Typically, we try to stay away from controversial subjects unless we view it as a benefit to collectors. However, this week I had several conversations with customers regarding the different types of dealers, and how they affect or benefit the overall marketplace for coins. The coin industry is comprised of several different sectors and sub-sectors that are all active in their own way, and I promised that I would discuss and comment on them to offer some clarity into the marketplace. The reality is, some people won’t like what I have to say, but as your “Partner in Collecting,” we view it as a crucial discussion to have with our customers.
- Wholesale Dealers: I (John Brush) worked for the largest wholesale dealer in the country before coming to DLRC. It was a fantastic place to learn about coin values and how to run a business. These folks source coins from collectors, dealers, auctions, etc. with the intent of selling them to other dealers. They often develop auction or retail operations to maximize value, but in large part, these companies are silent market leaders behind the scenes. Typically quite well financed, they advertise to purchase coins and collections. If you need quick money but aren’t concerned about maximizing your return, it’s a good place to look. They are large and efficient, but customer service and relationships aren’t necessarily their forte.
- Crack-Out Dealers: These are dealers who utilize their grading skills and knowledge to buy coins from other dealers and auctions in an attempt to maximize the grade on the coin in any way possible. Sadly, there are even some who doctor or alter coins. Many of these folks don’t care about the long-term nature of the hobby and are only looking to maximize their return on investment in any way possible. Is the collector or coin valued by these guys? Very rarely. Are they looking out for the investor? Nope. It’s all about swift turnover and quick profit. The fascinating part of this sector is that it’s an exceptionally diverse group. Some are amazing numismatists and are well-grounded in the history and hobby…and some have no idea whatsoever about the historical significance of the inventory. Regrettably, many of these individuals are a poor choice for the hobbyist as they prioritize profit over both the collector and the historical veracity of the pieces they tout. The danger an unethical Crack-Out Dealer can pose to their coinage can result in coins devaluing both individually and across the wider market.
- Marketplaces: A marketplace is often disguised as a venue to reach the retail customer by any means possible. In the coin business, it’s largely an internet auction or inventory aggregator that offers a large selection of coins. Unfortunately, these aren’t backed by actual numismatists and have no real interest in the hobby, the collector, the buyer, or the seller. It’s all about making their commission. These are certainly helpful when they offer the coin you HAVE to get, but in the long run, it can be a dangerous game to play as the commissions seem artificially low, but there’s no protection that they offer for the consumer in the long run. There’s zero support for the collectors, and there’s very little need for them to work on behalf of the consignor or buyer. They will be making their commission (and their hidden fees) no matter what. While we all understand that there’s a cost of doing business, imaging fees and exorbitant shipping charges shouldn’t be a profit center. Are there decent deals to be had here? Sometimes. But they are often good deals with significant unknown risks. It’s a dangerous place. We all think we’re smart enough to avoid these pitfalls, but when the company isn’t backed by years of experience or numismatic knowledge, it’s probably not a good long-term plan for you and your collection.
- Direct to Collector Dealers: Direct to Collector Dealers, like David Lawrence, are companies that primarily work with collectors, investors, and institutions that do not plan on immediately re-selling. Do they sell to dealers? Of course they do, but in much smaller quantity and after that inventory has already been offered to collectors. A pure direct-to-consumer dealer is offering collectors the first shot at these pieces that haven’t been changing hands between dealers for years. Collector-based dealers prefer the original state of their coins and give upside to collectors in the long run. This is only the broad overview of our quadrant of the market, but between comprehensive inventories, and representation at major numismatic shows, we feel that Direct to Collector Dealers offer a secure and personal approach to buying coins. As mentioned, DLRC fits most squarely here, with the added service of auction, to help our customers when it comes time to sell and to prevent client favoritism when offering new purchases. Keep in mind, while we’re the biggest fan of this model, there are few concerns we feel must be acknowledged:
- Telemarketers that unethically mark-up the price of coins.
- Businesses in this category that act as “fences” for crack-out dealers and coin doctors.
- Smaller companies/collectors that aren’t active in the market and thus sometimes carry exorbitantly priced inventory.
A few last things to note: It’s important that your dealer buys coins. It’s not so that they compete with you or are trying to harm you. It should give you confidence that they are willing to invest their money alongside you and to offer guarantees to you when it is time for you to sell. If they aren’t willing to do that, it’s time to look elsewhere. It’s why we set up at over a dozen major coin shows every year. We not only want to offer coins for sale, but we want you to know that we’re also active buyers and participants in the marketplace.
Lastly, does your dealer support trade groups and organizations for the betterment of the hobby? This should be an absolute requirement. As a Board member of the PNG and the Chairman of ICTA, we are serving to better the hobby. These things take time and effort, but it’s important to give back. These organizations not only serve the dealer and the collector, but they are safeguarding the hobby for the long term.
At DLRC, our focus is always on the collector and the long-term importance of the hobby, as 95% of our business is directed to actual collectors. We’ve been doing this for 40 years, and it’s the main trajectory of our business. Sell coins to customers that we build relationships with and when the time come for them to sell, help them through the process with care. It’s the reason that the coins we offer are often “fresher” than our competitors. At DLRC we understand that as a collector and a buyer of goods and services, you vote with your dollars. Figuring out what matters most to you determines who you do business with repeatedly. Considering our selection, quality, pricing, service, and genuine respect for these historic items, we hope that DLRC makes a compelling choice to keep at the top of your numismatic source list for building your collection. Not just today, but for the long term.
John Brush and Your Friends at DLRC