Why Your Coin Dealer May be Less Likely to Purchase Some of Your Items
The coin and bullion industry is cyclical like most other industries. For coin dealers and collectors, there are times when certain items are in high demand and others when they are not. Additionally, at times, individuals may be interested in liquidating their coins and coin collections at the same time as everyone else. This could be driven by a number of factors, including a poor economy, job loss, high precious metals prices, etc.
Coin dealers are tasked with keeping their finger on the pulse of the market to ensure that they have sufficient supply to meet demand and at other times, avoid acquiring too much inventory that is likely to sit on the shelves and tie up capital.
The inspiration for today’s article is an email that we received from a prospective customer. He has a diverse collection consisting of some items that are always in demand, such as proof gold eagles, proof silver eagles, Carson City Morgan silver dollars in GSA
holders and uncirculated silver dollars. The collection also consists of items that are in lesser demand, such as proof and mint sets, including Premier, Prestige and silver proof sets.
In this case, the prospective customer shared that they are interested in selling the less liquid items and would potentially consider selling some of the higher demand items in the future.
In this article, we’ll share with you our response and will highlight why your local coin dealer may or may not be interested in your coin collection, or parts of your collection.
Supply & Demand of Coins & Coin Sets
Before we delve in, we’re going to take a moment and discuss the supply and demand of various coins and sets so that our readers have a better understanding of where we’re coming from. While we touched on this concept in the opening paragraph, it deserves further discussion to provide our readers with a coin dealer’s perspective.
We have shared in the past that all coin dealers buy coins, but not all coin dealers buy all coins. This is an important concept to remember, as coin dealers throughout the nation, and even in the same metro area (ours being in Atlanta) may have a different customer base and area of expertise even though geographically they’re located relatively close to each other.
When supply outstrips demand for certain items, this pushes down prices and tends to create a glut in the industry. As an example, we’re members of the three largest coin dealer networks in the nation and recently saw a bulletin from a coin dealer looking to unload a large lot of clad (nickel-copper) foreign coins.
While the first coin dealer attempting to sell these coins was able to receive a reasonable price for these items, this prompted the rest of the network to post their excess foreign coins. Before you knew it, there were a large number of posts and by the end of the day, they were selling for about half of what the original coin dealer posted his coins for.
We also recently heard from the widow of a coin dealer that has a moderate size coin collection that primarily consists of modern-issued clad (nickel-copper) coins. While some of the coins are certified, which can add some additional value, overall, the collection consisted of low demand and bulky items that would take a lot of time and effort to liquidate. While there were some items that were of interest, we didn’t want to cherry pick the collection and leave her with items that she’ll have a difficult time selling.
Cherry Picking a Coin Collection
Speaking of cherry picking, we do our absolute best not to do so, as we realize that most people selling coin collections are interested in selling the entire collection. In some cases, we’re told by the prospective sellers that they’re only interested in selling the entire collection.
Before we proceed, let’s take a step back and touch on what we’re referring to when we use the term “cherry picking.” In case you’re not familiar with the term, we are referring to items that are in the greatest demand that will be the easiest and quickest to sell at the highest profit margins.
While some coin dealers employ this practice, as evidenced by “some of the stuff left over” from coin collections that were originally rifled through by another dealer, this isn’t fair to the seller nor is it a good business practice.
Our approach is slightly different in that we let the customer know which items are of the most interest, which items are of limited interest and those that are of zero interest. When purchasing a coin collection, we always tell our customers that we’re willing to accept the good with the bad and will just need to spend some extra time liquidating the items that are more difficult to move. However, we’re unable to purchase face value items, as this takes time and effort to roll and take to the bank, which is something we’re not equipped to handle.
At the end of the day, if the collection consists of enough marketable items, we’ll typically purchase the entire collection. However, we have also passed on collections in the past that consisted of many items that are time intensive, take up space, and that yield very little profit for the time expended. These are always difficult conversations to have, but there’s a finite amount of time in each day and week, and while we love our job, we also love spending time with our families.
Large Inventory of Coins & Sets
Nearly all, if not all coin dealers can attest to the fact that they have purchased many items in the past that they really don’t have a market for and are sitting on dead inventory. In other words, the inventory is taking up space, sitting on shelves and is not moving, as there’s little to no market for the items. Even so, coin dealers have a bad habit of continuing to purchase items that they really don’t need or want, but we’ve seen a bit of a shift as of late with coin dealers becoming more particular with the items they’ll agree to purchase.
As an example, at present, we have a large quantity of Lincoln wheat pennies/cents, Indian Head pennies, Buffalo nickels, V nickels and clad proof sets. These are items that are common in nearly every coin collection that we evaluate. We’ll still purchase most of these items as a courtesy if someone is selling us an attractive collection but are doing our best not to add to the substantial quantities of these items that we have on hand.
We’ve had to cease purchasing wheat pennies altogether, unless they’re part of a complete penny
collection, are key date or low mintage coins, or are high-end condition coins that have been certified by a third-party grading service.
Of course, we want to be a one-stop shop for all our customers, but there’s only so much space available. Considering that we have new inventory coming in daily, this can create some challenges.
We suspect that most coin dealers are in the same boat with respect to items that they frequently see, so you may find it difficult to sell certain items or receive what you believe to be a fair price for the items.
