What happens to all the stale, overpriced coins in dealers inventory?

Manorcourtman · February 12, 2011 2:46AM

Being an avid buyer of all coin series I have to ask the question......... What ever becomes of the overpriced, stale inventory that dealers accumulate? Being an avid Barber collector I search many sites for fresh coins. I can't help but notice several dealers continue to try to sell the same coins for the same ridiculous prices. Do they not want to move old, stale coins unless they make an unrealistic, ridiculous profit? I give the the following example on eBay. This dealer has had this coin for sale for probably a year now. He runs a three day Buy it Now listing. It never sells and he relists it.......week after week, month after month. The coin is overpriced by nearly 50%. What is the point in holding on to stale, overpriced inventory?? I just don't get it. I am sure others see the same overpriced material daily. What ever becomes of these coins??? And I guess I should ask what happens to these dealers???

questor54 · February 12, 2011 2:51AM

Beats me.

I wonder what the average 'shelf time' is for a coin like that? Maybe a year or two is not unusual. If you want the coin, is there a way you could make him an offer for it without violating eBay rules, of course?

Manorcourtman · February 12, 2011 2:58AM

<< Beats me.

I wonder what the average 'shelf time' is for a coin like that? Maybe a year or two is not unusual. If you want the coin, is there a way you could make him an offer for it without violating eBay rules, of course? >>

I don't want it. I only use it as an example. My daily search has brought this coin up hundreds of times because it is relisted every three days.

OPA · February 12, 2011 3:01AM

And it will cost him $2.00 in listing fees whenever he re-lists. (unless eBay is running a promo)

PerryHall · February 12, 2011 3:06AM

eBay
Teletrade
Wholesale to other dealers
Have a blowout sale to favored customers

In many cases, the dealer refuses to lose money on any coin and is buried with the coin.

Elcontador · February 12, 2011 3:16AM

I've seen the same coins in some dealer cases for a good year at Long Beach Shows (I won't name names). These people refuse to sell a coin at a loss to a retail customer. Eventually they quietly unload them as Perry Hall wrote above.

dragon · February 12, 2011 3:20AM

There are some dealers who believe that every single coin in their inventory is super PQ, walks on water, is undergraded by 2 points, etc. and worth the price they are asking. Then there are those dealers who believe it's good business practice to sell just one coin infrequently at a very large premium as opposed to selling many coins at a fair and reasonable market prices. Then you have those dealers who really don't care too much if they move their inventory or not, and coins are a sideline activity for them.

There used to be one dealer I knew that would basically carry the same (albeit nice) coins from show to show for months on end without selling anything because of the huge premiums he was asking. His inventory used to be referred to as a traveling museum by some of us.

PonyExpress8 · February 12, 2011 3:25AM

There could be other possibilities. Maybe it's a consignment coin or perhaps the seller feels it is undergraded.

On the positive, it is a nice coin and appears to be accurately graded, although not in the most sellable holder.

I sold a PCGS AU50 a few months back for $275 so it would appear to be overpriced by $50-$60 unless it's one of the above scenarios.

This also brings up an interesting corollary. I find if I am solidly on my game I typically sell at least half of the coins I purchase within 2 shows, so from a matter of days to 3 weeks out depending on the schedule.

Their are many reasons why perhaps the others sell more slowly such as more readily available alternatives, thus lower demand.

More expensive coins often take longer which can be a bit frustrating because the % profit is typically lower.

And sometimes there are additional layers involved such as trades etc.

I can think of a coin here and there I have had up to a year. It just hasn't found the buyer or maybe I just liked it too much. For the most part though if it's not sold within a few months it's time to drop the price and move on. Tying up $$$$ and not turning it over is not a great way to go.

I would much rather turn the inventory 4x a year @ 15% then create a "museum" and hold onto something for a year and make 20% holding out.

15% x 4 = 60% or three times being a curator!

But there are a lot of dealers out there that refuse to take a loss should the market move against them and get stuck with the same coins for a long long time. I guess it's just a different business model, but not one that makes a lot of sense to me.

