Dealers’ operations have gotten bigger and are moving online, but personal connections remain important
By Jeff Garrett for Numismatic Guaranty Corporation (NGC) ……
Other than plucking them from circulation, anyone who collects coins buys them from someone. For those unfamiliar with the hobby, the mention of a coin dealer probably brings to mind a small “hole-in-the-wall” operation. Or perhaps they have seen coins displayed at a flea market or in the corner of a hobby shop. Very few people who are not involved with numismatics have any idea of the size and scope of the hobby.
As has been mentioned many times, numismatic sales nationally exceed billions of dollars per year. Who does all of this business and in what kinds of operations? The answers to those questions are important so collectors can source their coins from the best places.
The following are brief descriptions of the various coin operations I have observed over the last few decades.
Flea market dealers: These dealers set up a few display cases on the weekends. Most of the coins are inexpensive and uncertified. Flea market dealers have been around for decades and were the source of many of my early numismatic adventures. Very few flea market dealers are full-time operations and their numismatic knowledge may be limited. Flea markets also have been the source of many counterfeit coins sold in recent years. Everyone loves a bargain, but we know how that can work out!
Vest pocket dealers: These are small operators who maintain a few boxes of rare coins and attend local and regional coin shows or coin club meetings. Again, most are not full time. They specialize in going from table to table, shopping their wares. They may buy coins from other small dealers and are mostly wholesale operations. Lots of rare coin dealers started their careers this way. The overhead is low and it’s a great way to acquire the knowledge needed to pursue coins as a full-time job.
Online sellers: This is a relatively new phenomenon in numismatics. Many are small operators who list a few to a few hundred coins per month on eBay or other auction sites. Many larger dealers also use eBay, and a quick glance at the site gives you an idea of the material available. In recent years, eBay has been making an effort to improve its numismatic offerings.
As I have stated many times, you should buy coins only from dealers who offer full returns if there is a problem. This advice applies to internet auctions as well.
There are also several large rare coin companies that do the vast majority of their business online through highly sophisticated websites. This type of rare coin operation seems to be the fastest-growing part of the market. The amount of numismatic material available this way is staggering.
Small coin shops: Decades ago, before the internet and at a time when bullion dominated the numismatic scene, these were much more common around the country than they are today. There are some survivors, and most cities have at least one or two similar operations. Quite a few might fall into the “hole-in-the-wall” category. It would be almost impossible for a small coin shop to stay in business just buying and selling rare coins. Most also buy and sell scrap gold, jewelry, and coin supplies. Many are nothing more than buying stations purchasing coins from the public.
Large coin shops: Over the decades, some well-run large coin-shop operations have thrived around the country. Most are in major cities and have much more diversified offerings. Usually, they have very knowledgeable owners and staff members who have worked with local collectors for years. If you are lucky enough to live in a city with a large coin operation, you would be well served to establish a relationship with the owners. They can be a great source of numismatic information and material. Large coin shops also can offer an interesting social aspect because many collectors like to congregate there on weekends.
Mail-order dealers: Anyone who has read a numismatic periodical has seen their ads, usually multi-page offerings. These dealers usually offer uncertified material, some of which has been optimistically graded. Over the years, I have seen quite a few collections that have been purchased this way. The collectors were more interested in price than quality. With third-party grading becoming ever more important, some players in this field have started offering more certified material.
Coin show dealers: This category covers a large and varied group of rare coin dealers. Most have offices but conduct a large part of their business at coins shows around the country. Some are primarily wholesale dealers; others cater to the retail crowd.
Probably 20 to 25 fairly major coin shows are held in the country each year. Most of the coin-show dealers, including me, attend nearly all of them. Some of the sharpest numismatic minds in the industry can be found at major coin shows. These are dealers who make a living based on knowledge, and most have spent a lifetime trying to learn as much as possible.
Coin shows are also where many of the “specialists” in the numismatic industry operate. If you like Large Cents, a major coin show is a great event to attend. You will find quite a few dealers who have made a career dealing in copper coinage. The same can be said for silver dollars, gold coins, tokens, world coins, and many other specialties.
Coin shows are a great place to meet and to establish a relationship with dealers handling the rare coins you collect. A bit of caution is recommended, however. Quite a few rare coin dealers are there to buy and sell as many coins as quickly as possible. They only deal with other dealers and can come off as quite rude to collectors wandering by. Also, look for dealers with well-maintained booths and avoid those with only a few coins scattered in their cases.
Auction houses: Auction houses have become an integral part of the numismatic landscape. A few decades ago, an auction house might have had sales approaching $10 million per year. Today, that can be a single average sale without a major collection. In the last few years, over $500 million worth of rare coins has sold at auction annually. Many coin show dealers have been struggling to source coins because so many are being sold at auction.
Auctions are a great place to see a large variety of rare coins for sale. There are a few major players in the rare coin auction business and most offer wonderfully produced catalogs. Quite a few auctions are conducted at major coin shows and are excellent opportunities to see the bourse floor and auction in one place.
Cable TV dealers: Anyone who channel surfs has seen these shows. Quite a few have very successful rare coin operations. Most of their offerings focus on modern coinage and other coins that can be purchased in quantity, such as silver dollars. These shows are an excellent recruiting ground for new collectors. Cable shopping channels have introduced hundreds of thousands of collectors, many of whom later become more advanced in their numismatic pursuits, and the shows are a great driver of growth for the hobby.
Mega-dealers: These are some of the largest numismatic operations in the country, with hundreds of employees. Some have offices that could better be described as campuses. Most of these large dealers focus on mass market retail and have advanced web operations.
Companies such as Littleton spend millions each year advertising in national publications. Others choose cable TV or the internet to shop their wares. These are well-diversified and shrewdly run businesses. Some offer everything from $5 coins to million-dollar coins and everything in between. These companies would stun most collectors and non-collectors with their size — they are quite the opposite of the “hole-in-the-wall” operations.
The mega-dealers are also a great driver of new blood for numismatics, bringing untold thousands of new collectors into the hobby each year.
This list is only a rudimentary examination of the many types of rare coin dealers in the country. I’m sure I may have left out a few varieties.
Regardless of whom you buy coins from, understanding the numismatic landscape will give you a better idea of how the hobby operates.
And remember, establishing a relationship with someone knowledgeable, regardless of what kind of dealer they are, will be one of your best investments.