Awhile back a friend of mine started talking about how he was getting into coin dealing as a full time job. I was never able to quite believe him, and then was just kinda baffled when he started buying houses and nice cars and boats and taking expensive vacations. Was he legit or was he dealing drugs? Is the coin game that lucrative?

Hmmm I mean it can certainly be lucrative but it is NOT a get-rich-quick kind of business. It's a get-rich-slow business if you know what you're doing and put lots of effort in over years. So I'd say I'm skeptical, but you never know!

I'm not sure I'd jump to the conclusion that he was dealing drugs, but it's certainly an option that he was...shall we say....washing his income.

To what extent did your past income (IPOs, executive…) provide the necessary capital to do this profitably? I wonder if there are some economies of scale required outside of numismatics know-how - ie get positive expected value/profit if you can front to buy $100k worth of coins for the 1 coin that is worth it at $101k.

That is an excellent and reasonable question. I was able to put a moderate chunk of capital into my inventory and yes, that absolutely has helped (the old 'it takes money to make money'), but at the same time, I'm not the most efficient capital allocator. I know people who make just as much as I do (and more!) with 1/10th the capital, but they play a different version of the game I do and have a different set of skills.

I do think that numismatic know-how is an absolute must and the more you have the more opportunities there are. There's very little money to be made simply churning bullion, for example. That doesn't require a ton of know-how other than hanging a shingle and buying and selling gold and silver. But margins there are 2-3% if you're lucky, so that's a hard game to play unless you've got a BIG chunk of capital to throw at it. (Also, I'd argue bullion slinging is on the fringe of true "numismatics" but I'm a snob about that lol)

Thanks for the details!

If you’re ok sharing, what’s a sane startup cost in your mind as to be competitive in the numismatic-competent approach you describe, but still small time ($10-20k/yr profit) - an initial $5-10k, $10-30k, $40k+?

I think a 1:2 capital:revenue ratio is what I would call "medium difficulty" mode -- you should know what you're doing and don't need to be insanely perfect in every call. So to make $10-$20k annually, putting $20-40k to work should do it.

But you never know - I've had double-ups on some coins, so you might buy a $10k coin and make $10k in a single deal if you know what you're doing :)

Ty! I’ve got the time and capitalization to try this in that case. Grew up interested in stamps so sounds like time to re-engage in a way. Appreciate the unselfish discussion and details.

Shoot me an email (see bio) and I'm more than happy to help in any way I can. The other wonderful thing about this hobby/business is that for the most part more dealers !== more competition, since there are so so many different facets of the business it ends up growing the hobby more than not. Happy to help you find your niche.

Will do next week. Thank you!

I have been curious about using computer vision to bulk scan and identify valuable coins. Have systems like this been put into use already? If not do you think they might dilute the value of "rare" coins by creating many more "finds" then were typically possible without the technology?

Hasn't been done (well) yet, and it's absolutely doable. BUT - I don't think that's actually one of the big problems to be solved. I would argue there are enough knowledgable eyeballs out there that there really aren't too too many "undiscovered" rarities.

And what I mean by that is, for example: The 1909-S VDB or the 1955 Doubled Die are two of the mega rarities when it comes to Lincoln cents. They are worth $500+ even in the worst shape. But they're very obvious to someone with even basic coin knowledge, and there are lots of books and pictures out there. And in fact, I'd argue there are very very very few of those coins out there that haven't been identified for what they are -- they've been known rarities for 114 and 68 years respectively. So computer vision telling someone that it's a rare coin isn't going to be too much of a game-changer.

(This is a strongly stated, loosely held belief btw - I can easily be argued into a different perspective).

I think a much more interesting application for computer vision to the business is when it comes to grading (coins are graded on a 1-70 scale for Reasons). And in some cases, the difference a single grade point makes can be $thousands. Official grading is still done entirely by human eyes. An efficient computer vision system to look for undergraded coins I think has real opportunity. It's not an easy feat though - you can't really truly grade with static photos, and there needs to be normalization, so you'd need video clips w/ depth mapping of many thosands of coins to train a model properly. But it could be done!

