This is an open letter to the coin collecting and dealing community in response to a guest commentary by Richard Francis recently published by a major weekly coin publication entitled;
"Firms's acquisition of 2011 sets, while legal, is troubling"
I am going to simply take the approach of answering allegations and presenting information one item at a time. Then I will make additional comments and observations, and finally I will point you to a thread on Collector's Universe where you can read over 100 posts from a mix of mostly collectors but some full time dealers. I think it's important that each reader gets multiple perspectives, not just mine.
- Rules are rules, laws are laws and they are not always one in the same. The U.S. Mint establishes rules or guidelines for purchasing items from them. If you fail to comply your order will be identified and rejected. The "rule" in question here was a "five set per household" limit. We did not break this rule.
- One common method of obtaining more than 5 sets is to set up many PO boxes and use many different credit cards. A single individual could end up with say 100 or more sets this way without too much difficulty. ModernCoinMart (MCM) did not do this.
- Other methods involve soliciting entire businesses with 100's of employees to have each employee buy the limit then sell to the pre-determined buyer.
- Others have "friends and families" networks that routinely buy for them when the quantity desired exceeds the household limit. This is the most common method and I estimate it has been used by thousands (not hundreds) of U.S. Mint customers going back a decade or more but mostly starting with the 2006 20th anniversary coins.
- Church groups are a popular network. Yes, you heard me right. Trusted members of various congregations of varying denominations are being used to pass along opportunities to their members.
- Many Coin Clubs have organized efforts to buy items from the mint for various reasons and in some cases I am sure it allows others in the club to get more of something that is limited by household.
- Dealers routinely use dealer only trading networks to buy items that are expected to sell well before the U.S. Mint actually begins selling them.
- Some, including ModernCoinMart, contact their own customers via email and ask them if they would like to purchase the item (s) and then sell them to us at agreed upon terms. We've been doing it for about 5 or 6 years now and within the past year or two I estimate another dozen or so companies are using the same strategy. I've personally seen a half dozen or so offers to buy in my email boxes from dealers for products that have not yet been released. While some of the companies, like ModernCoinMart, offering to purchase coins by email actually have the buyers that want the sets (in most cases graded), there are others that are just looking to make a fast buck by "flipping" anything they can acquire.
- With regard to the A25 25th Anniversary sets, our first offer was $60 per set over US Mint cost. We were not the first dealer out there making offers and this offer was about $10 higher as I recall. Every few days new buyers would come into the market and the offers were increasing. Almost immediately we were paying $100 over in response to competition. Before it was all over we had a paid a few people as high as $400 per set over cost. A market had developed for buying and selling these that could be accessed on FACTS, COINNET, and the CU BST just to name a few places.
- "By having others purchase for them, MCM is the actual customer thus far exceeding the limit set by the Mint"......Really? Says who? My customer is the buyer and I am buying from them. There is no other way to interpret this. It's their funds used to purchase, their shipping address, their US Mint account and then they are reselling to us at a profit. It's a purchase order generated by us from our customer, not the USM.
- "Had they advertised their buy price after the sets sold out, I would have no problem with that". Gee, thanks, and we did for months make offers to buy and sell even after the sell out. However, we live in a competitive world and like others have customers that want certain products. Our job is to get them, not to wait for a sell out and hope we don't lose the customer that got the set from a dealer who was more aggressive.
I've had differences in opinion on a few occasions with this publication over the years and they always published the rebuttal. I'm not giving them the satisfaction of one this time because I do not want to help them sell papers and advertising at this point, in fact I refuse to name them here. Last year we spent $183,726.08 advertising with this publication. For that I do not expect an exemption in standard tenets of journalism involving separation of editorials and advertising, but I do expect due diligence and fairness in protecting my company's reputation. That was completely omitted, and frankly, I am disgusted by the lack of professional courtesy and low standards applied in publishing the "commentary".
