How do coin dealers make a living?

I've contemplated on opening a coin shop or website, but quite frankly I don't know how coin dealers make a living. If these are secrets of the trade then let them be.

#1- Attending Coins Shows and Auctions costs $$. Hotel, food and gas fees will eat up any profits made. I realise that there may be some tax write off's because of this.

#2 Websites and coin shops cost $$ also. Website maintenance fees, Coin store rent, bills, payroll for employees, time invested, shipping, ebay fees, auction house cuts ect.

#3 Where to buy coins and turn them around for a profit. I've heard before coinshows that dealers may exchange coins at grey sheet bids. Why would a dealer give another dealer a discount? Wouldn't it be better to give the customer one?

#3 continued. I understand that most coin shops have a "sell" and "buy" price. Are there that many people selling coins for a lower cost than what they paid? If I purchased a coin today from my local coin shop and sold it the next day I would lose $$. Very few coin dealers will buy a coin back or or give you a trade in at the price you paid. I know AJ does this and I'm pretty sure Rick Snow and The Penny Lady will honor returns and or trade- in's but there are not many dealers like this.

Personally The only coins I've sold are gold and silver bullion coins along with a few key date mistakes I've made in the past. I definitely lost on the key dates and usually almost break even on the bullion depending on the price of gold.

So how do you coin dealers keep your head above the water without drowning? If you buy a $2000.00 coin from Heritage and sell it $2100.00 for it you probabally lost $$.

Harry

 

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There are 2 ways using your numbers. Either sell 5 coins at $2100 or sell 1 at $2500.

However, the dealers I have seen anything about do not make money buying from Heritage, but mostly from drawing people with their Heritage coins and buying the customers coins below retail.

Another way is buying Heritage dealer lot auctions. Yes, Heritage sells a LOT of coins raw, often unsorted, in lots to dealers.

 

I'm not a dealer, but I know that my local dealer jacks up his selling prices from his buying prices a lot more than 5%. That being said, I often wonder how he even pays the rent with the price and amount of stuff that sells in there.

 

I'll agree with that logic; Make a smaller profit but sell more in quantity. Increased sales however can increase to a point where a business needs more human resources to accomplish the task. So a business would need more employee's. Now I'm thinking of a smaller business, however more sales will increase your time invested.

 

I will tell you it in a few words.....volume volume volume and customer satisfaction... If I make %15 I am a happy man. If my customers are happy then they come back and they tell their friends. Silver and Gold, you buy it right and then you sell it as close to spot as you can. Most dealers I know do not sit on the silver or they try to retail the gold above spot. Just a little insight from a very small town dealer.

 

Harry,

It sounds like you need to attend Session II of this year's ANA Summer Seminar. This course if made for you:

33. ​

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So You Want To Be A Coin Dealer?​

It’s not as easy as youmight think! This course is designed to steer you in the right direction once you decide to become a retail, wholesale, vest pocket, Internet,mail-order or coin show dealer. Topics include dealer ethics, choosing a location and setting up a store, educational requirements, sourcing product and services provided to dealers. Learn how press releases and public relations will bring in new clients. (Note: early registration is recommended as class size is limited.)
Instructors: Barry Stuppler, ANA president and owner of Barry Stuppler & Co.; and A. Ronald Sirna, ANA general counsel, coin show dealer and president of the Toned Coin Collector’s Society.

I took this course a couple of years ago and learned a lot. I took the course to learn something about the business but I don't have any any intentions to become a dealer any time soon.

You can register here. ​

 

This is a really interesting thread. Thanks. I often wonder how my local coin dealer makes it.

 

ill tell you how. during the famos chicago show i saw a whole bunch of dealers who were interested in buying my gold rupees coin for $400 so what if happened to be a 3k coin. so thats how majority of them make it if they dont have have the big clientelle they rip some poor fellow off. there have been too many such incidents where such stories have been shared with me. i dont know why it helps them float their ego

 

"How do coin dealers make a living?"

They buy as cheaply as they can and sell at a higher price point than their cost plus expenses -- just like everyone else in collectibles and retail.

 

hehe even if the low point is below face in some instances

 

I get the feeling some buy bagged and true estate coins and hope for the best. They keep the best and then e-bay the ones they can for red book value or just below knowing someone is sitting at home with a red book instead of a gray sheet. They buy as cheap as possible and sell for as much as the market will tolerate. Yes a few people who think they are getting a great investment buy some coins they shouldn't and make the dealer a little more money than normal. They keep their expenses to a nominal and sell on the Internet as much as possible to keep overhead down. Ice

 

I'll think about this one then post later.

 

Well, here's my educated guesses.

There's always somebody falling on hard times. They need to find somebody who will buy what they have and buy it fast. It's called desperation. The dealer offers 50% or less. Sold!!

