You Can't Sell From An Empty Wagon

After any major coin show the leading numismatic publications will feature quotes from dealers asking them about the market. The responses vary from the usual “good show, but no fresh coins” to “slow sales with lots of lookers.” The problem with these perspectives on the market is the result of huge variations of dealers’ inventories. It would be similar to asking someone how the real estate market is fairing. We all know this depends on location, location, location. A similar reframe can be made of the rare coin market: it’s inventory, inventory, inventory. A dealer with $10,000 of rare coins is going to have a very different show experience from the major operators with millions of dollars worth of inventory. Many of the same dealers give their market perspective after shows and it can sometimes sound like a broken record. To fully understand the market, you need to dig a bit deeper and explore the wide range of dealer operations that are found at a typical convention.

Let’s start with the smaller dealers who take tables at coin shows. Many operate local coin shops and might only attend 2 to 3 shows per year. Their inventory will consist of what has been purchased across the counter in the last several weeks or months. These types of dealers depend heavily on the bullion market and the foot traffic it provides. If metal prices are depressed, the small coin shop dealers suffer from lack of business and new material. Conversely, when metal prices are in the news every day and the shops are busy, many are buying rare coins as well. Small dealers such as these are the ones providing many of the “fresh coins” you often read about. Any successful coin show has an ample number of small dealers to provide new material for the market. A couple of large west coast shows have lost many of the small dealers in recent years and the shows have suffered greatly as a result.

Next are the mid-size operators who make up a majority of the dealers in attendance. Some have shops and others work from offices around the country. Many of these medium sized rare coin dealers specialize in one series or another. There is everything from Large Cent dealers to those who specialize in tokens and medals. A mid-size dealer’s success at coin shows is very dependant on the inventory they bring to the show. If they have bought a collection in recent weeks, they are sure to be singing the praises of a hot market. If their inventory is somewhat stale, you are most certainly going to hear about how slow business was. One fact is certain in the rare coin market, you can’t sell from an empty wagon! Dealers who make an effort to stock a good variety of new merchandise are always busy. These dealers are easy to spot at most shows. They are the ones with 5 to 6 people waiting to see their coins.

Finally, we have the major coin dealers who now populate the rare coin market. These are the dealers with an average of 4 to 10 tables at each show. They bring a dozen staff members and millions of dollars worth of coins. The coin market has seen an amazing amount of consolidation in the last several years. Many of the largest dealerships now are more like small conglomerates than just a rare coin operation. Nearly all have auction divisions and some have even branched out into other collectibles fields. The one thing these dealers all have in common is that they are the “players.” They want to buy and sell as many coins as possible. They are all extremely competitive. These guys all have large overhead and can’t afford to have slow shows. They are guaranteed action! If things are a bit slow, they will make something happen.

The rare coin market has evolved tremendously in the last few decades. Years ago, the rare coin market moved in rather sharp, up and down cycles. Today, the market seems steady with broad overall demand. Everyone is concerned about the US economy and the impact it has on the demand for rare coins. For now, rare coins enjoy the pleasure of being considered a collectible and an asset class. Determining the actual state of the market is much more complicated than a few random quotes from show attendees. Remember, it’s all about perspective. A small dealer might be thrilled to sell $5,000 worth of coins and for others that would be a terrible show. It always pays to dig a little deeper when evaluating a market analysis. The next major rare coin show is the Florida United Numismatists (FUN) convention in Orlando. After the show you will probably hear or read someone say “great show, but no fresh coins”!

Jeff Garrett bio