by Louis Golino for Coin Week
There is little doubt that along with the U.S. Mint coin dealers are probably the most frequently criticized players in the coin industry.
Many collectors seem to believe that dealers are unnecessary in the online age and many question their ethics.
The Coin Dealer Newsletter recently published a fascinating article on whether coin dealers even need to exist. The answer in brief is that if they did not exist, they would need to be invented.
That is mainly because they provide necessary liquidity to the coin market and are a critical source of information for collectors and investors.
Better dealers often develop close relations with their customers and impart information about coins and the market that collectors are not likely to obtain elsewhere. In these cases you are benefiting from their wealth of experience.
There is no question that some dealers are dishonest.
We have all heard stories about dealers who paid pennies on the dollar to someone who was not well informed about what they were selling.
But that is really the exception to the rule.
Moreover, one definitely needs to choose a coin dealer carefully whether buying or selling.
I have had my share of bad experiences, especially with mail order companies that often sell over graded coins. This is a learning process everyone needs to go through.
One frequently hears negative comments from collectors who sold their coins to dealers, who were disappointed by the amount they received and turned off by the experience.
The best way to avoid this kind of experience is to arm yourself with knowledge.
Learn as much as you can about your coins, study the market, try to find out what the wholesale buy and sell prices are for your items, and find out as much as possible about a dealer before selling to them.
Check how long they have been in business and what professional organizations they may belong to. Being an ANA member helps a lot and means they have agreed to the ANA’s code of ethics.
You can request binding arbitration through the ANA if you feel you have been wrong by a dealer who is a member. There are some interesting stories about this in past issues of the Numismatist, the ANA’s monthly magazine.
Dealers who are members of PNG, the Professional Numismatists Guild, are held to even higher standards of ethics.
Such companies do focus more on the higher end of the market, and have many wealthy customers, but most also sell items at a wide range of price points and will give the more modest collector better service than you might imagine.
The advantages of dealing with them are many from getting better quality coins that are likely to outperform lower quality examples to the security that you know your items are authentic, or at least guaranteed to be.
Selling one’s coins is a complex challenge that should not be rushed.
The first thing one needs to do is to decide which route to take: auction, dealer, or retail it yourself on e-Bay, at a coin show, or another selling platform.
If you have higher end and unique or rare items, auction is probably the way to go, but remember you will pay a substantial seller’s fee in most cases.
Many people today sell their coins on e-Bay. That may indeed be a good avenue depending on lots of factors, but before choosing that as opposed to selling to a dealer, I would suggest doing some calculations.
Factor in listing fees, selling fees, which are generally 9%, insertion fees in certain cases, and the cost to ship and insure your item, which can be substantial for expensive coins.
There is also the time it takes to create a good listing and the need to wait and see if your item sells. If it does not, you are still out the listing and insertion fees.
This leaves the option many choose, selling to a dealer – either your local dealer, at a coin show, or via mail if you are dealing with a major dealer who buys a lot such as APMEX or Modern Coin Mart.
If you are careful to choose an honest dealer with lots of experience, you are more likely to get a fair price.
The buy-sell margins vary quite a bit depending on what kind of coins you are trying to sell.
If you have something that is likely to take time for the dealer to sell, and which he has plenty of, you will obviously receive less.
You may want to try someone else who specialize is that kind of coin, who may be able to pay more.
If you are selling a desirable precious metal coin that has a strong wholesale market, such as PCGS and NGC-graded generic pre-1933 gold, or better modern U.S. Mint products with low mintages, you will probably get a price that is at least equal to what you would get if you retailed the coin yourself on an online platform.
Dealers buy and sell such coins on very small margins generally and make their money on volume, whereas they have to make a larger profit on lower-end items to compensate for the extra time it takes to sell them.
Keep in mind that in most cases, when selling such an item, you are selling to a dealer who is likely to wholesale your coin to another dealer for a small profit, rather than trying to sell it in their store or on their web site.
One also need to remember that dealers have many expenses from insurance to rent, personnel costs, taxes, and so forth.
If you are planning to sell your whole collection, or a good number of your coins, I would not sell it all to just one dealer unless you have very rare items that you want to sell through an auction.
It is also a good idea to purchase the latest issue of the greysheet, the Coin Dealer Newsletter, which will give you a good idea of the wholesale market.
In general, your dealer will pay either bid or a little below bid for better coins that sell easily, and less for coins that take more time to sell like lower-end collector coins.
Another way to determine how much dealers are paying for coins you want to sell is to check the web sites of some of the major retailers, who sometimes post their buy prices for items they need.
Finally, keep in mind that many people fail to understand that market for coins is cyclical and that it takes time to make a profit.
One needs to be patient, study the market, and remember that if you are looking to maximize your return, you may want to wait for the market for your particular items to improve.
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for Coin Week, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.