Edit for spelling..

RichieURich · February 12, 2011 3:25AM

<< 

<< Beats me.

I wonder what the average 'shelf time' is for a coin like that? Maybe a year or two is not unusual. If you want the coin, is there a way you could make him an offer for it without violating eBay rules, of course? >>

I don't want it. I only use it as an example. My daily search has brought this coin up hundreds of times because it is relisted every three days. >>

Well, the seller is the "Eternity Coin Shop". So maybe they take "eternity" literally.

As a dealer, stale inventory becomes an issue that becomes larger and larger if you don't do anything about it. Every coin that you have carefully selected for your inventory looks like a winner when you buy it. Just like every pick you make on in the NCAA basketball championship looks good when you make it. It's only after they play the games that you find out how little you know. In any case, what you need to do is move the coin out of inventory somehow, and learn from your mistake. A lot of dealers say "I don't want to lose money on that coin". So it sits there forever. Newsflash: you already have lost money on the coin, you just haven't accepted it. The problem has resulted from a bad purchase, not necessarily inadequate effort at selling the coin. When I see a bad purchase in my display case, I am reminded of my poor decision in buying it, so I would like to sell it so I don't have to look at it too many more times.

OK, what are the ways to move stale coins out of inventory?
1. Reduce the price, even below cost if you have to. You will have a loss if it is sold below cost, but as I said earlier, you have already lost the money, you just might be in the state of denial about it.
2. Trade it to someone else for something you think you can sell.
3. Wholesale it to a wholesale dealer you have done satisfactory business with previously.
4. Consign it to someone who might be better at selling that type of coin than you are.
5. Sell it on eBay or Teletrade.
6. Consign it to an auction.
7. Pull it off the market until conditions for the sale of that coin improve.

With respect to coins in your inventory that have been consigned to you, you have fewer options. The best is to talk with the consignor and try to obtain a better price to move the coin.

BillJones · February 12, 2011 3:25AM

Some dealers refuse to take losses and hold on to stuff for years. As long as the coins, tokens or whatever are not total junk sometimes the market catches up, and they sell the stuff off at a profit. In other cases, it's there until they or their business croaks.

When I wanted to get rid of something I’d blow it off with a special sign in my case at show, or if I REALLY wanted to get rid of it, I blew it off on eBay. But I’ve not used eBay in more than five years. I also consigned the last of my token inventory to auction when I was shutting my business down.

291fifth · February 12, 2011 3:37AM

Many of them eventually make their way into the stocks of Sunday bourse dealers. I can think of several local Sunday bourse dealers whose stock seems to consist entirely of stale, low end of grade/overgraded, overpriced material. These folks never pay much for what they buy so quality coins are never offered to them. They also tend to be of the mindset that "I will never take a loss on a coin" so their "stuff" just sits and sits.

ambro51 · February 12, 2011 3:45AM

They Tone?

BillJones · February 12, 2011 3:59AM

Sometimes "ye olde high priced junk box" can contain some very interesting items. One time an old time dealer pulled out his "special junk box" for my review. Among the items was a Templeton Reid $5 gold piece. Its surfaces had been polished like crazy, and at least one of the grading services had refused to pass an opinion on it, counterfiet or genuine. Another piece was a low grade Pike's Peak $10 gold piece. That one was genuine, but it had probably been someone pocket piece and had lots of wear.

droopyd · February 12, 2011 4:41AM

<< What ever becomes of the overpriced, stale inventory that dealers accumulate? >>

From what I've seen, they continue to sit and become staler and staler. Some of these coins won't change hands unless the dealer liquidates his/her entire inventory, whether by choice or by death.

Greeniejr · February 12, 2011 5:14AM

I am in the process of paring down some of our higher priced stale inventory and what I did first was consigning it to a vest pocket dealer to walk at some shows. What he wasn't able to sell is up on eBay now with 1 cent starting and no reserve.

