Numis Network: A Careful Review

I started out in Numis when I first caught the “Gold Bug” however after doing some research I came to realize that the Numis product was overpriced. For example, my first coin from Numis was a 2010 MS70 American Eagle that sold for approx $110. While I was excited when I received my coin I soon realized that I overpaid for it. When it comes to Numismatic coins look for 3 things; metal content, condition, and rarity. While my 2010 MS70 American Eagle is 1 ounce of pure silver and it’s in a perfect graded “Mint State 70″ condition, The U.S. Mint produced 34.6 million of those coins in 2010 so the coin will NEVER be rare and the only value of the coin is the current spot price of Silver. Basically I paid $110 for a coin that’s worth $35.

Another thing to look at when purchasing graded Numismatic coins is which company is grading them. The majority of coins from Numis, and all of the “coins of the month” are graded by ANACS. PCGS and NCG are the top 2 grading companies. ANACS doesn’t have the reputation of the other 2 and that will factor in the price when you decide to sell.

Overall the article was spot on and if you like network marketing Numis isn’t bad, but if you’re looking to build a nice collection of Numismatic coins, you’re better off looking elsewhere.

CoinManHerb

@CoinManHerb: Sounds like Numis has been a useful education in the true value of different coins. Excellent, and there are worse ways to learn that lesson.

I will disagree with this bit of your commentary:
“if you like network marketing Numis isn’t bad”.

Thanks for sharing Herb. Food for thought.
FYI: I’m all caught up now.

@Terry Gipe: As a Numis distributor, any comment yourself Terry? Sounds like you know Herb?

I have to say, thank you for writing this article! I wrote on this company last year and came to similar conclusions, however (gulp, yours is more well written than mine….I’ll get over it.) Point is there are not many well written, informed, articles on Numis out there. It is a love or hate thing.

Here is where I think some people go wrong. They “Say” they understand the difference between bullion and numismatics, but then they go and compare the two with a, “Buy low sell high mentality.” Basically, they are still stuck in a commodities / trading mindset.

I would wager most Numis distributors are in it because of network marketing AND they feel that, as a network marketing product, they can’t do much better. The product is sticky….people love the little shiny things. It is also competitively priced and has that nice little buy back policy. (Sets the nerves at rest)

Most folks are NEVER going to go out and buy gold and silver coins, bullion or numismatic (Even though it is a good idea). Not many people are coin collectors, unless someone introduces them to it. But, we have a lot of network marketers out there that aren’t into the usual MLM products and still want to be in the industry.

So, that’s my thoughts. In all fairness I am in Numis and I am a financial professional. It’s about building a solid network marketing organization with a low attrition rate and a product that is addicting.

Thanks for writing this!

–Jeremy Reece

PS – It is about network marketing, not investing….ever. If you are wanting to do investing, consult a financial professional, not a network marketer

Hi Jeremy – thanks for your compliments – and personal take on Numis.

I certainly agree that the best thing about Numis is that it adds to the awareness about gold and silver.

I’m not sure I agree that the buy-back policy is nice, except in a marketing sense. Such a ‘guarantee’ is most likely to fail when it is most needed. The very opposite of what you need in an ‘insurance policy’. And if you read it very carefully it is actually extremely limited in scope.

Numis will most likely succeed well – until the gold bubble bursts – and you just need to be able to keep your reputation intact when it does. Being honest and upfront with people is vital, and this is exactly how the company is keeping its nose clean. Most of the distributors I come across seem to blur the distinction between bullion and numismatics.

“Most folks are NEVER going to go out and buy gold and silver coins”.

There are many countries where this is not true, and it may not be true for much longer in Western countries soon either. It is the trend that Numis is latching on to. Now, if you said, “most are never going to go out and buy NUMISMATICS” – there I will 100% agree with you. It’s that distinction again.

Fantastic article. You made a lot of great points. In my opinion, owning a Numis business is really going to depend on your investment goals. In my case, for example, I buy gold and silver bullion because I expect the price to rise over the next few years. In order to purchase that bullion I need cashflow. So, I can get a j – o – b (not happening) or start my own business. That’s where Numis comes in. I am very confident that gold and silver are going to be in very high demand soon, for reasons that I won’t get into here. So being in Numis allows me to build a business that produces cashflow, allows me to learn a tremendous amount about marketing, lets me build a list of followers that will stick with me if Numis crashes and we need to move to a different company, and the cashflow from my Numis business goes into gold and silver bullion which will eventually be sold at a profit and invested into cashflow real estate. As far as the coins I get from Numis, well, their just an added bonus. I’ll probably hold onto some of them to pass down to future generations (gold and silver go up and down in cycles, history proves this). And others I may sell. But all in all, I’d take Numis over any other mlm out there today for many more reasons that I won’t get into here! Thanks again for the great article.

Please put those other reasons, because I’m not sure you have understood my article in full.

You have mixed up ‘bullion’ and ‘numismatics’. “I buy gold and silver bullion because I expect the price to rise over the next few years.” That’s a case for avoiding Numis, because you can buy more ounces for your dollar from your local dealer.

Those in Numis who don’t build a profit making downline (ie the vast majority of them) will have overpaid if they were actually wanting bullion. This will leave them with less ounces, and risks giving them a bad case of ‘buyer’s remorse’ and they may not be so ready to stick with you if they figure this out.

