CAC Dealers Markup above CDN Bid

[Houston Investor]

Have you had a chance to analyze the inventories of some of the CAC Dealers and their asking price vs CDN Bid? I have and have found it intersting - what about you? Do you believe these dealers are marking up these coins as high (on average) as 45% above CDN Bid? What are your thoughts on this?

 

EXAMPLE: Coin A (CAC stickered), an expensive classic coin has a price tag of $7500; CDN Bid is $4600. $7500 / $4600 = 1.63. The coin is priced at CDN Bid plus 63%.

 

Not a bad profit margin huh? Or is this just a modest premium for a nice coin?

[Arizonadesertrat]

Your statistic needs to be understood in a different context. Did these 'markups' inflate as a result of CAC stickering? What were their prices, for coins like those you sampled, before (i.e., without the advent of CAC stickers)? Dealers have been paying more to get the coins they want during the last year and, this notwithstanding, they have been complaining about a dearth of nice coins when they go shopping for inventory additions or in fulfillment of customer want lists. It's not clear (to me, anyway) CDN bid is relevant where these dealers are concerned.

 

I do think that a CAC sticker will be accompanied by a price increase (or else there would be little point to the CAC consortium), but I think that we need more information.

[bsshog40]

I can't vote as to I would probably never be purchasing a coin with a CAC sticker on it anyways. The only reason for that is I presume if the coin was worth paying the extra dollars for the sticker, it's out of my price range anyway.

[James_OldeTowne]

Very few nice coins - which CAC coins purport to be stickering - can be bought at or near CDN "bid" with or without a sticker. I have some coins marked up much higher than just 45%!

[Houston Investor]

Ariz - thats a good question and deserves an answer. My sample (or pricing model) helps me in understanding what other people are asking for their coins. It is based on my sampling or sometimes analysis (of a dealers entire inventory). It is a time consuming, evergreen document. The data is derived from the CDN and Dealer ads, pricelists, and online inventories. I have subtotals by dealer, etc. So all those snazzy little newsletters I get in the mail and fancy websites I go and take my sample. One online dealer in particular who does big ticket coins but had only 30 or 40 items I took his entire inventory as a sample in my spreadsheet. I sort of liked his approach - not too many coins to have to handle.

 

As it stands now, for retail asking pricing non CAC Dealers (I have sampled) have a markup of 31% above CDN Bid and CAC Dealers stand at 46% (and this after some 100% above bid CAC items thrown out of the analysis so as not to skew the CAC numbers even higher). Now these are averages - in the CAC Dealer Sampling the asking price above CDN Bid has ranged 18 - 78%. From comments posted in this forum I have found another CAC dealer (Iarge CAC inventory) to analyze and look forward to getting some of their data and expanding the sample further. Now I am not trying to say these guys are making a killing or trying to rip anyone, simply curious what their asking price is for their stickered CAC coins as it relates to published wholesale (CDN Bid). But this puts me in a quandry - since my own coins are cherry picked for quality anyhow what % above bid should I really ask? Are the CAC guys getting these bucks above bid? - maybe I should start looking for CAC coins on ebay.....

 

This whole sampling process is something I do being the financial analyst I am and for my info as to how other people price their coins and my pursuit of the holy grail of a CDN based pricing system.

 

[Houston Investor]

Very few nice coins - which CAC coins purport to be - can be bought at or near CDN "bid" with or without a sticker. I have some coins marked up much higher than just 45%!

 

Tell that to some of my customers at shows who do not pay more than 5% above bid and Coin Shop owners who have flipped me coins at bid.

 

From a sales point of view I would not argue with you. However, I have bought a lot of nice coins at or below CDN Bid. It is not always easy to do and there many types and issues one would find it difficult or impossible to acquire at or below bid: Nice MS Key Dates, Barber, Liberty Seated, Trade Dollars, CC Gold.

 

My question to you is this: If you pay 45% above CDN Bid for a coin - how soon do you expect to make a positive return on your investment? Do you realize that when you go into a shop to sell they will probably only offer Blue Sheet Bid if that much?

[Tradedollarnut]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

[bsshog40]

"Man who sleep on railroad tracks, wake up with split personality". I'm sorry, I just couldn't help myself!!

[Houston Investor]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

Oh I totally agree - too bad a lot of my ebay lookers don't seem to agree.

[Arizonadesertrat]

Oh, no. TDN, please tell me that you haven't been toggling.

[MikeInFL]

As a financial advisor, I would expect that you understood the concepts of margin and markup.