I used the iphone/android Maktun a little, it can identify coins and paper bills from camera.

If you're comfortable answering, I'd be SUPER interested to know how the income compares to tech!

If I may give you a somewhat indirect answer: One of the best things about this business is it returns proportionate to the effort you put in. I know people working with $50k in capital who make $500k a year. I also know people with $1m in capital who make $100k a year. (And I know people with $50k in capital making $50k a year).

And at the extreme: I know one high-volume wholesale dealer (who's been doing this for decades) talking about his business. He has about $250k in capital for inventory and he turns his inventory 36 times a year --- $9m in gross sales! And he's a high margin guy -- so I'm guessing he's making $1.5-$2m a year on $250k in rolling inventory.

There are a lot of ways to make money in the coin business and one of the most fun parts is learning new and different strategies every day.

And then there's the other half that's losing money

LOL true! My internal survivorship bias was showing. You do hear an awful lot from the dealers who have been around for 40+ years but not-so-surprisingly less so from the ones who didn't make it.

What percentage of your sales are to other dealers vs collectors/non-industry customers? Thx

This is a good question and one that comes up often. I'd say it's around 60% to dealers, 40% to collectors. I'd like the skew to be more like 10%/90%, and that's my aim, but I take the position that a quick profitable sale to a dealer can be better than waiting for the right collector to come around and pay full retail price. It's a delicate dance and you need to develop an intuition for what coins are collector-friendly and quick sellers vs. what's more likely to sit around for a while. And the answer is different for every dealer and every series of coin. There are a lot of variables!

Is forgery ever an issue?

Yes! There are quite a few fakes (both coins and currency) floating out there. Some of the best fakes are gold coins that - and you might find this surprising - are actually made out of gold. The reason is that at various times through mid/late 1900s, many countries forbade the export of gold while the US allowed for imports of our own coinage. So a crafty smuggler who wants to get their gold out of, say, the middle east and into the US would have the gold minted into fake US coins so as to bypass the export/import restrictions. Real gold, fake coins. Kinda wild.

Anyway, coin and paper money nerds are quite good at identifying fakes - there are specific die marks, casting marks, etc. that allow a trained eye to identify a counterfeit pretty easily. This is combatted with a combination of experience and the 3rd-party certification companies which encapsulate coins and paper money along with a genuine guarantee (and they will pay you for the item if it's discovered to be counterfeit at any time).

It's an issue for some types of coins more than others, but with experience it's usually possible to identify counterfeits.

That's fascinating. In a way a gold smuggled coin like that seems more rare than the genuine article? That would have an effect of its own on the value? Or maybe the problem is such coins are impossible to identify with certainty because they weren't made by an "official" mint?

There are definitely people who collect fakes/smuggled coins, but because they have the stench of counterfeit on them, their appeal is limited.

However - there is one super notable example. In the mid-1900s a guy who became known as the "Omega Man" made counterfeits of the famous 1907 High Relif $20 Gold Coin that were SO good that for many years many of them were certified and bought and sold as genuine. Like many craftsmen of his ilk, the Omega Man couldn't resist leaving a calling card on his (gold) fakes, and it was eventually discovered. Those are outright collectible today for more than their gold value.

Some details:

https://www.ngccoin.com/news/article/10583/omega-counterfeit...

How does tech help you to run this business?

I left this reply for last because it's the best question and most significant one for me. Tech helps me A LOT, and it's one of the reasons I'm having so much fun doing what I'm doing.

I've written my own software stack that does a few things:

Consolidates pricing -- by putting readily-available data all on a single screen, so when everyone else needs to check 3 different price guides to get various pricing indicators, I have it all in one place.

Manages inventory -- you would be surprised and perhaps shocked at how disorganized most dealers are. They have absolutely no idea what they own or how much money they're making -- when they buy a coin, they slap a sticker on it with their "cost code" which is just an incredibly weak substitution cypher -- and they refer to this code when they quote sale prices.

