I Hate It When The Ms. Says She is Investing ...
wondercoin
Posts: 16,998 ✭✭✭✭✭
in her clothing purchase!!
Merely a "Braddickian" query:
I was reading a thread on the other board today about a collector who was quoted around $45 by a dealer for a particular coin the dealer was offering at around 3x that price on his website. When asked about the vast difference in price, the dealer apparently said that the spread was needed to stay in business and make a profit. There was overall distain for the dealer's spread and even an inference that the dealer was being unfair to have such a buy/sell spread.
Yet, whenever I go out to dinner, I face a spread like this on nearly every wine on the wine list!!! I'm also sure other businesses operate on a 100-200% market up (like the clothing business) and no one thinks anything of it. My wife spends $100 on some garment and says it was a "smart investment" as her wardrobe really needed that addition!!!! Geez!!
Why is the retailing of coins different than the retailing of wine or clothing or many other things out there we deal with day to day?
Wondercoin.
Merely a "Braddickian" query:
I was reading a thread on the other board today about a collector who was quoted around $45 by a dealer for a particular coin the dealer was offering at around 3x that price on his website. When asked about the vast difference in price, the dealer apparently said that the spread was needed to stay in business and make a profit. There was overall distain for the dealer's spread and even an inference that the dealer was being unfair to have such a buy/sell spread.
Yet, whenever I go out to dinner, I face a spread like this on nearly every wine on the wine list!!! I'm also sure other businesses operate on a 100-200% market up (like the clothing business) and no one thinks anything of it. My wife spends $100 on some garment and says it was a "smart investment" as her wardrobe really needed that addition!!!! Geez!!
Why is the retailing of coins different than the retailing of wine or clothing or many other things out there we deal with day to day?
Wondercoin. Please visit my website at www.wondercoins.com and my ebay auctions under my user name www.wondercoin.com.
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Comments
Coin Collectors are Cheap and Always want Something for Nothing. Heck You know this.
The Retailing of Coins Probably would not be Different if the Gray Sheet and all other Price Guides were out of Print. Just My wild guess at this.
Good point. Diamonds, industrial property, new car sales....you name it and it exsists everywhere. I think for someone just being exposed to the behind the scenes transactions or learning about the function of a middle man (don't take this wrong, but coin dealers are actually middle men IMHO). As you said this happens in all aspects of business. Ther is nothing wrong with this, its just how the world turns. Of course if he didn't like the price he could always try and make the coin and grade he wants... Here is the real eye opener
Kenny
My Washington Type B/C Set
Wondercoin.
If coin collecting was viewed more in context -- i.e. an enjoyable hobby that allows you to recover at least some of the money you put into it (unlike skiing, for example) then people would be far more likely to stay within a reasonable budget. And much less likely to be hurt by price swings or the inevitable large (as compared to most true investments) buy/sell margins.
Over the years I've been involved to some degree with several other collectibles - notably baseball cards. I've found that an investment philosophy creeps into every hobby. It may be unfortunate, but that's how very many collectors view their collections. They may love 'em, but they wince at the thought that they may go down in value.
I wonder how many of the coin collectors on the forum would KEEP their collections, if they KNEW it was likely that the value of their collection was going to depreciate, say 2-3% a year, every year?
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Friday night I saw a 1952 NGC Pr67 Cameo Franklin on ebay. The "guide" said it was a $6,000 coin. I don't collect Franklins. What did I do? Of course, I bid $1,075 (that I don't really have at the moment) on a coin that was stuck at $850. I stayed awake until after midnite only to get sniped at $1100. with 13 seconds to go. THAT was my speculator mode. (My congrats to the sniper) Had it been a Kennedy I really wanted, I might have had trouble falling asleep. Point is, the seller may have made 100% mark-up on his investment; now the new buyer thinks HE can make a 100% mark-up when he sells. It all comes down to "perceived" value. (Question: Who in their right mind would pay $3.50 for a glass of beer at Bennigans ? I have. Yet if I walked into the beer store and they were charging $80 a case, I would run out of the store laughing. Why is it ok for Bennigan's to make a 500% profit but not the beer store?
