I neglected to write anything about the F.U.N. show in January because I was awaiting the outcome on the coin doctoring meetings. Many dealers recycle the same old dribble about how great every show is and that you should buy coins. We like to give a true, how we feel perspective on everything. So allow me to touch on a few pertinent points.
First, we loved the F.U.N. venue this year. The convention center was excellent. Our table spot was great and the hotels in the area are much closer to the show. I’d have no complaints if it was always held in Tampa.
The coin doctor meetings went as I expected. Back peddling and changes of stance were the name of the game. This has long been a problem and will continue to be one. Many dealers have engaged in it but the big problem is that the grading services did not have active numismatists grading the coins to prevent this from continuing and also, the doctors became so good because the they were given the opportunity to perfect their skills. Now, maybe more doctored coins won’t get graded but there are millions of dollars worth of doctored coins in collections. I personally have viewed seven figure collections with tons of doctored coins including many proof gold coins. I spent time at the F.U.N. show telling dealers which certified coins they had in inventory were doctored. The biggest problem with doctored coins is that as long as a coin can be sold, why fight it! Many dealers take the money and run. They feel that the onus will be on the grading services, not taking into consideration the negative effects it has on the whole industry. Combine this with a public attitude of trying to spend the least amount of money on a coin and compromising is compounded. Always try to buy the coin first and don’t rely on the grading service alone. Try to get the grading services to buy a coin off the market, especially an expensive one. Be ready for a long, long drawn out fight. They don’t cheerfully buy coins off of the market.
Most of the current business in our industry is being done in bullion related coins. American eagles in silver and gold in particular are hot. The problem is that many of these buyers want nothing to do with rare coins but everything to do with bullion. Now, we have a chance to educate the consumer but instead, most dealers are going with the flow. Why you may say? It is the path of least resistance. A dealer now can make larger mark-ups on modern graded bullion than they ever could make on a rare coin; particularly if the modern piece is graded MS-70 or Proof-70. Dealers are making hundreds to thousands of percent mark-up on some of these modern contrived rarities. We have spoken to dealers that say they have never made more money in their lives! We sell bullion silver for 2% over our cost and bullion gold for 1% over our cost. We are actually trying to protect our clients. It won’t be too bad if gold & silver continue their meteoric rise but at some point these modern coin buying geniuses may realize they would have been better off not paying outrageous premiums for graded bullion and just got it graded themselves.
Two year ago, a client wanted $65,000 of proof gold eagles from us. Paul, a numismatist in my office had a supplier ready to fill the order and asked me about it. I said “with gold at $900 per ounce, tell him not to fall for the promo Proof eagles at $1,650 per ounce. I feel they will drop and don’t want to risk our reputation.” Today, gold is about $1,400 per ounce, more than 50% higher and proof eagles sell for $1,600 to $1,650 per ounce. The man opted to buy the proof eagles from another dealer and complained about us. That’s a common scenario for us.
Future thoughts…diversity, incorporate some semi numismatics and numismatics for the future. If the Dodd-Frank Act passes and the ownership of commodity and bullion contracts becomes regulated, that could possibly positively impact the prices of semi-numismatic and numismatic coins. Feel free to call us with our current recommendations.