Allows for quick appraisals/quotes -- again, most dealers open a paper pricing guide and write down line by line how much they're willing to pay for a coin when they're quoting someone. I can enter a line in 10 seconds and have a buy price right away.

Does some VERY light machine learning / price prediction -- I'd love to say this is massively complex AI, but it's a pretty simple tabular regression based on historical sales data. It gives me one extra data point when I'm buying or selling to figure out if I'm paying a good price or not.

I think it's very possible to run a successful coin business without tech and I know a lot of people who have done it, but I certainly think having this software is helping me get better faster. It's like a set of training wheels that lets me play with much more experienced dealers at a much faster pace than I'd normally be running.

Do you do paid appraisals of collections?

Yes! And free appraisals if the collection is for sale and I can have an opportunity to make an offer :)

It's a balance of time investment for me. If I know someone has no intention of selling and just needs an insurance appraisal, then that would be a paid service since I'm simply selling my time and expertise (which I'm more than happy to do). If there's an opportunity for me to purchase the collection, I'll usually put the bid together at no charge since that's a sales & marketing expense on my internal brain books.

A lot of dealers will try to split the difference -- they'll offer the appraisal at no charge if they get to purchase the collection, and if they don't end up purchasing then the appraisal fee comes into play. I actually think that's a reasonably fair model and may adapt that.

Doesn't that make for a tricky conflict of interest? (No offense intended).

I mean if you're paid for the appraisal then there's no incentive for your number not to be honest.

On the other hand if you are valuer, then buyer, then it pays you to err on the low side. Not "wrong", just "low".

I don't mean to impinge your ethics of course, but as a model (which I'm sure the whole industry follows) it seems to leave the seller open to abuse from folks with imperfect motivations.

To be sure though, I can't suggest a better alternative. The best people to value it are dealers. Short of more-or-less auctioning it to multiple dealers at the same time.

I think this is true for most collectibles. And especially true for the collections of those who have passed. My suggestion to any collector is for them to sell it themselves before they die.

No you're absolutely right -- it's a great point and I was imprecise with my response. The key is really to differentiate a "how much is my collection worth I kinda want to sell it" request from a more formal "I'd like an appraisal" request.

I conflated the two but they really are separate requests and are to be treated distinctly.

The former (which is much more common) is what most dealers hear. It's a request from folks who happen upon a collection and want to sell it and turn it into cash (or gold or silver or whatever near-cash equivalent they desire). That's where a call to a dealer isn't so much a request for an "appraisal" (in the formal definition) but more "how much money can I get for this collection now". It's implicit that the number the dealer offers is what they'd pay for it, which also happens to be the number the dealer believes it's worth. I don't have any moral qualms about that.

(Side note -- speaking of "not wrong just low" -- one of my favorite old-school dealers who's been doing this for 40 years and is appropriately salty lives by the mantra "I like to pay on the low end of fair".)

The second type of request - which is for a formal, written, insurable, usable-in-court Capital-A "Appraisal" is where there might be more potential for a conflict of interest, but if we as dealers are clear this is the job we're being hired for then we're going to issue a valuation which is based on published price guides (and the appropriate disclaimer that is is retail replacement value, not necessarily the price a dealer will pay).

Hope that clears it up - and thank you for the comment.

how specific is the hobby? are folks generalist collectors or do people go deep on a specific region/period?

All of the above! There are people who are SUPER specific -- they collect only a single series (say, Buffalo Nickels from 1913-1938), some people who only collect a very specific type within a series (Buffalo Nickels from San Francisco in MS65 or better), and generalists who just like anything that's pretty or interesting or gold or silver or from their hometown, etc.

There are 1001 ways to collect and it's fun to meet all the different folks and learn about their different approaches.

Are you hiring? Haha

Eventually, I hope so! Gotta spin up the machine a bit more. I don't ever want more than a handful of people working on this I am a big fan of the 2-pizza team, but I know I need to scale to a bit more than just me.

huh! that's awesome, personally - this is a very inspiring bio.

Thank you!!