5 Situations in Which a Coin Dealer is Most Likely to Extend Discounts
We all love deals. Even coin dealers love deals. The idea of getting a deal on an item – especially one that you’ve had your heart set on for a while, is a rewarding experience. It’s all part of the hunt. In fact, we personally know of individuals who are quite wealthy that admittedly get an adrenaline rush when they find or negotiate a great deal. It’s not uncommon for folks to brag about what a great deal they received on a recent purchase, such as a house or car.
If you’re wired this way, which admittedly we are, then you’ll know that it’s rewarding whenever you get that item or service you wanted for even a little less than expected. The same extends to coins and bullion. “Stackers,” who are folks that accumulate precious metals, are always in search of a deal. They scour the internet, call local coin shops, and may even attempt to secure a deal through an online classified or trading platform. While the latter may be tempting, it’s fraught with fraud and potential danger, so we recommend refraining from these transactions.
Whenever the spot price of gold and/or silver pullback in price, as is the case at the time of this writing, folks call in search of gold and silver. Of course, as a coin dealer, our preference is when individuals purchase items at higher spot prices, but regardless of the market (especially in the case of good and loyal customers), we do our best to accommodate folks.
In this article, we’re going to highlight 5 situations in which a coin dealer is most likely to provide you with discounted rates. Some may be obvious, and others not so much. With that being said, we’ll begin with the first example, which is when the spot price of whichever precious metal you’re interested in (gold, silver, platinum, palladium) has recently increased in price.
1. An Increase in Spot Prices
Gold, silver, platinum and palladium spot prices fluctuate throughout the trading day and are impacted by monetary policies, fiscal policies, the economic environment, and the geopolitical environment, just to name a few. When there are issues in any of these areas, there tends to be a flight to safety or quality, of which precious metals are one of the prime recipients.
For those of you who may not be familiar with the vernacular, the spot price of a precious metal is a futures price published by various financial outlets that provides the troy ounce price of the metal. A troy ounce varies from a traditional ounce, in that it consists of 31.1 grams versus 28 grams. This price fluctuates every four seconds throughout the trading day and is oftentimes impacted by the latest economic reports, which may consist of monthly jobs reports, CPI reports, and quarterly GDP reports.
Bad economic news is oftentimes good for precious metals and is positive for the value of the inventory that a coin dealer has in stock. For example, if silver increases 5% or gold increases 3% in a day, that makes the coin dealer’s total inventory much more valuable. Some of these price increases are expected, based on market forecasts, while others are not.
When a coin dealer sees a nice, unexpected increase in the value of their inventory, whether it’s a one-day pop or a weeklong upward trajectory, they’re more likely to consider selling coins and bullion at a discount. The reason being is that most coin dealers have a certain margin that they must meet to keep the lights on and remain profitable. If they’re able to meet their target, even if they’re selling at a lower premium than normal and can move a decent bit of inventory at the higher spot price, most are willing to do so.
We recommend making it more appealing to a coin dealer by offering to purchase a large quantity of items. If need be, contact your fellow stackers to go in together on a large purchase to make the offer as attractive as possible to the coin dealer.
2. When the Basis is low for a Coin Dealer
This is somewhat related to our first point, but another opportunity to acquire coins or bullion at a discount is when the coin dealer has a low basis in the item. This doesn’t necessarily always apply to coins and bullion that tend to move in lockstep with the precious metals market. It could be a collectible or numismatic coin that the coin dealer purchased a while ago at a much lower price that has been sitting in inventory for a while that they would like to move.
It’s doubtful that a coin dealer has been sitting on
the most popular coins traded in the marketplace. However, they may have had a semi-key date coin or a common date coin in high-end certified condition sitting on their shelves for a while that they would like to sell. Keep in mind a coin dealer only makes money when they sell items, so it’s in their best interest to recycle products and sell at a profit, even if not ideal, as opposed to sitting on dead inventory.
Coin dealers tend to carry a good bit of inventory, both numismatic and bullion, and some bullion items may not move as well as others. For example, we
have been carrying around a decent bit of 80% Canadian silver dimes and quarters, Panama silver balboas, Mexican pesos, British crowns, and a few other items that were
acquired years ago when the spot price of silver was much less. Even if the current spot price isn’t extremely high, if given the opportunity to move a decent amount of this product at a profit, we would be happy to do so.
While it’s typically not appropriate to ask a coin dealer what their basis is, it should be pretty obvious from their response which of the items in their inventory were acquired for less than the current market rate. In some cases, you might find a motivated seller, which could end up being a win-win.
3. Coin Dealers are Overstocked with Particular Item(s)
Back in the day, Overstock.com was an extremely popular website. It was almost as common as Amazon before it became a behemoth. I haven’t thought about overstock.com in years, and out of curiosity, went to the website while writing this article to see how it has changed. In fact, it has changed so much that it no longer exists. The link redirects to Bed, Bath & Beyond, which recently filed for bankruptcy and is likely to be a defunct company soon, if it’s not already.
The purpose of this story is to let you know that on occasion coin dealers are carrying an overstock of a particular item that they would love to trim down. While some coin dealers are members of coin and bullion networks, like us, the wholesale market isn’t always strong for some items; especially those items that the rest of the country seems to be acquiring at the same time. While every market is different, there are usually some similarities nationwide as to what individuals and coin dealers are buying and selling.
Like us, on occasion, coin dealers may purchase a large amount of an individual coin that is well in excess of their local market. For example, if a coin dealer sells on average ten of a particular type of gold coin a month and they acquire 200 of these coins from a collector or an estate, then they’re going to be motivated to pare down their holdings, as no coin dealer needs nearly two years of inventory of any one coin.