Mike Maloney, author of the Rich Dad’s Advisors: Guide to Investing In Gold and Silver, talks about a different numismatic company here, but his message is just as important for all to consider – http://www.youtube.com/watch?v=x2ZuNo2Kfjs (Note: you won’t find this on a YouTube search, you can only get to this by having the direct link.) And for those who prefer a written overview of Mike’s take on numismatics as investments go here.

Great article, intelligently written. I know how much time and effort is involved in investigating these ‘Great Opportunities’, having just blogged a similar article about the ‘Daily Income Career Network’.
Keep up the good work!

@Scam Dex: Nice work there yourself too. Thanks.

This is a great article. However, I agree with Mike. Numis is a great place to create the cash flow to invest in bullion. MLM is already a proven industry and capitalizing on the gold and silver trend using Numis is a great idea. I didn’t join Numis to start being a coin collector. I joined to create more capital for other business ventures. When this bull market comes to an end, and the average joe is rushing in to gold and silver, I will sell my coins, or use the 5yr buy back guarantee and move on with cash in hand into the next asset.

Thanks for commenting and being open about your situation.

I didn’t say you can’t make money in Numis – that’s been done many times. Making money for a few doesn’t make something legit. One person’s great cash flow is another person’s being out-of-pocket (often many, many other persons).

I didn’t say MLM is bad – this is not an industry problem.

Please research the history of failed bullion MLMs, particularly from the last gold price spike in the US. Why didn’t they last through til now? Oh, and how many lasted 5 years?

Anyway, my main point is that Numis only has a true customer market in the Numismatic niche. Yet it is actually being hyped in the bullion area which is a invalid market in whichever way you want to take that term. With your comments about “I didn’t join Numis to start being a coin collector ” and what you will do with your coins (the bull market is in bullion NOT in numismatics which are being overproduced), you are demonstrating exactly what I am saying. Hope this site can be part of the incredible self-improvement learning curve that is marketing, and MLM in particular.

The comment about the MS70 is absolutely ridiculous. Major websites sell that coin between $150 – $180 dollars and just because there were a lot minted has nothing with the condition. The fact that it is a perfect coin gives it a special value. I had a coin dealer tell me mine was worth 40 bucks as well until I asked him to sell me ten of them!!! I am not saying Numis has the least expensive coins, but $35 is even below spot. You have no idea what you are stating and further ANACS is the OLDEST grading company. Moreover, an MS70 is a MS70 period. While it is true that most collectors perfer the other 2 they came after ANACS and Numis sells coins from all three. As far as legit, give me a break if you bothered to look at the owners and the fact that Mike Meezak the creator of the modern issue for the last 20 years he is backing it. The three owners run a company called IDTSC which has created hundreds of comp plans for OTHER network marketing companies. By the way Numis has created a new niche in the network marketing industry, the exact same things were said about AMWAY back in the 1950′s. Menawhile Numis just launched UK!!!

@ Mark- LIKE!

@Mark Ghobril: Thanks for your comments. To take it bit by bit, ignoring the accusations and hyperbole…

“Just because there were a lot minted has nothing with the condition.” Agreed. Quantity has to do with price/value instead.
“The fact that it is a perfect coin gives it a special value.” Agreed, but how much premium exactly?
“$35 is even below spot.” The price has gone up since CoinManHerb made that comment.
“Moreover, an MS70 is a MS70 period.” Actually, not quite. Different years have different rarity and therefore different numismatic value in the end. The more you print the less value – in both the paper market and in the numismatic market.
“As far as legit, give me a break”. I did NOT say the company is not ‘legit’. They know the rules and have stuck to them. The reps usually do not. The problem is that the volume is in the bullion market, not in the numismatic market.
“By the way Numis has created a new niche in the network marketing industry”. Actually this is an old niche revived. Check out the history of gold MLMs.
“Menawhile Numis just launched UK!!!” Thanks I didn’t know that.

@Martin, I appreciate the feedback.

“The fact that it is a perfect coin gives it a special value.” Agreed, but how much premium exactly?’

Well the market dictates anywhere from $99 – $200 average being somewhere around $180.
All one has to do is consult shopnbc.com and/or franklinmint.com

Actually, not quite. Different years have different rarity and therefore different numismatic value in the end. The more you print the less value – in both the paper market and in the numismatic market.
I need you to explain this one the scale is from 1 to 70 and 70 being the “flawless” coin. So regardless of who grades it ANACS, PCG< PCGS a MS70 is a MS70.

Check out the history of gold MLMs.
There has never been a graded coin MLM and to compare bullion to graded is like comparing apples to oranges. I have been around a while I have see loads of network marketing companies and the vast majority which is about 98% have never heard of graded and are happy that the product is an asset instead of a consumable. There are some great products out there don't get me wrong.

The problem is that the volume is in the bullion market, not in the numismatic market.
Graded coins are a $100 Billion market worldwide. Mike Meezak moves 100 Million a year on the shopping network.

I am not saying do not buy bullion I am saying graded gives you the added advantage of creating an income stream. Once you are a Ray Higdon, buy all the bullion you desire.

If you want to look at a MLM doing it wrong look at American Gold Reserve. Here is a guy who owns a mint, is getting people to sign up for free and then the monthly charge will be about $80 ABOVE spot which they are planning about $180.00 monthly.

I realize you never said the company was not legit, but show me a single MLM or traditional company for that matter that does not have people who do not play by the rules. They are weeded out in time and Numis certainly does not stand for anyone breaking the rules.