MrEureka · February 12, 2011 5:35AM

Certainly, some coins don't sell because they are priced too high. But I think most retail buyers would be amazed (if not scared) at how long it often takes to sell a properly priced coin. So don't assume that every coin that has been available for months is overpriced.

coin22lover · February 12, 2011 5:49AM

Well I think this could be asked about 90% of all coins listed for sale (including one of mine, although I'm a casual trader and not a dealer). But look at it this way...if someone marks up a coin 100% and it takes 5 years to sell, they have doubled their money. Not too bad.

OchoReales · February 12, 2011 5:54AM

<< In many cases, the dealer refuses to lose money on any coin and is buried with the coin. >>

Not always true. There is an old saying in the coin business. 'If you NEVER lose on a coin, you're probably not doing enough business'.

BillJones · February 12, 2011 5:54AM

<< Well I think this could be asked about 90% of all coins listed for sale (including one of mine, although I'm a casual trader and not a dealer). But look at it this way...if someone marks up a coin 100% and it takes 5 years to sell, they have doubled their money. Not too bad. >>

Yea, but in the mean time they turned off enough potential customers to shoot themselves in the foot. When I go to the large shows I head for the dealers who price their material fairly, and only go the guys who overcharge after I've seen everyone else. Usually I don't get the "keystone" pricing guys at all.

In the medal business there used be this guy who had loads of ads and published books, but his prices were so high I couldn't be bothered. I could go to a major auction or work the bourse floor and do much better. Sure I could have gotten my collection together faster if I had bougth from this guy, but for some of us shopping is part of the fun.

LindeDad · February 12, 2011 7:01AM

<< And it will cost him $2.00 in listing fees whenever he re-lists. (unless eBay is running a promo) >>

Not really he has a eBay store and fixed price listings only cost 20¢ each. But I do bet he does a lot of re-listing that is only one of many items grossly over priced that I saw.

GritsMan · February 12, 2011 7:13AM

I see the same thing--and wonder the same thing--with ads in NN. I look at the 1995-W ASE and think "How many is this guy really selling at $2850 a pop?" I'm guessing not many, but he's afraid that if he lowers the price, the whole pricing tower will come crashing down.

coin22lover · February 12, 2011 7:19AM

<< 

<< Well I think this could be asked about 90% of all coins listed for sale (including one of mine, although I'm a casual trader and not a dealer). But look at it this way...if someone marks up a coin 100% and it takes 5 years to sell, they have doubled their money. Not too bad. >>

Yea, but in the mean time they turned off enough potential customers to shoot themselves in the foot. When I go to the large shows I head for the dealers who price their material fairly, and only go the guys who overcharge after I've seen everyone else. Usually I don't get the "keystone" pricing guys at all. >>

I'm not too sure what you mean by keystone, but it seems like a lot of overpriced dealers do extremely well. They consistently receive the highest praises, where as if a regular nobody would have rotten tomatoes thrown at them left and right. I've seen it before.

dragon · February 12, 2011 7:36AM

Maybe this seller could answer the original posters question?

http://cgi.ebay.com/1882-S-Monster-Toned-Morgan-PCGS-MS-66-/360130526653?pt=Coins_US_Individual&hash=item53d973bdbd

ModCrewman · February 12, 2011 7:45AM

<< Well I think this could be asked about 90% of all coins listed for sale (including one of mine, although I'm a casual trader and not a dealer). But look at it this way...if someone marks up a coin 100% and it takes 5 years to sell, they have doubled their money. Not too bad. >>

Of course if he started with $1,000 and did as you suggest at the end of 5 years he has $2,000.

If he starts with $1,000 and marks up 50% to $1,500 and it sells in 6 months, and reinvests the $1,500 and marks it up 50%, sells said coin in 6 months, and he repeats that process for the full of 5 years....at the end of the 5 years he has an astounding $57,665.

If instead he marks it up just 25%, and sells it in 3 months...the number after 5 years is $86,736.

Of course if you're happy with $2,000...I suppose that's okay too.