 

Either you don't, or you are intentionally distorting the truth.

 

Listen, Parker, I'm sorry that you buy and sell by the sheet and have animosity (jealousy?) towards those that don't, but your arguments are getting a bit tiresome, particularly when they rely on misrepresentation.

 

You can do better....I hope.

[Arizonadesertrat]

"....My question to you is this: If you pay 45% above CDN Bid for a coin - how soon do you expect to make a positive return on your investment? Do you realize that when you go into a shop to sell they will probably only offer Blue Sheet Bid if that much?" [Parker]

 

Parker, I have been watching the CAC-phenomenon with interest, simply because I am interested in in a second opinion, given the problems with grades on slabs and expert doctoring. Unsatisfactory coins will get by CAC graders too. However, the main point to CAC is marketing, not grade verification. If the CAC consortium is to manage this effort well, then at least two things will need to happen:

1. Establish end-user (i.e., collector) confidence by some sort of policing mechanism that results in removal of CAC stickers from unsatisfactory coins. I have seen two coins, posted on chat room threads, that I don't think deserved a sticker, and will be interested to learn of their fates during the next two years or so. If the stickers aren't going to be removed, I suggest owners of the coins sell them to CAC members (who will be buying stickered coins on a sight-unseen basis).

2. Reinforce end-user confidence in the concept that stickered coins will have added value. I fully expect that CAC-stickered coins will cost more, in some cases double. This multi-tier pricing phenomenon was already in effect before CAC appeared, and very few price guides are accurate. I have routinely paid 30-50% over sheet for really nice coins, so higher prices for CAC-approved coins don't bother me at all. Many coin dealers and market watchers have opined that low-end coins are dragging down the prices of ones that are solid for their grades (to say nothing of PQ coins). We will find out how accurate this assumption is during the next 2-3 years. Presumably, members of the CAC consortium will pay more to get CAC-graded coins back for resale (if not, then this would be a serious issue). It would be folly for owners of CAC-stickered coins to sell them for less to dealers outside the consortium, so I don't see your point here.

 

[Houston Investor]

Some intersting if not combative comments. I can't knock people paying a generous premium for nice coins or for that matter fine liquor like Crown Royal. Lets see how our poll shapes up once more results are in. I will continue my analysis and expand it with additional data.

 

MIKE - I HAVE TO WONDER WHAT YOUR SMOKING OUT THERE IN FLORIDA

 

[carson city]

Most, if not all, top end coins of any series cannot be bought at CDN bid, CAC has nothing to do with this fact !

[MikeInFL]

Most, if not all, top end coins of any series cannot be bought at CDN bid, CAC has nothing to do with this fact !

 

I just had to do a double take. I couldn't believe my eyes. Was that really you?

 

Seriously, bravo CC for being objective on a CAC-related topic!

[jackson64]

I believe that like most collectors---I don't care... only a small % of the millions of people with coin collections buy from either of these sources...let the little political struggles continue, and when the little segment has isolated themselves and created an absurdly priced market...then they can play with their coins all by themselves..

 

PS: I'm sick of you nay-sayers slamming CAC---you're not going to sway someones opinion who is financially invested in the idea.. Do you expect people to say "you're right--this whole thing was a dumb idea, I didn't know what I was thinking".................and likewise you dealers and people invested in the CAC...aren't going to get collectors who don't want to spend another "certification fee" to agree with you, even though I understand your want/need to protect yourselves from "dogs" in the sight unseen ask/bid world.....

 

I would love some uniformity in grading...I am sick of seeing some junk coin sell for double what it should sell for because of a subjective slab grade.......

 

Like I said b4...unless there is a way to tell if a coin has been rejected by CAC or just not seen by them...there is no viability...and if people want to limit themselves solely to the small selection of coins with the stickers...that's better for the rest of us so quit complaining......there will be millions of great coins in slabs without the CAC sticker to choose from, maybe the price will even drop a bit in 10 or 20 years for non-stickered coins.....works for me either way..

[James_OldeTowne]

I have no issue at all with someone charging way above "bid" for certain coins. It's a fact of life that some coins (a lot, actually) are seriously undervalued on the greysheet. It is also true that many coins are overvalued, but stickers, slabs and marketing vehicles have nothing to do with those discrepancies. Basically, the greysheet simply has many errors - valuations that don't reflect reality.