By the way Martin, I thought your article was well written with the exception of the following points:

■Numismatics don’t always hold their premium pricing. '

Historically they have NEVER decreased in value and you simple have to lookup the current price for past years. An example is 1998 Silver Eagle $510, this is average there are some worth a lot more.

■When gold and silver prices eventually peak and fall for good, Numis’ business WILL take a big hit
Wow first of all our dollar is completely devalued and given the recent financial collapse, I do not see the economy coming back anytime soon. However, if the price drops then autoship decreases and this is a good thing. In addition, you are not taking into account the income stream generated from the business.

One futher point

As a RK side note, Numis talks about it’s business as being what Kiyosaki calls an I-investor quadrant option, when in fact I would say an MLM is actually an S or B-quadrant business in the Rich Dad model. Educate yourself from the original source, and make up your own mind, and understand also that Kiyosaki gives a much more limited endorsement of MLM than most people realize.]

That was the case…then he dedicated a COMPLETE book and video to network marketing, and now has a network marketing company himself. Not sure how you make that statement.
In his new book The Business Of The 21st Century, Robert Kiyosaki questions: What would you rather be Employee or Entrepreneur? Fully endorses NETWORK MARKETING!!!
http://www.youtube.com/watch?v=kN0L2M4Nqss

I agree go to the source!!!

@Mark Ghobril:

> By “how much premium exactly?”

I meant that the premium can vary over time, so the quoted price today may not stay that way. In a hyperinflation the price of gold will rise much faster than the numismatic premium.

> I need you to explain this one the scale is from 1 to 70 and 70 being the “flawless” coin. So regardless of who grades it ANACS, PCG There has never been a graded coin MLM and to compare bullion to graded is like comparing apples to oranges.

As you can see in the comments above, many reps have confused the comparison. I don’t see a fundamental difference between one type of numismatic and another, graded or not.

> I have been around a while …

If you went through a previous gold MLM I’d be interested in your story.

> Mike Meezak moves 100 Million a year on the shopping network.

And people are selling gold more than buying it. It just means that the wider public education hasn’t really kicked in yet to the true gold story, but it will.

> Once you are a Ray Higdon, buy all the bullion you desire.

This article for the smaller player, and for those who are big and want to look out for the smaller player.

> If you want to look at a MLM doing it wrong look at American Gold Reserve.

David Morgan and Mike Maloney’s video warned that they expect a plethora of scams, tricks and hazards as new players come into this arena, not just one.

> Numis certainly does not stand for anyone breaking the rules.

I haven’t been close enough to the company to check how they have policed the rules, but I have certainly seen big players in the company blur the distinction between bullion and numismatics. Even if it keeps it’s nose clean legally however, the core issues remain the same.

> By the way Martin, I thought your article was well written

Thanks.

> Historically they [numismatics] have NEVER decreased in value and you simple have to lookup the current price for past years. An example is 1998 Silver Eagle $510, this is average there are some worth a lot more.

Well NEVER is too strong a word. Numismatic premiums MUST fall when there is greater supply as is currently happening (and wasn’t happening in 1998) – IF/WHEN demand drops. More importantly the numismatic premiums on new coins are very likely to not keep up with the rise in the bullion price. So if bullion doubles, it is unlikely that the numismatic premium will double. If silver goes from $40 to $80, will a numismatic silver coin go from $180 to $360? I doubt it.

> ■When gold and silver prices eventually peak and fall for good, Numis’ business WILL take a big hit
> Wow first of all our dollar is completely devalued and given the recent financial collapse, I do not see the economy coming back anytime soon.

This is an argument for bullion. Overlap again.

> However, if the price drops then autoship decreases and this is a good thing.

But the value of all recent purchase falls and people get crunched by keeping hold of overvalued coins as the market falls. So then they try to sell, and flood the market making the price fall even faster. It cycles from undervalued to overvalued and back, like with the previous 1970′s bull market.

> In addition, you are not taking into account the income stream generated from the business.

The majority of reps will NOT have an income stream worth mentioning. This not bashing MLMs – it is a statistical fact. MLMs rely on a true customer base to support the reps, and this is what is missing in Numis.

@Mark Ghobril: As to Robert Kiyosaki, here is a quote from my copy of his book on MLM on Why he recommends network marketing. Robert shows that he really does understand this industry when he says on page 29
– “I do not recommend looking into a network marketing business primarily for the money.”

Not many people will give you that Robert Kiyosaki quote, but it’s a key one. Are you in it ‘primarily for the money’?

@Dr. Martin Russell

Forgive me but it seems you are taking that way out of context with the original arguement you made. I would hope that most people looking to be successful are not focussed on “the money”, and it is my experience that most are not looking at only the money, this does not only applu to network marketing but pretty much any business traditional or not.

“when in fact I would say an MLM is actually an S or B-quadrant business in the Rich Dad model. Educate yourself from the original source, and make up your own mind, and understand also that Kiyosaki gives a much more limited endorsement of MLM than most people realize.”

You really change sides and honestly double talk yourself. Robert CLEARLY states that he recommends MLM and it falls under RESIDUAL income and BIG Business. He is very specific that it is in fact the business of the 21st century. The whole purpose of the business of the 21st century is to take people from that left quadrant to the right quadrant. ‘

This is taken from his website
“Robert T. Kiyosaki knows a good thing when he sees it.

That’s why, for the past several years, he has been a staunch supporter of network marketing. Like many people, Robert was skeptical about the industry at first … until he learned firsthand what network marketing is all about:

It’s about helping people.

