The great coin melts effect on coin totals.

"Hello, Silvertowne? Yeah, I am not a customer, and have no interest in buying, but I would like to ask a very detailed question concerning your business practices"

I bet that would go over well.

 

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Well for this specific guy by me he states that he is a "metal guy". He has no interest in the coins themselves just their melt value. He will sell some of his nicer coins but if he doesn't sell off his junk silver within a month or 2 he melts it. Because my funds are limited, I can only buy so much off him before he goes and melts it. However, his practice has allowed me to pick up some really nice coins for a buck or 2 over spot. For example about 15 1943-46 Walkers in AU to MS condition for $12-14 a piece depending on silver price at the time. I just wish I had the money to buy all the silver off him before it got melted.

But I agree, I think he is loosing tons of money this way but I am not twisting his arm to quote me the prices he does. Sad thing, is I am moving 2 hrs away from the store in less than a month.

 

I'm not even referring to selling the coins as coins, but rather buying random junk silver coins for the price of silver as bullion and then melting them to resell for the price of silver as bullion. The cost of melting seems wasteful there, unless they are actually able to sell the non-junk silver for a premium over the melting cost because of purity, or they're making their own jewelry and run their own melter.

 

I am just curious about something. How does a dealer know it is physically melted? Maybe Silvertowne does since they make those little silver medals. I am askign simply because I knew dealers in the past, and when they "melted" coins, they physically shipped them to a dealer who bought junk silver. Now, this dealer, in TX, was also one of the largest dealers in bags of junk silver. When we talk about "melting" silver, is it a euphemism for selling a coin wholesale for a function of its silver value, or are we talking about selling it to a smelting company who does not sell bags of coins, and physically melts them?

My suspicion is dealers sell for "melt" never knowing what happens to the coin after that, and many are in fact resold in bags to buyers. Maybe I am wrong.

 

I am friends with the folks at Silvertowne. I see them pretty often. Next time I see Leon I will ask him how many silver dollars he thinks he has melted over the years.

 

Ty sir that would be interesting.

Can I ask a question of you? When you sell "for melt", what kind of company do you sell to? Is it a refiner, or is it an aggragator of junk silver?

 

I think Silvertowne does all of their own processing.... but I'm not 100% sure on that one.

 

Seems like coin melting only hurts the quantities of coins that obtained lower grades from circulation. Pretty much nobody who sees an AU+ coin is going to think 'oh this is only worth its metal content'.

 

1962-64 dimes, quarters, and halves say hi.

I bet you half of these have been melted, and I have never seen a worn 1964 coin below AU.

 

Not only are these being melted on a daily basis. But somehow I'm under the impression the processed bars are well on their way out of the country. You always hear about articles about how India and China are the biggest hoarders of the stuff, not just the big private banks, but the actual governments of these countries just buy, buy, buy. Our once melted US currency is exported out daily, probably from the refiners to a shipping company and across the oceans.

 

Why spend the money to melt them? Seems to me they are just as liquid in their current state of junk silver US coinage as they are as a silver art bar. Maybe even more so being they are easier to verify in coin state.

 

Sorry, I must be dense, I'm still not understanding how they make more money that way. They buy bullion for the price of silver, pay a melting cost, and then sell bullion at the price of silver. Are mark-ups for .999 silver bars/rounds over 90% silver coins enough to pay for the melting & associated costs?

How is it preferrable to buy, melt and sell versus just buying at wholesale and selling at retail?

 

Pure silver trades at a premium over spot on the sell end. 90% sells at a discount under spot on the wholesale side... as the price incresese the spread gets to a point where it's feeseable to process 90% and refine it to pure.

 

Coins have been made debased and underweight for millinea. This is hardly a problem with US coins but there are many heavily worn US coins and these are light. Many buyers don't care if these underweight coins are scarce date seated liberty; they just want full weight.

There's another factor as well and that is that most investors desire 999 bars and the ETF's require 999 1000 OZt bars. The major reason is that it's easier to trust that bars are real silver and a secondary reason is that they require less storage room.

Common US silver will not become scarce anytime soon. These are melted because there aren't nearly enough collectors to absorb the large amounts of these coins. While AU/ U walkers might get pulled out on the way to being melted there are lots of bunches of coins that don't really get screened at all. Everything that comes in gets shipped right off. The refiners usually don't have time to save much of anything. If people sell it for scrap prices then there's a good chance it willbe melted as scrap. Of course this doesn't apply to the stuff the motel buyers steal. They will obviously pull out easily sold coins.

 

Agreed, during the 1979/80 melts Leon sent 300 bags of unc 1883-O dollars to the smelters. That is 300 bags of just one date and mint.

Yes and no. Yes a premium if you have a ready strem of clients that want them and more clients than available bags. But six months before the big melt those unc 1883-O dollars were selling for $10 to $15 each and were slow movers because they are common, and Leon had 300,000 of them. If the collectors weren't interested in them at $15 six months before they definitely weren't interested in the six months later at $42. But the smelter will take them all at $40 and away they went.

It is for the refiner. He has customers who need pure silver that he needs to supply so he needs scrap stock and a lot of it so he will normally be a high bidder for the silver coins. The only way a collector or speculator is going to get it is to be willing to pay more than the processors will. A lot of people say there is a market for bags of junk silver. True but how many of those bags are being bought by representatives of the smelters? Like I said they need stock and if the market price for bags is low enough they can melt it profitably, they will be the ones buying them up.

No they don't They do have their own melting and minting capabilities but they are very limited on refining capabilities. So they melt and reprocess some of the 999 fine material they buy but not the sterling and coin silver. That goes to the smelter/refiners

Take the price your being paid for junk silver and determine how much you are being paid for pure oz and compare that to the spot price which is about what the refiner gets paid and you'll find there is a difference. There are some expences but in that difference is where the refiners make their money. It isn't much per oz, but they do a LOT of ounces.

 

I figured you would know for sure Conder. I thought they did more then just melting and minting. I defer to you tho.

 

Yes thank you for your responses Conder. Kinda sad actually.

 

When they melt to get the coins, I assume that they make silver and copper bars. Would that be correct?