Who are the "mystical five coin dealers" who account for 26% of PCGS revenue?

[James_OldeTowne]

I just read something about that in this article and am wondering.

[IGWT]

Some guesses: Hannes Tulving, Silvertowne, Heritage.

[gmarguli]

Tulving was #1, but think he dropped quite a bit.

 

I believe that Rare Coin Wholesalers was #2, but they sure seem to have a lot more NGC and less PCGS coins over the past year or so.

[wayneherndon]

I suspect US Coins is in the top five.

 

WH

[DC Dawg]

It seems that this number has changed a bit. The 26-percent was from a 10-Q (quarterly) financial statement submitted in 2006. According to their last 10-Q filed for the quarter ending September 30, 2007, the statement is:

 

"Five of our coin authentication and grading customers accounted for approximately 13% and 14%, respectively, of our total net revenues in the three months ended September 30, 2007 and 2006."

 

If you are interested, Collectors' Universe reported a $611,000 loss for the third quarter or $0.01 per diluted share. Revenues on coin grading were $6,038,000 for the first three quarters of the fiscal year, up from $5,590,000 a year ago. However, CLCT reported that while revenues were up by 8-percent, the number of coins graded dropped by 23.7-percent over the same period.

 

CLTC's biggest operating expense is the start up of a gem certification service that was part of the purchase of American Gemological Laboratories. CLCT reports that AGL is fully integrated into the business and their financial information now appears part of the consolidated statements.

 

CLCT is still flush with cash, reporting more than $37 million in cash and equivalents. Their cash flow deficits are lower than last year, but there were no acquisitions for CLCT to spend cash for. There appears to be greater operating expenses, but that could be attributed to the AGL purchase.

 

COMMENTARY: I wouldn't say that CLCT is "bleeding cash" but the losses on the gem certification business and the decrease in the number of coins graded is very worrisome. Coin grading is their primary and largest business, and yet it is showing a slowdown while they have some deferred debt that comes due in 2008 and 2009--unless they refinance that debt. While CLCT appears fundamentally sound, they seem close to the edge of a downturn. This is not an inflation-proof business and the economy may hurt this company sooner, rather than later!

 

Scott

[BillJones]

The coin grading business has reached the mature stage of its product life cycle and is headed toward the decline phase IMO. Most of the really nice classic coins have been graded that CAN be graded. The only areas for possible growth are new coins in ultra high grades, but the mint is now threatening to saturate the market with so many new designs that collectors are soon going get sick of the whole thing.

 

Does anyone remember what happened to the baseball card hobby when the companies came out with more and more new series of cards? Collectors got tired of game, and the sports card hobby is mired in the doldrums. Modern numismatics is headed for the same fate.

 

Bottom line, I am not a purchaser of Collectors’ Universe stock.

 

[DC Dawg]

but the mint is now threatening to saturate the market with so many new designs that collectors are soon going get sick of the whole thing.

Threatening? I think they already have! Read about in this post.

 

Scott

[MikeInFL]

Does anyone remember what happened to the baseball card hobby when the companies came out with more and more new series of cards? Collectors got tired of game, and the sports card hobby is mired in the doldrums. Modern numismatics is headed for the same fate.

 

Very interesting parallel...

 

But to you or others more familiar with this market than I -- what did the sports card hobby teach us? Did so-called classic cards go down with the ship, or did the market for them disconnect from the flooded modern card market.

 

Just wondering if there is a lesson to be learned here and/or just how extensible this is to numismatics...Mike

[Houston Investor]

I think many people who have experience grading coins for awhile are saying to heck with someone else grading their coins when they feel they can grade too.

 

Hence, the popularity of the Chinese self slab product for coins the owner feels aren't worth a $15 - $30 grading fee.

 

As far as the big 5 slabbers I would also consider Teletrade Raw Coin Service.

[gmarguli]

As far as the big 5 slabbers I would also consider Teletrade Raw Coin Service.

 

I thought of them as a possibility, but decided against them. Since the financial statements are referring to revenue, the higher revenue customers are either those that deal with a lot of higher value coins and submit using the higher cost tiers or the modern sellers who submit massive quantities.

 

TeleTrade charges $9 a coin for grading. I'm not sure what percentage of that they get to keep, but even assuming 100%, I don't think they do the volume that would put them in the top 5. Just guessing at rough numbers, but 3 auctions a week, about 1,250 coins in each auction. Assuming that 20% are submitted raw and 50% of those go to PCGS, that works out to be about $175,000 in submission fees for an entire year. That seems rather low to be in the top 5. However, I'm just taking a guess at those numbers.

[MarkFeld]

I'd guess that perhaps one or two of those slots might be filled by a major wholesaler or two that I know. Most here would not know their names even if I mentioned them.

[Doogy]

1. Bob's Tune 'n Lube and Rare Coins: Pocotello, Idaho

 

2. Maury's house of numismatic inspired wigs: Queens, New York

 

3. The less Grand Ole' Oprey gift shop: Branson, Missouri

 

4. The 'Boiler Room' Consortium: Beaumont, Texas

 

5. the Carson City annoying quote coin shop: Carson City, Nevada

[Arizonadesertrat]

.....

5. the Carson City annoying quote coin shop: Carson City, Nevada

 

 

Shhh....you'll only encourage him to come back out from under his rock.

[World Colonial]

There is actually one large untapped market not mentioned in these posts for TPG. It is world coins but that has not caught on to any large extent except for a few series and markets.