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Michigan Results Show Market Pulse

Morgan DollarThe Michigan State Numismatic Society hosted its spring convention and show March 14-16 at the Adoba Hotel in Dearborn. This show of roughly 140 tables ran from Friday through Sunday. Morgan dollars were hot while bullion silver and silver American Eagles were not.

What is it like to work at a booth in the show? Here are some insights from the other side of the table that may help collectors when they attend future shows.

My company’s inventory runs the gamut of U.S. coins and paper money, foreign coins and paper money, ancient and medieval coins and exonumia. Therefore, we need a lot of space to display a portion of our inventory. As we are a relatively large dealer in the Midwest, we took two tables hosted by a staff of three.

Overall, the show for my company was alright, but nowhere near what we have done at this show at times in the past. Our sales were well into six figures when you include transactions that were confirmed before the show that were delivered at MSNS. As is pretty typical, about 98 percent of our sales were made to other dealers. Although our purchases were modest, about 95 percent of what we spent was paid to other dealers.

Wait a minute. Aren’t coin shows supposed to be ways for retail customers to meet a variety of dealers face-to-face? Aren’t dealers there to increase their customer base?

Well, yes – and not necessarily. You see, coin dealers operate in a number of different ways. Some, such as my company, have actual brick-and-mortar stores. We purchase anything and everything from retail customers, even merchandise that we don’t need for our retail clientele. There are other dealers with no means of physically meeting the public except at coin shows. Such dealers have limited ability to acquire specific merchandise that they seek from retail sellers. Further, other dealers operate by mail-order or online, which rarely involves personally meeting with customers. Of course, several dealers also buy and sell by multiple methods.

This is why such a high percentage of show transactions are dealer to dealer rather than dealer to collector. Dealers without stores seek inventory from a company such as mine that might have extra inventory to sell wholesale. There are also wholesale buyers seeking coins for promotions that can scour a bourse floor for dealers looking to sell the desired items.

There are other dealers who specialize in the “crack out” side of the industry. They use their experience to seek coins in certified holders (slabs) where the coins might merit a higher grade if resubmitted. Such buyers will often pay a premium over the regular retail price of a coin. As an example, I sold multiple certified MS-65 1902-O Morgan dollars to dealer buyers at prices as high as $250, far above reference catalogs and retail price lists.

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For decades, my company has been a consistent aggressive buyer of higher grade Morgan and Peace dollars that are somewhat tougher dates. We have developed a national customer base for such coins. This is a numismatic sector that has been so strong of late that the bids listed in The Coin Dealer Newsletter (called the Greysheet) are often close to or higher than retail price references. While I did sell a couple such coins to retail collectors at the MSNS show, I sold a large number of such coins to other dealers who needed them for their customer want lists.

The collector buyers and sellers who seemed to gain the most from attending the MSNS show were those who knew ahead of time the quality of the merchandise they had and were up on current market values. My company has been relatively aggressive at pricing our merchandise at minimal markups over the wholesale prices, which led some unknowledgeable buyers to decline purchasing from us because we were unwilling to discount our listed prices as much as some other dealers do. (As I’m sure most experienced collectors understand, collectors who are not careful graders and only buy on price tend to miss out on optimizing value with their purchases.)

Dealers have a variety of pricing strategies. Some are more optimistic than others in grading their inventory. You have probably all seen dealers who advertise to purchase “slider-unc” quality coins but who only offer to sell more effusively described coins, often at prices that might appear to be a real bargain. I have seen some dealers who figure that any and every certified coin they have in inventory must be high quality and marked with a high price. Such dealers can often afford to heavily discount their marked prices. Then there are other dealers who are low-priced sellers relative to wholesale value.

What counts is not what the dealer says. Instead, it is the quality of merchandise and what it would cost you to purchase it that determines whether a prospective purchase is a solid value.

At MSNS shows, we have in the past decade sometimes purchased more than $10,000 face value of U.S. 90 percent silver coins. This time, with the price of silver still more than 50 percent below where it was almost three years ago, we did not purchase a single coin of “junk” silver. As best I recall over more than the past 60 spring and fall MSNS shows, this has never happened before. Also in years past, we have regularly sold hundreds or thousands of current year silver American Eagles. This past weekend, I don’t think we sold a hundred pieces to dealers and retail customers combined.

We did look at some lovely collections, but had no luck purchasing any of them (again – not an unusual experience at coin shows). Some collectors see trophy coins selling in auctions for 50 percent to 100 percent above indicated wholesale levels and figure that their much more commonly available coins should also sell for such multiples. As an example, one collector wanted $400 for a lovely coin where we had several in our display at a retail price of $319. I would have loved to purchase such a coin, but we just could not get together on price.

On Sunday, as usual, we did purchase some inventory from dealers who were looking to improve their cash position at the show and had not sold enough to retail customers.

As happens at every coin show, some of the value comes from visiting and socializing with other dealers, old friends and new. It helps us better gauge the direction of the market, re-energizes existing relationships and also brings up opportunities for new business in the future.

Perhaps the most popular items we had at our booth were copies of the monthly newsletter, Liberty’s Outlook, which I write for subscribers and customers of my company. Even though we brought several hundred copies, they were all gone by Saturday morning. I’d like to thank all the collector and dealer fans who complimented me for their enjoyment of the newsletter, the columns that I write for NumisMaster.com and other websites, and my radio programs.

Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Other commentaries are available at Coin Week. He also writes a bi-monthly column on collectibles for The Greater Lansing Business Monthly. His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing.

 

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