Goldin Vault

[Peter_Spaeth]

Originally Posted by BobC

Hmmm....at that value I would initially think that no sales tax would have had a lot to do with those vault submissions. But if these were submissions they received at the National, the owners would have already paid any sales tax due, so that can't be it. Would guess these submissions are mostly by flippers or others looking/expecting to sell in the near future, and not by more traditional collectors then who would more likely want actual/closer possesion of their valuable cards. Assuming they plan to use PWCC then for eventual sale, and likely made the submissions at the National for ease and convenience since they were going to be there, and then not also incur the cost/risk of having to mail their items to PWCC in Oregon. And some submissions could have been from acquisitions made at the National for real convenience.

Personally, unless I was using it to get around sales taxes, or planning all along to consign items to PWCC for sale at some point, I just don't see the attraction or advantage of using PWCC's "vault". Is there something I'm missing and not seeing/realizing that would be attracting such sizable submissions to PWCC then if it was not to save on sales taxes, especially in light of some of the questions and potential issues that have been discussed in this thread?

I think it's probably mostly "flippers." Someone on BO mentioned they will also loan money against your vault holdings, so maybe "investors" are looking to work that angle too and leverage more purchases, I don't know.

[BobC]

Originally Posted by Peter_Spaeth

I think it's probably mostly "flippers." Someone on BO mentioned they will also loan money against your vault holdings, so maybe "investors" are looking to work that angle too and leverage more purchases, I don't know.

Aaaaahhh.....hadn't heard that one before. That sounds like a pawn shop operation then, which I believe are also subject to differing laws and regulations, depending on what state the pawn shop is operating from. I've heard of consignors sometimes getting advances on items they are putting up for sale with auction houses, but always thought that was only through actual, licensed auction houses for consigned goods. Thought outfits like PWCC and Probstein were different from fully licensed and state regulated AH's though, and therefore such advances would be considered more in line with pawn shop activities after all, especially if in PWCC's case the advances are being made on items kept in their "vault" that have NOT been formally consigned for actual sale by PWCC yet. I would think that distinction could make a difference. Have not seen or heard about what actual agreements or documents PWCC has people signing in regards to placing items in their "vault", what additional agreement or documents (if any) are also required to be signed to remove an item from their "vault" to then being formally consigned for sale, and whether or not the "vault" operation and PWCC's Ebay sales consignment operation are actual, separate legal entities, or all just one company. Would love to see blank/redacted copies of all these PWCC agreements and documents to get a better idea of exactly what they are doing.

Would also assume there could be a difference if these $100M of submissions were actually being made to just PWCC's "vault", or if they actually were tied to consignments for sale. An earlier poster questioned the veracity of the reported PWCC "vault" submissions at the National. Is it possible that figure could in reality be a combination of true "vault" submissions and sales consignments?

[Exhibitman]

The whole third party holding idea leaves me cold.



Gotta play with toys.

[BobC]

Originally Posted by Exhibitman

The whole third party holding idea leaves me cold.



Gotta play with toys.

+1

Definitely not for true collectors.

[ajjohnsonsoxfan]

Talked to a guy at the national who has a BGS playoff contender Brady 10 at PWCC. He needed cash for a downpayment on a house and was able to get a $1mm loan on the card.

[Casey2296]

Originally Posted by ajjohnsonsoxfan

Talked to a guy at the national who has a BGS playoff contender Brady 10 at PWCC. He needed cash for a downpayment on a house and was able to get a $1mm loan on the card.

Interested to know what rate and terms?

[Peter_Spaeth]

Originally Posted by Casey2296

Interested to know what rate and terms?

Open an account and find out.

[Casey2296]

Originally Posted by Peter_Spaeth

Open an account and find out.

Ha, no thanks. I'm in the loan business so I enjoy running the numbers. I'll just keep building my collection "cash & carry" like the old days.

[Mark17]

Originally Posted by Casey2296

Interested to know what rate and terms?

I wonder if there will be capital calls if the market for that card starts heading south.

[BobC]

Originally Posted by Mark17

I wonder if there will be capital calls if the market for that card starts heading south.

LOL

Good one, but that is why I'm guessing such loans/advances are at least initially going to be more short term in nature, and are likely tied to sales consignments rather than "vault" submissions to be held for an indeterminate amount of time.

[BobC]

Originally Posted by Casey2296

Interested to know what rate and terms?

Like I was saying earlier, would love to see some of the actual documents and paperwork they have these people signing. Also wondering if this isn't just an advance on a sale consignment of the card, as opposed to a true loan with PWCC holding the card as collateral. Regardless, this could possibly be a huge reason they got so much in alleged "vault" submissions during the National. The bulk of those $100M in submissions could have actually been consignments more so than just people putting cards in their "vault" to be held for some unknown period of time. Especially if those people doing the submitting were also looking to get advances/loans against their cards right away.

I understand PWCC does quite well, but if they are getting submissions and then giving out such advances/loans of the nature mentioned, I'd have to speculate they don't have that much cash just lying around to continue doing such advances/loans if they expect to continue this going forward. And if they do continue this, I would expect they would look to get financing to supply them with cash to cover such advances/loans. I don't see normal banks going to approve such financing (or being allowed to under current regulations) if the collateral is primarily sports cards, which would seem to leave it for private investment companies/investors to step in then.

OMG - If this is now going to be the case going forward, we are truly seeing the transformation of our hobby into an industry dealing in investment commodities. Instead of someone buying and selling cards to make money, this is where someone can make money off the capital loaned to others buying and selling their cards. So PWCC (and/or whomever is supplying them with cash) is possibly becoming the first J.G. Wentworth type of company to start taking advantage of people dealing in cards. Unbelievable if this turns out to be true.

