Coin Gallery in West Boca Square
West Boca News likes to tell stories about unusual businesses in our area. For example, we did a profile on FridgTech last year. With the holiday season upon us, we thought the Coin and Jewelry Gallery of Boca Raton would be interesting for our readers.
The store is in West Boca Square, the plaza on the west side of 441, north of Palmetto. The biggest store in there is Target. The gallery is halfway between Long Island Bagel and Babies R’ Us. The West Boca store opened in February of 2012. They also have a place on Military Trail in East Boca (the plaza entrance is across from Butts Road).
We became friends with Marc Tancer sometime last year. He’s been working in the business with his uncle Gary for a couple years now. He’s bright, thoughtful, and was able to explain a lot about how the business works and who their customers are.
Most of the what they do breaks down into two groups of customers: Buyers and sellers. Unlike the way we think about most businesses, sellers are actually the most important in this business. Without people coming in to sell, there’s nothing for the store to sell to buyers. And of course, there are many customers who both buy and sell, selling jewelry and then buying coins, for example.
I asked Marc what the holiday season is like for his business. They do not publicize Black Friday promotions. Unlike other stores, they can’t give large discounts on their merchandise because the mark up is relatively small to start with. However, for this Friday and Saturday Marc expects to give substantial discounts on the premiums they charge.
Sellers come to the store with jewelry, sterling silver, flatware, coins and other items that they inherited, or that they just need to sell.
Buyers mostly buy coins. If you want to learn more about collectable coins, then there is a blog post called ‘3 Coins That Are Collectable’ on Dramming News which will provide all of the necessary information. There are two broad types of coins that the store sells: Collectibles and bullion.
There are two main types of buyers who come to the store: Collectors and investors. Collectors are generally looking for coins that have a substantial value beyond the specific metal and its weight. The field is also known as numismatics.
Within that area, some coins are particularly valuable because they are scarce, and that increases their value as collector’s items. As an extreme example of that, they have listed on their eBay store an 1855 Indian Princess gold dollar for $18,000.
Regular investors not seeking that kind of collectible value shop for bullion, or bullion coins, where the main value of the coin is the metal and its weight, or what some describe as melt value. Those looking to learn the ropes of investing in precious metals and who are trying to find a place to begin may want to check out gsiexchange.com to learn about the markets, tips for buying and selling, popular products for investors, and more. Gold and silver trade in markets at something known as the spot price. One of the most popular places to see spot prices is on the Kitco website. These prices reflect large transactions of precious metals, mainly gold, silver, platinum and palladium.
Bullion coin prices are generally a small percentage higher than the spot price for the relevant metal. There is a wide range of bullion coins. The most common example is dimes, quarters and half-dollars from before 1965, when they still had actual silver in them. Gold bullion coins include American Eagles, Canadian Maple Leafs and South African Krugerrands. For silver you might see American Silver Eagles, Canadian Silver Maples, and Chinese Silver Pandas. There are many others. Typically the lowest cost way to get one-ounce silver coins is what are known as “silver rounds”, which do not carry a prominent brand name like the ones mentioned above. They tend to have the lowest premium over “spot.” Coins come in a variety of sizes, from an ounce down to as small as a tenth of an ounce, plus the pre-1965 coins. You can get some idea of their values on the coinflation website, though the store may have information beyond what such websites offer.
From an investor perspective, one can also buy precious metals through mutual funds and especially exchange-traded funds (ETFs). Physical coins and other bullion have both advantages and disadvantages compared to ETFs. From the standpoint of expenses, ETFs tend to be far more efficient, and that is only set to rise, as the likes of Hydrogen ETFs are now coming to the forefront of this sector too – see hier for more information. In the meantime though, if you buy $5000 of an ETF, a typical brokerage account will charge you less than $10 for the trade. That works out to two-tenths of a percent, far less than the typical 2%+ premium you’d pay for buying gold bullion. Also, an ETF may be more cost-efficient for holding with expense ratios as low as 0.4%. If you hold physical gold you have to store it somewhere, often in a safe. Depending on how much you have you may want to put it on your homeowners insurance and that may raise your premiums. You also face the risk of theft – a real problem here in South Florida where residential burglaries seem all too common. And there’s even the simple risk you might lose your coins.
With that said, there are key advantages to holding physical coins and other bullion. First, there’s the immeasurable value of possession, which gives some people a feeling they don’t get from their quarterly IRA statement.
Tancer points something few think about with their investments – counterparty risk. When you buy capitec shares, or any other shares in fact, in an ETF or other investment, you are trusting that the investment company will honor its contract with you. The investing world includes an unknown number Madoffs, Enrons, and MF Globals. If a counterparty you’ve invested with or in goes under, you are left with paper that may be worthless. Investing in physical coins avoids that counterparty risk completely.
Within the investors who buy coins, there’s a subset who are focused on a different kind of risk. The world of preppers has become somewhat famous thanks to the NatGeo TV show Doomsday Preppers. Of course that show tends to portray the extremes. Most preppers are concerned about the danger of scenarios that really can and do happen in the world, such as hurricanes and economic crises. This year we saw bank depositors in Cyprus take a large “haircut” on their deposits. You can read about that in Forbes and Reuters.
Holding physical coins is generally perceived as safer from this kind of risk. Of course the government can still try to take that from you, but it’s far harder for them to do so. Roosevelt did it in 1933, followed by silver. Some people turned their gold in. A few who did not were prosecuted. But the government did not send agents door-to-door to ransack houses. Some believe that the wealthy shipped their gold and silver to other countries for safe-keeping. Coins are also portable and relatively easy to hide.
Most investment advisors encourage portfolio diversification. Physical possession of some portion of your portfolio can be a form of that.