The Coin Collecting Arbitrage No One Talks About (Real Numbers Inside)
I’m not sure if I’ll ever publish this blog post, but I want to tell you the story of how I believe I have found a coin and bullion arbitrage. Now, there are a couple of things we need to know here first.
One, this is a belief, and there is a 99% chance I’m wrong. Two, I love physical money. My grandpa got me hooked on coins, mainly because he would hoard his regular ol’ change and we would count it and sort it. I didn’t understand coin collecting, grading companies, or how much money can actually be tied up in it.
Almost 1 year ago, exactly now, I bought my first physical silver. I purchased 100 Canadian Maples from a local bullion shop as they were running a New Year’s special on them. It was the last 100 they had and I purchased all of them for $31 an ounce. With the spot price of silver currently north of $100, I should have bought more obviously, but I don’t have a crystal ball, and neither do you.
This first purchase was the start of me collecting coins, currency, and bullion throughout 2025. I’ll go into what I purchased and why in a future post, but for now, let’s get into the arbitrage (allegedly).
Yesterday, January 24th 2025, I went to my local bullion dealer. There are a couple in town but I like this one the most. It looks a little run down, but don’t let that fool you, this place has been moving some bullion in the last year. This is mostly fueled by the insane run that silver has had. Remember, I bought my first Canadian Maples for $31 an ounce, and now silver is well over $100 an ounce. That is an insane return on investment if I were to sell.
I like this place the most because the people are nice. They like to chat, educate, and overall are incredibly friendly. Makes it easy to do business with them. What I noticed yesterday though was something that I believe can help both them and I.
Now, with silver up over 200% in the last year, people have been selling like crazy and why not? These grandmas and grandpas have been sitting on these coins for who knows how long and they are cashing in and I don’t blame them! But what caught my eye was they had more NGC and PCGS-graded coins than usual. Actually they had over 3 dozen. I, of course, asked where they came from and they explained a collector was cashing everything in.
These are the coins that bring back the spark I had when my grandpa and I would sort through coins when I was little. Coins that have history, are incredibly old, and potentially are worth something. The great thing about these coins is you can look up the value via the Red Book or online on NGC or PCGS websites and that’s exactly what I did.
What I noticed was they were priced exactly at or slightly below last year’s red book. Additionally they were priced 10-15% under the value that NGC and PCGS had online for them. The discrepancy here is most likely due to the price of the silver in these coins and I’m assuming when this year’s red book comes out it will reflect that. But we had an opportunity to buy low.
I made small talk with one of the employees who was incredibly helpful. I mentioned that I don’t see slabs sitting around often in their case and she confirmed my observation. We talked about the bullion craze and what we think will happen over the next couple of weeks and months. I then asked her a very pointed and honestly sort of intrusive question. “How hard has it been to cash flow this whole thing?”. The look on her face confirmed what I already knew. They were buying like crazy and immediately turning around and selling to the large firms that melt the silver and gold down and turn it back into bars. But they had to act as the bank. Pay cash now to customers when they bought but when they sold these huge firms would often hold cash for 2-4 weeks or even worse.
Cash is king in business and over the last couple of months, they’ve had to watch it like a hawk.
This is where the opportunity came up for me yesterday and I believe in the future. I then asked her “What type of bulk discount can I get to buy the whole case of graded coins?” The question caught her off guard of course but I was dead serious. I already believed they were priced slightly under market in the 5-8% range. This paired with the cash flow issue they were having I told her very simply “I’ll pay cash right now”.
She pondered it then went to the back and made a phone call. She returned a few minutes later and said 10%. I of course countered at 15% with the justification that they had already told me these slabs will sit for a while and that the only thing people want to buy right now are gold and silver rounds. We went back and forth for a minute or two, this was all incredibly friendly banter by the way, and settled on 13% off. Score.
The deal was done, we shook hands, and I handed over the cash.
Last night I inputted all of the coins into a spreadsheet I have with all my collectible investments. I then did something I have never done before but will be doing from now on. I entered the coins, their NGC or PCGS number, date, mint mark, etc. into Claude and told it to give me the fair market value for each coin and then a lump sum. Usually I would sit for an hour or two and scan through the red book. I still like doing this because of the pictures and it makes me think about the what ifs but from a practical perspective it’s no longer needed.
Claude confirmed what I already knew.
It was a great purchase and a win-win for myself and the store owner. They moved some slow inventory, I acquired some coins that I won’t sell for 10+ years, and we will both make money.
And Yes, I know it sounds like I’m counting my chickens before they hatch and that is very true. I totally understand that markets can change and these coins could become worthless someday. I personally think the risk of that is incredibly low.
For now, I’m going to keep working this angle. As gold and silver keep going up people will continue to sell their collections they have been sitting on for years.
Time will tell if I’m right or a complete sucker.