I recognize there are a lot of other variables involved; but to me the successful dealers are the ones who recognize that the coins are essentially "widgets" upon which the market says entitled to a reasonable mark-up when sold. And the market doesn't care how many times he chooses to turn his product and he makes no money unless he sells something.

coin22lover · February 12, 2011 7:58AM

<< 

<< Well I think this could be asked about 90% of all coins listed for sale (including one of mine, although I'm a casual trader and not a dealer). But look at it this way...if someone marks up a coin 100% and it takes 5 years to sell, they have doubled their money. Not too bad. >>

Of course if he started with $1,000 and did as you suggest at the end of 5 years he has $2,000.

If he starts with $1,000 and marks up 50% to $1,500 and it sells in 6 months, and reinvests the $1,500 and marks it up 50%, sells said coin in 6 months, and he repeats that process for the full of 5 years....at the end of the 5 years he has an astounding $57,665.

If instead he marks it up just 25%, and sells it in 3 months...the number after 5 years is $86,736.

Of course if you're happy with $2,000...I suppose that's okay too.

I recognize there are a lot of other variables involved; but to me the successful dealers are the ones who recognize that the coins are essentially "widgets" upon which the market says entitled to a reasonable mark-up when sold. And the market doesn't care how many times he chooses to turn his product and he makes no money unless he sells something. >>

True, but this is assuming the dealer is active enough to replenish their inventory.

Rollerman · February 12, 2011 10:02AM

I think they were all in the last auction I went to!

keets · February 12, 2011 10:07AM

as dragon said, i'm sure every regularly held show in any locale has "Museum" dealers, i know the shows i go to do.

Julian · February 12, 2011 11:41AM

I happen to be a very good person to respond to this question.

1. Coins do not get stale. Bread gets stale and becomes worthless. Coins are never worthless and for the most part increase in value over time.

2. There may not be a buyer for an item at this moment, like Andy alluded to, but everything will sell eventually. You can force an immediate sale, by lowering the price or by auctioning it, but someone will purchase it eventually at a fair price.

3. I happen to love coins and do not panic if something doesn't sell immediately. If I bought it, I liked the quality or the value.

4. I have always preached that patience is a very important virtue in numismatics. Both buying and selling.

5. I am sure that I have had coins for 20 or 30 years or more. It just happens when you have a store. No big deal.

bidask · February 12, 2011 11:50AM

<< I happen to be a very good person to respond to this question.

1. Coins do not get stale. Bread gets stale and becomes worthless. Coins are never worthless and for the most part increase in value over time.

2. There may not be a buyer for an item at this moment, like Andy alluded to, but everything will sell eventually. You can force an immediate sale, by lowering the price or by auctioning it, but someone will purchase it eventually at a fair price.

3. I happen to love coins and do not panic if something doesn't sell immediately. If I bought it, I liked the quality or the value.

4. I have always preached that patience is a very important virtue in numismatics. Both buying and selling.

5. I am sure that I have had coins for 20 or 30 years or more. It just happens when you have a store. No big deal. >>

It just happens when you have a store. No big deal But what if you don't have a store....?

RedTiger · February 12, 2011 11:55AM

Some of the other replies touched on the math. Each dealer is going to have a different way to manage inventory. Some sit on stuff no matter what hoping that a fish will come to bite, some dealers mark it down and offer it to retail buyers, some wholesale it to other dealers, some blow it out at auction on Ebay or Teletrade, some consign it to other dealers and get what they can.

As for Ebay listings, there are a promotions and specials, and free listings, so don't assume that the seller is paying the full boat rate that a newbie seller might pay for every listing every cycle. On Teletrade, the house likely owns or has a stake in so many of the stale coins it isn't funny.

The most financially successful dealers, the "two Ferrari dealers" are often able to do both, charge a decent markup and also turn over inventory relatively quickly. The compounding is likely amazing. Imagine being able to turn 5%, 10% or more, every month on several million dollars in inventory--that's how those top top dealers get to point of being able to afford two Ferraris.

