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8 Types of Coin Dealers You Should be Cautious of When Buying Coins

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The coin and bullion industry consists of many types of coin dealers, ranging from local, online, ecommerce etc., all of which operate a bit differently. For the most part, we believe that this is an ethical profession and that coin dealers truly want what is best for their customers. Of course, there are different categories of coins, all of which have different profit margins. The coins with the highest margins are typically collectible coins that traditionally are a bit less liquid than bullion or bullion coins.

This doesn’t make them any better or worse options. At the end of the day, every coin collector or investor is different with varying interests, goals, holding periods, time horizons, etc. In our opinion, the key to being an ethical coin dealer is having a discussion with our clients to determine what they’re trying to accomplish. Only then, can we recommend the best products to help them meet their goals. While we’re not financial planners or wealth managers, and have never claimed to be, we have a duty and responsibility to provide guidance that aligns with their goals.

We also believe that part of assisting coin collectors and precious metals investors is helping to steer them away from common pitfalls and mistakes that we frequently see.  As a coin dealer that has years of experience in the industry and purchases hundreds of coin collections a year, we feel that we’re well qualified to comment on this topic.

To assist our readers, we’ve identified 8 categories of coin dealers that you should be cautious of. We’re not painting with a broad brush and believe that there are some decent options within each category. However, by and large, we routinely see estate coin collections consisting of coins that were purchased from these dealers that aren’t very marketable, and in some cases, are simply face value coins that have been dressed up in attractive packaging. In other cases, the coins were purchased for many times their market value and likely will never be able to be sold for a profit.

Without further ado, here is a list of coin dealers that we recommend you be cautious of before making a sizable investment.

Coin Dealers that Advertise on TV with Celebrity Spokespeople

There are many ways for coin dealers to advertise. This includes paid online advertising, such as pay-per-click, paid directories, through industry-related websites and publications, magazines, circulars, radio, billboards, partnering with local businesses, etc., but one form of advertising that is quite expensive and typically doesn’t benefit the consumer is TV advertising. More specifically, TV advertising featuring celebrity spokespeople.

This form of advertising is incredibly expensive, especially if it’s aired during primetime viewing. While some of the comments made by these spokespeople are accurate, including why you should invest in gold and silver, typically the products they sell are subpar or overpriced. We’ve also heard from our customers in the past that some of these companies employ bait and switch tactics. This involves advertising low premium gold and silver coins and bullion, but once on the phone, attempting to upsell them on high premium numismatic coins which aren’t for everyone. In many cases, the only people that benefit from these transactions are the coin dealer’s sales team.

Some categories of items, such as bulk silver, are more in line with what investors are truly looking for, but in some cases, the quality of many of the items appears to be subpar. Some of the most common bulk products are 90% silver dimes, quarters, and half dollars as well as Morgan and Peace silver dollars. We oftentimes find ourselves having to sort through the coins to separate the retail quality items from the off-quality coins. The subpar coins are commonly referred to “cull” coins in the industry and sell for substantially less than retail quality items. Not only are investors overpaying for coins, but in some cases, are doing so for subpar quality items.

Coin Dealers that Run Infomercials or Sell Coins on Late Night T.V. Shows

Another form of T.V. advertising, which is slightly different, is coin dealers that sell products through infomercials or on late night T.V. shows. They differ in that traditional celebrity T.V. advertisements are typically one to two minutes, while informercials and late-night television shows can run anywhere from 30 minutes to an hour, if not more.

Again, this is an expensive way to advertise, especially if coin dealers are attempting to sell to the public what is in their best interests, which is typically low premium coins and bullion. The individuals that sell through these mediums are expert salespeople. Their goal is to try and make the items as appealing as possible, which they’re oftentimes successful in doing. While the quality of the items usually isn’t an issue, the marketability (i.e. your ability to sell the items in the future) and the price oftentimes are.

Infomercials are typically hit or miss with respect to the marketability of the items. The late night T.V. shows are more likely to sell more desirable products, but typically do so at above market rates. If you enjoy these shows and want to support the folks running them, that’s fine, but realize that you’re not likely going to get any deals from these programs.

The thing to remember is that it’s costly to run 60-minute T.V. programs, so the folks that run them need to cover their costs one way or another – either through the sale of large quantities of items and/or higher prices. Typically, it’s a combination of the two, so just be prepared to pay more when you go this route.

Coin Dealers that Routinely Make Unsolicited Phone Calls

We all hate receiving unsolicited phone calls. Personally, I don’t have the patience for them and do my best to end the call as quickly as possible. While they can be annoying, some coin dealers purchase advertising or mailing lists from marketing companies and place unsolicited phone calls to sell coins.

On occasion, we’re approached by companies who are interested in purchasing customer contact information from us or that attempt to sell us a list of prospective customers who have purchased coins and bullion in the past. We take our customers’ privacy seriously and never share this information with any third parties, regardless of how much a company is willing to offer. Nor do we purchase these lists, as we don’t employ aggressive sales tactics when selling coins.

