In Jim Cook's Archive

Not Pretty

Back in the early 1980’s the failure rate among coin and bullion dealers went through the roof.  Although the price of silver had gone to $50 an ounce and coin dealers had made money almost every major dealer went out of business or filed bankruptcy.  Most took a lot of their customer’s money with them.  Millions of dollars of gold and silver never got delivered.  The money was gone.  For years we got calls from people who had lost their money asking if we could help in some way.

The dealers who offered the cheapest prices failed first.  I would scratch my head at the low prices they offered.  A customer once called me claiming he could buy silver coins cheaper than I could buy them from my  wholesale sources.  Buy 10 bags for me I told him.  He said he’d get back to me but of course, he never did.   Dealers were selling gold and silver at prices so low they could not pay their overhead.  Today I see the same thing happening.  A lot of dealers have built up a big overhead so any slow-down in sales volume can terminate them.  Others scrimp on insurance, get in trouble with regulators, fail to pay income tax or sales tax, blow money on high living or manage their business poorly.

John Kamin of the Forecaster Newsletter used to write that 9 out of 10 coin dealers failed every decade.  So if you are considering sending your payment across the country to some price cutter who may use your money to make his car payment perhaps you should reflect on the frightening possibility of getting nothing for your money.  My major competitors in the early 1980’s were Bullion Reserve for silver and Jonathan’s for gold.  Both were in California and they both were “cheaper.”  When the president of Bullion Reserve committed suicide and Jonathan went to jail, their customers were out millions.

My company also had hard times in the late 1980’s but we always delivered the goods.  Twice I had to sell part of a collection I cherished to make payroll.  I always kept enough assets liquid to raise money so that if the business died I could turn the key and walk away without any client losing a dime.  This is still our greatest responsibility and we have made certain that no matter what happens our customers will be O.K.  Nobody in the country has delivered as much gold and silver into the hands of their customers as Investment Rarities.  No customer has ever failed to get what he or she ordered.  That’s the best record in the coin and bullion business.

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