I noticed a pattern dealer chimed in about the length of time needed to sell at full retail price. Patterns are a different world as are some of the less active series or areas. Far different from say, generic MS64 common date Morgans. Even with the commonly available stuff, there are a few dealers that make a decent living buying low and selling at full retail with markups at 100% on more common material. Some major big name dealers with magazine ads come to mind. They do enough business to keep running the ads. The math in terms of profit margin and turnover rate, works for them.

With all that, the coin business is not an easy business. There is no "factory" (unless we are talking about Chinese fakes) to call and order inventory at a set price, when inventory runs lows. Finding decent inventory that can be sold at a decent profit is one of the most difficult parts of the puzzle of being a successful dealer.

Julian · February 12, 2011 12:24PM

<< 

<< It just happens when you have a store. No big deal But what if you don't have a store....? >>

It is just about money management. Do you like your inventory or do you want to flip everything?

OPA · February 12, 2011 1:24PM

<< 

<< And it will cost him $2.00 in listing fees whenever he re-lists. (unless eBay is running a promo) >>

Not really he has a eBay store and fixed price listings only cost 20¢ each. But I do bet he does a lot of re-listing that is only one of many items grossly over priced that I saw. >>

True... I stand corrected...it's a fixed price auction.

okracer · February 12, 2011 1:30PM

<< 

1. Coins do not get stale. Bread gets stale and becomes worthless. Coins are never worthless and for the most part increase in value over time.

>>

.........I was about to say that!.........

penny4yourthoughts · February 12, 2011 1:46PM

ebaybuyer · February 12, 2011 2:01PM

i dont know much (anything) about barbers, that 06-D could be a scarce date in that condition, it could be that the seller feels it would upgrade, possibly the seller would sell it for less, could be that he really doesnt care if he sells it, who knows. interesting question though

RedTiger · February 12, 2011 3:14PM

<< I'm running the dangerous gauntlet of bullion flipping at the moment. I've put about a thousand into capital...buy at a price in my mind, sell to a dealer, and make...wait for it...about a dollar per dollar of face. But, after expenses, I can make about $50 bucks. That's in a couple weeks time. It seems very possible to double my money without substantial risk in a year. Where else could you do that? I don't rip off grandmothers, either. If you could do this with a hundred thousand dollars worth of capital, you could have Ferrari in no time. >>

In one sentence you use the phrase "dangerous gauntlet," and then in the next you write "double my money without substantial risk." Sounds like you know intuitively that there is a danger. As for $50 after expenses, for how much time? With coin flipping profits rarely do the operations scale up smoothly. There is no "factory" to order more inventory to flip. A person might be able to double that $1000 or even perhaps $5000, but the bigger the size, the more competition you are likely to find. In most locations there is a finite amount of silver coin being sold each week that can be flipped. When there is a bigger payoff, there tends to be more competition. Try to do deals 10 times bigger to make $500, and there will be more competition. Go to 100 times bigger to try to make $5000 in one deal, and there will be many more players.

As for risk, here are three biggies: fakes, theft, and fast moving markets (like that day they raised silver margin requirements and silver futures fell 15% in a minute). Play long enough and one of those three is almost certain to happen to you. One bad incident can wipe out a month or six months of profits, depending on how bad the damage is.

penny4yourthoughts · February 12, 2011 3:36PM

rld14 · February 12, 2011 4:16PM

I think it depends on how you look at it, but the fact is, if you're a dealer, the longer you sit on a coin the less you make.

Glenn (PonyExpress8) basically nailed it. Turn is very important. Those of you who know me know that I am in the car business as a used car manager. One of the dealerships where I worked was a store that I "turned". Basically, they were holding out for home runs on every single car, they were selling 20-25 used cars per month at $4,000 per copy on average, and that's front end gross profit, not including finance income (Which was dismal). When I left, they were selling 50-60 cars per month at $3,200 per copy including finance income. Basically, they went from making $80k/mo to nearly double that.

With an inventory cost that went from $850-900k on average to $1,000,000-1,100,000 on average.

My little system put nearly another million dollars a year in gross profit in the dealer's pocket.

