The future in coin transactions

[Merc]

Who are the end consumers of coins? - Collectors. They hunt for what they want, but it and keep it. Coins are sold by collectors when they upgrade to a better coin, or when they die! Several major collections were not sold until the owner died.

 

In the distant past, if a collector wanted a certain a coin they could try to find it from circulation, buy it directly from the mint, or try to trade or buy from friends in his area. Collectors were isolated from trading and buying if they lived far from each other. Hence came the need for dealers. Dealers for a fee could travel and buy coins from collectors in one area and sell them to other collectors in other areas. This also allowed collectors to quickly find a buyer for their coins when the time came to sell. Major auctions grew as collectors with rare collections wanted to sell to a larger market.

 

The trouble with dealers is they want their cut in the transaction. Collectors are not interested in the dealer, they just want the coin.

 

Now with computers, collectors from far away can find each other and do business directly. There are several on-line auctions that work fairly well. Digital cameras were very expensive just 5 years ago. Now they are common and can take high quality pictures so collectors are see what they are getting. I will predict that in the near future, people will take short movies of their coins to rotate them to show luster and to magnify different areas of interest on the coins. The pictures will be of such high quality that it will be almost like holding the coin in person.

 

Now that collectors can find other collectors and buyers easily, will there be a need for dealers? Think how far computers and buying and selling on-line have come since 1994. What will it be like in 2014?

[HaydenTubbs]

I don't know about you,but I hoping that Scotty will someday be able to "beam up" my coins so we don't have to put up with snail mail

 

Beam me up Scotty!

[Hoot]

Now that collectors can find other collectors and buyers easily, will there be a need for dealers?

 

Without a doubt. I know many collectors who cannot make it to major events of sale and who feel comfortable with specific tastes that they and others share in coins. Those people seek out dealers with similar tastes or those who fully understand theirs in order to hunt down great coins. They build successful collections due to their patience, demand for excellence, and the "extra eyes" out there looking for them. Great dealers do a lot of business with the want lists of such collectors, who often do not have the time or energy to be looking themselves.

 

Besides, even the very best coin photographs and movies fail to reveal what a person can see and detect in-person.

 

With the volume of coins being traded and the prices that they are fetching, I think that we may see more collectors in the future, not less.

 

Hoot

[Wihlborg]

While there is no doubt that the internet and digital cameras have made it much easier for today’s collectors to buy and sell coins on their own, In my opinion there will always be a place for dealers who are friendly, competent, and honest. Why? Because having a good working relationship with such a dealer is an asset to any collector. They are a second pair of eyes looking out for you.

 

What I mean by that statement is that in addition to trying to find the coins you want, they will also be evaluating those coins for eye appeal and problems before ever offering them to you. I can tell you from experience that not every coin a collector may be looking for can easily be found on the internet, especially if you’re picky about what you want the coin’s eye appeal to look like.

 

The fact is that many of the nicest coins never make it to an internet listing. They are offered privately at coin show across the country or consigned to one of the large auction companies. While most collectors can’t make it to every coin show or auction, most of the big dealers do. They get to see and evaluate in person, the coins that the collector at home can’t, so the odds are that a collector working with one of these dealers will be able to find the coins they are after sooner than a collector sitting at home in front of their computer. It is in cases like this where I feel a dealer is well worth their ‘cut’ of a coins price.

 

JMHO

 

P.S. I am not a dealer.

 

John

[chinook]

I liken this situation to what has happened with the stock market over the past 15 years. Even in 1990 the public never had access to the trading and information systems that we have now.

 

I started out my career as a broker and while most of my clients still needed a helping hand or a shoulder to cry on, especially in 2000, I found myself being phased out. Yes there is still demand for a good broker but it is also much easier to get a second opinion now and do the trading yourself.

 

Today I am a daytrader. My "job" didn't even exist 15 years ago.

[dealmakr-migration]

 

Every market needs liquidity either on the buy or sell side, dealers (middlemen) and the auction houses fill that need. Even though the internet has opened up wide possibilities and opportunities such as Ebay, the deepest pockets really make the market along with supply and demand. Its fantastic to be able to pickup a piece from another collector, but when you have a grundle of coins to sell in one shot, you have to look at where you can max out your material.

 

regards,

 

dealmakr

 

PS: Chinook

 

Also remember day trading in a brokerage office back in 1983-4 where you had to read the tape scrolling accross, the little ding-ding from the Dow Jones news ticker meant that the tape would actualy print something and the Bunker Raimo was very primitive to the horsepower of the machines today. Today, trading from home also.

[Elcontador]

To paraphrase what John and Hoot have said, anyone who buys coins strictly from an internet image is going to be SOL bigtime.

 

Imaging, regardless of how good it is, does not show:

 

1) hairlines on proof coins

2) long, thin scratches on silver coins

3) very minor carbon flecks on copper coins

4) how a toned Unc. coin really looks re color(s), luster, etc.

 

And I'm sure there are a few other things I've left out. You simply must see a coin to decide if it "works for you." If I can't see a coin myself, the dealer or auction house numismatist whom I trust provides a valuable set of eyes to screen the coin for me.

 

If I can't see the coin myself or have a trusted set of eyes look at it for me, I am not interested, period. I think anyone who does not make coin purchases in this manner does so at his / her peril.