And now would like to find out even more how these advances/loans are going to be paid for with charged interest, or some other type of payment/charge to cover the carrying costs of whomever is fronting the money. If there is an interest charge in their somewhere, that in and of itself could have different tax implications depending on whether or not the person paying the interest is a dealer, investor, or collector. And if not necessarily an interest charge per se, can whatever charges are being incurred then be applied towards the basis of cards eventually sold so the seller gets some tax break? This could get real interesting going forward?

[Johnny630]

I’ve been saying it since it started the vault is a brokerage/trading account for your slabs. I don’t want any part of it. I want the cards in my possession for the long term. It’s also a easy way for the AH to keep you as their customer, not venturing to other AH’s.

It’s also about leverage buying with cards as collateral etc. They attract customers/investors with tax shelter marketing well guess what it only saves you from sales tax, not profit on gain. Wait till you get that check your gonna have to claim it.

[BobC]

Originally Posted by Johnny630

I’ve been saying it since it started the vault is a brokerage/trading account for your slabs. I don’t want any part of it. I want the cards in my possession for the long term. It’s also a easy way for the AH to keep you as their customer, not venturing to other AH’s.

It’s also about leverage buying with cards as collateral etc. They attract customers/investors with tax shelter marketing well guess what it only saves you from sales tax, not profit on gain. Wait till you get that check your gonna have to claim it.

Great observation, though I initially assumed the main focus of the "vault" concept was precipitated by the sales tax loophole idea, and to then use that to channel and retain more business for the AH. Just look at the timing and creation of the concept relative to the S Dakota Vs. Wayfair case decision by the Supreme Court, and the fact that the original PWCC "vault" operation was specifically set up in one of the few states without a sales tax.

The idea of using it like a brokerage account is I think possibly more a function of the impact the pandemic has had on the hobby overall, and the unbelievable surge in prices that have occured as a result. That impact didn't start till around two years after the Supreme Court decision so, would assume it was less of a factor in creating the "vault" concept, at least initially. If nothing else, the pandemic impact has radically quickened the additional use of such an operation as a type of brokerage account, and possibly even supplanted the original main concept of using it as a sales tax loophole. How else do you explain the $100M in "vault" submissions PWCC allegedly got during the National? The sales tax savings only occurs if the items are purchased online and shipped directly to a location in a state with no sales tax, not hand delivered by the owner while in Chicago.

What will be extremely interesting is to see how this "vault" concept grows, and possibly morphs, in the future. The fact that Goldin took on the concept that PWCC originally started already tells you that others in the hobby have recognized this as a possible way to grow and make more money in the business. So does that mean other AHs may start getting into the "vault" business to compete and maintain their current clientele and standing, or that entirely separate companies that don't even sell or auction off cards could jump into the "vault" business and end up being like financial advisors, only dealing in cards? Who knows at this point where this could go. I would think a lot of this will be predicated on how the card market reacts and goes as we eventually get out of the major effects from the pandemic and back into more normal times, whatever the new normal ends up being post pandemic. If the card markets end up severely tanking post pandemic, and we see major price drops in the high end market across the board, I think that would negatively impact the use of "vaults" other than for those still looking to take advantage of the sales tax loophole. But bcause of all the the changes and infusion of new money and investors in the "hobby", I think there is already too much invested by those new people to just let things fail apart and bottom out. An adjustment to the market and correction of prices for a time, yes can see that, but would also suspect it to have greater impact on the modern card side of things. I would think the vintage market will continue to do well and maintain, if not actually seeing increases overral as collectors/investors may move from modern to vintage at some time. At least for the foreseeable future. Guess we'll have to wait and see.

[mrreality68]

Originally Posted by BobC

Like I was saying earlier, would love to see some of the actual documents and paperwork they have these people signing. Also wondering if this isn't just an advance on a sale consignment of the card, as opposed to a true loan with PWCC holding the card as collateral. Regardless, this could possibly be a huge reason they got so much in alleged "vault" submissions during the National. The bulk of those $100M in submissions could have actually been consignments more so than just people putting cards in their "vault" to be held for some unknown period of time. Especially if those people doing the submitting were also looking to get advances/loans against their cards right away.

I understand PWCC does quite well, but if they are getting submissions and then giving out such advances/loans of the nature mentioned, I'd have to speculate they don't have that much cash just lying around to continue doing such advances/loans if they expect to continue this going forward. And if they do continue this, I would expect they would look to get financing to supply them with cash to cover such advances/loans. I don't see normal banks going to approve such financing (or being allowed to under current regulations) if the collateral is primarily sports cards, which would seem to leave it for private investment companies/investors to step in then.

OMG - If this is now going to be the case going forward, we are truly seeing the transformation of our hobby into an industry dealing in investment commodities. Instead of someone buying and selling cards to make money, this is where someone can make money off the capital loaned to others buying and selling their cards. So PWCC (and/or whomever is supplying them with cash) is possibly becoming the first J.G. Wentworth type of company to start taking advantage of people dealing in cards. Unbelievable if this turns out to be true.

And now would like to find out even more how these advances/loans are going to be paid for with charged interest, or some other type of payment/charge to cover the carrying costs of whomever is fronting the money. If there is an interest charge in their somewhere, that in and of itself could have different tax implications depending on whether or not the person paying the interest is a dealer, investor, or collector. And if not necessarily an interest charge per se, can whatever charges are being incurred then be applied towards the basis of cards eventually sold so the seller gets some tax break? This could get real interesting going forward?

Very Well said and I am of the same basic mind set