has anyone ever given any thought to opening a b m

cartermurph · November 15, 2009 1:50AM

I live in a city of over roughly 1 million people. I want to open a shop concentrating on bullion with coins and currency as a sideline. Do you think $50,000 dollars split among gold,silver and platinum would be enough to open the doors. I would have to stock the shop with coins comeing in over the counter. If a thread exists with such imfo could someone please refer me to it and i apologize for being off topic.

savoyspecial · November 15, 2009 1:54AM

>>Do you think $50,000 dollars split among gold,silver and platinum would be enough to open the doors>>

in a word, no

just the mere opening of those doors require substantial investment

topstuf · November 15, 2009 2:04AM

Nowhere near enough to have inventory and buy and sell.
It would be a ...start... on a "buy scrap only" style of shop.
Scrap can be profitable enough to finance the rest gradually.

But ONLY with location. If you had many customers, even that would soon be gone and you'd be in the unenviable position of being "out of money" til you got paid from your wholesale buyers.
That's not even 50 oz. of gold.

So, maybe only part time scrap buyer. Metals (AND COINS) aren't small taters anymore.

You COULD become a "roadie" and buy teensy scrap lots from really small dealers and then
take the difference between what you'd pay (typically 92% of spot) and turn it in accumulated lots to wholesalers for 96-98% of spot. Time consuming and low margin and few need it anymore.

We had plenty of those guys when we had the shop. Most were trying to augment their meager earnings by PESTERING for ...deals... on stuff there was no need to blow off. They often do shows as a small outlet for whatever they can cadge. REALLY tough without capital.

Julian · November 15, 2009 2:08AM

It is not enough money to have an inventory and be able to purchase coins on a continuing basis.

It is enough money to start to buy things, but you have to turn them over very quickly.

If you really want to have a full service store, it will take more money to start, IMHO.

Good luck!!!!

cartermurph · November 15, 2009 2:17AM

yes I understand construction costs, lease, insurance and fixtures would be an additional cost but $50,000 distributed $20,000 gold, $20,000 silver and $10,000 platinum. Is a 10% margin possible based on volume. The dealers in my area never have product on hand they have to order to demand. Then they drag the orders to try and cover multiple customers through one order. I'm guessing to meet tulvings minimum order requirements. Any thoughts?

topstuf · November 15, 2009 2:21AM

The gold would be inadequate, the silver marginal, and few buy platinum for investment at local shops.

cartermurph · November 15, 2009 2:23AM

thanks guys. this is more response than I had when i posted on the metals forumn. What amount would a person need $100,000. You don't know how respected your input is. thanks again

RWB · November 15, 2009 2:24AM

You should have approximately $300k in inventory & buying cash, and expect to turn not less than 10x per year if you want to stay in business. The key is not how much you make per $1, but how frequently you can turn over the $1. There are few FT retail coin shops because they require expensive security, have low inventory turnover, and are commonly based on a hobby with diminishing numbers of dedicated participants.

ocon4008 · November 15, 2009 2:25AM

My thoughts are you should listen better, and seriously think about retitling this thread. Some of the best in the business have just given you some words of wisdom, but it is obvious not what you want to hear.

I guess they are just afraid of more competition?

mkman123 · November 15, 2009 2:26AM

have like 50k or more in cash too so you can buy people's PMs and then resell it. I think you can do it with that little amount just pay good prices so when you do run out of PMs, you have people turning to you to sell.

Seriously locally over here, LOTS of people buy and sell DAILY that my dealer gets back metals without much problem.

Of course having more money is better but you can start small and build up. You could first be a flea market bullion dealer and then see how it goes. Build up a clientale, etc.

cartermurph · November 15, 2009 2:40AM

I am definitely listening but don't have any interest in chaseing down scrap. I have access to capital-cash but wanted opinions from the battle tested. I am leaving now to a store where the dealer quoted me $1000 apiece on 2 proof gold AGE. This was a phone quote I was surprised he gave it. I will post back in a couple hours. Again I assure I am listening to all input. Jason

mkman123 · November 15, 2009 2:45AM

uh proof 1 oz GAEs are selling for 1600+. There are dealers paying that price on BST!

See how the local dealers are low balling you? If you can set yourself up as the person who pays great prices such as offering people 1300 or more on proof GAEs, more people will sell to you and then you can flip it fast to other dealers, etc.

joebb21 · November 15, 2009 2:58AM

$1000 on a proof age? must be a half ounce coin

291fifth · November 15, 2009 3:01AM

$50,000 ... no, not even close to enough.

joebb21 · November 15, 2009 3:02AM

also- the only coin place thats around where I live mainly deals in pms. people come into the place all the time looking to buy and sell gold
he charges 7% over spot on bars (I think the same for eagles)
and pays spot for both as well.(maybe even 98%-99%)

he definetly is raking it in with the scrap. (the place is pact with gold sellers and I can almost guarantee hes making more than $5 per buy)

ColonialCoinUnion · November 15, 2009 3:10AM

$400K would be a more realistic number.

RWB · November 15, 2009 3:15AM

Didn’t a board member open a coin shop a year or two ago in Frederick, MD? How is that going?