Anyway, when they ask at work whether I'm collecting, investing or hoarding, I think we possess all of them; just at different times.
Joe
Well it's all about value added. Restaurants take some basic
ingredients and add a lot of value by combining them, cooking
them up and serving them in a pleasant atmosphere. Consequently
they can charge a higher multiple of what they pay for their
raw materials.
Now let's look at one of the functions of coin dealers. They
buy coins from one party and sell them to another. Not a lot of
value added so I wouldn't expect a big markup. In the area of
slabbed coins I would expect this mark-up to vary directly with
the grading ability/standards of the grading company. (if PCGS
grades very consistenly and the difference between the worst MS66
and the best MS66 is small, then the dealer has less of a function
is taking one coin and saying "this is a nice 66"). So in this sense
they are a reseller like Best Buy and I don't believe Best Buy operates
at a 3X mark-up.
Dealers can make more money and get a bigger mark-up if they add more
value. Consider having raw coins graded. When they "make" their
own coins, they don't sell it for 50% more than they bought it for.
No they used their expertise and took the risk of buying the coin
(and what it would be graded at) and they reap the rewards. They
sell the newly made coin at whatever the market price is. When Barlow
makes a new highest grade Ike you don't see me complaining that he
wants a 5000% markup on it.
And you can't just talk about markup percentage because people care
about dollars, not percentages. If you sell a $1000 coin you're
probably willing to take a smaller percentage than if you are selling
a $100 coin. What the dealer in your example is saying is that the
coin is not worth enough for him to bother with unless he completely
rips off the seller. Luckily the seller has alternatives namely ebay.
If he chooses to sell to the dealer for $45 instead of doing the work
himself and reaping the rewards, then fine, he's an idiot.
I am so thankful for ebay. Having a good outlet for collector to
dispose of coins they no longer want keeps a limit on how high
the markup can be. And of course dealers can get a higher marker
(not be undercut by ebay) if they provide something that doesn't
show up on ebay very often. I am also thankful for the registry
because when a collector wants to sell his coins, he has a list
of serious potential buyers.
> Why is the retailing of coins different than the retailing of wine or clothing or many other things out there we deal with day to day?
Well, clothing retail is very different field. Clothing is sold for very
high markup over what it costs to make. But how much of what is made
is sold at the retail price? Probably not a lot. So they make a ton
on what they sell but then they have wholesale the rest off (or worse)
as seasons and fashion change.
I'm sure you did some research before you left law and entered this
field, right. I always hear teachers question why they are paid so
little and (insert field) are paid so much. From their perspective,
the answer is "who cares, you knew what the two fields paid before you
entered the former".
Sorry to squelch your rant but if the markup on coins was what it is
in some other sectors I wouldn't have bought 90% of my coins. I spend
discretionary income on coins but I would spend much less if I had
to sell the coin for 30% of what I paid for it.
My 2 cents,
-KHayse
Please don't confuse "rant" with "Braddickian query"
Excellent thread!
Anyone who purports that collecting is NOT consuming, is wrong (IMHO). We ARE consumers! I read, with interest, the post regarding the bidder/collector laying awake to snipe that NGC PR67 1954 Franklin! If that isn't entertainment value, I don't know what is! (Would have been even more amusing though had you won that lot at such a give away price!).
COINS are the only consumable I know where, once you are done- it can be resold. As Mitch pointed out with his wife's $100.00 blouse, (be grateful she doesn't shop at Nordstroms. You got off easy on that blouse!) that can't be done anywhere else.
We buy coins, we handle them (carefully...). We (sometimes) currate them. We holder them. We house them in coin albums. We display them. We organize them. We type in Registry submissions using them! Let's face it: We LOVE to PLAY with our coins! We ARE consumers.
Coins are also the only consumable I am aware of that we pretty much KNOW what the seller paid. Try asking the chef of Ruth's Chris steak house what he paid for that slab of beef (You know, the one that once cooked and served to you is costing $35.00+).
