Free Coin Guide
by Rusty Goe
The term coin dealer evokes about as many images as does the terms car dealer, hardware dealer, book dealer, or just about any other avocation with which the word dealer is associated. There is no one-description-fits-all for the label of coin dealer. Just as in any profession there are different degrees of separation between those coin dealers at the top of the competency chain and those at the bottom.
Consider for example the computer industry. If a person tells you he’s into computers; is he at the level of Bill Gates or Steve Jobs, or is he an assistant on the Geek Squad at Best Buy? Likewise, when you consider 2008’s crop of presidential candidates, do Barack Obama, Hillary Clinton, John McCain, Mitt RomneyMitt-Romney-MBA Sep-07 and Mike Huckaby seem to be on equal footing with Dennis Kucinich, Mike Gravel, Fred ThompsonFred-Thompson-Failed-Hearings Nov-07 , Ron Paul and Bill Richardson?
So it is in the world of professional (or semi-professional) coin dealers. Some are front-runners, some are consistently solid performers who will always deliver, but never sit on top of the heap, and some are perpetual wannabes.
In this vast universe of coin dealerdom, there are no stringent rules determining who can claim membership. There are no tests administered to see if a person qualifies, nor are there licenses one must obtain to be accredited. It’s simply a matter of announcing to the world that you are now a coin dealer. And, as far as anyone is aware, these self-appointments are for life. Once you claim dealership status you can include it on your résumé for as long as you so desire?even if other members of the dealer fraternity refuse to recognize your stature.
If you are familiar with the old adage “you can’t tell the players without a scorecard,” you might appreciate the following characterizations of different categories of coin dealers. Please keep in mind that it is impossible to pigeonhole every type of coin dealer and that this brief study in no way encompasses every category under the sun. For instance, my focus will be primarily on dealers specializing in the U.S. coin market, although many of them do cross over into the foreign coin market. I think it’s safe to say that demand for U.S. coins is greater than that of any other country’s coins. Although, if the Chinese, with their enormous population, get bit by the collecting bug, gold miscals, silver taels, and panda yuans could give U.S. Indian gold pieces, Morgan silver dollars, and Buffalo nickels a run for the money.
Old-Line Coin Companies
Throughout the first seven decades of the twentieth-century a collegiality of influential coin dealers practically dominated the market in the United States. They used their own names, or simply their surnames, or occasionally a catchy adjective for the names of their businesses. The most prominent dealers among these old-line firms conducted auctions as one of their many services to clients.
Coin grading, not nearly as intricately evolved as it became in the last two decades of the twentieth century, took a backseat to other aspects of a dealer’s repertoire. Background information on every coin minted in the U.S. was essential. Memorization of mintages, proficiency in pedigree information, knowledge of rarity factors, familiarity with varieties, and a keen awareness of current and historical coin values were foundational elements of a dealer’s expertise.
For the most part, these dealers showed up to work every day wearing suits and ties. They displayed a professional and courteous deportment and generally catered to their customers’ needs. Although travel factored into their business schedules, these dealers concentrated their efforts in their own backyards. The strenuous national coin show circuit had not as yet emerged.
A handful of these prestigious rare coin companies survived into the final decades of the twentieth century. More often than not, the founders of these firms had passed into the next life, leaving their operations in the hands of their descendents. In some instances, only the firm’s name survived, with no family members involved in the business at all.
The descendents who carried on these families’ traditions acquired new skills never imagined by their ancestors, such as Internet technology and a more highly sophisticated system of coin grading. New collectors entering the hobby in the first decade of the twenty-first century are often unaware that these descendants are not the original owners of these old-line firms. Yet commonsense suggests that if a company boasts of being in business for seventy to eighty years, the founder or founders are probably long gone. With the exception of one or possibly two of these “dinosaur” coin companies, which originated in the first half of the twentieth century, none of the rest has survived, unless you include one or two that remain in name only.
Modern-Age Dealers?The Industry Giants
From the legacy left by the old-line coin companies has emerged a plethora of dealer categories, almost as diverse as the types of coins available to collectors. There is one mega-company, which if it continues its exponential growth, could produce gross revenues equal to all of the other coin dealers combined. This is due in large part to the large percentage of this company’s revenues which is derived from its diverse auction business.
Another firm, which emerged in the late 1960s and early 1970s, might resemble as much as any the family dynasties from the old-line companies. Whether its founder’s descendents will maintain the dominant position it experienced in its niche market for more than three decades remains to be seen.