COALPORTER · November 15, 2009 3:15AM

Maybe you could rent a space in an antique mall or flea market type set up. Around here, there are several places that rent you a set amount of floor space in a building shared with others.

I know a few stores/dealers near me that DO NOT have $50,000 in inventory-no way -no how. These stores max out at coins that cost $500. and most coins are only worth a few dollars or maybe 10. (I don't know how these guys survive, but they must know how to move low quality junk). I even had them refuse to buy a $15 coin becasue it was too "high end" for their customers

I know of one guy that runs a shop that is attached to his back yard garage. (Think wood plank shed with no HVAC) So, his operating costs must be near zero. He sells coins and other collectables. It looks risky, but I don't think he has ever been robbed. They guy has been there for years. His coins are common morgans - walkers-indian cent etc.

WHAT I WANT SOMEONE TO TELL ME IS HOW TO BUY COINS CHEAP ENOUGH. IF YOU CAN MAKE A PROFIT ON EVERY DEAL, THEN YOU SHOULD BE ABLE TO START WITH ANY AMOUNT OF MONEY AND BUILD UP. IF YOU CAN'T MAKE MONEY ON A 50 K INVESTMENT, WHAT MAKES YOU THINK YOU WILL MAKE MONEY ON A 1 MIL INVESTMENT ?

COALPORTER · November 15, 2009 3:19AM

Oh, I forgot to mention in RE to the junk dealers - it helps to have a rich wife the will support your money ventures - only in a dream.

mkman123 · November 15, 2009 3:24AM

coalporter is right, you can start small, out of your garage, out of a very small mall space or what not and build up. You really don't need that much money to start up. If you are good at buying and flipping you can really build up.

Also scrap jewelry is big money. The local dealer pays 70% of what gold is worth and gets like 90+ % from the refiner........its adds up into a lot of money. Some places in my area lowball and do 50% and still are able to buy quite a bit.....of course they don't get the amount of business like the dealer who offers 70%. So pay well and you will gain customers for life

darktone · November 15, 2009 3:25AM

I have had a wholesale dealer offer to partially stock a store if I ever wanted to open one. Maybe you could find someone willing to do this? I would guess you have some connections if you are seriously considering this- talk to people and see if you could get some inventory to get you going. Of course you will have to give them a pretty good percent.

WinPitcher · November 15, 2009 3:35AM

Helps if you own the building too.

Steve

cartermurph · November 15, 2009 4:03AM

wow thanks for the posts. I just got back from his store and it was as I suspected he didn't have any bullion in his case. I asked his sell price on 1 ounce AGE he said $50 over spot (didn't ask about proof thought he might put it together that I was fishing) He didn't have any 90% silver someone had bought him out of $900 dollar face at 13X. The buyer wanted all he gets in. Just so no one thinks I'm a jerk I bought a silver eagle from him for $25.

rainbowcoins · November 15, 2009 4:18AM

$50, is not enough and I would say at least $300, would be more in the range of inventory you would need to start and have more chances of some sales. And like the other members mentioned, maybe a stand at a flea market or a small lease office kind of place would be a better option for what you want to start off with.

TwoSides2aCoin · November 15, 2009 4:32AM

It's harder than I thought when I got past entertaining the thought.

dsessom · November 15, 2009 4:54AM

You would really need a BARE MINIMUM of a quarter million to hit the ground running in a B&M.

You can start with less by dealing from your home (and get some killer tax breaks too!) and doing business via website and/or Ebay. Most dealers don't just jump into a B&M right off the bat. They usually start out part time, at home, going to coin shows and doing business via website, Ebay, etc. and gradually build up inventory/assets and finally get into a B&M.

ecichlid · November 15, 2009 5:07AM

$50K? You have to be kidding.

anablep · November 15, 2009 5:18AM

Half a million dollars is more likely a good start.

You were off by a factor of 10 in your estimate, IMO.

Good luck...

truthteller · November 15, 2009 5:30AM

<< <i>I live in a city of over roughly 1 million people. I want to open a shop concentrating on bullion with coins and currency as a sideline. Do you think $50,000 dollars split among gold,silver and platinum would be enough to open the doors. I would have to stock the shop with coins comeing in over the counter. If a thread exists with such imfo could someone please refer me to it and i apologize for being off topic. >>

Start as a vestpocket dealer and get to know the area in which you want to open a store. Be aware that $500K is what you should have in cash and liquid assets at any given time. Also, have a line of credit for $200K when the big deal comes in. You never want to be lacking funds when you need to pay out money on the spot for a deal. Have trustworthy employees, preferable family members.

One aspect to owning a store which might give you pause. Are you willing to be able to contend with robberies, burglaries and theft on an ongoing basis? Have you ever thought that you may get hurt one day while running your store, or going to the bank or home? Coin shops are vunerable targets to those who commit crimes. Frankly, unless you are in a smaller, safer community, I wouldn't open a store.

TRUTH

Swampboy · November 15, 2009 5:52AM

FWIW, I have recently (in the last 10 days) heard 4 seperate radio commercials for buying gold.
I mention this because wherever you open up you obviously will need to consider an advertising budget in order to claim your fair share of bullion trade; at least as long as gold prices are up and are being discussed ad nauseum in every media.

