Observations from a Dealer Wannabe

Prethen

I'm one of those poor SOB's that's seriously considering jumping into coin dealing waters, albeit part time (I'll keep my full time job). I've been on the fence with this one for awhile and I'm actually starting to lean away from doing it.

First off, to those of you who would say "Hey, if you wanted to be a dealer, you'd already be doing it and not talking about it, so shut up." Yes, I've heard that opinion espoused and a disagree entirely. I guess there are some dealers out there who are fortunate enough to be born into the dealer's circle with 10's of thousands of dollars of inventory and have the innate business sense to make a go at it. I'm not one of 'em and I admit I have some learning to do. So, I did the one thing that seems to make sense: I volunteered to work a coin dealer's table at a local coin show. Actually, I've volunteered for two shows and I might do more. Some of my observations follow.

You might ask, "Why the heck do you want to be a dealer?" That's a great question and I'm not entirely sure of the answer. I can say that my passion for the hobby has been increasing practially logarithmically starting from about 18 months ago. I've been collecting off and on for 30 years. I want to be around people who love coins as much as I do; I want to learn more about how to fine-tune my numismatic skills that seems possible only when dealing with a large number of coins; and, I want to earn a few bucks at something I enjoy. I get a total thrill at being amongst coin show crowds and I thought it would be a natural fit to join the dealer's circles.

While working the dealer's table, I got some reality checks. My general observations are these:

Coin dealing is a business. The margins where money is usually made are not huge. This seems obvious and told over and over again, but it really hits you when you're observing the opposite side of the transactions.

There are plenty of risks in the business. It seems like every dealer can tell a story where they were ripped off by another dealer or the public. Plus, if you're not really up-to-snuff on grading and detecting problem coins, you can risk paying into a coin that you have to sell at a fraction of what you paid for it, if you can sell it at all.

Expenses. There are a ton of 'em and they have to be kept in mind when looking at your net income (see my first point)

Your either a Dealer or you're a Collector. This point kind of hurts, but I think it's actually true. You might have a small specialized collection you can work on, but the days of collecting different sets and/or hoarding are gone. Of course, if your a Collector, you would want to buy like a Dealer for your best value, but you have to remember you're in business. If you have a collection, that's potentially stock that can and should be turned. The one thing that seems tough for me to do is to switch out of Collector mentality into a Dealer. I have no idea how many times I saw coins pass in front of me that were well-priced and I thought that would be cool to have. The Dealer thinks: Who can I sell that coin to; how quickly can I sell it; and, how much profit can I make.

I have a list of very specific observations that I'm hesitant to list on a public board. I hesitate because I'm not entirely sure if what I'm learning while being on the Dealer's side of things is meant for public consumption. Don't get me wrong, I don't mean that there's anything illegal or really secret going on. However, I'm afraid (maybe I'm being naive) of offending Dealers that peruse this board if I happen to note something that might be considered as professionally sensitive or anti-competitive.

My next coin show that I'm going to volunteer to work with a Dealer is next Saturday. I'm looking forward to it. I'm sure I'll learn a bunch more.

kieferscoins

<< <i>I hesitate because I'm not entirely sure if what I'm learning while being on the Dealer's side of things is meant for public consumption. Don't get me wrong, I don't mean that there's anything illegal or really secret going on. >>



Post it.

Cameron Kiefer

RYK

Great points. I enjoyed reading your observations.

Now, out with the "secret handshake"!

kranky

Having worked a few shows with a dealer (not that I want to become one) I agree that it's an eye-opener. You can have some really nice coins priced right, and no one wants them. You can have some average looking stuff and people buy it up. I'm like you, though - I really like being at the shows and getting to meet people. It's also a big plus that the dealer who tolerates me (Pat Vetter) is a super guy and so is his partner (I mean, his wife ).

I can't think of anything you would have to shy away from posting about as long as you don't name names. I've posted plenty of things that I observed while working at a table. You have to decide for yourself if it's going to hurt your potential business, though.

Fairlaneman

<Your either a dealer or your a collector>. Lets just say I would love to have the collections of three dealers I know personally. Some dealers may consider a coin as just a hunk of metal others see it in a different light for sure. The hunk of metal sellers are probably the ones to stay away from.

Ken

Russ

<< <i>However, I'm afraid...of offending Dealers >>



Yes, this is also one of my big worries.

Russ, NCNE

Prethen

I can't tell you how many times I've said, "But, I can't part with and sell off coins from my personal collection" and have a dealer laugh at me and respond, "Yeah, I used to think that way, also." As some Dealers might say, "You no longer have a collection....you have inventory."

morgannut2

I have a simple question: In your short experience, do you think that the "real" money is made when the dealer buys

coins--especially from the publc--or when they retail coins on the floor. How about getting coins regraded for a fast profit?

