might. . .i.e. selling a $100 coin to a dealer might get you $60-$70 whereas trading the $100 coin towards other coins in their stock might allow $80-$90 credit towards the new "purchase".

Jeff