How Do Dealers Make Money?

That's some great advice. Thanks
VINCENT

Prethen, I agree 100 % with the comment on Bullion, it should not be graded and surely not slabbed, just another way for dealers to make $$$$ Then again if there are buyers what the hell. PT Barnum was right.

Tony

I think that many collectors rely on the TPG's because they don't know how to grade themselves and don't feel that they could learn. To be honest, I've looked at coins that were graded by the top TPG's and have simply disagreed with the grade. They all use different standards to grade by and, for the most part, I've seen a terrible lack of consistency. ANACS is the exception to that. Any coin that I've sent to them for grading has come back within 1 point (and mostly exactly) what I felt the grade to be.

There was a time before the TPG's that collectors graded for themselves. The Red Book and other pocket coin books had guidelines in them for how to grade. This was all prior to the Sheldon scale. I have to admit that the Sheldon scale is a good idea, however the actual standards used are not global. As a result, I do not feel that it is ever worthwhile to pay for a TPG graded 70 coin. It is also rare that I feel it to be worth having a coin graded by a TPG.

The exception to this rule would be authentication. It is helpful to have a rare or often counterfeited coin in a TPG slab as the authenticity is guaranteed at that point. I feel that having modern coins graded is pretty much a waste of money.

Keep in mind that this is my opinion and is based on my experience as a collector and a seller. What may be true for me may not be for others.

as far as buying by dealers goes, I was told to check the "gray sheets" to see what dealers pay, but can't remember the site they were on. When ever I am selling something, like a coin to a coin dealer, my suspicions always go up when the first question is "What are you asking for it?" I feel that my lack of expertise is about to cost me, if I give too low a price the dealer jumps on it and makes a big profit at my expense. Some dealers will actually look at the coin, check the value and make you an offer. I prefer someone who will tell me what the coin is worth and then offer me 20% less to save me the trouble of photo, listings, etc., etc. I realize the dealer has to make a profit to stay in business and that is the American Way, but good dealers should be consistent in their dealings with All customers. That means the profit is in older coins, not recent issues unless you can get some (in my opinion) bogus upgrade....by that I mean why should I pay tremendous mark up from a MS65 to a MS67 when only the person who graded it can tell the difference? Maybe I am just cynical. basicbob101

I have to admire any small business owner who can legally, morally and ethically make a living in today's economic climate. Think of the money most coin dealers have tied up in stock...all in the hopes that someone will walk through the door who wants that particular coin! And trying to keep a selection of relatively common dates and grades (for the novice and/or less well-heeled customers)along with high grade items for the more experienced collector must be daunting. They have to pay the rent on the building, hire some help (preferably honest and knowledgeable) and work long hours.

The internet provides potential added customer base, but also a healthy dose of competition. And finding a way to keep your online stock updated, etc. is time-consuming and expensive, too.

My hat is off to them!

I talked to my local dealer about this before. when I told him someday I would like ot own a shop. His reply to me was that is very hard to make good money at it. he said if oyu think you are going to become rich being a coin dealer you will not. he said the only rich coin dealer are the dishonest ones that take advantage of customers. he said you cna make a good living at it if you are honest and people learn to trust you but it is hard. He also tolkd me that his main income is not coins, he invest in real estate. I know it is off of the point a little but acourding to my local dealer he saids it is hard to make money. But I have seen alot of dealer who buy coins at the low price on the grey sheet and then turn around and sell it for the price in coin Values. so I guess that is how most do it. Buy low sell high.

As already noted most dealers don't make a fortune on graded and slabbed coins. However, if you go to enough coin shows you'll see there are people that will only buy a coin in a slab. I believe this is partially due to all the fakes, counterfeits, errorneous grades by dealers. I've even seen simple coins such as a 1989 Lincoln Cent graded as MS60. I'd wondered who the nut was that had that coin graded but later I noticed it was sold.
Back to how dealers make money. That too was fairly well covered especially the robbing of customers. I've seen so many of that at coin shows and at dealers. There is one coin store downtown in Chicago I've witnessed ripping off customers by offering them cents for coins worth dollars. Not long ago I saw a dealer at a coin show buying a bag of Mercury dimes from a custome for double face value. Last weekend I was talking to a dealer I know at a coin show. He showed me a Mercury dime and Washington quarter collection in Dansco Albums and most coins in MS something or other. He paid $6,000 for both from someone. He is selling the 16D Merc for that exact amount. Lots of profit in that deal.
Most dealers will give you practically nothing for coins worth a lot if you don't know what you have. I've never heard of a coin dealer telling anyone anything like you have a fortune here. In many instances some dealers work with massive profits.

Boy I've learned alot!!! Thank you to all for all your help. One final thought. What percentage of coins purchased at mint come back graded ms69 or pf69. What do dealers do with them? I've noticed that one grade dramatically reduces the value. Add that to the equation and the profits are getting smaller.
Thanks again for all your help!!!
Vince