Coin Dealer Ethics

Theyre price guides.

http://www.numismedia.com/fmv/fmv.shtml

http://www.greysheet.com/

Blue book is like Red Book but its on the buying side. Being a book though is a disadvange as the prices are made in advance. The greysheet webpage has the price guides a lot of dealers use for buying.

Think about this one. Let's say an honest coin dealer who runs a coin shop has an 1884-S Morgan dollar walk in the door. Now we've all had some of those coins where we've gave it more than a second or third look because its a border line coin for uncirculated. Yes I'm talking the coin that one minute you think MS-62 or 63 and the other minute AU-58. Now with the 84-S Morgan the honest dealer has a problem a big money spread problem. 84-S is a four figure coin in MS-60 but in AU-50/55 it is between one and two hundred dollars. He cannot gamble that PCGS or NGC or ANACS will grade the coin MS-62 or 63 even though he really thinks it is. This is business. If it were a common date like an 81-S MS-62 vs. AU-58 will be a few dollars not much. He won't lose sleep over paying buying the 81-S as an AU and it comes back MS-62 or 63. The fact is folks that the big three TPG they PRICE coins. Any grade on any coin that commands a huge jump over the immediate lesser grade will really be under the microscope and that includes 84-S Morgans from AU-55 to MS. The dealer here can't take that risk. Would you? So many times the shop dealer has people walk in and they want the money NOW. Especially when that person is somebody that inherited a collection from their parent or grandparent but really is not a coin collector themselves. They just want the money. Shop dealers have to interact with and buy from a vast group of public that knows little if anything about coins and how the coin business works. Now if a serious collector brought that 84-S he more than likely would understand and have the patience and time if the dealer tells him I want to send this off first to see if THEY (the TPG) will grade it as such and then I can make you an offer based upon that.

For me, the assigned PCGS grade is mostly irrelevant. The real question is what grade/price would the dealer have assigned to the coin had he sold it raw? If he had resold it as a raw MS-62 for 62 money, then I see no ethical issues here as that simply means the guy is just a tough old-school grader. Every single dealer that regularly submits to TPGs has hit the grade lottery at least once, that doesn't necessarily mean they they are ripping off their over-the-counter sellers.

Part of what a dealer must figure for "profit margin" is the fact that selling coins professionally is a very inventory-intensive occupation. You have to tie up massive amounts of money into inventory, it turns over very slowly, and that's a cost all its' own. I can easily see a long-term habit of building a little margin into your business by habitually undergrading; in the majority of cases, that margin won't be nearly as large as it is here.

The unspoken thoughts here are, did he pay 62 wholesale for that coin, or did he help the customer out some? Did the TPG heavily "hook him up" on this grade, in that random way they sometimes do? Is he as surprised as you?

I tend to be a tough grader. But sometimes the excitement of seeing a rare coin, and the potential dollar signs, make you overlook things. In my early days as a dealer I made the mistake of overgrading a coin and really paying the piper!

Now; I'm much tougher on grading coins coming in. But if I grade it as a 63, I pay 35 to 40 percent back of 63 Grey sheet bid. Remember I have to pay taxes on the profit I make off this coin AND it can sit on the shelf for anywhere from 10 minutes to 7 years. But I do price it at the grade I bought it at. Unless I have it slabbed. In which case it sells at the slabbed grade.

When buying the safe bet is to go with your first impression and then take it down a point. Remember the seller is likely to counter your first bid. I used to bid my actual price that I would pay. Too many people got mad when I wouldn't budge on a counter offer. So now I build in "wiggle room".

I'm not sure I can fault the dealer on this. There are some huge price differences between MS grades for this coin. If he offers to buy it at what he thinks it might be and it comes back just one grade lower, he is taking a big loss. I would assume it would only need to happen once to a dealer and from there on out he would be very conservative.

I don't blame him at all for grading it conservatively.

It is also incumbent upon the seller to do some homework and know what they have. There are plenty of resources out there, including this forum, for people to educate themselves and get other opinions as to what a coin might be worth.

If you think this dealer acted improperly, I would guess that you have never been self-employed.

He has bills to pay and a family to feed.

What is stopping the seller to do research on his/her own and get the coin professionally graded?

The seller opted to sell to the dealer.

Nothing was done wrong.

Ethics in business is a very fine line and we are not here to judge.

Remove your thoughts from what the subject is about - put in place of the coin - an automobile, house, or piece of land.

Now...review what transpired.


The seller ripped themselves off. They should have shopped the coin around to more than one dealer, researched on their own, and even submitted coin for grading.

The dealer should have and probably did know what they did.

Does not matter that they have business expenses, overhead, or whatever.


So.....in my mind, shame on both. Dealer should call up the seller and make it right with them. Dealer has to live with themself at the end of the day....