We’ve highlighted in the past why we believe doing business with a local coin dealer is preferable to conducting business with a large online coin dealer/broker, but two additional benefits that we failed to mention are avoiding sales pitches and actually receiving your coins. While trying to direct individuals toward coins that may not best suit their investment needs is unethical, failing to ship coins for orders that have been placed and paid for is downright criminal! Unfortunately, Merit Financial and The Tulving Company, two of the largest online coin dealers in the nation, have recently been accused of doing just that. We’ll discuss in further detail the two additional benefits that we highlighted above as well as address some of the allegations made against these two prominent companies.
While you expect to receive a hard sell while shopping for a new vehicle, the last place that you should expect to receive a sales pitch is from your coin and bullion dealer. Professional sales people can be quite convincing, especially when they’re trying to upsell you or direct you toward higher premium numismatic coins. While numismatic coins can be great investments, your reason for buying the coins should be well thought out prior to doing so. Additionally, you should do your homework on the historical value of the coins and how they’ve appreciated over time and under different market conditions. Merit Financial, who advertises prices that are 1% over cost, has been accused of trying to upsell their clients and directing them toward more costly and profitable numismatic products. Some of the details of the allegations can be found in the following article from Coin Week.
To recap the allegations made against Merit, they’re being accused of telling their customers that numismatic coins are better investments and offer more privacy than bullion coins, are not reportable from a tax perspective and can’t be confiscated by the government. Some of these statements are outright mistruths, while others are debatable. Reporting profits on the sale of any coins, whether bullion or numismatic, is required. An exemption doesn’t exist for numismatic coins. Furthermore, there doesn’t appear to be a basis for the statement that numismatic coins offer more privacy than bullion coins. Certainly, the case can be made that numismatic coins offer the potential for higher returns, but it depends on the particular coin. As to the confiscation issue, it should be noted that very few individuals were prosecuted for failing to voluntarily exchange their gold coins for dollars following the passage of Executive Order 6102 in 1933, which is better known in the coin and bullion industry as the “Gold Confiscation Act.” Numismatic coins were exempt from the act, which makes them attractive to gold bugs that are concerned with potential confiscation of their coins. Details of the case can be found on Wikipedia’s site.
While hard selling customers and using bait and switch techniques is highly frowned upon in the industry, there’s absolutely no excuse for not delivering coins in a timely manner that have been purchased and paid for. Unfortunately, The Tulving Company, one of the nation’s leading online coin dealers, has been accused of doing just that. The following link provides additional details on the situation, but in a nutshell, The Tulving Company has been accused of failing to deliver on upwards of $500 million worth of orders placed and paid for by their customers. While formal complaints made to the BBB and BCA seem to be expediting the delivery of some orders, it appears as though Tulving may not be able to make good on all of the outstanding orders, which could eventually spell bankruptcy for the company. What’s particularly disturbing is that up until 2011, The Tulving Company had an impeccable reputation, which means that things can turn on a dime in the coin and bullion industry.
The best way to avoid subjecting yourself to a hard sell or non-delivery of your coins is by establishing a relationship with a local coin dealer. A coin dealer shouldn’t try to steer you in one direction or the other without having all of the facts. They should openly and honestly answer all of your questions, and only after having a clear picture as to your investment goals and needs, provide some recommendations. Of course, when you purchase coins from a local coin dealer, you take immediate possession of the coins, so you eliminate the risk of the coin dealer failing to deliver. However, it’s not uncommon or unreasonable for a coin dealer to request a deposit if a special order is requested. While it’s highly unlikely that some of the nation’s largest online coin dealers, such as APMEX, will fail to honor their obligations, the safest way to conduct business is with a local reputable coin dealer with whom you’ve established a relationship.
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Visit his website at http://www.atlantagoldandcoin.com for additional information on the products, services and educational resources offered by his company.