 

The issue I could see happening is this. Let's say a certain coin sheets for $100, and let's say that two dealers have identical examples for sale, one stickered, one not. It the unstickered coin is for sale at $130, and the stickered coin is asking $190, and the sole reason for the $60 premium is a sticker, then that is just plain ridiculous.

 

This assumes all else being equal, of course.

 

[IrishMike]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

I believe that quote should be attributed to Coinfucious.

[Arizonadesertrat]

I have no issue at all with someone charging way above "bid" for certain coins. It's a fact of life that some coins (a lot, actually) are seriously undervalued on the greysheet. It is also true that many coins are overvalued, but stickers, slabs and marketing vehicles have nothing to do with those discrepancies. Basically, the greysheet simply has many errors - valuations that don't reflect reality.

 

The issue I could see happening is this. Let's say a certain coin sheets for $100, and let's say that two dealers have identical examples for sale, one stickered, one not. It the unstickered coin is for sale at $130, and the stickered coin is asking $190, and the sole reason for the $60 premium is a sticker, then that is just plain ridiculous.

 

This assumes all else being equal, of course.

 

I agree with what you said, but in fairness we are already in a ridiculous situation. What you described is likely to happen for several years or more. While that is going on, there will be cherrypicking opportunities for sharp-eyed and knowledgeable collectors (just as is the case today with respect to collectors who buy raw coins and get them slabbed to add value in the marketplace).

[Doogy]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

from what i've seen, only the drek can be had for CDN prices; and with world coinage, only the decent stuff (read: far from "nice") can be had for Krause prices.

 

want quality? be prepared to pay a premium, even if only a modest one.

 

 

[BillJones]

I can't answer your question because you didn’t list the right answer for me. I don't care if the coin has CAC sticker or not. I buy coins, not CAC stickers. If a dealer is charging too much I'll pass, CAC or no CAC.

 

AND for those who have been collecting significant coins recently, you should know that the Coin Dealer News Letter bid and ask numbers are hardly in play. If a coin scarce to rare, is properly to conservatively graded and in demand, you are better off looking at "Coin Values" magazine. The old Gray Sheet is not more than a guide at best, and if you have your nose stuck in it 100% of the time, you are not going to buy many or more likely ANY nice coins that collectors really want.

 

AND that been true for the past two years - even before CAC came on the scene.

 

[James_OldeTowne]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

from what i've seen, only the drek can be had for CDN prices; and with world coinage, only the decent stuff (read: far from "nice") can be had for Krause prices.

 

want quality? be prepared to pay a premium, even if only a modest one.

Actually, I don't quite agree with this either. There are actually many "nice for the grade" coins that can be got for "bid" or less, and classic examples include common Morgans, Walkers, mid-grade Mercury dimes - basically the common stuff. A lot of what can be had below bid is "widgets".

[Bruceswar]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

from what i've seen, only the drek can be had for CDN prices; and with world coinage, only the decent stuff (read: far from "nice") can be had for Krause prices.

 

want quality? be prepared to pay a premium, even if only a modest one.

Actually, I don't quite agree with this either. There are actually many "nice for the grade" coins that can be got for "bid" or less, and classic examples include common Morgans, Walkers, mid-grade Mercury dimes - basically the common stuff. A lot of what can be had below bid is "widgets".

 

I agree! I have seen many coins at my local dealer which I would consider to be nice for the grade, and under ASK.

[Bruceswar]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

from what i've seen, only the drek can be had for CDN prices; and with world coinage, only the decent stuff (read: far from "nice") can be had for Krause prices.

 

want quality? be prepared to pay a premium, even if only a modest one.

Actually, I don't quite agree with this either. There are actually many "nice for the grade" coins that can be got for "bid" or less, and classic examples include common Morgans, Walkers, mid-grade Mercury dimes - basically the common stuff. A lot of what can be had below bid is "widgets".

 

I agree! I have seen many coins at my local dealer which I would consider to be nice for the grade, and under BID. Usally these would be coins that might have been there for some time or coins that he got in a lot.

[mommam17]

I think collectors are going to find out what is nice for the grade doesn`t mean it`s nice enough for a CAC sticker.

[Arizonadesertrat]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

from what i've seen, only the drek can be had for CDN prices; and with world coinage, only the decent stuff (read: far from "nice") can be had for Krause prices.

 

want quality? be prepared to pay a premium, even if only a modest one.

Actually, I don't quite agree with this either. There are actually many "nice for the grade" coins that can be got for "bid" or less, and classic examples include common Morgans, Walkers, mid-grade Mercury dimes - basically the common stuff. A lot of what can be had below bid is "widgets".

