Allen Rowe: Where is your money headed?
July 13, 2014
Choosing a company to do business with has many potential complications. In today's day and age, we see businesses can put on great fronts and yet have no depth. Finding a rare coin or bullion dealer is no different. Doing a little homework up front can save a huge headache in the end.
First of all, many of us now shop online. Unfortunately, one can't usually see a true picture of a company from a website. Are you dealing with a large viable company or a guy sitting in his underwear out in his own garage? Researching who you are dealing with is not hard. You can search the address and find out if the company is in a building or just a mailbox. Finding out which peer associations the company is with also is important.
Each industry usually has groups or peers that will endorse those who are worthy of dealing with. In coins we have Professional Coin Grading Service and Numismatic Guaranty Corporation who authorize dealers, the American Numismatic Association, which monitors members, and the Professional Numismatists Guild which embodies most of the countries elite dealers. Searching eBay feedback also can be a way to find out what kind of a company you are dealing with.
As an example we recently had a customer who bought from us over an online company. Yes, he could have saved money on his $40,000-plus deal, but when we added it up it was less than $200 difference. He was able to pick it up in person and not wait 4-6 weeks to get his product. Sure, the company he was checking out was probably fine, but by coming in person he could be assured of who he was dealing with.
Choosing a local business can be a great viable option. Looking a person face-to-face often gives us a good read of who we are dealing with verses a website.
In going local one must ask a few further questions. Can the company you are dealing with cover the amount of business you are doing? I once had a customer who consigned a collection to a dealer with one specific customer in mind. The collection was sold and yet the customer was not paid. When he questioned the dealer he was told the money had gone to pay bills and he would get paid soon. The customer eventually did get paid, but after much heartache.
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Another thing to question is whether the company you are dealing with has enough insurance to cover you and your dealings. Every once in a while things are out of a company's control. Fire, robbery, or losses to others do not let a dealer off of a liability to you. But if there's nothing to collect, you could be out. I once saw a dealer who mailed off hundreds of thousands of dollars worth of bullion to a company only to have the company go bust. The dealer never got paid, yet he still owed the customer. To his credit he sold nearly everything he owned to cover the customer, but over the years I have seen it go the other way, too. If you cannot look around and see enough to cover you it may be wise to find another company.
Finally, as the market tightens we see desperation rise. Offering deals that are too good can be one of those signs. In the late 1990s I once saw a bank advertise in the USA Today offering about 4 percent on a one year CD. A friend of mine sent his money in only to find the bank in receivership within a month. Yes, the FDIC covered his investment, but he lost all potential interest and it took nearly a year to get his money back. Rather than dealing with someone he knew was good he took a risk for just a little better gain and nearly lost it all.
Ultimately ask yourself who you are dealing with. Going with a solid company will potentially save you grief in the future and if you are fortunate enough to have a strong local company it's even a better benefit, whether in coins or any other industry.
Allen Rowe is the owner of Northern Nevada Coin in Carson City.