One of the ways people that do what I do are graded is not only gross profit, but also on "turn".

Say it takes me, on average, 45 days to sell a car with an average cost of $20,000 and an average gross profit of $3,000.

If I have that car in stock for 6 months, I'd have to sell it for $32,000 to be even, if I blow it out for $18,000 I don't lose $2,000, I really lose $14,000!

I can understand that there are exceptions to the rule, such as esoteric coins where the market may be VERY limited and where you know up front that the coin will take a long time to sell. In which case I'd say you need to keep a healthy margin on it.

golfer72 · February 12, 2011 9:07PM

<< I catch the ironic nature of it. For me, $1000 isn't a significant risk. I enjoy the "thrill" and it occupies my time. If I lost it all tomm, it was a fun way to spend my time. Realistically though, even if the market lost 75 percent at open tommorow, it would eventually buy back up to half or whatever example one wishes to use. If I lose my earnings, I consider it the cost of my entertainment....same with the capital. I feel that this is somewhat of a bubble in the grand scheme. Eventually interest will wane. Will it go to $4.25 again? I really doubt it. $15 bucks? Very possible. As to the amounts, I make the same on average regardless. If it takes 20 $50 deals to do the same as 1 $1000 deal, I'm fine with that. Plus having a couple 20 dollar face deals sitting around for a couple days isn't as risky at any particular moment as one $1000 sitting there for a couple days in my view. I don't buy unless I know with reasonable certainty I can sell for a profit. >>

" I'm running the dangerous gauntlet of bullion flipping at the moment" Is it dangerous or not?

PerryHall · February 12, 2011 9:40PM

<< True... I stand corrected...it's a fixed price auction. >>

It's either a fixed price sale or an auction. It can't be both.

halfcentman · February 12, 2011 11:15PM

There is no bigger turnoff for me (and most collectors) than looking at the dealer's graveyard/museum of deadwood.

Frankly, most dealers (even successful ones) have a horrible understanding of Utility Theory. Even though qualitative factors should be taken into consideration, some of those qualitative factors should also include how much you are pissing off your customers with your stale garbage. Doing that is robbing your business of "appearance equity."

EVERYTHING has a price. You need to take some hits and increase your cash flow. Make it up on some better purchases and learn.

tradedollarnut · February 12, 2011 11:52PM

What makes you more profit as a dealer - hold one coin 12 months and make $1,000 on it ... or turn 10 different coins in a year and make $100 each?

I dare say the former. In a stable or rising market where it's difficult to replace quality coins, I see nothing wrong with that strategy.

ColonialCoinUnion · February 13, 2011 12:23AM

<< What makes you more profit as a dealer - hold one coin 12 months and make $1,000 on it ... or turn 10 different coins in a year and make $100 each?

I dare say the former. In a stable or rising market where it's difficult to replace quality coins, I see nothing wrong with that strategy. >>

Sure, but there are other costs associated with having an inventory that rarely or never changes:

1. People stop bothering to look at it.

2. People start to think that your prices are too high, which leads us back to 1.

RedTiger · February 13, 2011 12:45AM

<< What makes you more profit as a dealer - hold one coin 12 months and make $1,000 on it ... or turn 10 different coins in a year and make $100 each?

I dare say the former. In a stable or rising market where it's difficult to replace quality coins, I see nothing wrong with that strategy. >>

This is a key point. There is no place to call to order quality inventory. Finding decent coins to sell at a profit is much tougher than finding customers willing to buy quality coins at a low retail price. Think about how many years it has taken to put together your own collection, with each coin, hopefully carefully selected. Now try and replicate it within 3 months or 6 months or 12 months or whatever the definition of stale is in your own mind. Think about doing that quickly, replicating the coins, the quality and also buying at a wholesale price, so the coins can be sold at a profit. Unless the collection is all common and average looking coins it is going to be a difficult trick. Even with dealer access, dealer connections, and working 24/7, for many collections it is going to be a monumental task to complete before the time expires.