You can almost be guaranteed that the coins these companies are attempting to sell are high premium, high commission products. Afterall, most low premium coins and bullion sell themselves, so there’s not a need to actively market these items.

Please note that our comments don’t pertain to customers who have specifically requested that they be notified once certain items are in stock. There’s a big difference between making unsolicited phone calls and asking to be notified once requested items are available. However, if you find that a coin dealer is contacting you too often, whether you initially requested to be contacted or not, don’t hesitate to let them know.

Coin Dealers that have the Word “Mint” in their name

Most coin dealers are not mints nor do they privately mint rounds, bars or bullion, but many have the word “mint” in their name.

Outside of a couple of noted exceptions, such as Golden State Mint and Scottsdale Mint, these are just run-of-the-mill coin dealers that may be attempting to elevate their status in consumer’s eyes by using more of an official term in their name.

Some of these dealers also choose names that sound similar to the U.S. Mint. In many cases, when we talk to folks selling their collections, they were under the impression that they were buying from a government mint as opposed to a coin dealer. While not always the case, as some of the larger coin dealers have branded bullion, most companies with the word “mint” are not producers of coins or bullion.

In our experience, many of these “mints,” either sell subpar quality items that are advertised as retail quality or sell retail-quality items at substantial premiums. When we purchase estate collections from individuals who have receipts from these outfits, we know that we’re going to have to have a difficult conversation, as the price at which they purchased the items are oftentimes a multiple of the market value.

Again, our comments don’t apply across the board to coin dealers that have chosen the word “mint” in their name. However, when that’s the case, we recommend that you do a bit more due diligence to determine if you’re truly working with a mint or a traditional coin dealer.

Coin Dealers that ship monthly coin catalogs

Another category of coin dealers to be wary of are those that ship monthly coin catalogs. If you’re old enough to remember, we used to receive enormous catalogs from Sears and Montgomery Ward in the mail. We always used to look forward to them as kids, as we would circle all of the items in the catalogs that we wanted for Christmas. Unfortunately, Santa’s sleigh was never big enough to hold all the items that we wanted!

These days, catalogs are incredibly expensive to design, produce and ship, so there’s little to no chance that any of the featured coins or sets can be acquired at a bargain. The only possible exception is an overstock situation, where a coin dealer is sitting on a huge inventory of items that they’re trying to move out.

Keep in mind that catalogs need to be paid for somehow, which is usually in the form of higher costs. From our perspective, coin dealers that routinely send catalogs are targeting individuals that may not be internet savvy or have strong research skills, as most folks with this skill set will be able to quickly realize that the published prices in the catalogs are typically above market value.

Lastly, it’s almost impossible to publish static prices on many of the coins and bullion traded in the industry, as most items are price or market sensitive. In other words, as the spot price of gold, silver, platinum and palladium go, so do the prices of the featured item. Granted, there are some products that aren’t market sensitive, such as those composed of nickel-copper or whose value is primarily derived from the collectability of the coin, but a catalog solely consisting of these items isn’t likely to gender much appeal. This means that coin dealers need to ask for a high enough price in their catalogs to take into consideration market volatility.

Coin Dealers that Produce Slick Marketing Materials

While not considerably different from the last category, coin dealers that produce high-end slick marketing materials may not be the best option for most folks. As we noted above, producing any physical marketing materials or catalogs is incredibly expensive. They need to be paid for somehow, which is typically in the form of higher costs.

While not always the case, you can almost be assured that a high-pressure sales team is behind the high-end marketing materials. As you can probably tell from the tone of our article, we’re not fond of aggressive sales tactics. Gold and silver coins and bullion should really sell themselves. Once folks are educated on why these metals, including to a lesser extent, platinum and palladium, should be included in any portfolio, it should be apparent that everyone should be invested in precious metals.

While we understand that every industry needs marketing to let potential consumers know that they exist, to build a client base, and hopefully operate at a profit, we believe that the best approach is to educate prospective customers. To the extent that marketing materials are used as an education tool, kudos to the companies producing them, but in our experience, this typically isn’t the case.

Coin Dealers that have Monthly Buying Programs

The last couple of categories that we discussed are somewhat similar, including monthly coin buying programs, but there are some subtle differences. We’re showing our age a bit again, but if you were born in the mid-70’s or earlier, you may remember the Columbia Record Club. They made their program so appealing that nearly everyone participated at one time or another.

In a nutshell, Columbia would offer to send you a number of cassette tapes (yes, this was before CD’s and digital downloads) oftentimes free of charge or at least as a nominal fee to get you into their program. Thereafter, they would mail to you their tape of the month, which you could return (within a very short window) or keep and pay full retail price for. Usually, it wasn’t a tape that you were interested in, so you would want to return it.

Before you knew it, the tapes you received would stack up, along with the invoices. I don’t know exactly how it happened, but it seemed like in a matter of months, you had a number of tapes laying around that you didn’t want along with “final notice” invoices from the record company. It was nearly impossible to extract yourself from the program, and only after sending threatening letters would they finally relent and remove you from their program.

