In the stock market world, Regulation "T" states that you may only borrow up to 50% of the value of collateral STOCKS. Since the coin market is "volatile and thinly capitalized" as the government now requires PCGS to warn, a lender should loan LESS money on coins than he would on stocks, since there is more risk and less liquidity.
Frank Provasek - PCGS Authorized Dealer, Life Member ANA, Member TNA. www.frankcoins.com
<< <i>As a long-term net buyer of coins, I love it. When entities start touting margin as an easy way to make a killing, the end is near... >>
Several major dealers were ruined circa 1990 when they held large quantities of common PCGS-65 Morgans purchased with borrowed money at $500 to $700 each, and they fell to $70.
Frank Provasek - PCGS Authorized Dealer, Life Member ANA, Member TNA. www.frankcoins.com
<< <i>If you know how to manage loaned money, you can use this service for business opportunities and make money. This service was offered by A-Mark years ago. I used the loan service judiciously and purchased several large coin deals using the proceeds. Otherwise, I would not have been able to swing large coin purchases on a short term basis. The key to this service is SHORT TERM purchase and sales of coins for a profit. MANY of the big coin dealers use this type of service on a regular basis.
You don't borrow money using this kind of service for long term collecting.
TRUTH >>
Couldn't have stated it better T.T. I've had several successful experiences with CFC in this model. But let's just keep the wagons drawn in a tight circle. And keep on makin' money with this service.
If you are not going to avail yourself of their services then why should this bother you? I assume that their legal beagles are ok with it. If you do have an interest, think it over very carefully and don't borrow what you can't pay back.
Well, I can see how this could help both dealers and collectors. Dealers moreso.
Personally, I have a better credit line than 'prime+4'. And I don't buy coins on credit anyway.
What I don't like is the thought of widespread use of this leverage... ...I do not like the thought of a highly leveraged coin market and the highly inflated prices that result when folks build their collections up 4 times the size they ought to be on credit...
If they are loaning money on PCGS coins , and I have PCGS coins , and they state 65% on moderns , and I offer them moderns ,
and they:
hey -wait a miniute ......r u saying they might say " go scratch - we don't mean those modern PCGS coins ! >>
Si senor. I bet there are a lot of PCGS slabbed coins that wouldn't be suitable collateral. If you put up a $40K coin you would qualify for $30 K. I wonder how hard they would try to get more than $30K or whatever you owed for it?
<< <i>ohh this sounds fantastic ; how do they determine the value of my coins ?? >>
Current published price guides, auction prices realized for similar quality of like items, and current C.C.E. bids. Every coin is reviewed sight seen, and you have the call on which items you want held as collateral, as long as the aggregate value equals the amount of the desired loan; minimum $10K on all loans.
<< <i>Sounds like some folks haven't learned from the housing market collapse. >>
I agree with Barry. My experience has been that these asset-based lending products work until they don't. What lenders are coming to realize is that when asset prices fall or liquidity dries up, these loans get hammered. If both happen at once, the market collapses.
As a collector, I will never borrow money to buy a coin. As a dealer, this short term leverage might make sense if you can quickly move your inventory, as Truth mentioned in his post.
<< <i>They loan 75% for pcgs coins against what price list? >>
Blue sheet if they're smart.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Comments
<< <i>1929 .....Dave >>
I was thinking more like "1989," at least where the coin market is concerned.
I for one would welcome it with open arms. Assuming I still had a stable job.
Since the coin market is "volatile and thinly capitalized" as the government now requires PCGS to warn, a lender
should loan LESS money on coins than he would on stocks, since there is more risk and less liquidity.
<< <i>As a long-term net buyer of coins, I love it. When entities start touting margin as an easy way to make a killing, the end is near... >>
Several major dealers were ruined circa 1990 when they held large quantities of common PCGS-65 Morgans purchased
with borrowed money at $500 to $700 each, and they fell to $70.
<< <i>thestig,
As long as PCGS doesn't control the market in tin foil hats, you'll be fine.
Russ, NCNE >>
<< <i>If you know how to manage loaned money, you can use this service for business opportunities and make money. This service was offered by A-Mark years ago. I used the loan service judiciously and purchased several large coin deals using the proceeds. Otherwise, I would not have been able to swing large coin purchases on a short term basis. The key to this service is SHORT TERM purchase and sales of coins for a profit. MANY of the big coin dealers use this type of service on a regular basis.
