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Dealer Distrust and the US Mint Product Market Boom...Cause and Effect?

Two themes have grown stronger on the boards over the past five years:

1. The Modern Market has grown substantially and the US Mint Product Market is booming.

2. Collector distrust of dealers in general has never been higher.

Just 7 years ago the mint could not give stuff away. The only sellout in years was the 2001 Buffalo dollar. Any US Mint product that was a winner became one because of lack of interest resulting in extremely low mintages. Now the prices are skyrocketing because of demand not seen since the SOL commem in 1986. Sell out after sell out.

Seven years ago moderns were collected my a small minority. One could always find some moderns on ebay but the supply was quite limited when compared to today's listings.

The fact is that seven years ago the primary source of coins was the traditional dealers. I see very few members here buying from traditional dealers today. From my point of view it seems like 90% of coin purchases posted on this forum are either US Mint Products, ebay purchases, or auction purchases. With the exception of the Specialist or High End Dealer, it looks like the traditional dealer has become the odd man out.

Is this the result of the attitude collectors have towards dealers. I was wondering if this was the impetus for move towards mint products and moderns. If not, what is behind the boom in the US Mint Product and Modern market?

Discuss


Edited to add a post I made below which helps clarify the thread.

Comments

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    It seems like the dealers are buying up all the mint products, before the public has a chance to order.
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    i'm not seeing the correlation between the mint onslought and an increase in dealer distrust.
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    FatManFatMan Posts: 8,977


    << <i>It seems like the dealers are buying up all the mint products, before the public has a chance to order. >>

    So it is not collectors buying directly from the mint bypassing the dealers? How are the dealers buying them all up? I thought the mint put limits to keep that from happening.
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    << <i>

    << <i>It seems like the dealers are buying up all the mint products, before the public has a chance to order. >>

    So it is not collectors buying directly from the mint bypassing the dealers? How are the dealers buying them all up? I thought the mint put limits to keep that from happening. >>



    I have not idea, but I am sure a conspiracy is involved. When I get home from work on order-day, they're all gone.image
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    t seems like the dealers are buying up all the mint products, before the public has a chance to order.

    I think the better statement is:

    The more knowledgeable people are buying up the hot mint products before the less knowledgeable people find out what to buy.

    The days of a dealer doing what you suggest with Mint products are over.

    All Clicks are equal. Some clicks have more money behind them, true, but to the Mint, a click of the mouse is a click of the mouse.
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    stmanstman Posts: 11,352 ✭✭✭✭✭
    Fatman, it will get better, we have to believe. there are people in the background that are doing things. We don't know what they're doing and don't hear about it...... but rest assured, our best interest is in their heart and soul. (how did that sound?)image
    Please... Save The Stories, Just Answer My Questions, And Tell Me How Much!!!!!
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    My two cents....How do large dealers aquire products from the Mint in bulk? Do limits apply to larger dealers? I know, what is large! does not matter. They are ordering more than the Mint limits.
    This is how a dealer can effect a Mint product IMHO.

    I'm not a vigilante, I'm an undocumented border patrol agent!
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    FatManFatMan Posts: 8,977
    stman, that gives me a warm fuzzy feeling inside.image

    Just 7 years ago the mint could not give stuff away. The only sellout in years was the 2001 Buffalo dollar. Any US Mint product that was a winner became one because of lack of interest resulting in extremely low mintages. Now the prices are skyrocketing because of demand not seen since the SOL commem in 1986. Sell out after sell out.

    Seven years ago moderns were collected my a small minority. One could always find some moderns on ebay but the supply was quite limited when compared to today's listings.

    The fact is that seven years ago the primary source of coins was the traditional dealers. I see very few members here buying from traditional dealers today. From my point of view it seems like 90% of coin purchases posted on this forum are either US Mint Products, ebay purchases, or auction purchases. With the exception of the Specialist or High End Dealer, it looks like the traditional dealer has become the odd man out.

    Is this the result of the attitude collectors have towards dealers. I was wondering if this was the impetus for move towards mint products and moderns. If not, what is behind the boom in the US Mint Product and Modern market?


    Posted this in the opening post for clarity of thread.
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    BAJJERFANBAJJERFAN Posts: 31,625 ✭✭✭✭✭


    << <i>The more knowledgeable people are buying up the hot mint products before the less knowledgeable people find out what to buy. >>



    Actually my local dealer had not a clue about the 3 piece 20th anniv sets; he dint even have ONE AFAIK.
    theknowitalltroll;
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    JapanJohnJapanJohn Posts: 2,030
    State Quarters and the Internet is my guess as to the surge in Moderns.

