Where do Dealers get $

Touchdown

I have seen many dealers with large inventory's. Sometimes over a million dollars. Are the majority of big dealers financed by someone else or do they really have that much money?

pharmer

I always assumed they borrowed money for their inventories. I'm often wrong about stuff though

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classiccoin

youd be surprised just how much you can make ripping coins off the general public

WTCG

Many coin dealers, just like business tycoons in other industries, have multiple sources of income. Many dealers own other businesses, and even more are big players in real estate.

Borrowing money to buy coins can be financially dangerous. I myself have never borrowed money to buy coins ever.

BlindedByEgo

I think most of them stole from my family trust

WTCG

<< <i>youd be surprised just how much you can make ripping coins off the general public >>



Ripping coins off the general public can only earn you a few month's wages. Ripping the public will never earn you enough money to retire and die rich. I have access to firsthand accounts to dealer rip stories, and almost never can the additional profits from dishonesty cover more than a few month's operating costs.

classiccoin

"I have access to firsthand accounts to dealer rip stories"

you have only heard the stories that even the scumbags will admit to.. ive seen dealers buy homes on some of the rips theyve made from the general public.. er sucker

ever see an original ms roll of barber quarters get sold for a tad over melt.. how about a killer unc 1884-s morgan for common date price.. theres a million stories in the naked city young man

markglicker

I just hit the ATM.

Blackhawk

<< <i>youd be surprised just how much you can make ripping coins off the general public >>

My exposure to an admitedly small sample of dealers proved to me that this goes on much more than would be imagined by some collectors or admitted to by some in the brotherhood of dealers.

jdcheers

I would guess some dealers made their fortune in other business ventures and turned into a coin dealer later in life, some may have come from rich families, some may have just got "lucky" and cashed in on a couple of fortunate breaks, and others may have just figured out the coin business and are good at what they do. However, most dealers are inventory rich and cash poor. It may seem like they have a lot of inventory, and in fact many do, but it is very common for those same companies to ask another for "terms" when making a purchase. Usually that means holding their check for 30 days etc.

RYK

Where do Dealers get $?

From me.

CarlWohlforth

Welcome jdcheers!

<However, most dealers are inventory rich and cash poor. It may seem like they have a lot of inventory, and in fact many do, but it is very common for those same companies to ask another for "terms" when making a purchase. Usually that means holding their check for 30 days etc.>

It seems you have some awareness of the industry.

Personally I was lucky enough to buy tons of coins with excess cash during the internet stock market bubble of 2000. This financed my part time business. If I can make a few bucks on each coin on average I make money. My inventory can be less than it was in 2001 and it still adds up to something.

jdcheers

Thanks for the welcome! This is a happening place. I have some awareness of the industry, but apparently not enough to know that all this comradeship was going on at collectors.com without me .

Russ

<< <i>Where do Dealers get $ >>



I wish I knew. I'd be grabbing some for myself.

Russ, NCNE

majorbigtime

<< <i>

<< <i>Where do Dealers get $ >>



I wish I knew. I'd be grabbing some for myself.

Russ, NCNE >>



Maybe they get it from their AHs!

Russ

Good evening, Fat Boy.

Russ, NCNE

WTCG

<< <i>"I have access to firsthand accounts to dealer rip stories"

you have only heard the stories that even the scumbags will admit to.. ive seen dealers buy homes on some of the rips theyve made from the general public.. er sucker

ever see an original ms roll of barber quarters get sold for a tad over melt.. how about a killer unc 1884-s morgan for common date price.. theres a million stories in the naked city young man >>



classiccoin, or should I say...old man

The dealers who are probable "scumbags" will often exaggerate their stories in order to brag to their colleagues. The 1884-S in UNC...even if you pay melt prices for one it won't make you enough money to buy a house. It's known that coin dealers often "pump up" their moneymaking stories...it's their way of one-upmanship. I attend many coin shows per year and I know virtually every dealer on the convention circuit. I have heard my share of rip stories.

Have you heard the story about that one dealer who convinced an older woman that it was illegal to own coins made of silver? Form your own ending to that tale.

Don't think that the only way to get rich in dealing in coins is to be dishonest. There are far more dealers who have earned their money by being honest than those who did by not being honest.

roadrunner

Ripping the public will never earn you enough money to retire and die rich. I have access to firsthand accounts to dealer rip stories, and almost never can the additional profits from dishonesty cover more than a few month's operating costs.

