Although it's easy to find somebody selling coins, finding an honest and qualified coin dealer is a lot more difficult. Everyone would like to find a great deal when purchasing a coin. However, if a coin dealer is fair and honest, they will give you a fair and honest price. If a deal is too good to be true, it usually is.
Therefore, you will want to find a coin dealer who is well-versed in numismatics, is financially stable, respected by his peers, and has demonstrated ethics. In case something should go wrong, you will want to have recourse in case of a dispute. Fortunately, we have the PNG (Professional Numismatists Guild), an association of coin dealers who have met strict standards to join. Here are the five questions you should answer before doing business with any coin dealer.
1. Is the Coin Dealer Experienced?
There's an old saying around numismatics that goes, "Buy the book before you buy the coin." While this is excellent advice, and I strongly recommend following it, the fact is that not every coin collector can become an expert in every field of numismatics. The same holds true for coin dealers. A coin dealer will usually specialize in one area of numismatics. For example, early American copper coins, classic silver dollars, or modern U.S. coins.
If you are buying coins, especially for investment purposes, you will want a knowledgeable, reliable coin dealer who can give you accurate and meaningful advice. Additionally, they will be familiar with the current market conditions. The coin market is no different than any other market. There will be upswings and downward trends. A knowledgeable coin dealer who is in touch with the current market conditions can save you thousands of dollars on your investment coins.
When you first meet a new coin dealer introduce yourself and tell him/her what areas interest you. Then ask him some questions to get to know what type of dealer he is. Here are some examples:
- How long have you been a coin dealer?
- What areas do you specialize in?
- Are you a member of PNG or the ANA?
- Do you have a brick-and-mortar coin shop or do you just set up at coin shows?
- Do you have a partner that we can work with?
Depending upon the answers to these questions, you will get a better idea of who you are dealing with. If the "coin dealer" just began attending coin shows as a coin dealer a few years ago, his knowledge may be minimal. If he says he specializes in everything, you know that he is stretching the truth. Being a member of one of the professional organizations (PNG or ANA) demonstrates a level of commitment to ethical dealings with customers.
Not all coin dealers have brick-and-mortar shops, and not having one does not necessarily mean they are a "shady fly-by-night" coin dealer. They may not have the resources to staff a coin shop and also travel to coin shows around the country. Some dealers that have chosen to specialize in a particular area of coin collecting do not have a brick-and-mortar coin store.
Finally, if it is a one-person show and something happens to the "one-person," there may not be anybody for you to go back and complete any transactions that may have been started and left incomplete. Having a partner will ensure some assurance of business continuity in case something happens to one of the partners.
2. Does the Coin Dealer Have Adequate Assets?
Although the overwhelmingly vast majority of coins on the market are genuine, occasionally some counterfeit, altered, or doctored coins turn up. You want to be assured that the coin dealer is likely to still be in business five years from now if that 1907 $20 Saint Gaudens High Relief investment turns out to have been a high tech counterfeit.
Although third-party certification services and encapsulated coins have somewhat alleviated this concern, a coin dealer's financial stability is a good indicator of the likelihood that he'll be around for a long time and financially able to provide repayment in case of a dispute. Just because he has a lot of gold coins and bullion in his display cases, but they may be leveraged against a business loan, or he is selling them on consignment and does not possess ownership of those coins.
3. Is the Coin Dealer Known and Respected Among His Peers?
One of the best safeguards you can get is using a dealer who has been vetted by his peers before being permitted to join a guild. After all, if the coin dealer has a bad reputation, and does not have the respect of his peers, he is probably not a good choice to do business with. It is impossible for a coin collector to know the reputation of every coin dealer. That is why it is important to know if he is a member of a nationally known Guild or Association.
If you are a member of a coin club, ask other members if they have ever dealt with that coin dealer. Find out if they have had any problems with the dealer and if it was resolved to their satisfaction. Don't be swayed by large cases filled with gold and silver coins. This is not an indication of a trustworthy and reliable coin dealer.
4. What Are the Coin Dealer's Ethics?
There is nothing more disheartening than standing at a dealer's table at a coin show and watching a little old lady approach the dealer with a jar of old U.S. coins, and have the dealer barely glance at them and say, "I'll give you 10% over face value. That's all they're worth, and I'm being generous."
A coin dealer such as this isn't just lazy; he's hoping to make a score. He's hoping that there'll be something in that jar that will spell a big payday for himself. But even if we give him the benefit of the doubt, and attribute his action to laziness, is he being fair with his customer? She was trusting his expertise. Would you like to do business with someone who treats his customers that way?
Additionally, using high-pressure tactics in order to close a deal is just as disturbing. Both parties should come away from a deal with a feeling of fairness. If pressuring a customer to close on a deal is their way of business, you will want to avoid this coin dealer.
Coin dealers who subscribe to a code of ethical standards, such as that espoused by the PNG, have enough respect for their customers to take that extra 2 or 3 minutes to look through the little old lady's jar and give her an honest appraisal. They agree to represent their merchandise fairly, grade coins honestly, and treat people ethically. These sound like traits you should expect anyway, right? Unfortunately, this isn't always the case, so think about this before choosing a coin dealer to do business with.
5. Do You Have Any Recourse if You Get Ripped Off?
Coin dealers who are full members of the PNG have agreed to submit to binding arbitration to resolve disputes. This agreement is a critical consideration if you are buying expensive coins or coins for investment purposes. What happens if there's a dispute? If you don't choose your coin dealers carefully, you might be out of luck, unless you have the time and energy to file lawsuits and complaints with government agencies. Why not avoid that possible situation, and do business with coin dealers from whom you have some recourse.
How to Find a PNG Coin Dealer
The PNG has an online coin dealer directory where you can search for coin dealers using various criteria. The next time you buy coins, think about the things in this article when you decide who to buy from. Someday, you might be very glad you did.
Edited by: James Bucki