    As a US Gov't Employee it tickles me to death to see one of our branches actually making money instead of spending it like we do in DOD.

    I like modern stuff and I'm pretty sure that every great coin in history was once modern crap.

    John
    Coin Photos

    Never view my other linked pages. They aren't coin related.
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    TwoSides2aCoinTwoSides2aCoin Posts: 45,023 ✭✭✭✭✭
    I've been buying mint products for the past seven years so when I break into the scene and buy a table at a show, I can trade some modern mint stuff for some classic stuff. And I might even get cash with the trade image
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    FatManFatMan Posts: 8,977


    << <i> State Quarters and the Internet is my guess as to the surge in Moderns. >>

    I agree that the Internet has played a role. But why has it favored moderns? There are many more coin sites listing classics.
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    CaptHenwayCaptHenway Posts: 33,861 ✭✭✭✭✭


    << <i>I've been buying mint products for the past seven years so when I break into the scene and buy a table at a show, I can trade some modern mint stuff for some classic stuff. And I might even get cash with the trade image >>



    Better be careful......if you sell a coin and make a profit, FatMan will hate you.....
    LOL
    image
    Numismatist. 54 year member ANA. Former ANA Senior Authenticator. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and ANA Lifetime Achievement Award 2020. Also won the PNG's Robert Friedberg Award for "The Enigmatic Lincoln Cents of 1922," Available now from Whitman or Amazon.
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    CaptHenwayCaptHenway Posts: 33,861 ✭✭✭✭✭


    << <i>

    << <i> State Quarters and the Internet is my guess as to the surge in Moderns. >>

    I agree that the Internet has played a role. But why has it favored moderns? There are many more coin sites listing classics. >>



    All seriousness aside, the telemarketers who are driving the modern market are doing so because they can obtain them in quantity, and amortize their promotion costs over many units. We have sold six or seven 1909-SVDB's at retail this year, but to a telemarketer that is nothing. They want widgets they can get by the thousand, and nobody is going to buy up a thousand SVDB's so they can promote them. They can't find the good, old stuff.
    TD
    Numismatist. 54 year member ANA. Former ANA Senior Authenticator. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and ANA Lifetime Achievement Award 2020. Also won the PNG's Robert Friedberg Award for "The Enigmatic Lincoln Cents of 1922," Available now from Whitman or Amazon.
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    MilesWaitsMilesWaits Posts: 5,566 ✭✭✭✭✭
    Yes, the Mint and it's vast plethora of products has allowed me to gain a certain level of control I didn't have with my local dealer(s), yet I still depend on the face to face, mano y mano experience the brick and mortar offers me.
    As far as distrust, my local dealer has liitle interest or expertise in the surging, piepline wave-speed movement of the Mint's sell-outs. One of my local dealers remains "stung" by the experience of buying a number of the 2006 Buffalos that he has had to sell near spot. This may be more of an "laymens" market, as you have noted in your original and "focusing" post, with the quickly vicious nature of ebay/US Mint (as I believe they have become joined at the hip) and it's ability to focus and drive a product.
    I appreciate the the learning experience I've had in playing like a dealer with Mint without the risk and dedication to a brick and mortar nor the self-discipline it takes to make any bussiness float above the sea of competition.

    Miles
    Now riding the swell in PM's and surf.
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    GreeniejrGreeniejr Posts: 1,321 ✭✭✭
    Going on what Tom said, whether we like it or not telemarketers and TV huksters are an important part of our industry and pretty much support many parts of it. In terms of the moderns (moreso with buffalo's and USGE) they can buy them as bullion, slab them in large numbers and take the 70s in profit. They risk nothing because they can hedge their gold position and if they get a margin call, they are capitalized to a point where they are still safe. Why risk thousands on a rare coin when they can risk nothing and make the same on widgets. In terms of the new mint releases, outside of proof sets, proof gold and silver eagles and certain commems, dealers do not really have much of an advantage. Dealers could only order 5 each BU and Proof 1st ladies. That being said it is per person per address so some dealers may be able to get their hands on more pieces. Even so, the reason these are getting so pricey is because the telemarketers create demand at obscene enough prices that the coins can be bought on the secondary market and still sold for a profit. Watch one of the coin shows on Direct TV... i think there are 3 or 4... and you will see why the mint products are booming.
    David
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    Coin FinderCoin Finder Posts: 7,724 ✭✭✭✭✭
    I think it is very easy to become a "dealer" today and be somewhat anonymous what with ebay and teletrade. So if one has a bad experience with a dealer, they can go around them now like never before or become one. People are learning how to be flippers by watched others do it. I think this activity creates a opportunity for the US Mint. So rather than distrust of dealers I think there is less of a need for them and that has an effect on the hobby by increasing the publicity and buzz around coin collecting and made it less of a hobby and more of a speculation game.