I must be in a different hobby. Some of the biggest and most lucrative dealerships working today got there by ripping the public new arses in the 70's, 80's or early 90's. Only slabdom has brought them somewhat under control. Brick and mortar dealers routinely need to buy big rips to pay the overhead. And by that I mean 35 cents on the dollar or less for big time coins (like hi-reliefs or proof gold for example). Don't kid yourself on the altruism of larger or long time dealers. It's one reason why my list of "good" dealers is relatively small.

roadrunner

Mercury

Well, I know for a fact that the very first dealer I ever came across made around $10 grand off my stupidy. With that said, I do not blame the dealer for my ignorance, However, I will never deal with him again. It is a shame since he one of only a handful of dealers in New Orleans.

Mercury

kranky

Here's a story I've told before. I was helping a dealer at a local show, when an elderly guy came up and started chatting. He told me he was a retired local dealer and he assumed I was a dealer also since I was behind a table. Turns out I had been in his shop many times as a kid. He went on to relate these stories to me...

"I was successful because I knew how to buy coins. I made the shop owners rich. That's where the money is - in the buying. You know you can't pay top dollar and charge the lowest prices in town. No one can make it that way. I knew how to buy. A lady came in one day and said, 'I have a coin but I don't want to sell it.' I said, 'Then how can I help you?' She said she wanted to trade it for silver dollars. You might not believe it, but she was holding a nice 1878-CC five. I asked her what she wanted to trade for, and she said she wanted eight silver dollars. I told her she could pick any eight from my case she wanted. Then I called one of the shop's owners and told him to come down to the shop right away. I gave him the five so he didn't have to share it with his partners and I never even wrote it up. I didn't like the other partners anyway. I think he sold it for ten grand.

"And see this ring? (It had a $5 Indian.) One time I was at a show where I didn't have a table when another dealer asked me to work his table while he went to lunch. While I was covering for him a guy came up and pulled out two big handfuls of loose gold coins to sell - two and a halfs, fives, eagles and double eagles. I was good at sizing people up. I could tell what they would accept right away. The guy was with his girlfriend and they didn't look like they knew much about coins. The girlfriend looked nervous and I figured the coins were stolen. So I offered him double face for the whole pile. He said, 'Hey, these are gold, aren't they?' And I said, 'Yes, but they aren't worth much. You could take them to someone else, but I pay cash and don't require any identification.' See, I wanted him to think other people would make the deal complicated. I knew the girlfriend would push him to take the money and sure enough she told him to just take the money so they could go. So when the other dealer came back I showed him what I bought and when I told him I only paid double face, he gave me this five and I had a ring made out of it."

Longacre

Spreads of 5-15% (or more) can be pretty profitable, especially for higher end dealers.

nwcs

Well, let's not forget that the dealer doesn't necessarily own every coin in their inventory. Some of the items could be consignments.

Outhaul

Oh goody...someone asks a simple question and it tuns into yet ANOTHER dealer-bashing thread; how exciting and productive. Some of you people have some mighty broad paintbrushes.

kranky

Outhaul, I did not mean to bash dealers. It was the only first-hand account I have of how dealers get their money. To clarify, I guess I should say that it is only one story and I don't want to imply that's the way everybody does it. Looking back, that story doesn't even apply to the OP since the question was about large dealers with million-dollar inventories.

Outhaul

No sweat, Krank. But you do understand where I'm coming from. I'm certain we ALL have at least one story. The problem is that we probably ended up holding the stinky end of the stick due to our own ignorance and naiveté'. Because we are a society of people who don't take responsibility for our own actions (well, most people anyway) we feel it is encumbent upon the dealer to tell us truthfully what a good deal is. When the dealer doesn't, and we get taken, we blame the dealer. We SHOULD be blaming ourselves for not doing our homework beforehand...laziness will get you every time.

If someone came up to me with a roll of Morgans and I asked him how much he wanted and he said forty bucks, I'd pay the man. Does that make me a bad person? Or rather, and astute businessman. The latter is the correct answer, but there is no doubt in my mind that the dealer-bashers will feel it's the former.

Anyway, as we all have at least one "bad deal" story, when you put them all together it sound like the industry is awash with bad dealers.

ADDED: BTW...I'm not a dealer

Cheers,

Bob

TheNumish

I don't have a shop. Don't buy from the public. Don't buy stolen coins. Don't rip off old ladys. Don't even shill my ebay auctions. Try to treat my customers like I like to be treated. Own all of my own inventory. Don't owe a fricken dime in debt except my house. I work hard and I work smart and that's how I make my money. I do a lot of modern coins so if you want to call me scum then so be it.

Lots of these guys that do shows give up a lot. They spend all weekend away from their families and homes. Work long hours. Believe it or not most started in this business because they love coins. Takes a lot of money to do high quality coins. Takes a lot of guts to put your money where your mouth is. These guys have to deal with the same traps and challenges you collectors do. Many are just good business men and have made their money buying and selling amoung their peers. Not saying coin dealers are saints but most don't need little old ladys to rip off in order to make money.