[DaveG]

I also think dealers will continue to be necessary because:

 

1) There's no substitute to seeing the coin in person (Images can be manipulated and I'm not sure they'll ever be able to capture hairlines, etc.),

 

2) Dealers provide liquidity and carry inventory (What if I don't want to take the effort to sell my coins one at a time on the Internet? and, Sometimes I don't know I want a coin until I happen to see it in a dealer's case),

 

3) Dealers go to the major shows and auctions that not every collector (like me, for instance) has the time and money to do; and,

 

4) Dealers provide expertise. (They've seen thousands more coins than I have. If I'm looking at a coin, how can I know if it's nice for the grade? A good dealer will have seen 10 or 20 examples of the same date, mintmark and grade and therefore has the expertise to make such a judgment.)

[michael]

Without a doubt. I know many collectors who cannot make it to major events of sale and who feel comfortable with specific tastes that they and others share in coins. Those people seek out dealers with similar tastes or those who fully understand theirs in order to hunt down great coins. They build successful collections due to their patience, demand for excellence, and the "extra eyes" out there looking for them. Great dealers do a lot of business with the want lists of such collectors, who often do not have the time or energy to be looking themselves.

 

Besides, even the very best coin photographs and movies fail to reveal what a person can see and detect in-person.

 

With the volume of coins being traded and the prices that they are fetching, I think that we may see more collectors in the future, not less.

 

 

 

 

Hoot

 

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as per the above the best i have ever heard and extremely well written to boot

 

 

michael

[michael]

Elcontador

 

Re: The future in coin transactions

 

To paraphrase what John and Hoot have said, anyone who buys coins strictly from an internet image is going to be SOL bigtime.

 

Imaging, regardless of how good it is, does not show:

 

1) hairlines on proof coins

2) long, thin scratches on silver coins

3) very minor carbon flecks on copper coins

4) how a toned Unc. coin really looks re color(s), luster, etc.

 

And I'm sure there are a few other things I've left out. You simply must see a coin to decide if it "works for you." If I can't see a coin myself, the dealer or auction house numismatist whom I trust provides a valuable set of eyes to screen the coin for me.

 

If I can't see the coin myself or have a trusted set of eyes look at it for me, I am not interested, period. I think anyone who does not make coin purchases in this manner does so at his / her peril.

 

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Toda gata é parda na escuridão

 

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as per the above a superlative true statement

 

 

michael

[Merc]

Thanks for replying everyone. I guess I was thinking more in terms of the future of collecting in 10 years from now, 2014. Just 10 years ago, there was no internet selling or auctions. Hi-res digital pictures did not exhist 5 years ago. Now with certified coins (NGC, PCGS) you can be certain you are getting a real coin that is not horribly overgraded. I could imagine that in another 10 years, you could get very high res moving video of the coins that would be almost as good as looking at it directly.

 

I'm sure there will still be a need for specialist dealers who sell hard to find and expensive coins. I can see a decline in the number of smaller dealers as collectors bypass them to sell directly to each other or over on-line auctions.

 

I also think the spread between dealer wholesale and retail will decrease. Currently, I've seen many dealers who buy at 20% back of greysheet bid and sell at 50 to 100 % over greysheet ask. As it becomes even easier to sell over the computer, collectors will deal directly to avoid the dealer cut. The dealer buy/sell spread will have to shrink to keep business.

[michael]

a great thread and i think merc is correct

 

also for me i think to work with a dealer you like and have a relationship with and whom you can trust is one of the best ways to add numismatic items to your collection

 

of course if you have lots of discretionary income

have much time on your hands can go to all the shows and auctions

and have insider information

or your expertise in coins is as good as or better than the top movers and shakers in the coin game

then you will not need anyone but yourself to dabble in coins but for the majority of collectors this is not a reality so i defer to the statement below

 

 

also for me i think to work with a dealer you like and have a relationship with and whom you can trust is one of the best ways to add numismatic items to your collection

 

 

michael

[reid1836]

I think you have a valid point Merc. I too suspect that a much larger percentage of coin related transactions will exclude the "dealer" as they are perceived today. Although as previously stated, photo`s do not show the entire picture and some sour transactions do occur. By enlarge, my personal experience with internet commerce has been 99% positive. I believe some drastic adjustments will have to be made in the future , for many of todays dealers to survive past the next decade. Currently we are in a raging bull market. Profits abound across the board for collectors and dealers alike ! But, when the dust settles. I think a much larger majority of coin deals will be procured through other collectors than through dealers who make their living dealing in coins. What it boils down to is market share and dealers are well aware of their shrinking slice of the pie. Which is why so many dealers bad mouth the coins that are for sale on the internet, excluding their own of course ! The internet has become the "Great Equalizer" in the rare coin market. Collectors no longer have limited options for selling their collections. Speaking as a collector myself. I am willing to pay much closer to a coins retail value than most dealers are prepared to do and so are quite a few others apparently. Usually dealers offer wholsale or less. To me greysheet prices will shortly be going the way of the dinosaur.

It`s really quite simple ! Ask yourself this question . If you had a coin with a retail value of $1000 and a greysheet price of $565. To whom would you rather sell ? A dealer who will offer greysheet ,+ or - 5% and then sell for retail +20% or -10% or another collector who would have no quams about giving $700 to $800 possibly more and feeling as though they got a great deal. The internet has now made the latter a very real possibility. Dealers in the very near future will definitly have to evolve or become extinct. I`m not saying that there won`t be any dealers in the future, just a new breed of them !!!!!!!!!!!

[EZ_E]

The internet has become the "Great Equalizer" in the rare coin market. Collectors no longer have limited options for selling their collections.

 

Outstanding statement, Reid!

 

I too believe that technology is in its infancy and will be much, much more advanced in a decade. However, greed is with humanity to stay so one will always need to be numismatically informed as Michael, et al mentioned.