Selecting the Right Coin Dealer
by Doug
Winter Copyright © September 2001
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A successful relationship with the right coin dealer is an essential
component in the enjoyment of coin collecting. The collector who chooses
to "go it alone" may be setting himself up for some serious
problems, even if he is well-connected and knowledgeable.
A client (and friend) of mine recently coined a phrase that I feel
succinctly describes the ideal relationship between the collector and
dealer: the "dealer-partner." The relationship between a dealer
such as myself and my clients is mutually enhancing. I sell my nicest
coins to my best customers and, in turn, will hopefully be able to
reacquire these coins in the future. My clients buy nice coins at fair
prices, acquire important insider information and market insights and,
literally, put bread on my table.
When deciding on the "right" dealer, I would suggest that you
think carefully about the following:
1. How much does the dealer know about the area that you wish to
specialize in? If a collector called and told me he wished to put together
a set of Lincoln Cents, I'd probably recommend that he choose someone
else. I think I have a great eye and I probably know more about Lincoln
Cents than most collectors. But I'm not what I'd call an expert in this
area. On the other hand, if a collector called me and said he wanted to
put together a set of Charlotte gold coins, I could state with honesty
that there is probably no better dealer to work with than me. The
collector needs to choose a dealer who really knows an area. That's one
reason why I have always respected specialized dealers and it's why, some
twenty years ago, I made the decision to be one.
2. What are the dealer's credentials within the numismatic community?
It can be hard to determine how well respected a dealer is within the
numismatic community, given the fact that many dealers are not quick to
compliment their competition. If I were a collector, I'd want my dealer to
have the following qualifications.
First and foremost, I'd want him to be a member of the Professional
Numismatist Guild (PNG). There are fewer than 500 dealers worldwide in the
PNG and it is the only significant numismatic organization that doesn't
admit everyone who applies.
Secondly, I'd look for a dealer who is stable. If he has worked for
three firms in five years, that's a red flag.
Thirdly, I'd want to deal with an individual who was a proven expert.
Has he written books or articles? Is he a contributor to the Redbook or
other pricing guides? Do experts respect his opinions? A dealer who is
universally respected and who has the credentials to back up this respect
is a good person to do business with.
3. Does the dealer go coin shows and auctions? Unless a dealer attends
shows and auctions, he will be "behind the curve" when it comes
to knowing current market conditions. Dealers who get second hand
information and pass it onto to their clients are not nearly as helpful as
dealers who are out doing battle on the frontlines of coin shows and
auctions.
4. Does the dealer actually enjoy working with collectors? Some of the
most knowledgeable dealers are primarily wholesalers who do not have the
personality or available time to work with collectors. These are not going
to be good people to work with due to their inaccessibility and lack of
enthusiasm. But don't totally rule out one of these wholesale specialists
as their knowledge tends to be far greater than the "typical"
retailer.
5. Does the dealer own his inventory or broker it? I have nothing
against the concept of brokering coins. In fact, there are times when I
wish I could take the considerable amount of money I have tied up in my
inventory, place it in a money market account, collect interest and sell
other people's coins. But I am a firm believer in putting my money where
my mouth is. Every coin that is in my inventory has first been sold to a
very strict set of eyes: mine. People who are coin brokers have often
never seen the coins that they are selling. In addition, since they do not
have their own money and/or time invested in the coins, they tend to be
less concerned with their appearance.
6. Will you have too much competition for the coins the dealer buys?
Let's say that you are a Charlotte quarter eagle collector who wants to
put together a world-class set. You should ask a potential dealer if there
are other existing collectors in this dealer's base who collect the same
coins. Will there be situations when the dealer will have to make hard
decisions about which collector gets which coin? If so, how will the
dealer make these decision? As a rule, truly choice and/or rare coins are
scarcer than the collectors who want them. Will you be able to get first
shot at the coins that mean the most to you?
7. Does the dealer make a two way market? The best coin dealers are
those who make strong two way markets in the areas they specialize in.
They will be anxious to repurchase the coins they have sold you and will
tend to be stronger buyers than non-specialists. It's easy to find dealers
who only want to sell you coins. It's much harder to find dealers who want
to buy them from you.
8. Does the dealer offer "post-sale service?" Good coin
dealers don't disassociate themselves from a collector after they've made
a sale. Services that many dealers offer include giving advice on when to
buy, sell or hold, upgrading coins or crossing them from one service's
holder to another, letting you know if someone else is interested in a
coin you own and getting you a discounted seller's commission should you
decide to place your coins in an auction.
9. Is the dealer someone you like and trust? This is an especially
important question, in my opinion. If you are going to spend a lot of
money with someone, you had better trust them. And if you are going to
have a mutually beneficial long-term relationship, you'd better like them.
If a certain dealer "gives you the willies" every time you speak
to him, then you probably shouldn't consider giving him your business; no
knowledgeable or well-connected he is. Conversely, if you really like
someone and they give you a warm, fuzzy glow when you speak with them,
they might be a better dealer for you than someone who is more
knowledgeable and better connected.
In summary, you should ask the following questions to any dealer that
you are thinking of doing a significant amount of business with:
Do you really know the series that I collect? How long have you been in
business? How many years have you been at your current address? Do you
attend shows and auctions? Have you written articles or books about coins?
Do you belong to the PNG? Are you a retail or wholesale dealer? Do you own
your inventory or broker other peoples coins? How many other important
collections have you built? Will you be as anxious to buy my coins as you
are to sell them to me? What will you do for me after you've sold me
coins? What can you do to earn my trust?
The following are red flags that might make you think twice about doing
business with a dealer:
He has worked for numerous companies in a short period of time He has
been in the coin business for a shorter period of time than you've been a
collector (nearly all of the really great coin dealers have been in the
coin business since they were teenagers) He goes to fewer than three to
five coins shows per year He has never bought and sold coins in the series
that you collect He has no inventory of his own His level of knowledge
does not seem much greater than your own
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