I tend to believe each successful dealer has a decent handle on the math of the business. Do folks think they are stupid? Really? Top coin dealers can afford two Ferraris plus a big house, plus a SUV for every day driving, work for themselves, and they are the stupid ones? What collectors often don't understand is the other side, how difficult it can be to find decent inventory at decent prices. It is dog-eat-dog, shark-eat-shark, because every active dealer is always looking for decent coins to sell. It is an endless treadmill. Blow out all their current inventory so there are no more stale coins for the picky collectors to be discouraged by? Then what? Pick up the phone and call who? Or go fishing? Managing inventory is a balancing act that every successful dealer does relatively well.

Sure there are hobbyist dealers that don't make much, and don't sell much, and are in it just to be around coins, but they aren't top dealers making the big money. There are also some dealers that only carry a small inventory, and do move out their coins that hang around. They travel light and move quickly, but don't have many coins to offer. Set collectors will never finish a series set, if they only do business with low inventory nimble dealers. On the other side, any long term dealer with a large inventory is almost sure to have some stale inventory (stale by the definitions of the thread).

As I often write, the hobby is a big tent. It is for collectors as well as dealers. There are a lot of ways utility theory, compounding, and the math of the coin business can be made to work or fail. The successful dealers find a decent balance in terms of how long to hold their coins, how much profit to aim for on each transaction, how much inventory to carry. It may not please some of the collectors that are always looking for new, fresh, and competitively priced, but if the dealer is successful, that balance is working for that dealer. The hobbyist dealers, or the dealers that wash out, have not found that healthy balance, or could find a much better balancing point if they think about it. The coin market is self-selecting.

roadrunner · February 13, 2011 1:08AM

My most striking example of inventory abuse by a major retailer was on a slabbed pop "top" rarer date NGC MS66 half dollar I considered purchasing in 2002. It was a decent coin but technically only a 65 or 65+. I was willing to pay about 80% of the original ask price but not the 100% price that was being based on the price realized of the other MS66 (PCGS) that was indeed properly graded. In the end, the coin took 5 or 6 trips to major auctions during the 2002-2005 period. It was bought back everytime but the last one. And inbetween auction trips it was sometimes relisted in inventory at ever-reduced prices. It finally took a downgrade to PCGS 65 and accepting 50% of the original price to get it sold over 2-1/2 yrs, falling from $33,000 to something around $16K to get 'er done. In the meantime it became so stale that I'm surprised the holder didn't crack. The coin became so over-exposed that I no longer wanted to touch it at any price. This is the way many midjudged coins of many major dealers end up...touring the auction circuit until the dealer finally admits they made a mistake and letting it go.

roadrunner

timcoin · February 13, 2011 1:24AM

I have heard, on numerous occasions over the years, dealers say things like, "I don't care if I sell it!" and "the current market value of this coin is too close to melt, so I'm hanging on to these for a while." and "here are two coins graded the same, this one I want $1,500, and this one I want $3000." and "I may be asking MS64 money for an MS63 coin, but you find me an MS65 with this much hair detail and I'll buy you a steak dinner." and "These seem too cheap right now, so I'm hanging on to them. They don't eat anything."

I actually like hearing things like this. It provides me with information on what dealers are thinking. I learn from it. It gives me an "edge" when I'm walking the floor. If a dealer I respect says Liberty Half-Eagles are too cheap, I might be inclined to look for good deals on them as I walk the floor.

I can think of much bigger turnoffs than a dealer who has a "graveyard/museum of deadwood."

Cashflow is only important if you are prevented from buying something because something you are holding is taking up the resources needed to purchase that item. If you are not short on cash, it is really not that big of a deal. At worst it is just a gamble that by holding on to something you have a chance to outperform an alternative investment choice.