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    Actually my local dealer had not a clue about the 3 piece 20th anniv sets; he dint even have ONE AFAIK

    I said 'people' which is a large set of folks of which Dealers can be a sub-set of image
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    TahoeDaleTahoeDale Posts: 1,785 ✭✭✭
    Fatman,

    The coin market is large and diverse, with thousands of collectors who want to enjoy a hobby that has been around for decades.

    To the same extent, there are today hundreds, if not thousands of small to mid-size firms that seek to carve out a niche for their chosen inventory.

    Is the volume of mint products being sold directly to collectors caused by a distrust of dealers? No, I don't think so.

    But with the ability to buy direct, a collector can by-pass the dealer, most of whom do not even deal in current mint products.

    I feel comfortable in saying that most firms that are not merely vest pocket individuals would much rather have better than average coins from the following series, for sale at all times: Walkers, SLQ's, Mercs, Buffalos and Liberty nickels, Indian Head cents, Barbers, Seated, dated gold, Pl and DMPL Morgans, and last but not least Bust coinage of every denomination.

    But they have not had a sufficient supply of such coins for several years. And most do not carry the Moderns, in the high grades directly from the Mint. So their inventory is slipping.

    Thus, the collectors who desire these new issues go directly to the Mint, as their main source for buys. And believe they are getting the coins as cheaply as possible.

    The question I would like see answered, is where will the re-sale of these PR/MS 69 and 70 coins be conducted, and what will the average collector then do? Only a few dealers want to buy these coins from collectors, and I see only a faint few show up in National auctions.

    E-bay and Teletade are a source, but one day, it should be clear that these high volume(survival) commems, Silver eagles, Anniversary sets will never retain large dollar increases over time.

    Those that say all coins were once Modern crap, fail to understand the likely high survival rate for Mint issues, not made for circulation, but for collectors to put away in their home safes, or as gifts for their children.

    There will still be almost 300,000 2006 Proof Buffalo $50 in 68 or 69Dcam, 100 years from now.
    TahoeDale
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    JapanJohnJapanJohn Posts: 2,030
    I can't speak for anyone else but when I order something from the Mint I know what I'm going to get and I know it's going to be authentic.

    Can't get that level of trust anywhere else. Certainly there are great dealers but scammers are getting much more sophisticated. If they can fool a guy who does this for a living, I'm toast.
    Coin Photos

    Never view my other linked pages. They aren't coin related.
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    TomBTomB Posts: 22,968 ✭✭✭✭✭
    One thing to keep in mind with US Mint sales is that they only started selling online in 1999 or very close to that date. Before 1999, one had to mail, fax or call in requests for Mint products, with some products specifically limited to mail only be a predetermined postmark date. At that time it took much more effort to find what the US Mint was offering and to physically go through the hoops to order the material. Now, however, anyone may go to the US Mint site and order new product at will as long as it is not sold out.
    Thomas Bush Numismatics & Numismatic Photography

    In honor of the memory of Cpl. Michael E. Thompson

    image
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    RedTigerRedTiger Posts: 5,608
    Why the boom in moderns?

    Off the top of my head, NGC started grading them. Then PCGS and NGC started giving out the 70 grade. Then the Registry started. All of these were big factors. Then First Strike came into being and more money went to the grading companies and into modern sets.

    Success breeds success. The big increase in prices in issues such as the 1995 W silver eagles, the Jackie Robinson commems, the 1999 silver proof set, were wake up calls. Collectors saw coins they could get directly without paying through the nose and that were going up in price. In some cases sky rocketing in price.

    Another factor is that in the classic coin market, the range in prices is startling to most novices. The difference in price from low end wholesale to top end retail is often 100% for classic coins, sometimes more than that. Being novices, guess which price they get to pay when they buy, and what they often get when they sell? That alone is a big motivator.

    At many shows, many dealers report 60%-70%-80%-90% of business is dealer-to-dealer. That often means a collector is paying one, two, three, five dealer margins before the collector takes the coin home. A lot of dealers talk about 5% to 15% margins, however, in many cases it is multiple dealers each making their percentage before a collector gets it. Add to the mix, the artificial/accelerated toning debacle, the wholesale dipping and stripping that goes on, and a lot of novices think they are much better off buying from the mint. They get a coin at the same price as everyone else (unlike the classic market where novices often pay 20% to 50% more than an experienced collector with connections). They get a coin that is totally original, with 100% certainty (something that no matter what classic collectors say, is a romantic notion for most classic coins).