High-Profile Independents
Securing a healthy segment in the next position on our descending scale are the highly visible dealers with annual revenues of $50 million to $100 million (or more in some cases). It appears as if the majority, if not all of these dealers, are backed by wealthy individuals or investor groups. These dealers, for the most part, are knowledgeable in their fields of expertise, but obviously hold significant advantages over their less fortunate peers because of the seemingly bottomless wells of capital at their disposal. They are in many ways living every coin collector’s dream by having access to blank signed checks allowing them to purchase whatever rarities their hearts desire.
Then there are the upper echelon independent dealers whose annual revenues at times approach the levels achieved by the highly visible dealers backed by large infusions of cash. These very successful independents can be classified into two categories: old wave and new wave. Dealers in the old-wave group made their bones during the 1960s and 1970s, and have maintained their status as key players to the present date. The new-wavers emerged in the 1980s and 1990s and have risen like cream to the top in the more sophisticated market environment fueled greatly by the Internet. Old- and new-wave upper-echelon independent dealers are seen at most major coin shows, generally operate out of an office, service a diverse clientele, maintain inventories valued between $2 million and $10 million (in 2008), are usually experts in one or more series of coins or currency, possess sufficient to superior grading skills, and utilize advertizing to promote themselves in trade periodicals, as well as hosting their own websites.
The Coin Shop Owners
Coin shop owners represent another segment of the dealer community. These independent operators are found in hundreds of cities across the country. Some of them run small mom-and-pop operations, with gross annual revenues of between $100,000 and $1,000,000. While others joined in either partnerships or perhaps employing larger staffs, maintain a sizable market presence. Coin dealers that operate shops can offer a wide variety of services to collectors, including want-list researches, providing appraisals, purchasing collections, and education in basic fundamentals. A small percentage of coin shop owners set up at shows as well.
Since there are no exams administered to determine a person’s qualifications, anyone can operate a coin shop, or declare himself to be any kind of coin dealer for that matter. Thus, you will encounter some coin shop owners who barely know more (or sometimes less) about the hobby than the collectors frequenting their stores. On the other hand, many coin shop owners are advanced numismatists and possess a vast wealth of knowledge, as well as acumens in categories such as coin grading, rarity identification, investment counseling, and research work.
While a large segment of the coin collector community will rarely, if ever, encounter dealers in some of the other categories described in this article, most, if not all collectors will come into contact with a coin shop owner at one point or another. Coin shop owners are in many ways the links between collectors and the hobby.
The Telemarketers
Another category of coin dealer is the telemarketer, a rather pervasive segment of the industry, which includes the boiler-room salesperson who is hawking numismatic items at exorbitant prices, and the operator of a huge and sophisticated sales force, whose prices are not necessarily considered fraudulent, but whose high-pressure marketing tactics could easily be construed as unethical. There are a handful of rather large and elaborate telemarketing companies that sell millions of dollars of rare coins every year. And while not all members of these firms’ sales staffs can be considered coin dealers in the strictest sense of the term, there is usually at least one recognized numismatic authority connected to the company.
There are some in the dealer community who extol the telemarketers?at least the so-called legitimate ones?for the large volume of coins they sell each year. Yet, while it might be true that this stimulates the coin market, the dynamic tension created by the propaganda employed by many telemarketers is cause for concern. Sales pressure and frivolous claims should never be used to coax potential retail customers to purchase rare coins. While caveat emptor is the battle cry proclaimed by telemarketers to justify their questionable methods, collectors should be educated and never be forced into situations in which they must beware of their decisions.
The Advertisers
Still, there is another group of coin dealers of which collectors must be on guard. These are the “advertisers,” who year in and year out saturate numismatic periodicals with multi-full-page ads, featuring what appear to be great deals on coins. The problem is, the majority of the time, buyers do not receive coins in the grades advertized. For example, a silver dollar might be described as “Brilliant Uncirculated,” when in reality it is what is referred to in the hobby as a “slider.” In other words, a coin in Almost Uncirculated condition, which has probably been dipped in a solution to make it appear brighter.These “advertisers” don’t sell coins which have been certified by top-tier third-party grading services, such as PCGS and NGC?at least not many such coins. Instead, they sell “raw” or uncertified coins, for which they can employ their own subjective?often very liberal?grading standards. Yet their ads appear like clockwork year round and constitute a major portion of numismatic periodicals’ advertizing revenues.
