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What Price Paperwork?
November 04, 2010

What is the impact of government regulation and paperwork?

In the coin business, perhaps a good example might come from Tom Hallenbeck’s coin shop business in Colorado Springs, Colo.

Though he has made headlines for his decision to seek the presidency of the American Numismatic Association, his day job is to operate his coin business.

One of the interesting things that he said to me was that he has a graduated payment rate for buying U.S. junk silver coins. A transactions of various sizes take nearly identical amounts of time to conduct. It is subject to the same holding law. So from a businessman’s point of view, the larger the purchase, the smaller the administrative cost as a percentage of the transaction’s total value.

That’s the Sam’s Club discount warehouse retailing approach in reverse.

When I talked to him a few days ago, Hallenbeck was paying 17 times face value for quantities of $500 face value and up.

Small quantities, under $25 face, got 15 times and $25-$100 got 16 times and $100 to $500 16.5 times face value.

What does that mean?

After the conversation, I started thinking. I don't recall ever running into graduated payments before.

Holders of small amounts of silver coins, or those who choose to sell only small amounts at a time, have to take a discount of nearly 12 percent in this instance.

That’s huge.

Especially if one considers current interest rates. How long would it take to earn that 12 percent back by the seller who is walking out the door with less cash?

Since Hallenbeck said he was retailing almost everything out again across his own counter, he wasn’t subject to what other businesses could or would pay him for his purchases.

Can all of this be blamed on government? No. Good businesses keep good records.

But as shops contemplate the costs to them of implementing the new 1099 reporting law set to take effect in 2012 on all purchases that aggregate to $600 or more in a given year, what impact will that have on the small junk silver sellers?

Will they get only 14 times face on a similar day because they might end up selling over $600 in value during the course of the year?

I don’t know.

It could be even less.

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About the Author
David C. Harper has been a coin collector since 1963. He joined the Krause Publications editorial staff in 1978 and is currently editor of Numismatic News and World Coin News. He also edits two books annually, North American Coins & Prices and Coin Digest. He is the author of the Class of '63 column that runs each week in Numismatic News. His first bylined numismatic article appeared in the June 1971 issue of Coins Magazine and his various Krause Publications assignments included a stint as editor of the magazine 1980-1983. Harper received a bachelor of science degree from the University of Wisconsin-Oshkosh in 1977. He had a double major of journalism and economics.

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