Like billionaires Donald Trump and Warren Buffet, Robert is sold on network marketing. He wants to share his insights with you on why he believes it is the business model of the 21st century—and why now is the perfect time to take advantage of the opportunities it offers!

If you’re worried about losing your job through down-sizing, or just want to take charge of your future by taking control of your income source, you need The Business of the 21st Century!”

You are so far of the mark here I question your objectivity. I believe your intention is to help people, then you should not be so misleading whith something so blanantly obvious.

when in fact I would say an MLM is actually an S or B-quadrant business in the Rich Dad model.

I have to point out that you sound very arrogant here, Robert created the quadrants to show network marketing as being in the left quadrant and yet you state it is a S or B.
In effect you are stating that you know more than the MOST respected and number one financial author of ALL TIME.

Update: I’m adding this notice that I have swiped from Tim Ferriss’ blog (highly recommend his first book)
Comment Rules: Remember what Fonzie was like? Cool. That’s how we’re gonna be — cool. Critical is fine, but if you’re rude, we’ll delete your stuff.

Mark: I am doing my best to quote Robert Kiyosaki accurately.

When someone uses Robert’s name they are trying to leverage off his credibility – a subtle form of ‘endorsement’. Robert very clearly describes seeing scams in MLM as elsewhere. He is very supportive and keen on people taking up network marketing (as I am too), BUT he does not give a blanket endorsement to the entire industry as some make out, “Robert says MLMs are good, so joining this one is fine!”

As for his quadrants, and Numis’s video statement that Numis is an I quadrant business, here is my take on what Robert is really saying: MLM is in the S – Solo/Small Business quadrant when you haven’t yet built a team (ie it’s where most people start). It becomes B – Business quadrant as your team gets big enough. I – Investor quadrant is what you do with the money eg that you earn from MLM. I’m happy to be corrected if I have misunderstood the quadrants but that’s my reading of it.

Very well written article. Just an update on the company’s current situation with regard to countries they’re open in. (You said they’re only open in USA and Canada).

Numis are currently at the start of their growth stage. They are currently ~ at the time of my writing this comment, Sept 2011 ~ in pre-launch within the UK, scheduled to officially launch in Nov 2011. And I am given to understand that other countries are planned in the near future.

Regarding your comments about RK’s Quadrants, I see what you mean about MLM being in the ‘S’ quadrant for newbies & ‘B’ for established MLM’ers. However, with the current rising trend in gold and silver I see that, at least for the present & foreseeable future, the Numis business model places its reps & customers in the ‘I’ quadrant too.

I joined the company as soon as they opened here in the UK. I had several reasons for joining. These are just some of my reasons for joining Numis:

1) I’m sick of MLM’s that sell consumable products with no lasting value.

2) Gold and silver coins do not have a “sell by” or “use by” date. I’m happy to have a garage full of them. In fact, I’d be so extatically, over-the-moon, happy-excited if I DID have a garage full of them!! Who wouldn’t be!!!???

3) Whether the value of gold and silver does eventually crash or decline, that’s going to be a while off yet. So, now is the time to get “ahead of the wave” as it were. By the time gold and silver have started to decline in value (if indeed it ever does), I will have a nice collection of collectible coins that I can sell on or will have already sold on at a profit.

4) I know that others have commented about Numis coins being over-priced. However, the websites that I’ve looked at are selling the same coins at higher prices than Numis. An example was a very nice, solid gold, extremely rare MS65 St Gaudins $20 coin, which Numis were selling for just of $2K. I searched on the internet and found a few others sites who where selling for on average $500-$1500 HIGHER than Numis.

5) The business plan makes sense to me and (as with any business) so long as you’re working at it & doing so intelligently, targeting the right demographic of people, then I don’t see why anyone should fail at this. It’s just a case of acting intelligently and targeting the right sort of people for your market. e.g. There’s no point going to down & outs, who are drawing benefit & whose life revolves around TV, beer & cigarettes to sell gold & silver to. The same is there’s no point selling weight-loss products to people who don’t really need to lose weight ~ you’ve just got to know your market.

Whilst I appreciate that everyone has their own opinions and this business is not going to be for everyone. However, this is my take on it and I am more than happy to give this “a fair crack @ the whip,” as we say in the UK. I WILL make money at it, so long as I keep my good work ethic and put the time and effort into it. And so, I sincerely believe, will anyone else.

@Jae: Thanks for the details about the UK launch.

Lots in what you said, and you understand RK’s quadrants fine.

> 1) I’m sick of MLM’s that sell consumable products with no lasting value.

Unfortunately residual income REQUIRES repeat purchases ie consumable. Once the price of gold goes down (as long away as that might be) people will stop buying Numis products, exactly because it is not a consumable. So the business then collapses.

> 2) Gold and silver coins do not have a “sell by” or “use by” date. I’m happy to have a garage full of them. In fact, I’d be so extatically, over-the-moon, happy-excited if I DID have a garage full of them!! Who wouldn’t be!!!???

I’d prefer to double my garage-fulls by buying the equivalent dollars in bullion. And as an I quadrant Investor I would rate bullion higher than numismatics – different markets entirely.

> 3) Whether the value of gold and silver does eventually crash or decline, that’s going to be a while off yet. So, now is the time to get “ahead of the wave” as it were. By the time gold and silver have started to decline in value (if indeed it ever does), I will have a nice collection of collectible coins that I can sell on or will have already sold on at a profit.

