Although it's easy to find a coin dealer, finding an honest, qualified one is a lot harder. You want a coin dealer who knows his topic well, is financially stable, respected by his peers, has demonstrated care for ethics, and from whom you have recourse in case of a dispute. Fortunately, we have the PNG (Professional Numismatists Guild), an association of coin dealers who have met a number of strict standards in order 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. 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.
When you first meet a new coin dealer introduce yourself and tell him what you are interested in. 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 attend 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 he just began attending shows as a coin dealer a few years ago, his knowledge may be very limited. 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.
Although not all coin dealers have a brick-and-mortar shop, not having one does not necessarily mean they are a "shady fly-by-night" coin dealer. they may not just 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 very specific area of coin collecting do not have a brick and mortar coin store. Finally, if it is a one-man show and something happens to the "one-man," there may not be anybody for you to go back and complete any transactions that may have been started. Having a partner will ensure some resemblance of business continuity.
2. Does the Coin Dealer Have Any Assets?
Although the overwhelming vast majority of coins on the market are genuine, there are occasionally some fakes and doctored coins that turn up. You want to know that the dealer is likely to still be in business five years from now if that $20 Saint Gaudens High Relief treasure turns out to have been a high tech fake somewhere down the line.
Although certification services and slabbing have palliated this concern somewhat, 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 recompense. Just because he has a lot of gold coins and bullion in this case, they may be leverage against a business loan or he is selling them on consignment and does not possess ownership to those coins.
3. Is the Coin Dealer Known Among His Peers?
One of the best safeguards you can get is from 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, or isn't respected in his own community, he's probably not a good choice to do business with. Especially when that business involves investing for my (or my kids') future.
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.
4. What Are the Coin Dealer's Ethics?
There is nothing more disheartening to me than standing at a dealer's table at a coin show, and watching some little old lady approach the dealer with a jar of old U.S. coins, to have the dealer barely glance at them and say, "I'll give you 10% over face; that's all they're worth and I'm being generous." A coin dealer such as this isn't just being 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?
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 is a very important 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 just be out of luck, unless you have the time and energy to file lawsuits and complaints with government agencies. Why not avoid that possibility to begin with, 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