You don't borrow money using this kind of service for long term collecting.
TRUTH >>
Couldn't have stated it better T.T. I've had several successful experiences with CFC in this model. But let's just keep the wagons drawn in a tight circle. And keep on makin' money with this service.
"Everything is on its way to somewhere. Everything." - George Malley, Phenomenon
http://www.american-legacy-coins.com
<< <i>old news? >>
yeah they've done somethign like this for awhile..nothing new
<< <i>thestig,
As long as PCGS doesn't control the market in tin foil hats, you'll be fine.
Russ, NCNE >>
Now Russ owes me a keyboard!!
"Inspiration exists, but it has to find you working" Pablo Picasso
<< <i>There is no top! The market is double nuclear and heading for triple nuclear.
Repeat after me:
There is not top.
There is no top.
THERE IS NO TOP!!!
You must believe!
WAKE UP !!
I remember selling silver for 35x face and people couldn't get enough.
And many great coins were at double of todays pricing.
So, maybe we are going to see 35x Silver again?
Don't hold your breath.
Gardnerville, NV
=========================
Our Website -->Innovation, Native & Presidential Dollar Errors, Lincoln Cents and more
Check it out --> Our eBay Auctions
They can keep the coins and I end up getting almost DOUBLE for what I could get in the open market !
<< <i>the way I see it -i can get about 35% of PCGS price guide wholesale for my Franklins .......... so if they lend me 65% ;
They can keep the coins and I end up getting almost DOUBLE for what I could get in the open market ! >>
They aren't going to take anything in collateral that they can't quickly liquidate for a good price.
If they are loaning money on PCGS coins , and I have PCGS coins , and they state 65% on moderns , and I offer them moderns ,
and they:
hey -wait a miniute ......r u saying they might say " go scratch - we don't mean those modern PCGS coins !
Personally, I have a better credit line than 'prime+4'. And I don't buy coins on credit anyway.
What I don't like is the thought of widespread use of this leverage...
...I do not like the thought of a highly leveraged coin market and the highly inflated prices that result when folks build their collections up 4 times the size they ought to be on credit...
<< <i>did you read what I wrote ?
If they are loaning money on PCGS coins , and I have PCGS coins , and they state 65% on moderns , and I offer them moderns ,
and they:
hey -wait a miniute ......r u saying they might say " go scratch - we don't mean those modern PCGS coins ! >>
Si senor. I bet there are a lot of PCGS slabbed coins that wouldn't be suitable collateral. If you put up a $40K coin you would qualify for $30 K. I wonder how hard they would try to get more than $30K or whatever you owed for it?
<< <i>ohh this sounds fantastic ; how do they determine the value of my coins ?? >>
Current published price guides, auction prices realized for similar quality of like items, and current C.C.E. bids. Every coin is reviewed sight seen, and you have the call on which items you want held as collateral, as long as the aggregate value equals the amount of the desired loan; minimum $10K on all loans.
"Everything is on its way to somewhere. Everything." - George Malley, Phenomenon
http://www.american-legacy-coins.com
<< <i>did you read what I wrote ?
If they are loaning money on PCGS coins , and I have PCGS coins , and they state 65% on moderns , and I offer them moderns ,
and they:
hey -wait a miniute ......r u saying they might say " go scratch - we don't mean those modern PCGS coins ! >>
Hope ya got about 500-1000 PCGS Frankies
"Everything is on its way to somewhere. Everything." - George Malley, Phenomenon
http://www.american-legacy-coins.com
I give away money. I collect money.
I don’t love money . I do love the Lord God.
<< <i>They don't have values for patterns - guess I'm SOL.
A $15K SLQ FH MS63 Off Center Mint Error is PCGS Valued at Non Error Price... they won't be getting fat off me either!
<< <i>Sounds like some folks haven't learned from the housing market collapse. >>
I agree with Barry. My experience has been that these asset-based lending products work until they don't. What lenders are coming to realize is that when asset prices fall or liquidity dries up, these loans get hammered. If both happen at once, the market collapses.
As a collector, I will never borrow money to buy a coin. As a dealer, this short term leverage might make sense if you can quickly move your inventory, as Truth mentioned in his post.
<< <i>so they can indeed and do reject PCGS coins ??? >>
I don't know from personal experience, but I'd guess that they can.
<< <i>They loan 75% for pcgs coins against what price list? >>
Blue sheet if they're smart.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire