shocking how much money is...wasted on unnecessary overhead in the coin industry

[James_OldeTowne]

Your reactions, please, to this quote posted on a board member's website?

[DirtyGoldMan]

It's hard to comment without knowing the context of the statement, but I think that depending on how one defines "how much money", one can make the argument either way.

 

I have read your previous posts about the thin margins in your own coin business, and aside from the splurging for Doritos and offering them to customers and passersby free of charge, I do not see much waste in your operation.

 

Business styles differ from person to person and operation to operation, and no doubt some are more efficient than others.

 

Finally, I am going to make a blanket generalization and say that blanket generalizations are usually next to worthless.

[Arizonadesertrat]

Businesses in other fields (e.g., patent law, pharmaceuticals, etc.) make coin dealers look like penny-pinchers.

[okbustchaser]

I haven't seen the site so, like SageRed, I am forced to take it out of context. But, IMO, there is a lot of wasted money in the coin industry. Every dollar wasted on an unnecessary slab is money that actually could have resulted in another purchase/sale.

 

Admittedly, not all slabs are unnecessary. But, 4 or 5 resubmissions in order to get a 1 point upgrade on a coin which even with the upgrade is worth under a thousand dollars??? Slabbing bullion when the average grade is 69? Putting 50.00 coins in a slab? All of these are examples that we hear about daily.

 

Too much overhead? Absolutely.

 

 

[James_OldeTowne]

The context of the quote is that it is given as a reason why the person decided to deal in coins.

[DirtyGoldMan]

The context of the quote is that it is given as a reason why the person decided to deal in coins.

 

In that case, it might be a "true-true-unrelated" situation. Yes, money is wasted on unnecessary overhead, yes, I want to deal in coins, but unrelated as to what one has to do with the other. Overall, I think that coin dealers are pretty efficient, and I am dubious that a new entrant is going to have operational advantages that the incumbent players do not.

[braddick]

Don't forget to factor in the "fun-with-your-coins" scenerio. I know I send coins into the Services just for the sheer joy of doing so- not that the coins are even worth the grading fee.

 

Take this one for example:

 

I suppose the same comment can be made with money spent dining out. Sure, it would be cheaper to open up a can of cream corn and serve spaghetti for dinner, but part of living is spending discretionary income on the things that bring pleasure into your life.

 

That could be a jet-ski or a plasma TV or all the above- including coins.

 

I don't believe too much money is wasted with coins when you subtract the above in the equation.

[CHABSENTIA]

It all depend on where you are coming from.If I buy a raw coin on Ebay and it turns out to be cleaned or dipped etc then whether it is a $50.00 coin or a $100.00 coin then you are out of luck.If one is building a collection of Morgans and a lot of the common dates in MS65 can be purchased for under $150.00 then why not go wiht the slabs.

 

If one can't afford the $150.00 or more per coin and they want to collect the Morgans then they are going to be about $50.00 per coin and somebody had to slab it.

 

If I have a raw 1993 Proof Silver Eagle then how do I know if it is a PR69 or better.? I might have paid less then $50,00 for the coin but in a slab at PR 69 then it is worth over $200.00

 

I sent in a raw Reverse Proof A.S.E a few months ago.I paid $109.00 for all three coins directly from the U.S.Mint in 2006. That is about $36.00 per coin. The Reverse proof came back as a PR70 which according to Numismedia here is worht $880.00.

[bsshog40]

Well I think there is overhead in any business that a person is involved with. Also to add, that one person's overhead is another's business profit/intake also.

[DC Dawg]

I am wondering how much of the overhead or inefficiencies could be decreased with technological advances?

 

Scott

[BillJones]

It's been my observation that most coin dealers are very frugal in the way they do business. The smaller ones travel to show together and share hotel rooms. They also keep their overhead under control when it comes to store locations. You don't see coin stores in high rent places much any more.

 

As for the company in question, they seem to think that CAC expenses are good overhead. They are strong advocates for reduntant grading.

[MikeInFL]

"shocking how much money is...wasted on unnecessary overhead in the coin industry "

 

I agree strongly, but doubt that TPG (or CAC) grading is a large part of this overhead...Mike

 

p.s. I would guess that significant overhead would include storefronts, travel, advertising, shipping, taxes, eBay/PayPal fees, insurance and other cost-of-sales overhead (including Profit -- thanks James).

[goldrarities.com-migration]

I agree strongly, but doubt that TPG (or CAC) grading is a large part of this overhead...Mike

 

 

 

I believe you are correct sir

[James_OldeTowne]

"shocking how much money is...wasted on unnecessary overhead in the coin industry "

 

I agree strongly, but doubt that TPG (or CAC) grading is a large part of this overhead...Mike

Mike, what about "hype", however that is defined?

[MikeInFL]

If you are asking me, hype equates to profit which equates to a cost-of-sales, kind of....

[cpm9ball]

Don't forget to factor in the "fun-with-your-coins" scenerio. I know I send coins into the Services just for the sheer joy of doing so- not that the coins are even worth the grading fee.

 

Take this one for example:

 

I suppose the same comment can be made with money spent dining out. Sure, it would be cheaper to open up a can of cream corn and serve spaghetti for dinner, but part of living is spending discretionary income on the things that bring pleasure into your life.

 

That could be a jet-ski or a plasma TV or all the above- including coins.

 

I don't believe too much money is wasted with coins when you subtract the above in the equation.

 

This is, sort of, in line with Pat's comment about submitting coins that don't justify the associated cost. How often does a dealer buy an entire collection just to get a few rarities or harder-to-find specimens from a private collector? Most of those coins would probably never sell, and they just take up space until the dealer finally decides to dump them. Why couldn't you consider this an indirect cost of overhead?

 

Chris

[Conder101]

.If I buy a raw coin on Ebay and it turns out to be cleaned or dipped etc then whether it is a $50.00 coin or a $100.00 coin then you are out of luck

And if you buy a slabbed $50 or $100 coin on eBay and it turns out to be cleaned or dipped you're not out of luck? (And yes cleaned and dipped coins can be found in slabs.)

 

If I have a raw 1993 Proof Silver Eagle then how do I know if it is a PR69 or better.?

Oh maybe look at the coin and grade it yourself? If you can't tell if it is a PR69 when it's not in the slab, then how do you know whether the grade on the slab is right or not? I know, you don't care if it is right or not, as long as it is there so you can potentially sell the coins for silly money.

[Houston Investor]

I think any Rare Coin Net Income Model is going to resemble like this:

 

Sales - Cost of Sales = Gross Margin

 

Gross Margin - Overhead Costs = Net Income (Before Tax)

 

The tougher your competetion the lower that gross margin is going to be so you better keep those overhead costs in check. As far as the big gun dealer some of you seem to be alluding to if its who I think it is, the costs of getting their inventory stickered by CAC is miniscule compared to the big ticket coins they carry. In addition, show expenses would be too. Considering such a dealer is able to make a premium of 10% on CAC stickered coins this would be huge for them.