And in dealer to dealer sales--was it significant volume wise?

Prethen

<< <i>I have a simple question: In your short experience, do you think that the "real" money is made when the dealer buys
coins--especially from the publc--or when they retail coins on the floor. How about getting coins regraded for a fast profit?
And in dealer to dealer sales--was it significant volume wise? >>



These are very good questions and ones that I tried to get a feel for myself.

As far as where the "real" money is made is a very difficult question to answer. I have to cop out and say it depends on the dealer and it changes from transaction to transaction. For instance, you can buy something from the public and end up reselling it for wholesale to another dealer at just a slight markup Or, you could buy something from another dealer at a price off the sheet or higher and have a retail buyer and make a similar profit. I guess you could say is the real money is to buy from the public at 10%-20% in back of Bid and sell the coin for full retail.

The whole thing about cracking coins out for regrade and getting the grade you want is still a mystery world for me. I'm not saying, I don't know how to crack out a coin a submit it. I just don't have that gut feel for when a coin looks like it could be upgraded. Plus, my luck, I'll crack open a slab, submit the coin, and get it back in a bodybag because of some "problem" or get it downgraded from Mint State to a circulated grade. But, with that in mind, here are my thoughts on that issue. If PCGS says they think at one time the coin is an MS65, but you think it has a shot at MS66 so you crack it out and resubmit it. If you get it back as MS66, you might have made a multiple of money back (on paper, initially). The fact remains, that a set of graders at one time thought the coin was a 65, now some other people think it's a 66...it's the same coin. The real question is, will it find a buyer as a 66 coin. I realize the answer is usually "Yes" and that the seller made a small killing. This is just yet another are I need to pay some attention to.

For your final question, generally the answer is "Yes", the volume is fairly significant. Does that mean they made a lot of money? Absolutely not. I've seen a pile of coins where one dealer bought from another who only made about a $20 profit (maybe a bit more). A different pile of coins for certain types of dealers will yield thousands of dollars profit, but they're also playing in a different ballpark when it comes to the type of coins they're selling (where each coin is in the thousands of dollars).

Prethen

One more thing I forgot to note.

Time.

Lots of time.

If I want to be a part-time dealer, I will have to dedicate a much greater portion of my "free time" to the hobby and the business. Not only is there a lot to learn, but there's inventory to buy; supplies to purchase and set up; inventory to grade, catalog, and price; shows to schedule, setup, and attend (anywhere between 1 day to 3 days long; bye-bye weekends); there might be security logistics of warehousing and transporting your inventory; and, the list goes on.

My wife has already begun to browbeat me about this. I have a 5 1/2 year old daughter. How much money can I make at this and is it really worth losing that family time? This is something that has made it to the top of things to think about. It's funny, but my wife would be thrilled if I really made a good little business out of it and she would be willing for me to sacrifice that family time. I've already told her, at first, I'm pretty much guaranteed to be behind the 8-ball and it would take a little while to get the business going. Other than that, there's no way I can honestly say, "Yeah, we'll make a ton of money at this!" <I can hear some of you laughing right now.>

PTVETTER

If you continue helping that dealer friend enough you will do one of two things become a dealer or stay a collector. If you enjoy being a collector and helping the dealer you will become a much better collector. when you become a dealer you still have to go thru the school of hard knocks I think all dealers go thru that and the better one are still in business.

What do I know I am just one of those wannabe dealers, but I still have my honor.

Let me see money or honor

I keep my honor and will try to work for the money

honor first last and always

lathmach

You just have a case of "going into business" jitters. If not coin dealing, any other type of business you were interested in, would give you the willies like you have about this.
I've been in business 29 years now, in a machine shop. I ran coin shows for about 12 years as a side line, and did a little dealing.
My advise to you is just start vest pocket dealing. Go thru the shows, try to find good values, and try reselling the coins.
Put an ad in the local paper that you're buying collections. Be careful here, though. You may get many more people wanting to sell stuff to you than you can afford to buy, so choose wisely what you spend your money on. It's gotta be stuff you can turn over fairly easily and quickly.
You'll find out pretty soon if this is really what you want to do with your life.

Ray

morgannut2

I wonder if a person really interested in starting in the business might get rid of the headaches partly if they formed an alliance with an honest pre-existing dealer. You could spend your time selectively buying top material to retail and wholesale off your mistakes, either at a show or auction. An increase in inventory by value/gross markup would help the dealer without costing much more as market entry costs are paid already. The problem is I don't know what a reasonable split would be per coin. It has to account for small losses too. Anyway, might free up family time. Obviously you'd need to find a dealer where you don't have to be concerned with accurate bookkeeping, etc.