 

The key phrase, as BillJones wrote, is coins that collectors really want. Collectors don't spend lots of time chasing after generic coins---they're all over the place, so there is no pressure that causes the prices of these to meaningfully increase. We are already competing for coins in a multitier coin market. Generalist dealers in my neck of the woods have plenty of coins, but they all have told me the same thing---any really desirable coins fly out the door within days, usually purchased by their best customers. We are in a tough time for collectors, as it's a sellers' market. So, if I have to pay more to get what I want, there is an increasing incentive to be sure that I get what I'm paying for (this is the root of my interest in how CAC turns out). If CAC takes off during the next year, dealers that are not part of the CAC consortium will have a tough time holding onto their customers who want better (grade- and price-wise) classic coins.

[Arizonadesertrat]

I think collectors are going to find out what is nice for the grade doesn`t mean it`s nice enough for a CAC sticker.

 

Most collectors don't see enough coins to know what 'nice for the grade' is, so their perceptions will not align with those of people who do (like graders and specialty dealers).

[MikeKing]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

You're very funny Tradedollarnut!

[MikeKing]

He who thinks most nice rare coins can be purchased at CDN bid has not a clue - Confucious

 

from what i've seen, only the drek can be had for CDN prices; and with world coinage, only the decent stuff (read: far from "nice") can be had for Krause prices.

 

want quality? be prepared to pay a premium, even if only a modest one.

Actually, I don't quite agree with this either. There are actually many "nice for the grade" coins that can be got for "bid" or less, and classic examples include common Morgans, Walkers, mid-grade Mercury dimes - basically the common stuff. A lot of what can be had below bid is "widgets".

 

I agree! I have seen many coins at my local dealer which I would consider to be nice for the grade, and under ASK.

 

 

I agree! I have seen many coins at my local dealer which I would consider to be nice for the grade, and under BID.

 

 

would you make up your mind?!!!!

[Syngraphic]

The last time I looked CDN publishes WHOLESALE prices for dealers.

What makes you think that any dealer is required to offer his RETAIL

merchandise anywhere near what CDN lists as wholesale prices.

 

Reputable Jewelry stores will buy a 14K chain wholesale at $300.00 and

instantly keystone their cost and put it out in their case at $900.00 (or more).

You can most likely get the same 14K chain from a coin dealer at under $400.00.

Go back and see what the same jeweler will offer you for that $900.00 chain

in a few days.

 

Reputable Antique and Stamp dealers will buy for $5.00, sell for $100.00 (or

more).....but if your a dealer take 5% off. Some don't offer a dealer discount.

 

Most coin dealers are happy to buy a BU 1 oz. Gold Eagle for $800.00

and feel good about $820.00 (or less), or 90% silver at $9550.00 a bag

to sell at $9700.00 a bag (or less), and then have to pack it and ship it and

Register it.

 

Every business has to cover their expenses and their cost of doing business.

Coin dealers can not come close to covering their expenses by buying

everything they buy at $800 to sell it to you at $820.00 (of less).

 

I've read way too many threads on coin forums condemning coin dealers for

realizing a good profit. There is NO SET PERCENTAGE a dealer is required

to buy or sell at. A lot of the dealer's price also has to include what kind of

costs may be involved for finding the right collector for a rare date coin, to

buy tons of schlock that just about every coin dealer acquires, and how long he

will have to tie up his investment for any number of days, weeks, months,

years, or even decades. And completely untalked about are the days, weeks,

months, years, and even decades that the dealer has already spent in full

battle dress trying to keep from being robbed by the badguys, regulated to

death by uncessary City, State and Federal laws, and uncontitutional sales

taxes (and it's only going to get worse). Dealers end up on the short end

of the stick concerning bad checks, bad money orders, bad cashier's check,

bad wire transfers, and/or bad debts. Let's not forget the stolen packages,

stolen registered mail, broken into Fed X shipments, and frauduelent orders.

And the beat goes on..... it is a long list of battles a coin dealers must fight to

stay in business. You ever have to eat Convention Center food 45 out of

52 weekends each year? How about flying and having all your proof sets

torn open and every coin taken out of every box during a security search.

Did I mention the "grinders" that want everything (anything) at under cost.

 

Take a look around at other major businesses and see what kind of markup

they need to have just to survive. Many of those other business can not

understand how coin dealers work on such short profits, using their major

investment, and having to contend with some very major (and scary) risks.