So you want to be a coin dealer?

ElKevvo

OK I have been wondering about this for some time and recent events have provided me with more time during the day to think about it! Too much thinking often leads to trouble to I thought I would ask. Here is the deal:

I am a web developer who was recently laid off from a work from home perm job due to my position being eliminated via to a corporate buyout (I was on the losing side!). Since I have some limitations with a wife who travels a lot and have two semi small kids who need someone to drive them around to various activities going back going back to an office type job is impractical. So I was pondering (see first paragraph about thinking too much!) about setting up a small web site and selling some coins. I would not be looking to make 100% of a living wage off of this, just some additional money from a hobby that I have enjoyed since I was a kid. I am not super knowledgeable about everything in numismatics, somewhat knowledgeable about a lot things in numismatics, and still have the capacity to learn more. I live in a suburb of Ft Worth and there is a small local show every couple of months and I could go there and set up if needed. I recall back in the day here on the board there were a lot of posts about 'wannabe' coin dealers and they were generally derided...I guess I would fall into this category as again not looking to become full time dealers, just gain some extra income, expand my knowledge of coins, etc. Here is a short list of things that I wonder about:

1) Is this a practical idea? I know some folks on the boards fall into the small dealer category and wonder if they enjoy it and it works out for them.
2) I suppose I could start by selling items from my collection which is large and sprawling but how do you get material at a price where you can make a decent profit?
3) How do you price items? I did have a grey sheet subscription several years ago...is that still used?
4) What sort of issues would I have with sales tax, etc.?
5) Any pitfalls I should consider?
6) I tend to be a numbers guy....for example I have been seeing some of the same coins in the same dealers cases for a couple of years and think 'What about the carrying costs of their inventory?' Am I going to have to be more laid back on this stuff?
7) Will it ruin my enjoyment of the hobby? I have a friend who is a great baker and she made the transition to a baking business...she now knows the difference between doing something as a hobby and doing it as a business.
8) Any other thoughts?

PM me if you would like....like I said I have been wondering about this for a while and since have I have some downtime possibly should dip my toe in the pond..

Thanks in advance for your opinions and insight!

K

ctf_error_coins

Go for it, I did, And I am extremely happy that I did.

1) YES. I enjoy it and it works fantastic for me.
2) Yes your collection (or part of it) becomes your inventory. You need to figure out what and where to buy by yourself. The key is to specialize and know market pricing.
3) I price my items for a profit. There is no real price guide for what I collect, which is fantastic.
4) You need to get a resale license for your state.
5) Tie up your cash in inventory.
6) I have unique coins that I do not mind keeping in my inventory. Many time I will sell a stagnant coin for a loss to buy a better coin.
7) Maybe. For me no , errors are fascinating.
8) Enjoy

Nickcap

Texas recently changed the sales tax law on gold and silver coins. Go look that up on the state website.

Most coins now do not have sales tax in Texas.

crypto79

<< <i>Go for it, I did, And I am extremely happy that I did.

1) YES. I enjoy it and it works fantastic for me.
2) Yes your collection (or part of it) becomes your inventory. You need to figure out what and where to buy by yourself. The key is to specialize and know market pricing.
3) I price my items for a profit. There is no real price guide for what I collect, which is fantastic.
4) You need to get a resale license for your state.
5) Tie up your cash in inventory.
6) I have unique coins that I do not mind keeping in my inventory. Many time I will sell a stagnant coin for a loss to buy a better coin.
7) Maybe. For me no , errors are fascinating.
8) Enjoy >>




This is more or less solid advice esp 2,4,6 & 8 also for starting small "The key is to specialize and know market pricing" can not be emphasized enough, be it by type, series, grade range, varieties what ever.

I would add that it leaves out the fundamental challenge of being a dealer which is buying coins. It is easy enough to sell coins for money but the trick is finding inventory that can be bought back of the price point including overhead to make money without a long term hold.

CoinZip

1. Practical for me yes, for you, only you can make that call.

2. I would concentrate on selling, the buying opportunities will find you. You get material at a decent price by knowing the sale side of the market when you buy. In other words, you should have a good idea to whom and for how much your going to sell it when you buy it.

3. I price items based on quality, demand, purchase price and gut feeling. The #1 question I'm asked about coins at a coin show is "What's the sheet on that?" which translates to what is the grey sheet bid/ask price. I honestly have no idea about grey sheet pricing, I don't subscribe to it or use it for anything.

4. Each State has its own laws on collecting sales taxes, you will need to check your states website and or call them.

5. Pitfalls....taxes, record keeping, stolen items, mustard stains, weight gain, changes in eye sight, just to name a few.

6. Most coin dealers I know are number guys, figure out how to use your numbers to make it fun and profitable.

7. If you allow it to consume you, yes it will ruin your love for it, just like everything else in life.

ricko

Give it a try using your own inventory (if you are not overly attached to good stuff). Get the Grey sheet again...review auction prices (big houses, ebay etc)..set up a site.... list it on the BST.....cannot hurt to try. If it does not work out...oh well....nothing ventured, nothing gained. Good luck..Cheers, RickO

ctf_error_coins

Another thing, You need to be very good at coin photography.