Russ

<< <i>Put an ad in the local paper that you're buying collections. Be careful here, though. You may get many more people wanting to sell stuff to you than you can afford to buy >>



I'd love to have that problem. All I ever get are calls asking how much "silver" pennies are worth.

Russ, NCNE

au58

I worked as a full time coin dealer for about 2.5 years. I worked for coin shop. It was really a business within a business. The owner and I had a very solid arrangement.
In 2.5 years, I averaged about three shows a month, almost 75 shows in 2.5 years. These were usually regional shows of one or two days duration in and around the midwest. I usually worked by myself. All expenses (table, travel, food, and lodging) were paid by the shop owner. We split profits 50/50. I kept meticulous books.
Mondays and Tuesdays were ususally spent preparing inventory for the shop. Anything that went into inventory was transferred into the owner's account at cost. I held back anything I wanted to carry to the shows, often the higher end stuff.
Wednesdays and some Thursdays were spent making the circuit of shops to "blow out" the wholesale stuff.
I did not collect anything during this timeframe, but I did accumulate a hoard of about almost one hundred 1853 Arrows and Rays Seated Half Dollars (mostly Choice XF and AU). NOTE: This issue may be important as a type coin, but it is vastly overpriced.
I was lucky to take off Friday, often I was on travel to a Saturday show.
The money was very good, enough to consider going solo, especially since I was doing most of the grunt work. I always enjoyed the shows. I never complained. It is what I wanted to do.
But the hours were horrendous and I was thinking of asking my (now) wife to get married.
After taking another job, it was about 10 years before I looked seriously at coins again.
I still enjoy coins immensely, but I bust my a** doing something else and enjoy coins as a hobby.

Veep

My advice (for what its worth): You have a 5 1/2 year old daughter. At best you have 5-6 years before her parents aren't the center of her world. Don't short-change her, or yourself. You'll have plenty of time to dig deeper into coins later.

Father of three, ages 24, 18, 16 and now part-time dealer.

originalisbest

A lot of intelligent stuff to be seen in this thread - & nary a this-side-of-cussing, browbeating post to be seen.

Russ

Russ, NCNE

Prethen

I really appreciate everyone's comments on my thoughts and observations. I'm inclined to go along with what a number of you have mentioned which is to continue volunteering to work with a dealer at various shows and/or create some sort of partnership where I'll act as a journeyman of sorts with profit potential on inventory I bring in.

Lately I've been meeting and talking to a lot more cool dealers and collectors than sucky ones. And, I definitely don't want to be one of those sucky dealers (or collectors for that matter).

Bochiman

<< <i>

<< <i>Put an ad in the local paper that you're buying collections. Be careful here, though. You may get many more people wanting to sell stuff to you than you can afford to buy >>



I'd love to have that problem. All I ever get are calls asking how much "silver" pennies are worth.

Russ, NCNE >>




Yeah, and I still haven't found that cliff you keep telling me to jump off of when I call you

poptopsRus

As a full time dealer, I found I had to open a retail shop to keep enough inventory coming in. For you and your family I would suggest making a deal with a dealer that wouldn't mind giving you a little table space at shows - maybe a case or something. Where in trade for the table space you would also sell his coins. This enables you to sell some of you stuff and he gets help at the table. There is much to be learned just doing this and you will also get buys at the table as well.

There is much to learn as far as what sells easily and what doesn't that you'll never get from the greysheet, you just have to be there to learn. You'll also be able to make contacts with other dealers which is very important in the industry.

Oak

The daughter/father relationship will be the most important relationship of a daughter's life, it will set the stage for the men she later dates.

Spend the time with her.

What states in midwest do you hit?

Bustman

As I professional photographer now for nearly 12 years ( shamelss plug for my web site HERE), I can tell you that it will likely not be as enjoyable a hobby to you as it once was, should you take on numismatics as your profession. While I absolutely enjoy what I do for a living, I rarely take photographs anymore just for the love of the hobby.

Prethen

<< <i>The daughter/father relationship will be the most important relationship of a daughter's life, it will set the stage for the men she later dates.

Spend the time with her.

What states in midwest do you hit? >>



I live in the Denver area and I stick to the Colorado shows like Longmont, Denver, Aurora, Castle Rock, and Colorado Springs.

I agree that I don't want to eat up the rest of my free time away from my family to make a few extra bucks. That doesn't make any sense. I'll try to find a happy medium.

Bustman, I'm very much afraid of losing the passion for the hobby by turning it into a business. It's something very much on the forefront of my thoughts.