And this is the key to Numis’ “success”. Ride on the wave of a bullion surge, and hope that investors will recover their numismatic premiums by the escalating price of gold so they won’t complain. This is all good until the bull market is over, and/or someone says, “If only I had bought bullion instead, what would I now be worth.”

> 4) I know that others have commented about Numis coins being over-priced. However, the websites that I’ve looked at are selling the same coins at higher prices than Numis. An example was a very nice, solid gold, extremely rare MS65 St Gaudins $20 coin, which Numis were selling for just of $2K. I searched on the internet and found a few others sites who where selling for on average $500-$1500 HIGHER than Numis.

At current prices they are in the market. But as an example, when the price of silver surged to US$50, the premiums for numismatic silver coins in Australia didn’t keep up. In fact for a while they almost disappeared.

Numismatic premiums are always determined by how rare a particular coin is, and Numis’ very business model requires the opposite – selling as many as possible. Future premiums will not hold up as well as premiums from last century before this bull market arrived.

> 5) … targeting the right demographic of people …

But you don’t mean targetting coin collectors, and people interested in learning numismatics. That is the legitimate market for Numis, but it’s too small.

> I WILL make money at it, so long as I keep my good work ethic and put the time and effort into it. And so, I sincerely believe, will anyone else.

There is big money in Numis if you build a serious downline. The comp plan is set up this way. No doubt about it, and I would never say otherwise.

“So will anyone else?” At least you didn’t say everyone else, because mathematically that’s not possible. Practically it’s more like 92-98% will go backwards (compared to spending the money to buy bullion that is.)

Maybe if Numis membership is thought of more like a “forced”, if high cost, savings plan into gold… That might make a pragmatic sort of sense.

[Side Note: does anyone have good links to the history of gold/bullion/coin/collectible MLMs. Most of it was pre-internet so I'm having trouble finding solid sources to point people to. Thanks for your suggestions!]

Dr Russell , thank you for the article on Numis Network. You obviously spent considerable time in your research. From the comment section, I got a lot more than I was expecting to find on blog. I want to thank all the people who commented as well. I am sure I will find more useful information in the future.

@Rick Martin: Appreciate the support Rick. Yes, this was one I wanted to be very careful about, because the fundamental problems in Numis aren’t showing up while times are good. But they are baked in.

Over time more and more people will be end up finding these problems, and be saying “Hey, that CarefulCash guy told me this would happen!”

I, too, appreciate the article and research as well as all the comments (and the effort you are making to stay on point about the issues not the emotions!)

I am closely examining the business model myself and throughout the literature Numis frequently makes the distinction that this is about coin collecting and NOT bullion investing. Perhaps this is to avoid running afoul of any federal regulations and/or tax/IRS complications for the company or its reps. Regardless, there is definitely a nod to the intrinsic value of the coins as a means to preserve wealth. Depending on who you speak with, though, it seems to be presented more as a secondary benefit to the primary MLM business.

Paying $120 for an ounce of silver worth $40 doesn’t make sense. In that regard, it is better to buy bullion. There is risk that the numismatic value could be compromised by the sheer number of coins on the market in the future or by a downturn in metals pricing. But Numis is presenting a business opportunity, one that given the nature of its product and current economy, might make it an easier ‘sell’ than other MLM opportunities. This should in turn make it easier to grow the business quickly and subsequently profit (ideally enough along the way to recapture any premium loss). The ‘byproduct’ of this particular business model is the purchase of something of tangible value. Whether the numismatic value keeps pace or not, there will always be some value for the metal itself so people who buy in can feel like they are not just throwing $ away.

That being said, Numis has a pricing policy that rises with the spot price of silver. The coin of the month now looks to be priced at $119.95/mo and goes up to $129.95/mo if silver is priced at $40 on the first of the month (scale can be found on their policies page). Numis has a built-in hedging strategy to maintain their premiums on the coins. I believe there is also a lot of thought behind the 5-year buyback guarantee as well. They are effectively ensuring a supply of graded coins for their kits (banking on the fact that many people will drop out and return the coins to recoup cash out-of-pocket) and at the same time they are locking in their own future purchase pricing of silver and coins.

You obviously have something in mind with the statement about the big players riding the gold/silver demand wave and having an exit strategy already in mind – care to share what you think that may look like?

@Jackie: Thanks for contributing.

Numis as a company keeps the distinction very clear. Legally they must. However the money is really in the bullion so that there are powerful incentives for all parties to blur the lines.

A network marketer’s profit comes from what would otherwise be spent on other methods of marketing eg newspapers, classifed ads, info-mercials. This is legitimate. However selling people on a make money system which is proven to fail eg bullion MLMs, or on higher-priced numismatics when they really just want the bullion, is not appropriate in my opinion.

Also from my reading of it the 5-year guarantee is a marketing tool, because it is not a useful insurance on your investment as it explains in the fine print. I don’t think it will work like you say because it only applies, “Within 120 days following the 5 year anniversary date of the purchase.” You have to wait to get your guarantee to kick in.

All the biggest players I know in Numis were big somewhere else before. They have jumped ship once, they will do so again when the time comes. MLMs naturally come and go – it’s just part of being in any business, MLM or otherwise, so you need to plan for this. But unlike Amway that could conceivably live forever, or bullion/coin dealers that will just go though ups and downs, Numis’ demise is 100% certain as soon as the gold cycle trends down again.

