Question For Dealers of Higher End Material ...

Fletcher

... if the market does in fact get a tad "soft" for a while and you find that your inventory stops moving to a significant degree, how long will it take you to drop the prices on your websites to reflect the current state of the market? And, if you will not drop your prices, do you simply stick the better material in the safe until the market rebounds? I am truly interested in your responses as a few of you here have material that I am interested in, yet some of the prices reflected online do not seem realistic given the current softening ... they seem to be priced as if they are waiting for a continuing bull market to bring buyers up to their price-point.

I definitely do not predict an impending market collapse by any means. However, it does appear that the tide is beginning to change and it is becoming a buyers market.

Thanks

Fletcher

Wow ... no respones. I am a bit surprised.

jayboxx

You are surprised you had no responses when you posted it at after 10pm just last night?

pbfloyd

Sounds like a " Take 15% off and I will buy" thread. Found any nice DMPLS lately?

cladking

There are only a few dealers of high end material around here very recently
and they might not be inclined to answer the question, especially at the current
time. How dealers react to declining prices varies a great deal with the individual
dealer and somewhat with the specific coins. No dealer can maintain a museum
and be very successfull but then taking large losses on great coins that are sell-
for too little isn't productive either.

It's still a little early to figure this question is necessarily relevant anyway.

ScarsdaleCoin

better material gets put away...... but prices on general inventory constantly reflect changing market conditions.

MrSpud

I'm not the right person to accurately answer the question, but I felt like speculating. I would think that the dealers would be better off selling the high end coins even at a loss rather than sitting on them because they would be able to buy more items from other dealers at the new lower prices that they can then sell for a profit. If they keep all their available cash tied up in the items they bought when prices were higher they will miss the buying opportunities that are available. I would expect that the break even point where they recover from the initial loss would be just one or two coin transactions away.

MrEureka

It's impossible to know what the seller is thinking until you try negotiating a deal. For all it's worth, if I have something on my website that has declined in value since it was listed, and if I have not lowered the price, it is because I have not gotten around to changing the price and I would welcome a counteroffer. Holding on to losers is not part of my business model.

Bryan1315

I am not a dealer but I have definately noticed the prices all over the place dropping like a rock within the past month even. I have even seen DLRC coins sell at their "auctions" for prices that would usually be "reserve not met". I would also like to know how long the softening would have to continue before prices on websites reflect the current market change, but I am sure most dealers dont want to go into details about it because they think if they do people will just wait until the prices hit rock bottom to buy and they may not buy the coin with the first or second price drop and making them make less profit

JRocco

<< <i>better material gets put away...... but prices on general inventory constantly reflect changing market conditions. >>



I understand the concept of putting the prime material away till the rain ends, but don't most larger dealers have a lot of money tied up in those prime pieces? I can't see any successful bar operate for any length of time by taking the top shelf bottles off their shelves and only selling beer.

Fletcher

<< <i>Sounds like a " Take 15% off and I will buy" thread. Found any nice DMPLS lately? >>



If I simply wanted a discount, I have absolutely no problem asking a dealer for it. In addition, I have recently completed my morgan collection and am not buying any more dimples for a while unless the pop 1/0 coins that I want come to market and are truly better than what I already have and not just over-slabbed. And, I have already sold off my duplicates and have only kept the best of each type of coin (that was not always the highest graded in my collection). I have now turned my attention to colonials and pre 1800 US rarities and have been browsing through members' websites looking for material. However, not having been through a down market before, I am wondering what dealers generally do with their higher end material: tuck it away or meet the market ...

MrEureka

I understand the concept of putting the prime material away till the rain ends, but don't most larger dealers have a lot of money tied up in those prime pieces? I can't see any successful bar operate for any length of time by taking the top shelf bottles off their shelves and only selling beer.

Many dealers have a collector mentality and don't mind owning their best coins for longer than they should. However, the real businessmen will sell anything, anytime, if the price is to their advantage.

RedTiger

Every dealer is different and how much they want to dump depends on their ready cash situation and what other opportunities they have to buy. Why any one of them would want to "tip their hand" on a public bulletin board is beyond me. Besides, many dumps to raise cash will be to other dealers not to their general customer base. The latter could hurt their business and marketing. High end dealers need to maintain a veneer of exclusivity in order to keep paying and charging premium prices. Discounting is not in line with that kind of image, so some may never mark down at all, just use a different avenue to sell.

Some may mark down once and leave it that and then either dump them wholesale and take their lumps or take them off the market and then put them back in a few months later. I don't think there are any high end dealers that are like the old Filene's Basement 21 days back dated so much off 30 days a bit more, though a few might have a second round of cuts. Market pricing goes on all the time, but the so-called market hasn't really moved. The so called correction is is all of a month old and more a trembling than a confirmed softness.

mrearlygold

If it collapses the business will be shaking off a multitude of people who will have to go back to their regular jobs or find new ones.

To be offered the best of the best material, or material that is a true classic rarity is always a privilege and not a right. In down markets and good markets. Some of the real Numismatists wet dreams will always be locked away but if you have established a relationship with someone in the business who really does have the type of client base who have or has the type of material that is in the upper tier of Numismatics ( no, not necessarily the finest knowns ) then you will get offered material from time to time. If not, then you'll get offered regular material with a good schpeel attached and "think" you are being offered special pieces when in reality you are not.

You've just now turned your attention to pre-1800 coins without specifying which ones? If you are buying the more common of the early eagles you're in for an interesting time heheh.