I'll agree that EVERYTHING does have a price. Thankfully the choice on what price to accept falls on the owner.

timcoin · February 13, 2011 1:34AM

<< My most striking example of inventory abuse by a major retailer was on a slabbed pop "top" rarer date NGC MS66 half dollar I considered purchasing in 2002. It was a decent coin but technically only a 65 or 65+. I was willing to pay about 80% of the original ask price but not the 100% price that was being based on the price realized of the other MS66 (PCGS) that was indeed properly graded. In the end, the coin took 5 or 6 trips to major auctions during the 2002-2005 period. It was bought back everytime but the last one. And inbetween auction trips it was sometimes relisted in inventory at ever-reduced prices. It finally took a downgrade to PCGS 65 and accepting 50% of the original price to get it sold over 2-1/2 yrs, falling from $33,000 to something around $16K to get 'er done. In the meantime it became so stale that I'm surprised the holder didn't crack. The coin became so over-exposed that I no longer wanted to touch it at any price. This is the way many midjudged coins of many major dealers end up...touring the auction circuit until the dealer finally admits they made a mistake and letting it go.

roadrunner >>

Great post. To me, the owner of this coin took a shot. Maybe he takes a lot of shots, with the understanding being that some shots will succeed and others will fail. Successful people do this all the time.

291fifth · February 13, 2011 1:49AM

<< 

<< What makes you more profit as a dealer - hold one coin 12 months and make $1,000 on it ... or turn 10 different coins in a year and make $100 each?

I dare say the former. In a stable or rising market where it's difficult to replace quality coins, I see nothing wrong with that strategy. >>

Sure, but there are other costs associated with having an inventory that rarely or never changes:

1. People stop bothering to look at it.

2. People start to think that your prices are too high, which leads us back to 1.[/q

My comment:

I have largely stopped going to local shows because of stale, overpriced merchandise. It gets to the point where it isn't worth the cost of the gas if you know you won't even bother looking at most of the tables.

LanceNewmanOCC · February 13, 2011 2:43AM

"EVERYTHING has a price. You need to take some hits and increase your cash flow. Make it up on some better purchases and learn"

I say things like this all the time. I will make more profit off coins that I've lost money on by using the cash to buy other better coins than other dealers will that wait for the big score and lose customers that are tired of seeing the same coins in their booths/shop/site. Sometimes it is good to wait, although it is a much bigger gamble. Had some items that were sitting for 12 months+ and right when I was ready to give up and dump the items a person wanted to do a trade and after all was said and done I made 4-6x from the trade items than the items that sat for all that time. I waited and believed in the items sitting and it paid off to wait. I probably won't let it happen again because if i would have just dumped the items after the first couple months and used the money (at a loss) to purchase other items over the next 10+ months, I probably would have made 10-30x the original investment and had a lot more fun instead of the 4-6x.

Fluidity is key for my particular strategy of turning over stock. We will not run out of coins to buy FOR A FACT let alone all the other billions of things we can purchase for resale.

Sell what you have as quickly as possible unless it is a rare high-grade or true r4+ which really are difficult to replace but you generally won't have any trouble selling coins like that anyway. Have some fun now!

With all the ways that you can die it is a good philosophy to prepare for the future with a balance of I may not have tomorrow so I should make something happen today. Since tomorrow is not promised to us, seems a good idea to let some people just have some good deals because any decent business person knows, you will make huge profits over a successful career, so pass those joys along to some other people and remember how you felt to get a good deal.

and that is all i have to say about that lol

rhedden · February 13, 2011 2:49AM

Good point made by the OP about the people who repeatedly relist on eBay. I've often wondered why they relist their overpriced coins 50 times. Do they not realize they spent $100 on listing fees? They'd rather spend $100 relisting an overpriced $75 coin than sell it to you for $60. Oh well, they will get what they deserve in the long run.

mrpotatoheadd · February 13, 2011 2:56AM

<< Good point made by the OP about the people who repeatedly relist on eBay. I've often wondered why they relist their overpriced coins 50 times. Do they not realize they spent $100 on listing fees? >>

Depending on how you do it, listing fees are not necessarily a big expense. I can list an item in my store for 30 days for 10 cents. Even if it takes a year to find a buyer, that's only a little over a buck in listing fees.

What happens to all the stale, overpriced coins in dealers inventory?

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