I like the spirited comments on this blog. Here is how I see it all, people join people in this business and there are plenty of very sharp marketers in Numis, plenty will join the opportunity simply for that fact and skip all the details outlined here. We all look at things differently and that is just fantastic. Can you imagine a world where everyone was doing the same thing or thought the same way.

@Rick Martin: When Numis falls apart (not if) what will people think of the ‘sharp marketers’ they joined?

If people are joining to become coin collectors, they got what they wanted. If everyone is being signed up to learn from sharp marketers, then maybe there is no buyer’s remorse here either. But there are many ways to get access to these guys – here is something from Ray Higdon, and you can get access to Rob Fore’s http://www.HeavyHitterUniversity.com as part of signing up with me in MLSP. Oh, and welcome to MLSP yourself too Rick. Cool system eh?

Well, for those people who worked on themselves and learned all they can about marketing and sales, then they will have gotten great benefits. If Numis did fold in the future, it would not be the first company to go under in this industry.
A great number of people who get in this industry cannot see pass their first 90 days much less 5 years and beyond, many of them change opportunities faster than they change their shoes.

@Rick Martin: So because most people quit and change opportunities well before Numis is set to fall apart, it is okay to sign them up and hope they learn a marketing lesson or two for their money? Hmm.

There are many good ways to learn marketing, and Numis is nothing special here. In fact I argue that it rewards marketing that blurs the line between bullion and numismatics ie poor marketing. I just watched another high-level video presentation that elegantly bounced back and forth between the two to justify the Numis opportunity.

Strong article. You didn’t spend much time talking about the upfront fees that are not required, but seem to be encouraged. Like it or not, it has been my experience that company’s with these type of upfront fees being paid in to fund some sort of “customer acquisition bonus” program eventually fall under regulatory scrutiny. I would be interested in your take on this. If I’ve gotten this wrong in regards to Numis, my apologies, as it has been some time since I’ve reviewed their comp plan.

@Ken Acree: Well, upfront fees certainly do help the program become profitable for the upline, but there is a physical product delivered and the usual ‘kit’ and online service, so it’s got its value.

The reason I don’t focus on it is that those type of things are changeable. If they got into regulatory trouble they could tweak it so it becomes ‘legal’. My concerns are at the very core of the company and the products where no amount of tweaking can fix them.

@Dr Martin Russell: I would have to say that working a program with potential regulatory issues which could be tweaked later to the detriment of profitability is no better than working one with product issues because you could bail later if you want.

I guess my point is, if a large part of the draw for marketers is a bonus program tied to artificially inflated upfront fees, that should be a red flag that the gravy train won’t run forever.

Philosophically, I’m not personally opposed to this kind of program, and could form a decent argument in support of the value of their fees charged. However, my opinion counts far less than that of the government, who have historically come down on the other side, even when company’s have armies of lawyers in tow.

My advice would be that anyone looking for a long-term residual income from Network Marketing look elsewhere. The product is not unique, and the margins are too thin to support a well-payed distributor force without playing money games that are likely to cause trouble in the future. Just my opinion of course, and I wish everyone success regardless.

@Ken Acree: Ken I agree with the pricing issue.

My hesitation is that most MLMs are at the higher priced end of their market, and often with great value to justify this. Of course, ‘value’ v price can be a difficult judgement call.

I’m lucky to be in an MLM that has a product cheaper than retail, but this is very unusua. So I don’t knock something just because I personally wouldn’t pay that price. The marketplace can decide the price issue, and in Numis’ case people seem to be willing to put up the cash. Ah well.

I appreciate your comments. In my opinion, the trouble lies not so much in a slightly higher price, but in where the revenue is coming from to generate bonuses.

If your company sells a unique product that is in demand, one would expect them to charge a premium. As long as the commission payout is based on the sale of that product, I don’t think there is any issue.

Trouble comes in two main situations. One: your company sells a product that is not particularly unique at an exorbitant mark-up that would not be supported outside of the MLM model. An example of this would be Destiny Telecom in the 90s. Even though they sold a legitimate product (phone cards), the price was so far above the price that you would normally pay for this service, that they came under scrutiny. That particular company had some other issues, but ridiculous product mark-up was the number 1 red flag, as I recall.

Two: Your company charges large upfront (or ongoing) fees in order to fund bonus programs. This is a huge red flag because AGs want to see commission paid on product movement, not other things. A lot of these programs are set up so that “technically” the bonus payouts are based on customer acquisition. They hire good attorneys, and try their best to toe the line. Unfortunately, distributors often blur, or flat out ignore that line. They openly discuss payouts for recruitment, “recruitment bonuses,” etc. For a good recent example of this, check out what has happened with FHTM in the past year. They have former AGs on staff, but that still didn’t save them from getting shut down, at least temporarily, in a couple of states.

I could argue that those examples were shakedowns by the state more than anything, but they did happen. Imagine what would happen (or will), when a large state like Texas or Florida decides to follow suit. Bye-bye momentum, and bye-bye distributor base, at the least.

@Ken Acree: It will be interesting to see if it ever happens. Laws and regulators can be a bit hit and miss about going after companies.

Numis has been very careful in the legal minefield of bullion MLMs, so I assume they have done their homework well in this area too. But we will see.