For the record;
One spot was for a motel type operation with a web site reminding folks "not to get ripped off at a local store".
One was from a respected jeweler who would pay top dollar for gold jewellry and coins.
Two were from local coins shops, the first I had heard these two firms on the air.

All of these spots were telling me two things; compitition is fierce and there's money in that there bullion.

Best of luck.

sinin1 · November 15, 2009 6:34AM

so what do you want to be, a bullion dealer or coin dealer (or bullion broker)

probably a difficult business as ocasionally move 10% IN 1 WEEK

and then some of the people you do business with may be thieves, drug dealers, people hiding assets, ....

and then the people that come in with masks and guns to get a discount on their acquisitions

Bear · November 15, 2009 6:34AM

Psst.......Save tin foil !

oxy8890 · November 15, 2009 7:00AM

The most successful coin shops open with smaller budgets I have seen are in distressed tertiary markets. The ones that are successful in major markets (over 1,000,000 people) are open with much deeper pockets.

pennyannie · November 15, 2009 7:38AM

50k, you will be in the hole in 10 days. Bullion would be the last thing i would really want to buy and sell. I know to have a B and M you got to buy and sell bullion but that sure ties up the cash in a hurry.

I would just start at the local show level if i only had 50k to play with.

cartermurph · November 15, 2009 8:08AM

I appreciate all of the feed back. I'm gonna go back to the drawing boards.

MrOrganic · November 15, 2009 8:48AM

I never understood why shops never have that "plate glass" set up like banks?

anyone know of a shop that does? I have seen the buzz through double doors and the darkened mirrored windows.

Geoman · November 15, 2009 1:11PM

The dealers in my area never have product on hand they have to order to demand....

Bingo!! There is more to this statement than most realize. First, dealers will not tie up their money in holding gold and silver. It is too volatile and the prices change to quickly for dealers to stock quantities of PMs. Instead, several dealers I know have connections where they can order AGEs, Buffalos, ASEs, etc. and get it sent overnight for delivery the next day. The dealer will lock in a price with the buyer and seller, and usually will want a deposit down before he places the order.

If you are thinking of opening up a B&M store basically for dealing in PMs, you need a lot more money as most have suggested. How much experience do you have dealing in PMs? The reason I ask is you really need to spend several years working with someone and learning that trade.

However, if you are opening a B&M store for buying and selling collector coins, I believe that could be done with less money than people are thinking.

Message me if you have some particular questions.

cartermurph · November 16, 2009 8:53AM

Thanks I will.

Musky1011 · November 16, 2009 9:01AM

<< <i>Half a million dollars is more likely a good start.

You were off by a factor of 10 in your estimate, IMO.

Good luck... >>

If he had 1/2 million he wouldn't have to work

UtahCoin · November 16, 2009 9:05AM

10% margin on metals???? In a word, no.

$50 K to start? Add a zero.

Been there, done that.

topstuf · November 16, 2009 9:24AM

<< <i>I never understood why shops never have that "plate glass" set up like banks?

anyone know of a shop that does? I have seen the buzz through double doors and the darkened mirrored windows. >>

Some do. I used bars. But....shops contemplated OR already open make one CRITICAL mistake.
They buzz people IN.
Absolutely wrong. I got robbed with that setup.
Leave the DOORS open for access. Robbers HATE customers coming in.
In my last shop, I am POSITIVE one bunch came in to rob but left immediately when a lady dropped in.
Put the barrier BEHIND the counters.

That adds an element that robbers hate.

A gun is less threat when they then have to get inside to YOU and your safe.

Sure they can smash and grab, but they can't grab YOU.

Every shop with either a buzz IN or a sally port is EASY to defeat. I had the combo. THREE came in.
ONE (with all the RIGHT coin questions) pulled the gun and let all the others in.

He could and DID get to ME. You've already lost after that.

Let customers come and go randomly. It unnerves robbers.

I was also always armed. It does no good when they got the drop on you.

An isolated OWNER is no good dead if there's another barrier beyond the cases. YOU stay locked in.

coindeuce · November 16, 2009 10:10AM

<< <i>I am definitely listening but don't have any interest in chaseing down scrap. I have access to capital-cash but wanted opinions from the battle tested. I am leaving now to a store where the dealer quoted me $1000 apiece on 2 proof gold AGE. This was a phone quote I was surprised he gave it. I will post back in a couple hours. Again I assure I am listening to all input. Jason >>

You need to learn and experience what the real market is for the material you appear to want to handle. Proof American Gold Eagle's were trading wholesale at $1800 - $1850 per ounce on 11/13 at about a $25/ounce lower gold spot basis than today. If you thought that $1000/ounce was a fair price, you won't be in business for long either buying or selling.

cartermurph · November 16, 2009 10:32AM

I wasn't really selling, I was trying to figure out what his spread was. Unforutately he didn't have any in stock for me to compare to. Needless to say he won't be getting hurt with $900 difference.

has anyone ever given any thought to opening a b m

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