Buying from a dealer
oldgoldlover
Posts: 429 ✭✭✭
I was at a monthly coin show and a member told me he buys wholesale as a he has setup a DBA as his legal entity through which he buys and sells coins. I am strictly a collector and do not buy or trade enough material to justify the accounting headaches. My question is are the any advantages buying through someone like this from a price standpoint? He mentioned he purchases coins from a large auction house at wholesale and marks them up about 8 to 10%.
Can anyone that does deal in rare coins comment on the advantages if any from a collectors standpoint or is this not worth the trouble to establish a DBA? Also what is the typical spread between wholesale and what you would pay at an auction as a collector? My collection is small but I do spread a fair amount of money on a coin when I buy one.
Best Answers
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Moldnut
Posts: 3,113 ✭✭✭✭
Large Auction Houses with everyone and their mothers bidding, sounds more like retail to me.
Probably do better walking the Bourse IMO.Derek
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cameonut2011
Posts: 10,181 ✭✭✭✭✭
@oldgoldlover said:
I was at a monthly coin show and a member told me he buys wholesale as a he has setup a DBA as his legal entity through which he buys and sells coins. I am strictly a collector and do not buy or trade enough material to justify the accounting headaches. My question is are the any advantages buying through someone like this from a price standpoint? He mentioned he purchases coins from a large auction house at wholesale and marks them up about 8 to 10%.Can anyone that does deal in rare coins comment on the advantages if any from a collectors standpoint or is this not worth the trouble to establish a DBA? Also what is the typical spread between wholesale and what you would pay at an auction as a collector? My collection is small but I do spread a fair amount of money on a coin when I buy one.
Professional dealers are able to obtain favorable pricing because they have spent several years building business relationships and the discounts will be made up by both sides with future good will. Merely incorporating does not make one a dealer. Anyone can incorporate online in most states within an hour and apply for a tax ID. That alone doesn't make someone a professional dealer and does not automatically entitle him or her to wholesale pricing. Many of these spring up flipping operations buy at auction and then mark them up to book value, which hardly anyone pays anymore. The internet, IMHO, has blurred the wholesale/retail distinction. In other words, what many of these operations consider wholesale would be what most of us here would pay on the BST and consider retail.
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roadrunner
Posts: 28,313 ✭✭✭✭✭
@oldgoldlover said:
I still would like to know the % discount a dealer gets relative to collectors on a nice coin that is tough to find.
Often, no discount. Why even sell a hard to get and desirable coin to a dealer if there is a collector in the wings who would pay more and possibly sell it back to you again someday? I mostly wholesaled for the years I maintained dealer status. And the truth was that I couldn't hardly ever sell a coin to a collector at discounted prices. In most cases they had no interest, no trust, or wanted it even cheaper. It was just easier to sell dealers, usually for more money than a collector would pay, as most collectors didn't know what the coin was truly worth in the market.
Dealer wholesale prices could range anywhere from 0-30% depending on the coin. Generic gold coins typically wholesale for 2-3% lower than retail. On common MS65 Morgans the dealer discount might be 5-10%. I think typically such discounts are in the 5-10% range. Lots of variables though such as how long said coin has been in inventory, cash flow, etc. I usually expect to pay the same price as a collector. If the coin is worthy enough, I'll still make money on it....or I wouldn't have asked in the first place. Sometimes a dealer's "retail" price is my "wholesale" level.
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A true wholesaler does not sell to a collector. If they do it is not at a wholesale price, so they do not upset other dealers. At least this is with the ones that I know.
I'm sure there are certain distributors who will only sell certain things at certain prices to people with a business license like there are in most industries.
Whether it's worth it or not would depend entirely on how much it costs in fees and taxes to run a business where you are located versus how much you are saving on the stuff you buy.
It is like bay fishing. I like to have the only lure in the middle of a school of fish. Point is auctions are not my primary source of coins. I live in south Texas and we have one good dealer in Houston that has been pretty fair with me based on Heritage results. I got a call from the fellow I made reference to about a VF 35 1796 dollar. I will post the price if the coin is of interest.
If there are any dealers out there what would the differential be retail/wholesale on a percentage basis?
There is an old quote "there is no Santa Claus in numismatics".....however, perhaps your dealer friend has special connections, but I'm a little skeptical that he is able to buy nice, scarce coins at wholesale from a large firm, and then is satisfied marking them up just slightly.
Most of the stuff I've seen from these large 'wholesalers' are problem coins, common coins, low end for the grade, etc. The nice stuff generally goes to strong buyers, or into large auctions. But if he is carrying the types of coins you are interested in, and selling them at a better price than others, by all means, stick with him.
Part of your post makes me think someone was Blowing Smoke at you.
Anyone can buy from most of the major auction firms at the same price; you just need to jump in, register and bid. It is true that dealers can get favorable prices for some wholesale lots, in example generic gold, but from what you described I highly doubt this dealer is offering anything that you couldn't have purchased on your own had you done the homework and found it first.
In honor of the memory of Cpl. Michael E. Thompson
The club member is a long time collector but until I see a coin in question and pictures I cannot say. I am always skeptical of dealers/wholesalers as the coin world is a racket. I'll let you know what I see from him if any. I agree his Tax ID number is probably of little value as anyone can get one and call themselves a dealer. I strongly suspect this guy is more of a broker selling out of other dealers inventory.
I see this fairly often with New Orleans gold as the same coin appears on more than one inventory list with pictures. Gold coins all have fingerprints as the bag marks and dings. I see the rarer DEs often come through Heritage more than once often. Some of the coins are dipped in between offerings but the marks remain.
As far as the fellow club member I am always to look and listen but admit I do not expect to get the better price on nice coins. I have had better luck with those that sell out of their own inventory as you cut one more party out of the transaction.
I still would like to know the % discount a dealer gets relative to collectors on a nice coin that is tough to find.
If u want to buy like a dealer take a table at a show, browse eBay auctions, or open up a shop.
A DBA is required for an assumed business name if opening up a bank account in that business name. Shows in my area require a sales tax permit in order set up at show. Many dealers use their name followed by Rare Coins, etc.
In my coin deals I go to the source unless some dealer offers me a flip that is attractively priced I can make money with.
A few statements ring so true
It is easier to sell to other dealers than collectors and fora higher price !
True wholesalers always prefer to sell to dealers and avoid the public (I have been told they are a PIA)
I have zero interest in being a dealer as I just got paroled from the banking industry after 32 long and stressful years. My reason for the thread was an effort to the wholesaler/collector price differential averages on rare coins. I do some deals from U.S. Coins in Houston and they have been fair and they often tell me what they are making as a credit card sometimes is not involved in the purchase. I want them to make a fair profit on every trade with me. They have always bent over backwards to help. They have a good reputation in this area and they have earned it
Putting myself in their shoes I would expect a lesser margin on more expensive coins as they have a significant amount of money tied up in collectible items. Dealing with the public has no appeal and it seems the smaller dealers don't do very well.
A example. My cousin and I were at a show and he wanted an uncirculated Carson dollar. He offered a dealer about $175.00 for one and the dealer to it but the deal fell apart when the dealer would not take a credit card. He said the fees would eat up much of his profit. The show was dead as the weather was bad as was the traffic that weekend.
I am simplifying my life as much as I can and for this reason have no interest in dealing coins only picking a nice one up when the right deal comes along. I am a collector and plan no changes.
Thanks to all for your reply's.
A lot of info to consider here, thanks all for posting your opinions/facts
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Us coins from Houston is a good place to get coins from. They are probably in the top 5 of major dealers with the largest inventories.
In terms of wholesale vs retail and margins there really is no simple answer as so many factors can play a role.
The cc story was probably one that was in a gsa holder and something that constantly is bought for $160-$175 and sold for a number around there wholesale.
Offering to pay $175 by credit card eats up $6 plus an annoyance when otherwise they can just sell it for cash elsewhere.