I just want to add, that since the last post, Numis has sold 2 “Coins of the Month” for far less than their retainl value. The 2011 MS Mexican Libertad was available to Numis reps and coin of the month members for $120. The same coin retails on APMEX for $349. They also issued the 2012 MS70 Canadian Cougar for $120 which is retailin from the American Historical society for $299. My challenge to anyone looking at Numis is this. Go to a Numis retail site and select 10 coins at random. Then look for the same coins on a competitors website i.e. Franlin Mint, Gov Mint, Shop NBC, APMEX or HSN. What you will find is that our coins are very competivly priced. Yes, occasionally we are a few dollars more but in most cases we are not.

As far as the bullion objection is concerned, when you look at the value of gold and silver when indexed for inflation over the past 40 years, performance is basically flat. Modern issue numismatics are the only area that have out paced the rate of inflation (See Modern Issue Coins by Eric Jordan). The thing to keep in mind is that these coins are solely for the purpose of collecting. You’re not expected to buy a coin and turn it. You’re expected to keep the coins for yourself and to build a legacy for the future. If you join any “consumable” MLM at the end of the day, you’ll have nothing left. But if you buy a numismatic coin you’ll still have your coin. When you introduce this concept to others you have the ability to make money. It’s just that simple.

@Graham Judd: Thanks for adding details of where Numis is cheaper than alternatives. I don’t think I ever said that they were badly overpriced compared to other numismatics, but it is good to have facts.

As for Eric Jordan – all I could find was his 2006 publication which I haven’t read completely. But a few notes from my skimming:
– he recommends ‘key date moderns’, not just any modern coins.
– his ‘Primary Recommendations’ are all for coins from the 1990′s up to 2001 ie before the bull market began and 5 years before his publication, and when volumes were nothing like what they are today, eg “Many modern issues are among the lowest mintage coins issued by the US Mint in the last 100 years”. Today we have record monthly volumes of Silver Eagles etc.
– and best of all his recommendation comes from the fact that…
“Many modern issues are available for at or near melt value.” [no longer the case in 2012!]

Oh if we had all bought coins back with the far-sighted people at the prices of 2006!

In a nutshell is the glaring FACT that anyone, let me repeat that – ANYONE – can purchase a new silver eagle in proof uncirculated condition right from the U.S. Mint or from a broker like Provident Metals or Paul Sims for $35 per coin (at current silver prices). Numis Network’s autoship is $99.00 per coin. So, basically, a Numis Network member is $64.00 in the proverbial hole when compared with collectors like myself who purchase from a broker. So much for the “investment” lie. And don’t give me that MS70 garbage, either. There’s NO DIFFERENCE between a Numis autoship coin and a coin from the U.S. Mint except for the cute little plastic container and the marked-up price. What do you think Numis pays for these coins from the Mint? You got it – $35.00 per coin.

This is a fact and it is undisputable.

Just in case anyone wants to pitch a further baseless argument about the coin grades being the difference; I send my coins to a PGCS Partner in Irvine, CA and eighteen out of my twenty 2011 silver eagles (which I got right from the U.S. Mint) were graded MS70. The other two were MS68. I haven’t send my 2012 coins yet but I’m sure they will have more of the same. So, in essence, there is *no difference* between the coins I got from the Mint and the overpriced coins from Numis Network. Period.

The official US Mint site states this…

Perfect Uncirculated (MS-70). Is in perfect new condition, showing no trace of wear. The finest quality possible, with no evidence of scratches, handling or contact with other coins. Very few regular issue coins are ever found in this condition.

United States coins are most often graded with a scale created by the American Numismatic Association (ANA) , a non-profit group created in 1891 and chartered by Congress since 1912. The ANA grading scale is summarized below. For more details and illustrations, see Official ANA Grading Standards for United States Coins.

The grading scale has been the hallmark of the coing industry and used to determine the quality of the coin. Less than 10% of coins make the grade of MS70 PERIOD.

The so called plastic is the fact that the coin is sonically sealed to perserve the condition of the coin.

Further this is taken from a PCGS price chart

505221 2011-W $1 Silver Eagle DCAM 58 58 58 58 58 58 70 100
The $100 is what they say a MS70 Silver Eagle is worth.

http://www.pcgs.com/prices/PriceGuideDetail.aspx?MS=1&PR=1&SP=1&c=939

http://coins.about.com/od/coingrading/qt/coin_grading101.htm

http://www.ehow.com/how_5602270_grade-gold-coins.html

Uncirculated and MS70 are in fact PLAIN as day 2 completely different animals.

@Mark Ghobril: I wasn’t going to reply, but then I found this, so as my reply… Peter Shiff (Posted Nov 28, 2011) states:

“Investment Grading and “MS-70″

Many coin dealers are selling bullion coins with an “MS-70″ (mint state, flawless) rating at multiples of the price of an ungraded coin. Our research uncovered one company selling 2011 American Silver Eagles with an MS-70 grade for $129. My company, Euro Pacific Precious Metals, sold the exact same coin for $35!

Grading is only meant for collectors buying genuine old and rare coins. When it comes to bullion, all you need to care about is the weight of pure precious metal. After all, do you care if the change in your pocket has a bright, shiny finish? No! Because it is meant to circulate as money. Gold and silver bullion coins are money, not collectors’ items.”

What a laugh,

I just checked his website and he does not in fact sell graded MS70. If he did, they would be encapsulated in the plastic to preserve the coin. He sells the coins in a tube. The silver Eagle is the U.S. Mint’s 1 oz silver bullion coin, and has been produced since 1986. These .999 fine silver coins come packaged in tubes of 20 coins each, with 25 tubes to a ‘monster box’ of 500 coins.