In some cases, it may be obvious as to which coins or bullion the coin dealer has in large supply. This may manifest itself in the form of a sale or a volume discount. In other cases, it may not be so obvious. If it’s not apparent if or which items a coin dealer has in large supply, there’s no harm in asking. In fact, we occasionally receive this question, and in many cases are grateful that someone has inquired, as it allows us to pare back our holdings while at the same time providing our customer with a great deal. Again, a win-win situation.
4. An Opportunity to Flip a Coin
The value of coins can range from a few cents to hundreds or even thousands of dollars. When a coin dealer purchases a high value coin without having a buyer lined up, they are generally more receptive to accepting less than retail value for the coin, especially if they can move the coin quickly. This is oftentimes referred to as “flipping a coin.”
We personally have purchased some high dollar coins in the past without having a buyer lined up. In some of those cases, we’ve run the coin through our networks in search of a buyer. When we do this, we typically receive less than we would if we were to sell the coin locally. The term used to describe this type of transaction is “wholesale.” In other words, we would sell the coin at a discount to another dealer that may have a local buyer. For the other dealer to make money, he or she needs to purchase it for below market value.
While hundred-thousand-dollar coins don’t walk in the door every day, it’s been known to happen. If you’re a collector with deep pockets that is looking for a deal on a high-end numismatic rarity, it may be in your best interest to ask if your local coin dealer has recently picked up any high-end coins that they’re interested in “flipping.”
Considering that folks from the Greatest Generation and Baby Boomers are passing on, who were some of the most avid coin collectors, these items are making their way into the marketplace more often than in the past. Your inquiry may coincide perfectly with a recent coin dealer purchase, enabling both of you to benefit from the exchange.
5. Coin Dealers Don’t Have Endless Capital
The coin and bullion industry is very capital intensive. At times, there’s a flood of inventory that comes to market that is well in excess of what a coin dealer can sell locally. This can present itself in the form of large estate coin collections or the large purchase of a single item. In an ideal world, a coin dealer will have an equal number of buyers or sellers, but that’s rarely the case. It seems like it’s heavily weighted one more or the other.
When a coin dealer has recently made significant purchases, they’re incentivized to move inventory. As we noted above, it’s important to recycle inventory and free up funds. When a coin dealer has tapped out their operating capital, they have two options. They can move items through the wholesale market (which may or may not be profitable) or tap their credit line. Considering that the wholesale market is hit or miss and interest rates have soared on credit lines in recent years, a coin dealer would much rather find a local buyer for their items.
We’re not suggesting that you prey on someone else’s misfortunes, but the reality is that sometimes a coin dealer experiences cash flow issues and may be willing to offer discounted rates to free up some capital. Granted, you’re not likely to contact one of the major online dealers and negotiate a steep discount, as they have incredibly deep pockets, but if you get the sense that your local coin dealer may be in need of some operating capital, talk with them about what type of deals they can offer to you.
That being said, be prepared to make a sizable purchase, as buying a 1 oz gold coin or bar likely isn’t going to put a dent in their capital needs. In these situations, you’ll very likely be able to purchase items at the lowest price you can find online, receive a level of customer service that is not available through online dealers, and feel good about supporting a local business. Not only that, but this could be the start of a long-lasting relationship with your coin dealer. We’ve addressed some of the benefits of developing a relationship with your local coin dealer in a previous article.
In conclusion, we’ve shared with you 5 situations in which a coin dealer is likely to provide you with discounted rates. We began our discussion with the topic of spot prices. When the spot price of any precious metal increases in value, this automatically makes the coin dealer’s inventory more valuable. A coin dealer may be willing to accept less for an item than they typically would as long as they’re able to meet their margins.
We then pivoted to a discussion on a coin dealer’s basis, or the price at which they acquired the items. When a coin dealer has a low basis, whether dealing in numismatics or bullion coins, bars or rounds, they’re more likely to be receptive to cutting you a deal. Keep in mind coins that are less mainstream may have been acquired some time ago, and while the current spot price may not be high, the dealer may still be able to make a decent profit on the items.
The term “overstock” can have a positive or negative connotation. If you’re a seller looking to sell coins, it may not be to your benefit, but if you’re in the market to buy coins or bullion, it can be your best friend. Some overstock items are quite apparent, which are frequently seen in the form of sales, while others aren’t. If it’s not obvious which items are in large supply, simply inquire.
Another great opportunity to receive a deal is when a coin dealer has purchased a high dollar coin and doesn’t have an immediate buyer for the item. If you have deep pockets and are willing to make a substantial investment, you may be able to acquire coins at below market value. A good time to check with a coin dealer is when they have recently come back from a large coin show, which is oftentimes a heavy buying venture for dealers. Also, coin dealers may be more incentived to sell items at the end of the year in states where an inventory tax applies. This is a win-win for both the customer and the coin dealer.
Last, but not least, a coin dealer is likely to provide you with a discount when they need to free up capital. Unlike the Fed, coin dealers can’t print dollars at will, so they have a finite amount of operating capital. While they do their best to recycle their product, at times they may be caught with more inventory than they have buyers. These are great opportunities to pick up a coin or coins at a discount.
We hope that today’s article provides our readers with some insight from a coin dealer’s perspective. Whether you’re in the market to buy or sell coins, Atlanta Gold & Coin Buyers strives to provide our customers with competitive rates and industry-leading customer service. Contact us today for all your buying and selling needs.