If a coin collection primarily consists of the above items that are of limited interest, we typically don’t make an offer. This can at times create a bit of a challenge, especially when someone finds an item on an auction site that appears to have some value. Of course, many people don’t take into consideration the time to post items, the auction listing and selling fees, and the shipping and insurance (if applicable), which quickly erodes the net profit realized from the sale of a coin.
Lack of Local Demand for Specific Coins
We thought it might be helpful to share with you an example of a coin that has some value but may not be of interest to your local coin dealer. Let’s take for example a 1922-d penny. This is a coin that sells in the $7 – $10 range, so you might be wondering why a coin dealer may not be interested in the coin or is only willing to pay you a couple of dollars for the item. One of the driving factors is a coin dealer’s local market for a particular item. For example, at the time of this writing, in nearly 14 years of business, we’ve never received a phone call from a prospective customer seeking this coin.
This means that other outlets need to be explored to sell the coin and prevent it from becoming dead inventory, which ties up a coin dealer’s funds and takes up unnecessary space. In this case, a coin dealer may attempt to move the coin through the wholesale market. While a 1922-d penny isn’t necessarily considered a common date coin, it’s not a key date coin either. In other words, most coin dealers have plenty of these coins on hand and probably aren’t willing to pay a substantial amount to acquire more.
There’s always the possibility that a coin dealer may luck out and find another dealer who is putting together sets of Lincoln sets and may need some of these coins to complete their sets, but the likelihood isn’t great.
This leaves coin dealers with very few outlets remaining, one of which is to post the coin on an auction site. While this may appear to be an obvious choice, as we noted above, there are many expenses that you may not have taken into consideration. Considering that most coin dealers have more work to do than time available, they may need to outsource the job of posting coins to auction sites.
On the surface, this sounds like a great option, but the challenge is that anyone willing to take on this task is going to want to be compensated for their efforts. You’ve probably noticed that wages have been bid up as of late, with even fast-food restaurants offering $15 an hour. In other words, labor isn’t as cheap as it once was, which adds to the overall expense in selling items on auction sites, thus greatly reducing a coin dealer’s margins.
Most Coin Dealers Will Eventually Retire
While we’re a long way from contemplating retirement, the reality is that most coin dealers will eventually retire from the industry. The coin and bullion industry is a bit different than most other industries in that most coin dealers will eventually stop purchasing items, liquidate their existing inventory and will close shop as opposed to selling their business. This of course isn’t the case with multi-generational coin shops and online coin dealers, but at some point, your local coin dealer will likely exit the business.
Coin dealers that may be getting up in age a bit and that see retirement on the horizon may be more particular with the items that they’re willing to purchase. Most folks that have been in the industry for a while tend to have large inventory rooms, and in many cases, multiple rooms dedicated to slow moving inventory.
Recently, a couple of long-time coin dealers have announced that they plan on retiring or that they have retired. One of these individuals announced his retirement two or three years ago and is still posting items for sale on our network daily. While we don’t know exactly how much he has remaining, chances are that he’ll still be busy posting items over the next year or so.
Another long-standing member of our community that has 50+ years in the business recently announced that he’s retiring. He mentioned that it will likely take him a year or so to wind down and liquidate his remaining inventory. In our opinion, this sounds a bit optimistic, as he’s been in the industry a good bit longer than we have, and we know how much inventory we’re eventually going to have to liquidate.
Summary
While today’s article probably didn’t provide any earth-shattering information, we felt that it was important to share with you the mindset and thought process of a coin dealer so that you’ll know what to expect when you reach out and make contact.
If you have a large collection consisting of highly marketable items but are only interested in selling off the lower value and demand items, don’t be surprised if you encounter issues finding a coin dealer that is willing to meet with you. This is because a coin dealer needs to turn over inventory to make a profit and they’re unable to dedicate a substantial amount of time to slow moving and low margin products.
Other factors that may prevent you from moving forward are a coin dealer’s existing stock of a particular item and the local demand for an item. While they may have other outlets available to them, the market may be somewhat limited or involve additional time and expenses that a coin dealer doesn’t have or may not want to incur.
While you don’t want a coin dealer to cherry pick through a collection, there may be a number of items that they can’t use or that are more or less face value items. When faced with the ultimatum of all or nothing, they may choose to pass on the collection when factoring in the limited market for certain items.
Lastly, the closer to retirement a coin dealer is, the more likely they’ll be a bit more particular with the items that they’re willing to purchase, as most know they have a long road ahead involved in liquidating their items once they close shop.
So as to not leave you in suspense, we responded back to the customer that we mentioned in our introduction and shared with him that we have a limited market for the items that he’s interested in selling at this time. We asked him to reach back out once he’s ready to sell the more marketable items as well. Once he realized that it was going to be difficult to only sell the items that weren’t of interest to us, he reconsidered and is now receptive to selling the entire collection.
We hope that you enjoyed today’s article and welcome you to reach out to our staff whether you’re in the market to buy or sell coins or a coin collection. While not an exhaustive list, here’s a link to our “What We Buy” page to give prospective customers an idea of what we’re currently in the market for. We look forward to hearing from you and earning your business!