Now, the coins in this tube cannot be graded until set to a recognized grader such as ANACS, PCGS, NGC. So this company does NOT sell MS70 coins….he may sell coins which have the possibility of being MS70, however until the coins are graded this cannot be so. The grading has to do purely with the condition of it. What he says is absolutely ridiculous. If you had a MS70 coin and mixed it in with the loose change it would no longer be an MS70. The condition of a coin is everything. People with the foresite to collect coins in MS 70 condition will become worth in more money in the future. There are websites specific to trading value of these coins.

There are MANY MANY collectors who buy the coins in tubes to send in for grading to get a MS70, a MS69 and then sell the rest. The fact is that only about 1 out of 10 coins in that tube will even qualify to be an MS70 coin.

If what this guy says is true, explain the vast amount of collectors, we are not even talking about Numis here, who go out of their way to collect MS70s. I agree vintage coins are a different breed of coins, however the grading scale is for all coins not just the vintage ones.

We have nothing against collecting numismatic coins. Many are indeed beautiful, and have wonderful historic provenance.

This is actually listed on tehir website…They claim the markup is too high on them so its really all about marketing.

990 AMERICAN SILVER EAGLE NGC MS70 FIRST STRIKES, EXTREMELY RARE, POP 13
POPULATION THE ONLY 13 FIRST STRIKES; NO SPOT, PERFECT
US $13,320.00
Extremely rare find for those years in perfect condition when we all know that silver is a metal that is constantly in reaction

This is JUST one example….hardly what I would qualify as a vintage coin my friends!!!

Incidentally, Peter Shiff is the company CEO I would hardly call that bias since his company does not even sell numismatics. You cannot have it both ways folks….you cannot say that MS70 are the same as loose coins and then say you do not sell them.

One last thing…the numismatic coins existed long before Numis entered the market place. This industry is huge. It is also limited given the fact that less than 10% of the coins right off the mint will actually grade as an MS70. Supply is therefore limited….many companies who cannot get hold of stock will try to downplay their worth. The fact is Numis aside, it becomes really simple – Supply and Demand. Since numismatics are a lot less than bullion, the demand is higher and the price would go up. If it were as many coin sellers claim…than ALL MS70 would be bullion and in fact the whole MS70 market would not exist because every single bullion coin would be an MS70. Clearly this is not the case, they have a higher value because they are more rare in terms of that grading. Bullion is always available but Silver Eagles MS70 grade always become hard to find after a couple of years.

@Mark Ghobril: Thanks for pointing out the details for Peter Schiff’s site.

“We have nothing against collecting numismatic coins.” As a Numis rep (not a Bullion rep) I woud hope so.

“The fact is Numis aside, it becomes really simple – Supply and Demand.” And the other factor in that equation is price, which is already imbalanced to fit. The question is whether the historic increase in the premium for graded coins will continue despite the vastly increased supply in recent years.

Thanks everyone for the intense and thorough discussion, which i believe is ongoing. I am personally in the decision making process with Numis Networks – whether or not to ship it back tomorrow. Right now i’m going to sleep on it and decide in the morning after i go back and read these analyses again.

@Dr Martin Russell:
I think you misunderstood my comment. I am aware that the coins from Numis are not investments. I use the cashflow from recruiting (fast track bonuses, etc) to purchase bullion. I teach others to do the same. If you recruit two people per month, that pays for your coins and leaves you with extra cash for investing in bullion.

The coins I get from Numis are just part of the overhead for the business (and therefore tax deductable). And an overhead of $110 that actually leaves you holding something of value (whether the market is up or down) is better than the cost of traditional businesses that require rent, employees, inventory, etc which is money you won’t see again. Numis is a great opportunity for folks with little capital or business skills to get started and learn how to market.

I totally agree that there must be an exit strategy coming into Numis because eventually the market will go into a bear. I’ve read Mike’s book and am aware of the risks with numismatics. The way I see it, if I’m going to be in network marketing, then numis makes sense because even in a bear market the coins will have some value and eventually the cycle will repeat itself. Any other network marketing company will require the products to be sold asap because they expire or have no tangible value, regardless of market conditions.

Numis is an opportunity to capitalize on the precious metals cycle, inflation, as well as the increasing demand for opportunities to make money due to job loss and the huge wave of baby boomers going into retirement. Is it for everyone? Of course not. Anyone who has fear of the market crashing should probably stay away because focusing on that fear will make it a reality.

Numis is for those who want to take advantage of the opportunity, are willing to take massive action, who do not let fear determine their results in life, and can keep themselves from becoming emotionally attached to the company and it’s products. It’s just a tool to achieve financial freedom (when your passive income meets or exceeds your expenses).

Once you attain that goal, invest in the next cycle (real estate, stocks, or whatever it may be) or begin investing in things that you are passionate about. But step one is to free yourself financially by having a business that produces enough income for you to do other things. And again, Numis requires much less capital and resources, has a product that does not expire, and is currently capitalizing on some major economic cycles.

Great article, and it’s obvious you spent some time both on the research but also on the follow-up comments. Just wanted to say your blog is really nice and clean, and will bookmark it to come back in the future. Keep up the great work, and good luck to those in Numis, and those who aren’t. We’re all out here trying to change our lives, and saving is a good thing no matter what the individual case is. I guess buying these coins for $100 a month is better than blowing it on some other items right? Have a great week Dr. Martin!