    The market has a way of correcting itself. The U. S. Mint will some day kill the golden goose and when it does, it will be a long dry spell for mint issues. It happened before that way, and will happen again that way.

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    fivecentsfivecents Posts: 11,207 ✭✭✭✭✭
    Modern mint products are perfect for the entry level collector. You really don't need to know how to grade. Most all of the Mint products are at least MS/PR68 or MS/PR69 coming from the Mint.
    With all the money to be made on flipping certain Mint products....especially in the year 2006 and 2007, even the dyed in wool classic collectors have jumped on board and started flipping. No better way to finance your classic collection than thru flipping moderns fresh from the Mint for double profit or more.
    As for affecting the market, I know that all these Mint products has strained my coin budget to the point to where I am not buying the classic coins like I used to. It has even slowed my local coin shop purchases down to 0.
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    << <i>I can't speak for anyone else but when I order something from the Mint I know what I'm going to get and I know it's going to be authentic.

    Can't get that level of trust anywhere else. Certainly there are great dealers but scammers are getting much more sophisticated. If they can fool a guy who does this for a living, I'm toast. >>



    image

    And I find a lot of what the mint is putting out in silver well done and attractive.


    image
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    DHeathDHeath Posts: 8,472 ✭✭✭
    Some dinosaurs are already extinct, or will die with this generation. Smart dealers seem to be doing just fine. I like DLRC's model, and buy from them on occasion. I collect 20th century coins, mostly raw, so all the other market gyrations are interesting but irrelevant to my interests. I'm interested in seeing how the classic coin collector community reacts to the dealer group that's conspiring to devalue some of their TPG holdings. It should be a hot summer.
    Developing theory is what we are meant to do as academic researchers
    and it sets us apart from practitioners and consultants. Gregor
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    I know that all these Mint products has strained my coin budget to the point to where I am not buying the classic coins like I used to. It has even slowed my local coin shop purchases down to 0. >>





    I am in the same boat. kid in Northeastern University and sending coins to PCGS 20 at a time i am busted.
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    FatManFatMan Posts: 8,977


    << <i>Better be careful......if you sell a coin and make a profit, FatMan will hate you.....
    LOL
    image >>

    CaptHenway, I know that was somewhat in jest as the winky would signify, but I do not understand the comment. If you have perceived this as an anti modern thread, or anti dealer thread that was not my intent. I am an avid buyer from the US Mint as well as a high dollar buyer from dealers. I have many dealers that I call my friends. Nothing makes me happier than to see prices go up and everyone making money. It just appears to me that in looking at the hot areas of market there has been a move away from the traditional dealer. I am just trying to gather opinion as to the reason, and if the primary reason is that collectors have tired of the traditional dealer MO, which is certainly jaded in distrust as posted so often on this forum.


    Edited to correct grammer image
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    RussRuss Posts: 48,514 ✭✭✭
    It's not my fault. The mint hasn't gotten any action from me since 2002.

    Russ, NCNE
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    << <i>It's not my fault. The mint hasn't gotten any action from me since 2002.

    Russ, NCNE >>



    They should bring out an anniversary AH Kennedy....LOL

    BTW beautiful coin on the bay.


    image
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    wondercoinwondercoin Posts: 17,128 ✭✭✭✭✭
    Fatman: If I may chime in here, let it be known that there has become an equal amount of "collector distrust" tied into US Mint products. Namely, collectors not honoring their deals. It started to happen with the 20th Anniv Gold sets - collectors who struck "done deals" with dealers (or fellow collectors) but elected to renig on the deals because prices rose. I know of one dealer who is researching now if he can effectively hire an attorney to address his breached deals. I can personally report though that there has been very few incidents of this I am aware of inolving board members.

    Wondercoin
    Please visit my website at www.wondercoins.com and my ebay auctions under my user name www.wondercoin.com.
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    LongacreLongacre Posts: 16,717 ✭✭✭
    There has certainly been a boom in US Mint issues and people collecting those items. That's fine if that is what someone wants to collect. I am less certain about what is causing that increased demand for mint issues. For the low mintage items, such as the Spouse Coins, it is possible for people to simply buy up the entire issuance and then the secondary market rises. The reason why the other mint issuance, such as proof sets, uncirculated sets, etc., hardly move in price is because of the relatively large mintages.

    As for dealers, I don't sense any increased distrust of dealers, even in today's market. However, I tend to deal with very, very few trusted dealers, so maybe I don't see what else is going on in the overall market.
    Always took candy from strangers
    Didn't wanna get me no trade
    Never want to be like papa
    Working for the boss every night and day
    --"Happy", by the Rolling Stones (1972)

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