I never thought of a dealer's inventory as speculative in nature, but perhaps it is...

Longacre

I was taking a look at the most recent Legend Market Report. In it, the author states the following:

"Having no coins around is both good and bad. It's bad because the market can actually slow due to lack of trading. We know that if we can not find the coins on our massive Want Lists, then we do not make sales. Sure, we have an inventory, but like everyone elses, it is speculative in nature."



The comment about inventory being speculative in nature is interesting. For the dealers (and collectors), do you view a dealer's inventory as speculative in nature? In particular:

(1) Is it speculative in the sense that you don't know what the market might be interested in buying?
(2) Is it speculative in the sense that inventory ties up capital that can be better used for other inventory if the market turns on a dime?
(3) Is it speculative by its very nature because the entire coin market itself is excessively thin?
(4) Is it speculative because of the vagaries of the auction process, and the fact that some coins for for silly money, while others go for reasonable sums?

garrynot

All of the above.


By the way, I thought Mick said "Didn't wanna get me no train" One of those mysterious lyrics, I suppose, like "Excuse me while I kiss the sky"

Sonorandesertrat

I would also note that, during the last few weeks, Legend's inventory has contained a large number of beautifully toned Morgan dollars. The 'toning premium'
for almost all of these coins is huge. Values of colorfully toned Morgans do not always hold up---they undergo more of a rollercoaster ride than blast white Morgans.

AngryTurtle

My interpretation was that "speculative inventory" means coins that you don't have a good idea of which customers are likely to buy them. This is as opposed to coins that you think you know who the likely retail purchaser will be.

MidLifeCrisis

<< <i>The comment about inventory being speculative in nature is interesting. For the dealers (and collectors), do you view a dealer's inventory as speculative in nature? In particular:

(1) Is it speculative in the sense that you don't know what the market might be interested in buying?
(2) Is it speculative in the sense that inventory ties up capital that can be better used for other inventory if the market turns on a dime?
(3) Is it speculative by its very nature because the entire coin market itself is excessively thin?
(4) Is it speculative because of the vagaries of the auction process, and the fact that some coins for for silly money, while others go for reasonable sums? >>


YES.

Plus AngryTurtle's comment as well.

RWB

...our massive Want Lists...

Clearly, this is the cause of glacial ice retreat, disappearance of snow from the summit of Kilimanjaro, deforestation of Brazil, toe fungus, removal of Viagra from golf course vending machines, and wobble of the earth's axis.

MidLifeCrisis

MrEureka

...

crypto79

Specialties guys/gals aside (rick snow and the like) Most dealers buy the best they can of whatever. It always seemed to me to be harder to buy good coins then to sell, so most dealers buy what they get the chance to. The speculative part come in what they pay since most is leveraged and if the will have to melt/wholesale/balk/retail/auction to flip it. The profit comes from transactions and a good dealer will work the deal on all sides to make his margins by doing as many transactions as possible. They tend to get burned if they buy at a levels higher then they will pass through in an item.

Sonorandesertrat

<< <i>It can be confusing to read literally the writings of the semi-literate. >>



Ouch. Spoken like THE MAN.

IGWT

<< <i>... >>



Somebody lost his nerve.

earlyAurum

Of course it is speculative. A dealer takes risk when holding coins that are not pre-sold. I don't have any experience as a coin dealer but I imagine that it must be very difficult to make decent money selling coins to retail customers. I would bet that dealers carry hidden inventory (unsold items) that has to be liquidated at a loss. Just the cost of carry has got to be a killer. I would bet that funding a coin operation is pretty costly even in this low interest rate environment. I hear that auction houses charge 1% per month on financing.
All in all, it's a risky business.

RYK

<< <i>My interpretation was that "speculative inventory" means coins that you don't have a good idea of which customers are likely to buy them. This is as opposed to coins that you think you know who the likely retail purchaser will be. >>


I agree. Examples of buying "on spec" include most coins in most of your favorites dealers' inventories.

breakdown

I actually paused on this same sentence when I read it, trying to understand what Laura (I assumed it's not George) meant. I admit at times, a few of her thoughts escape me. I guess/assume she meant that sometimes they offer a nice coin, having little or no idea whether there is a willing buyer in the neighborhood of their price.

Justacommeman

Yep, when a dealer buys a coin and doesn't have a specific customer or two in mind when purchased the buy is speculative in nature. Therefore, just about every coin that hits a dealers on line inventory page or bourse table is a spec coin. MJ