The dealer tries to find coin collectors who are willing to pay the money he is asking. Coin collectors are looking to buy coins for less than their value. So, it is important that the coin dealer has a network of people seeking coins. He then has to persuade them that his price is worth paying and that the coin's value is higher.

The question is - why don't these collectors buy and sell the coins themselves? Why do they need a coin dealer? Well, although the collectors think their coins are incredibly interesting, rare, unique, and therefore valuable, it may be that they have over-estimated their worth. Quite likely, these coins aren't desired by other collectors as much as they once desired them. So, the coin dealer is the person in between the seller and the buyer-rather like a real-estate agent but in the coin world.

If so many coins are available for selling, the second question is why doesn't the dealer drop the price, sell more coins, and make more cash? Well, firstly the coin dealer has to make sure that his own collection of coins doesn't become depleted. Therefore, he must ensure he recoups the money he paid to buy the coins. Secondly, if the dealer paid a goodly amount for the coin, why would he want to sell it for less? He'd lose money. Lastly, coin dealers are like Scrooge-they don't like to let go of their money. And coin collectors are no better. Each of them is eager for a bargain and won't pay more than necessary.

The dealer of coins is a risk-taker. If he pays a lot of money for a coin, his risk is higher because he has to ensure he recoups his outlay. Coin dealers also have to beware of collector spam. Yes, collectors can also be greedy and ask for more money than what the coin is valued. With so many coins on the market, the coin dealer knows that the collector can go elsewhere to sell his coins.

So how does a dealer of coins minimise these risks? Knowledge is the key. Without information, the dealer can be deceived. The dealer must know coins back and front-he must be an expert in grading the coins down to the finest detail. If the dealer can't be trusted to know his stuff, he isn't going to be the kind of bridge needed between the seller and buyer.

The dealer must also be a star-gazer and know the future of coin values. If he offers a price, he needs to know that it will one day fetch him a profit. This way he minimizes his risk and makes money. Like a spider waiting for a fly, the coin dealer will wait patiently for the right type of collector to come into his shop. This collector will pounce on the coin and not want to let go, willingly paying the price that the coin dealer asks.

Summary:

You must be speculating how a dealer of coins is capable of making so much money. It actually depends on the collectors and buyers of coins known to the dealer. To obtain coins, the coin dealer has to have a wide network of people who might be interested in selling their coins. Next he has to persuade them that they will get more price than the actual value of the coins by selling them. The coin dealer gambles in this trade.