I am replaying the game using a theif that im going to dual class into a fighter. I set the theifs abilitys to 205 pickpocketing and the rest on hide in shadows, so basically I never have to buy anything except if its in the adventurers mart. Now I have gone to Mayvars guild hall and decided to have a look if there was anything worth stealing off Gorch and have found that he will buy fenced items. Even items I have just stolen from him! So now I have just become rich by selling him expensive equiptment stealing it back and then selling it back to him and on and on and on.

Is this meant to happen???

Well, he's a thives' merchant, so he'll buy fenced items. The fact that you can steal from people and use the items before their eyes immediately is just the game's flaw, IMHO, and I wouldn't try to get rich that way. There are 2 thief merchants - one in Maevar's guild and one in main Shadow Thief building. Trading fenced items between them seems more logical to me ;)

There's also Arledrian the Fence on the 2nd floor of Gaelan Bayle's house and Roger the Fence, who is in the southern part of those sewers below the Temple District.

Its funny I dual classed to figher at theif level 13, im only a level 8 fighter but I can still steal from the theif stores.

Well if you consider that you never have to buy anything anyway, its not that great of an advantage is it?