IMHO of course

roadrunner

If dealers sense that this downturn is only temporary, then they will be more inclined to try and sit on better material for a tad longer. If they sense this is the last huraah in the bull market, they will begin to unload everything. That will occur when gold has played out its hand as well. I forsee more fireworks for gold, and with it coin prices will also uptrend.

roadrunner

Fletcher

<< <i>However, like Scarsdale coin said: better material gets put away...... >>



That is what I thought. Although, my question doesn't really apply to Legend because 99% of what you guys sell is "extremely better material" where market prices do not apply. I would think that your business would be fairly immune to a market downturn unless an "end-of-the-world" scenario came about (which no one is predicting).

RichieURich

<< <i>better material gets put away...... but prices on general inventory constantly reflect changing market conditions. >>



I agree, I think dealers will do what Scarsdale said.

MrEureka

my question doesn't really apply to Legend because 99% of what you guys sell is "extremely better material" where market prices do not apply. I would think that your business would be fairly immune to a market downturn unless an "end-of-the-world" scenario came about

My experience is quite the opposite.

pbfloyd

I wish you woul put your DMPL collection on your website. I know you have some killers!

roadrunner

My own experience from ANA was that type coins under $3-5K were somewhat saleable if decent. The ones $5K and up were a different story. $15K and up type coins, forget it. Your experience may be totally different. A wonder coin priced right will always sell.

roadrunner

MrEureka

A wonder coin priced right will always sell.

By definition, any coin will sell at "the right price". But history has proved time and time again that wonder coins are not immune to market forces.

roadrunner

During down markets, your decent coins often don't sell even when priced right to dealers. If they don't have ready customers they won't stick out their necks. A wonder coin still has that advantage that someone will take a crack, even if priced over what is considered "priced right." You can walk the bourse floor right now with desireable coins (non-widgets) "priced right" (at or near bid) and not sell anything. 1990 taught us that nothing was immune to price jobs.

roadrunner

tcmitssr

If the high end dealers are going to take less profit (NOT LESS LOSSES) on their higher end material, those coins will be offered to their best customers first. It won't be a first come, first served situation.

Non-higher end buyers won't be able to cherry pick as they hope. The smart higher end dealers will, first, offer the discounts to their top shelf clients. What will be left will be what they did not want or need.

I have a pretty good idea of what I speak as I am one of the higher end buyers (classic commems) and I've already been both in contact with, and contacted by, many of the small group of higher end dealers that work with me. My bet would be that they are doing the same with other coin types and their respective higher end customers of those.

MrEureka

The smart higher end dealers will, first, offer the discounts to their top shelf clients.

No doubt many dealers will do that. However, I won't, not because I'm stupid but because I don't want my clients to think I'm trapping them into coins that are about to fall off a cliff. When I think the markets tanking, I'd rather dump on other dealers and at auction. Even if I'm going to net a few less bucks.

Nic

Andy ... . Dealers, non-retail customers, pseudo-dealers, and folks who buy at auction (me) assume our own responsibility. K

Julian

Since this hobby, as all hobbies, is a luxury, I do not normally change the asking price, but I will certainly listen to proposals from seriously interested parties.

If the retail prices were cast in stone, then lowering the prices would be important, but since virtually all prices have some play in them, it is strictly a matter of finding a seriously interested collector, regardless of the current "retail" price.

Fletcher

<< <i>The smart higher end dealers will, first, offer the discounts to their top shelf clients. >>



That would make sense as well ... and, may explain why I have suddenly been getting cold call sales pitches from coin dealers for the last couple of weeks. It will be interesting ... at least for me ... to watch and see how the market handles a lull. While I am a big fan of looking to history for answers, with the proliferation of internet sales and auctions I don't think that history is as reliable an indicator as it once was. I do, however, think that even a small lull (which is what I anticipate) will cause certain "wannabees" to panic, thus creating some excellent buying opportunities in the near future ...



PS - Andy, I doubt that any of your regular customers would think that you were trying to trap them in to coins ... many smart investors/collectors buy heavily as the market declines ... especially if they believe that it is a lull and not a crash.

bidask

Fletcher posts a good question.

Although I am not a dealer I will give you some thoughts as one in the financial services industry.

Julian makes the comment that coins are a hobby of luxury. Dealers who believe this will not put themselves in a position where if the market tanks they neccessarily have to adjust their prices lower. Why, because they have a conservation of cash and other liquid investments to live off of. If any thing these dealers are in a position to buy at lower prices.

I have seen the notion on this board of some dealers having to be in a position to meet liquidity needs ( from auctions for example) . What a poor way to run a business in a bull market! The only thing worse than that is like being subject to potential margin calls. Dealers should always have cash on hand...or at least strong lines of credit at low rates.

I have spoken to many dealers and I get a sense that much of the buying and selling is between the dealers! ( up to 85% !) If this is true and I were a full time dealer, I would find that very scary. Full time dealers should constantly being developing full time collectors.

The price paid of a coin should and does fluctuate. The standards of grading should not. If standards of grading change over bull and bear markets, woe to the hobby, and collectors and dealers alike.

I suppose it gets down to the high end coin itself. Presumbly, if it is a rarity or condition rarity then strong hands ( defined as someone who has cash flow from income or other sources of liquidity, be they collector or dealer) do not have to sell.

MrEureka

Dealers, non-retail customers, pseudo-dealers, and folks who buy at auction (me) assume our own responsibility.

Naturally, but it's not in MY best interest to have you think I'm trying to (or succeeded in) taking advantage of you.

For those of you who have been pitched with this and that bargain since ANA, how many of you have been told by the dealer that he is giving you the break because the market has weakened?