Old person inherits a collection.
Kid inherits collection.
Husband dies. Never communicated much with his wife or documented the collection. Wife brings collection in to see what she can get to help pay the bills. Dealer offers "X"%.

Next scenario. Collection is stolen. Thief has no idea coin is worth 5k. Dealer sizes him up before offering 500 bucks. Thief takes the money and runs!

Coin shows. Dealer to dealer wholesale transactions are dirt cheap. Look at a greysheet some time and then try to get those prices.

Next option. Buying in bulk from the mint. Sooner or later, something's going to hit (99 silver proof sets as one example). Anybody that hoarded them made easy money.

Or, they can play the grading game.
Dealer knows what they are doing. Looks for premium MS-65 coins. Re-submits them multiple times until it comes back as a 66. Instant profit, sometimes major profit. If this succeeded with one, single, coin, the price difference could easily be more than a month's pay to me.

Or, you buy proof silver eagles, etc., in bulk at the dealer discount. Submit them all to the TPGs. Some are bound to come back as 70s. Instant, major profit for doing very little.

From what I gather, it would appear that as the dealer gets bigger with more available assets and $$ to buy things, the easier the business would get. Like any other business.
Once you can write a check for anything that comes in the door, on the spot, I would imagine the sky's the limit.

Some probably knowingly sell fakes.

Just to name a few ways. I'm sure there's many more. And I wouldn't know the details. But I do know some aim for insane profits. 100% or more is certainly not out of the question. I've seen it.

It never ceases to amaze me at how lazy people are. Young and old alike. There's no desire to use any energy to find out what something is actually worth (even in the age of the internet!!) before going to get their (likely) 50% or less offer from the dealers. It's easier to let the dealer dictate the values to them and they gratefully take the check and walk away.

I don't know what the proper etiquette is at shows when people come in trying to sell to dealers but one of these times, I'm going to beat a dealer's offer and get some steals that I didn't plan on going there for.

 

I know that I am somewhat late in getting into the fray on how Coin Dealers make money but here goes! There are honest Coin Dealers that purchase coins mainly from the public at 10% back of Bid based on the Dealer's Grey Sheets then sell the coins either to other Coin Dealers at Bid or back to the public at Ask or higher prices. Then there are the dishonest Coin Dealers that purchase coins from the public at prices that teters on grand theft. When a person comes into their' shop to sell coins, the first thing out of their mouth is, "What do you want for them?" or "What are you looking to get out of them?". If that gets confused responses like "well, I don't know!" or "I don't know what they are worth!" or "What are they worth?", then the Coin Dealer will usually quote a price which is at least 50% below the actual value of the coins and most often a lot less.

If you are really going to make it in the Coin Business and stay in it for a long time, then your reputation means everything. If you are honest in your dealings, the word will get out and you will do much, much more business than the dishonest Coin Dealers. Also, purchasing coins in Lots such as acquiring entire accumulations such as a Collector's Collection or Estate Collections seem to be a large part of the money makers for many Coin Dealers that I know. These are sometimes the purchases that contain Rare Key Date or Rare Variety/Error coins that are usually just thrown into a box with a bunch of other coins and have been long overlooked. Also, many of the Coin dealers that I know, have Collectors and/or other Coin Dealers already lined up to purchase these accumulations or Collections even before they actually make the purchase thus preventing the long-term tieing up of funds needed for other purchases.


Frank

 

Plain and simple. To do it honestly and right, you have to know the market and spot the undervalued coins. Best place for a dealer to buy is at his ( EDIT: or her ala Charmy ) table at shows.

One of my favorite things is to browse a show early on day 1 or setup day, and cherry the sweet coins. I know my series well, and can spot them.

If I had to live on selling coins, I'd be living in my SUV.

I luckily have a great day job, AND, am a collector first, just having fun. I do make money, but I have also lost a lot on certain coins. I made good money last year profit in coins. Not enought to live on by any means. Without tuition mistakes, that could have been alot more.

As a vest pocket guy my costs are minimal. $120 a month covers my website and by new Verizon set-up. I pay about $600 twice a year for my Tucson shows, hotel and travel included, $50 a month for my Scottsdale shows and $45 every 6 weeks for my Glendale shows. Add about $200 a month for advertising that I do, including here on CT.

I do about 30% on my website and about 10% of my biz on the bay, the rest is shows and wantlist customers. I do alot of favors as well, many times for nothing for friends and CT'ers AS I AM A COLLECTOR FIRST.

I will sell in bulk to wholesalers alot becauase it is fast and easy money. I also buy from wholesalers alot too. I can call a cpl folks I deal with and order a cpl rolls of semikeys and get them right.

The local dealers always know I am a strong buyer for NICE coins, so that helps when they get nice collections in.

I'll think and add more of MY experience later, this is just me and me only.