Allowing statements such as "I must question their moral compass" and describing our actions as "nothing short of greedy" in a targeted attack that names no other companies or individuals is reprehensible.
Shame on you for giving credibility to a minority viewpoint that is targeted and damaging to one of your best customers. Rest assured that while no one at your publication will be contacted by me to discuss this, we do plan on taking it to your parent company for a higher review.
This commentary was "packaged "as a "great concern to collectors" but was in actuality an attack against my company that a leading publication allowed to go to press. It was not general, it was very specific. It was not evenhanded in the slightest way. While targeted at ModernCoinMart, the article indirectly lumps all who had others sell A25 sets to them prior to having them in hand in the same ugly category described by the author.
Calling my company greedy and lacking a moral compass also places scores of others ranging from the largest coin dealer in the world, to hundreds of BST, eBay participants and corner coin shops, all in the author's same ugly category These market participants are without a doubt mostly honest and do not deserve the brutal attack put forth by a publication that we would expect not to conduct themselves in support of a "loose canon" with a narrow minded viewpoint. Hundreds of others including many non-dealing collectors did not feel that they were doing anything wrong in pre-buying sets from others.
We were not the biggest name offering to buy A25 sets in advance by email. Further, I personally received about 5 or 6 emails to my personal email addresses from other companies doing exactly the same thing, and there were a dozen others on FACTS/CCE and CoinNet dealer networks. I do understand that we are high profile in moderns and that in itself makes us a target and yes I have considered that as well as the fact that as you grow professional jealousy and individuals with an axe to grind do abound by default. Being aware of this does not make it any easier knowing that at MCM we all go to work each day trying hard to to the right thing for each and every customer.
I believe we were the first to voluntarily start offering "bonus payments" to the loyal customers that kept their word and a deal in selling us sets at prices lower than we bought from others. Is this how a greedy company would conduct business?
Most of the feedback we got was extremely positive with regard to our offers to buy coins before they are released by the U.S. Mint. I would say less than 2 or 3% had anything negative to say at all but in one case I offered to sell an unhappy person a set at my cost ($360 at the time) and he refused on principal even though I was paying $505 on that very day.
Let's shift focus a bit directly to the U.S. Mint (USM). It should be noted that our Mint is the only one I know of that does not work closely with dealers. Allow me to explain. Other than a bulk purchasing program that allows dealers a 4% discount on a few selected items, there is no benefit given to dealers. Unlike say General Motors that sells to its dealers, our Mint pretty much (excluding 4% on some items) bypasses dealers and sells direct to John Q Public. No other mint in the world does that (that I know of) without giving the dealer a 20% or more discount below the price the item is being sold at that Mint.
Our Mint does have an Authorized Purchaser program for super volume bullion dealers, and at last count I think there were less than a dozen of these in the world. That simply allows those dealers to obtain the bullion coins (not collector issue coins) at "Mint Cost" so they can add a very modest mark up.
My point is that other mints such as New Zealand Mint, Royal Canadian Mint, Perth Mint and more, recognize the need to allocate coins to dealers and allow them to make some money in the process. If our Mint would simply allocate a percentage of the mintage for EVERY new collectible item to authorized dealers we wouldn't have to jump through hoops to get the coins for our customers. Excuse me, but isn't this just common sense?
In closing, I want to say that we acted in a manner that is consistent with our commitment to have the latest products for our clients, and did nothing wrong in the way we acquired them, legally, ethically, or morally.
Some suggested that maybe I should just let this die on its own but when I feel unfairly attacked and real issues are being ignored I can't roll over. I will also be sending an email to our 20,000 active customers in the next couple of days with a link to this response. Our clients and the community deserve to have the full picture and to decide the issues for themselves.
We encourage you to visit the Collector's Universe Forum where a thread has been started on this topic. Understand that while I am a member, I do not personally know more than a few of the members (if any) personally that posted and had no influence at all in what they wrote on the subject.
CEO, JMRC/ ModernCoinMart