We share all of this with you so that you don’t make a similar mistake with monthly coin buying programs. As was the case with Columbia, some dealers will offer an introductory deal, sometimes at below the face value of the coins, to get you into their program, after which they bombard you with minimal value and overpriced coins.

However, our comment doesn’t apply to all monthly buying programs, as there are actually some good ones out there that benefit investors. These programs differ from our previous comments in that they don’t send you a coin each month that you can choose to keep or return. Rather, it’s a way to invest monthly as you would in a retirement plan in the form of dollar cost averaging.local coin store

With these programs, you may choose to invest a select amount, such as $1,000 a month, which will go toward the investment of items that you select in advance or that you have the coin dealer choose on your behalf. Once you build enough of an investment, you can periodically have the coin dealer ship the items out to you so that you take physical possession of your precious metals, which in our opinion, is the best way to store your precious metals.

The big takeaway here is that you should never sign up for a program that requires you to ship back items that you don’t want. If the program is geared toward you and your desired investments, it could actually be of benefit to you. If you can set it and forget it, in time you may be able to accumulate a decent amount of gold and silver as an investment or to serve as a hedge against inflation or a depreciating currency.

Coin Dealers that Advertise in non-coin circulars and publications

Last but not least, we recommend that you be cautious of coin dealers or companies that advertise in non-industry circulars, publications or magazines. Many of these advertisements are targeting a certain demographic that the coin dealer is hoping is more naïve or trusting than the general public.

While we’re not claiming that everyone who advertises in these formats is doing this, we have heard in the past of coin companies that were specifically targeting the elderly and Christians because they believed they were easier targets than the general public. Therefore, if you see coin advertisements in publications specifically geared toward these two categories of individuals, we recommend that you proceed with caution.

Most larger and reputable coin dealers will use their marketing dollars to focus on those individuals that have expressed interest in coins or bullion by advertising on industry-related websites or publications. While every coin dealer is hoping to reach a previously untapped market by bringing new investors into the fold, the best way to advertise is through trusted and reliable resources.

Again, there are many ways for coin dealers to spend their marketing budget, and if some believe that reaching out to a previously untapped market is the best strategy, that’s perfectly fine. However, we suggest being slightly more cautious when you’re exposed to the market through one of these non-traditional outlets.

 

Summary

In conclusion, we’ve shared with you eight categories of coin dealers or companies that you should be cautious of when making an investment in coins or bullion. Again, this doesn’t mean that you should completely avoid these coin dealers, as some are quite reputable. We just advocate doing a bit more due diligence before proceeding.

T.V. advertising, whether they’re 60 second advertisements, 30-minute infomercials or 60 minute television shows, are quite expensive. The folks that sell on these platforms are professional salespeople and can make any product sound appealing. While some of the items that advertise are great options, they usually come at a price which is oftentimes above market price.

We also recommend that you be cautious of coin dealers that make unsolicited phone calls. These are companies that likely purchased your contact information from marketing firms that collect and sell individual’s personal information. However, our comment doesn’t apply to a coin dealer that you have built a relationship with that is reaching out with a product that you may have purchased or expressed interest in in the past.

While catalogs are a thing of the past in many industries, some coin dealers still ship monthly catalogs. Nine times out of ten, you’re not likely to find any deals, except for coin dealers trying to move some excess inventory. Also be cautious of companies that have clearly spent a substantial amount of time and money producing slick marketing materials. In most cases, they likely utilize aggressive sales tactics.

Last, but not least, avoid monthly coin buying clubs, unless they specifically focus on items that are of interest to you. Also, proceed with caution with companies that advertise in non-industry publications. While not the case across the board, some of these companies are targeting individuals or groups of individuals that may have a reputation for being somewhat naïve or a bit more trusting than the general public.

At Atlanta Gold & Coin Buyers, we believe in pursuing ethical business practices, including advertising. While marketing is essential for any business, it should be done in a way to help educate the public on the industry and be done in a cost-effective manner so that individuals can purchase products at reasonable prices. Again, there are many good coin dealers that choose to advertise in different ways, so don’t discount any dealers off the bat. Just be sure to do your due diligence to make sure that you’re buying coins and bullion that are consistent with your investing philosophy and at a price that will allow you to realize a profit at some point in the future. Give us a call today at 404-236-9744 to see how we differ from the competition.

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Tony Davis
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Tony frequently writes on various economic and numismatic related topics affecting the coin and bullion markets and has been published on some of the industry’s leading websites, including Coin Week, the American Numismatic Association, Coin Collector, Coinflation, and Coin Auctions Help, just to name a few. Visit Atlanta Gold & Coin’s website at atlantagoldandcoin.com to obtain additional information on the products, services and educational resources offered by his company. Tony can be reached at sales@atlantagoldandcoin.com or at 404-236-9744

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