 

I'm sorry but for a true dealer it's just not about the money, it's a passion.

 

Why not go into medicine?

Coin dealers are right up there with used car salesmen and ambulance chasing lawyers. All three make their living by taking advantage of the other person.

As a hobby, its fun but as a profession? I would imagine it would eat away at your soul after a while. All of the honest coin dealers that I know of don't make much profit, if any. They do it for the love of the hobby and not financial gain.

 

I agree. My preferred coin dealer is a great guy. But according to him, you can't be on both sides of the aisle. You have to choose.

And if you're doing it for the "passion", why not just do it on the side. Basically, why quit your day job?

Not knocking the idea at all. I think many of us think (dream) of the same thing.

I also agree 1000% with the comment that successful dealers have a list of what people want. In many ways, it's probably more important to have people to sell TO than it is to have people to buy FROM.

 

All of the dealers in town here play the bullion game. They buy common date silver coins, scrap sterling jewelry and gold rings and such and turn around and sell it to a smelter. Of the four biggest shops in town right now two of them pay 5 to 1 for silver, one 6 to 1 and my dealer pays 7 to 1. They all then sell to the smelter and are getting around 9 to 1. When you do a lot of business in this way I'm sure it can keep you in the black, especially if you're the tools paying 5 to 1 ( I won't go to either of those shops as their coins are outrageously priced). I've also seen people come into dealers shops, and not knowing what they had say how much for all this "junk or stuff" they don't care so the dealer gives them a low ball number and makes a wide profit margin.

 

The way to make money is buying and knowledge.

The way to make money is to "buy it right" and know where there may be treasure.
Every dealer I know says the way to make money is to "buy it right". Now that means different things to different people. To some that may be 45% back of bid on some items or 10% over bid for some items. It really depends for example as you grow in the business you start to know your product, it's weak points and strong points and at which time for each. If a dealers has $14,000 sitting in the basement in mint and proof sets he does not want no more and will not offer much as with the 45% scenario - I cannot fault the man for that because he really hopes the guy will walk away, nothing wrong with that - it's like everything else in the market supply and demand. If the same man walks in with a 1922 "no "D" Lincoln in a PCGS AU-50 that same dealer may offer over bid for that coin because he knows you cannot buy them for grey-sheet money and he's got several people waiting for that coin.
The mistake that we, (many collectors & dealers) make early on is thinking that common junk like mint and proof sets should be treated the same (in regards to buying and selling) as truly rare and desirable key date coins - they should not even be in the same room at the same time. They are not the same will never be the same and will be priced, bought and sold accordingly. I'm not sure why that is a shock to folks accept that people mistakenly believe that they should always "get their money back " on coins - why would folks think that??? It' ain't true in any other market, antiques, guns, paintings, cars, and especially jewelry and furniture.
As to the posts mentioning dealers that are crooks the same thing applies - where is there not crooks in any market???
Our job is to have the knowledge needed to minimise the risks as it applies to buying and selling coins and bullion.
So how do dealers make money - the pay their dues.

1. Most work very hard and have stayed with it for a couple of decades at least.
2. They know the market and they know their customers.
3. They have built a reputation so as to have many avenues or outlets already in place to move certain types of coinage to before they even buy it.
4. They buy right - and with that I do not mean they rip their customers, sure some do but they do that in any market.
5. to further expand on #4 as you know more people you have more connections, more connections means more places and persons to tap into for buying, selling, trading, and resources to find out information.
6. They get chances at better stuff from time to time and some will yield nice returns.
7. And that brings us to die varieties, my favorite subject.
Now I know quite a bit about 19th & 20th century die varieties.
I have paid $8 dollars for 1971 proofs sets with all the "big 3" Lincoln's DDO's in them worth collectively more than $2500 for the three - I do not have to share my body of work when I am searching and digging for that doublED die. I have bought the books, I have searched the thousands of hours, I have belonged to the clubs, bought the magazines, updates, computers, phones and done the footwork and when I find one the above has already paid in advance for that coin. Now not every coin, and not with every dealer, customer but the fact is I do not have to share my bought and paid for knowledge with every single person to be an honest coin dealer. I will though freely share with anyone who asks and will always help folks learn about these hidden treasures.
I deal with 20 to 25 dealers each month and in between another 2 or 3 and I think the above hold true for most of my better dealers.

I'll tell you two things and not charge you'all for it - most dealers know absolutely nothing about doublED dies unless the coin is in the Red Book.
The other, mint and proof sets along with most bullion will never make you a fraction of the money that you could have made buying and selling truly rare key date coins and die varieties - folks putting money into mint and proof sets is a losing endeavor - I think you'd be better off with a boat - at least you can get out a few days a year and have fun - you will, know matter what lose money eventually in mint and proof sets.

Ben "I'm oh so tired now" Peters