This can not be over emphasized !

ebaybuyer

someone on here said all you have to do is list a bunch of coins on ebay, that magically makes you a coin dealer. you don't need to do anything else, just list a bunch of coins, im not sure exactly how many constitutes you being a dealer, but that person seemed awful sure of himself....

TomB

As with anything else, your rewards will depend greatly upon what you want to put into the business. One thing you haven't touched upon is security; you have two small children and now you may have your name (business or personal name) out there as a dealer in coins. There are many things to think about.

Unknown

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3keepSECRETif2rDEAD

Erik

BryceM

I know nothing about this, but from the outside looking in, I can't see being a very successful dealer without hitting a show every month or two at the minimum. Doing that with small kids might be tough, as most shows will involve travel and time away from home.

Being an Internet-only dealer is also possible, but I would think even these guys need to find coins somewhere. Living in a major metro area is a plus. You can advertise, but plan on spending some time with various sorts of people looking at stuff that is more bulky than profitable.

Finally, I'm of the opinion that any profit to be made happens when you buy a coin, not when you sell it.

Have a plan for when the market gets super red hot or super cold. Watching $100k of inventory turn in to $30k of inventory withinin a couple of months might not be survivable for some people.

CoinRaritiesOnline

From the time I first considered this as a business I did a tremendous amount of research, both studying coins in my specialty, and studying the business of coins by talking to dealers, watching how their businesses worked (or didn't work), trying to understand how they did it and how I might be able to do it better. Some people were very helpful in this regard; others told me to buzz off.

My first forays into the business were cautious, on the side, on a small scale, buying coins in my specialty and trying to resell them via various outlets (at shows, on ebay, at major auctions, etc.) and finding my way. Now, 15 years later, I have not regretted it for a second and would tell anyone to do it IF you truly love it. There is a direct correlation between the success you can achieve and the amount of time and effort you are willing to put in. I work about 18 hours a day and I love it.

Re where to buy coins or how to price them, see my first comments. Do your homework first. You need to be able to answer these questions on your own, ideally by identifying an opportunity in the market and then seizing it. No one can tell you to "Go to XYZ supplier and buy all of his gold coins". It doesn't work that way. Good deals (and bad ones) can be found anywhere if you know (or don't know) what you're doing, and pricing and market information is available from many wonderful resources (including PCGS Coinfacts).

After you have done some homework, I would suggest that any initial attempts you make to test the business should involve buying coins (even on a very small scale) and then trying to resell them. Many people suggest starting with your own collection as inventory, but I disagree. Other than as a means to raise capital or refine your selling skills I don't think you'll find that especially informative. Frankly it is not that hard to sell for a profit well chosen coins you bought 10 years ago, but that has nothing to do with running an ongoing business. If you have such items I think you'll find that they will all be sold rather quickly. Then what?

Making contacts and building relationships in all areas of the business is very important and can only help in ways you probably cannot imagine now.

As others have noted, there are rules and regulations governing business in your state, and in the states in which shows are held, and it will be critical to know what the rules are and to operate within them.

As TomB noted, security is a major concern, and so understanding how to minimize risk is very important. Insurance is also very important, and it is not inexpensive.

Finally, I respectfully but totally disagree with this statement

<< <i>Another thing, You need to be very good at coin photography. This can not be over emphasized! >>

I am terrible at coin photography, but fortunately there are some very talented people in the business who can provide excellent photographs for a reasonable fee. As a general rule, I try to spend my time as productively as possible. So I focus on the things I am good at, and contract out the things I am not.

ctf_error_coins

<< <i>Finally, I respectfully but totally disagree with this statement

<< <i>Another thing, You need to be very good at coin photography. This can not be over emphasized! >>

I am terrible at coin photography, but fortunately there are some very talented people in the business who can provide excellent photographs for a reasonable fee. As a general rule, I try to spend my time as productively as possible. So I focus on the things I am good at, and contract out the things I am not. >>



I agree with everything you wrote except the part about coin photography.

I really like about what you said is about buying and reselling coins and not using your inventory ... great advice. In my case, I have a main collection (which I kept) and a secondary collection which I put into my inventory. But I also buy and resell many, many coins.

..................

Back to coin photography, yes you can HIRE other people to shoot images for you. But that takes money and more importantly time ...

Being able to photograph your own coin in a timely matter has huge benefits. A coin can be photographed in so many ways, once you perfect coin photography you decide how you want it represented.

Knowing photography and how to use a program like photoshop lets you decipher other peoples horrible photography, you don't know how much I have made just from this.

If I get a coin in today, I can have it on my website in a matter of minutes, if I wish.

Coin Photography is super important for todays internet coin dealer, IMO it's a must.

ElKevvo

Thanks for the feedback everyone, I really do appreciate it. There are a lot of good points in the various posts and based on the info I am going to get started here on my website, checking state laws, etc. so hopefully will be up and running in another few weeks.

One good thing is I do have some stuff that I bought some time ago with the intention to resell so this will give me the opportunity to move those items without an upfront inventory cost. Bad thing is some of them are classic commems...anyone need a white PCGS MS-66 San Diego? I have a feeling I'll be taking a loss on those!

Thanks again and I'll post as things move along....hopefully all in the right direction!

K