How do reputable dealers make a profit selling coins?

[macrocoin]

I have been thinking about this for a while.

Say you wanted to actually make a profit selling coins, as a side business or a primary occupation. Assuming you arent charging ridiculous prices to unsuspecting patrons, how can a dealer carve a margin out of the market?

 

Unlike manufacturing businesses where a business produces a product cheaper as a function of bulk proccessing, rare coins are just that...rare coins. Do dealers have some special place they go.....do secret place where they get rare coins at a reduced rate? Do they get better deals because they buy huge lots of coins?

 

As a person that doesnt sell coins to make money, the only things that seem obvious are to buy low and sell high...thing is....how? I suppose the occasional estate sale will have some great coins at a great value. The occasional lucky auction price pops up now and again. Aside from getting the occasional 'great deal' on a lot of rare coins, how can a 'dealer' continually get coins in stock at a low enough price to be able to resell them on the open market at a price low enough to actually move them....and still make money doing so?

 

Just wondering out loud...not looking to quit my day job, just curious about the business. Maybe a second career / retirement opportunity someday.

 

Thanks in advance for any comments you may have.

[MunkyMan95]

They may get discounts when buying in bulk, but the markup is what kills you. I went into my local shop at the beginning of the year, looking for Monticello nickel rolls, the Mint wrapped P&D sets. I asked the guy, he said he had them, and his price was $14 each. I figured that was what it would cost me with shipping from the mint, so I said okay. The dude hands me one roll, and having already taken my money, hands me $6 in change. I got one Philadelphia roll of nickels, $2 face valye, for $14. The Mint charges a flat rate of shipping, so he just made himself double what he paid...

[Stanley]

You’ll need Knowledge, contacts, inventory, business license, lots of capital, Insurance, etc, etc.

The list would be long.

[TomB]

Knowledge. Experience. Opportunity. Persistance. Hard work.

[Brotherman]

My dad used to say that all success depends on LUCK

 

Laboring

Under

Correct

Knowledge

 

Hays

[Regis44]

From what I see in local dealers there are several attributes:

 

- Brick & mortor presence to be able to buy coins at near bullion prices from unknowing persons as opportunities present.

- Wisdom to keep in stock coins that will move in their market

- Sell supplies to anyone

- Broker special orders of higher dollar coins.

- Contacts and knowledge to move quality coins that will not sell in their area.

- Buy the 'right' coins when market is low and knowing which ones will go up.

- Reserve to weather periods of slow market.

- Provide services such as sending to TPS.

- The more knowledgable and experienced will help local collectors with grading and identification to maintain good relations.

 

That's off the top of my head.

[CTcollector]

A reputable dealer provides value at a fair price. He or she gets return business and more than likely the coins back when customers decide to sell.

[James_OldeTowne]

Although I'm not a full-time dealer, not by a long shot, I do make a "profit" at coins, albeit a very small one. The trick is neither "buying coins cheap" nor "flipping coins for big profit. Rather, TIME is the key, which means you must have patience.

 

Buy a coin now for $100, in three years, maybe you can sell it for $120. I've has some coins for sale for five years now, and eventually, they will sell, and I'll make a little. Occasionally, I do get a flip that nets a hundred bucks or so, but by far, most of my "profit" comes from coins I bought years ago, and that have now risen in value.

 

I don't propose that my system would work for a full-time dealer, but even if I thought I could do it, I just wouldn't want to become a full-time coin dealer, at least not at this stage in life!

 

James

[EZ_E]

That is a great question and has been a mystery to me too. I rented a bourse table a couple of years ago at a coin show in Hot Springs, AR and sold off alot of coins that I no longer wanted (although I wish that I still had a couple of them0. I did absolutely no retail business, just wholesale. I sold about $3,000 worth of coins but took a loss on everything. Not a bath but certainly a loss. So, this loss coupled with travel, hotel and gass adds up!

 

I wondered then how they did it. How does an honest dealer like Mark Feld make a profit? His coins are always great and his prices more than reasonable.

 

I have alot of coins that I purchased one plus years ago that I could net a nice profit on but that is because of the market upswing. Also, purchasing nice, problem free coins stand to profit much more than not.

 

I can understand how alot of the sheisters profit, i.e. by selling cleaned, overgraded and problem coins to newbies and the unknowledgeable. One sees their advertisements all day long in the numismatic publications. Dealers like John Paul Sarosi, Coast to Coast and Paul Sims. But how an honest dealer can flourish is still a mystery to me.

 

However, alot can depend on their customers with changing interests. They will sell the coins back to the dealer from whom they purchased the coins in the first place who, in turn, will turn it right back around a sell it again.

[just carl]

To start with you have to acquire sheet metal, metal press, forged dies of coins, large supply of 2x2's, secret location, fast get away car. Start making our own coins, take to coin shows, pretend to be an honest person, make lots of money and flea the country. This would be along with a second job as a used car salesperson since you can learn honesty by being one of them.

For real some dealers spend lots of time looking for coins for resale. I know of a few that hit every garage/yard sale, estate sale, estate auction, coin autions, etc. Also, as a dealer they are approached occationally by individuals that want to sell coins and are willing to accept a low price for them. Some dealers I know go to banks and buy bags of coins and during the week they and their family go through them looking for anything to sell. I saw a person with a bag of thousands of Mercury Dimes at a coin show trying to sell them for Silver value only. I knew the dealer that bought them for about .27 each and he said there were lots of 21's, 21D's, etc and most in very decent condition. He will make a good buck on that alone. Once your a dealer you get approached by many people tryingto sell coins. Naturally living in an area where there are coin shows every weekend helps with the buy and sell routine also. I've got 8 boxes of duplicates in 2x2's and several dealers I know want me to let them sell them splitting the profit of course.

Around here there is no license, tax number, etc required to sell coins at most coin shows, just a table fee.