How do these dealers survive, you ask, especially in an age of more sophisticated grading practices? There’s a slithery loophole that allows them to continue foisting their brand of hucksterism on an unwitting public. As long as a return privilege is offered on every over-graded, misrepresented item they sell, the “advertisers” are free to do as they please. Once again, caveat emptor is invoked, placing the burden of responsibility on the collector. And, there must be enough susceptible people out there, since there appears to be no subsiding of these kinds of ads in the numismatic press.
The Graders
While you will probably not see the “advertisers” submitting large groups of coins to the third-party grading services, our next category of coin dealers thrives on this practice. These dealers are referred to as the “graders,” since their modus operandi is to get as many coins graded at either of the two (PCGS and NGC) grading services as possible. They scour bourse tables at coin shows and travel from coin shop to coin shop across the country searching for coins which might be undergraded, for the purpose of scoring upgrades upon resubmission. The most talented of these “graders” generate big profits at times and consistently bang out good livings.
They sell to other dealers for the most part, as they are not usually interested in cultivating relationships with retail clients. After all, this might consume too much of their time, which would be better spent looking for more coins to submit to the grading services.
The Coin Doctors
A subset of the “graders” group is a category known as the “coin doctors.” These dealers employ many of the same strategies as the “graders,” as they are constantly searching for more coins to submit to the grading services. Yet, their techniques diverge from those employed by the “graders,” primarily because of their practice of altering the surfaces of coins in an attempt to outfox the grading services.
These “coin doctors” will apply artificial toning to cover hairlines and abrasions on coins; they will use putties and other substances to conceal wear or fill in nicks or gouges; and they will rub the oil from their noses or foreheads across the surface of coins to hide contact marks.
Supposedly, as the grading services have gotten wiser, the coin doctors have grown less successful. There is no quantifiable way to prove this however, but one thing is certain, these quick-change artists have left a slagheap of artificially enhanced coins in the marketplace.
The Authors and Experts
A small percentage of coin dealers have carved out niches in specialized areas of the hobby and comprise the next group on our list, known simply as the “authors and experts.” Members of this category have emerged from any of the other aforementioned categories, having developed a penchant for their area of expertise. They write books on their favorite subjects, many of which become recognized as the foremost authoritative references in their respective categories. Most writers and experts are actively engaged in trading numismatic items, although some are simply observant bystanders. Those that do deal in coins for a living, often have keen insights from their experiences in the trenches to share with their readers.
It appears as if there has been a proliferation of numismatic literature published over the past decade. This is welcome news for members of the coin collecting community, especially those interested in furthering their numismatic education. The dealers who write books are making a lasting contribution to their hobby.
The Vest-Pocket Dealers
Before a person becomes a full-fledged coin dealer he or she will often transition from the collector ranks to a part-time participation in the business, known as a vest-pocket dealer. The term stems from the inference that such a person maintains a portable store, carrying his inventory in his pockets so to speak, rather than operating out of a bricks and mortar location. Many vest-pocket dealers have tried and failed; but a small percentage of them have passed the test and entered into respectable full-time status.
The Cyber-Dabbler Dealers
As the Internet has pervaded our culture, increased numbers of what might be referred to as “cyber-dabbler dealers” have emerged. Online auction platforms such as eBay offer these “cyber-dabblers” the ultimate in portable peddling, and require much less accountability than is required from the face-to-face transactions conducted by their counterparts, the by vest-pocket dealers. Only the future will reveal how rampant these Internet numismatic novices are. One thing’s for certain, buyers pursuing coins in these online auctions will need to be doubly sure of whom the sellers are.
Conclusion
In conclusion, I want to remind you that this brief sketch does not encompass every category of coin dealer. For instance, I could have mentioned the coin brokers; individuals that never own inventory, but simply act as mediators between two parties. And then, there are the employees of large firms, who often begin as novices and gradually move up the ranks to become distinguished coin dealers in their own rights. Sometimes, they even branch out and start their own companies.
Finally, I would be remiss if I didn’t make a passing comment about the principles and the graders at the third-party grading services. For the most part, these individuals came from one or more of the categories aforementioned (some are still active in their respective categories, while others are committed to only working for their third-party grading company). They are proficient in one of the integral components of coin collecting: grading.
In theory, these third-party graders exist to keep honest the players in all the other categories mentioned in this article?In reference to accurately rating coin conditions, anyway. And while the two major services (PCGS and NGC) have been commendably successful in their mission, there is no better advice for any collector to follow than, “know your dealer.”
I hope this top-to-bottom glimpse into the world of coin dealers has been enlightening and that you will be better equipped to evaluate the ones with which you choose to do business.
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