In many ways, we're spoiled as Collectors. Information is almost TOO available to us! We kid about "inside information", but truly- where? Knowledge is out there, you just got to find it (besides, most Dealers aren't very good at keeping secrets, and the Collectors they tell are even worse).
Final thought: As Tad pointed out- Collect (consume). Don't "Invest". If you invest- you'll probably loose. If you collect and enjoy this hobby- you're a definite winner, no matter what your coins eventually sell for.
peacockcoins
Now, that would have made a great "Seinfeld". Couldn't you see George doing it.
When I just got started a few years ago with more dollars than brains or experience, I bought a few expensive "investment" coins from a well known dealer you would all recognize (no, it wasn't Mitch you wise guys). You know, I sent the dealer a check and asked him to get me some good investment grade material. Well, I spent a lot of money, and the coins were really nice high quality pieces. Problem was, first that I overpaid (though not ridiculously so). Second, once I figured out what I wanted to collect, I realized I didn't like these investment coins. Though the quality was good, they were from series I don't like. So, when I sold them a few years later, I got creamed. Lost about 15%. Great investment, right?
Now compare that to IKEs. While this dealer was picking up great investments for me, I started learning about IKEs and collecting them on my own. It was incredibly fun, learning about and building a series set. I certainly made some early mistakes, that probably cost me a few hundred dollars. When it came time to buy some of the better IKEs in higher grades, I asked the dealer to help me find some. He scoffed and said I was wasting my time and money. Who in their right mind would pay $1,000 for a 71P in MS66? Well I still have almost all of my top IKEs (though I did sell two pieces). They are worth in total at least double what I paid and probably more.
Which was the better investment? Sure I bought some collection coins that have gone down in value. For example, I bought a beautiful 1926 Peace dollar in PCGS MS66 about two years ago for my type set for $1,750. Today, its worth $1,300 if I'm lucky. But, you know what? First on balance my collection coins have appreciated nicely. Second who really cares about the Peace Dollar? Its still a beautiful certerpiece coin in my 20th century type set.
Sounds like a parable doesn't it?
Greg S.
I agree in general that most dealers of other items won't pay pennies on the dollar for the same items they sell, but there is one big difference:
Many (not all!) but many coin dealers advertise coins as an investment, whether it be in gold, silver, or simply scarce old coins. How would you feel if you bought shares of IBM for $90 and while they were still worth $90, you try to sell them, but you had to sell to a broker (say rules were different!), and they offered you only $45 a share, even though they are worth $90 at the exact moment you are selling!!! Yes, I realize stocks can and often do go down, but you can always get the same price (appoximately) anyone else can get at the same given time. Many people see that their coin is "Worth" $500, but they can only get $300 or $340 for it.
Go to a coin dealer, buy a coin they are selling for $100 and walk right back and ask to sell it and he certainly won't offer you $110! Of course, most people realize this, but some dealers probably bring the complaints on themselves by offering coins as investments. Computers, video games, clothes, etc. aren't sold with the "Investment" tag on them (unless saying an "investment" in your future, but that is different), and you would never think about going back to a place you bought some of these items and actually hope to resell them for any where near what you paid.
Just my opinion on this.
JJacks
Camelot
If only I could put in "short hours" like that
I'm out of here until tomorrow night - checking out a collection out of town. CU then
Some are called dealers, speculators, collectors, horders, promoters, graders, and consumers.
When the average American collector gets home after his daily chores he typically dumps his
collection on the dresser or in a jar. He'll then use his collection to make further purchases or
to accumulate wealth for the ski vacation he has planned. There is no real hard line distinction
between these various groups and individuals can occupy more than one, indeed most people
probably have engaged in aspects of all of them over a lifetime. The relative importance to
the hobby of these activities varies as the years go by and trends come and go and metamorphose.
Certainly it is the collector side of people which typically has the most fun, but all these facets
are necessary and inevitable in fact. We in the hobby tend to ignore the importance of the
people who use coin in commerce. Without them all we'd have is 2,500 years of NCLT issues!?
So go ahead and enjoy the wife's new cloths- - even if she used the credit card.