There was a rumor (really more of a report than a rumor) that many of the Martha Washington coins (5000 of them) were melted when gold hit $1000. Well those MW coins were originally sold for about $420 so you can see why they did it. Now we find ourselves at near or above $1000 an ounce again. If we hit $1100 I can see a lot of the spouse coins being melted. Your thoughts?
They will be thought of as numismatically valuable more than they previously had been if they get melted down. I think a lot of people just view them as bullion as of now.
First Spouse coins contain 1/2 oz of .9999 gold. If gold spot is $1,000 a First Spouse coin has a melt value of $500. At some point people will have to weigh whether the coin has numismatic value above $500 - especially in light of the low mintage of 40,000 and the thousands of them that have been melted.
I never quite understood this. If say an old double eagle was worth $1000 when gold was $800/oz, isn't it now worth about $1200 because gold went up $200? Or do I have to melt the double eagle down to make a gain on the investment?
Mill, You must distinguish between melt value and numismatic value. A Double Eagle contains 0.9675 oz of gold. If gold spot is $1,000 a Double Eagle has a melt value of $967.50, not $1,200. But it may have a numismatic value of $1,200 due to its rarity and condition.
Wasn't Silvertowne melting them by the bucket a while back? Last time gold spiked to 1K I think I read that.
I never heard of a coin being worth LESS than melt. There's always a numismatic premium to a coin. Melting them is absurd IMO.
The way I understand it Silvertowne and some other dealers bought a lot of the spousal coins and they weren't selling as well as they had anticipated. So all that came back from grading at less than 70 & 69 were melted down and sold as bullion. They could squeeze a little more profit by selling as bullion rather than raw or lower grade certified coins. If you type in "gold coin melting" on your search engine there will be several informative articles about it.
Who said a coin was worth less than melt? I guess I missed that one. How much over melt are you willing to pay for an EF-40 1964 Washington Quarter?
Not true, coins are sold for less than melt every single day. All you have to do is think of junk silver - dealers do not even offer spot, rather a percentage below spot. Even with many gold coins, I used to buy them for less than melt all the time, even slabbed examples and on ebay no less.
An undamaged coin is never worth less than melt value, but sometimes sells for less than melt value. The coin market is not always rational, so if you buy below melt and hold on for awhile, sometimes a fairly long while, the purchase usually makes sense. Right now things are even more complicated. The spot price is frequently used to judge the value of generic gold and silver, but the spot price is a paper price that is set more from expiring futures contracts than from physical bullion sales. So even fairly common gold coins are selling for more than spot.
That makes sense if we think of the cost of refining the metal, but what about coins made of pure silver or gold? Is it common to buy them below spot?
This makes sense only if you think of gold coins only as raw material for jewelry or electronics. But in another sense, gold in coin form is one of the highest and best uses as an investment asset. The coin form eliminates the need to test for weight or purity, and therefore a case could be made that metal in coin form should sell at a premium, not a discount, due to the savings to the purchaser.
It has advantages, also has disadvantages. First of all you have to know the coin is genuine - many are not.
Not really, no. The coins you can most often do it with are world gold, modern commems and the like. But even so, the exact gold/silver content is known, and buying below spot, is buying below spot - no matter how you look at it.
I would be real careful buying coins of gold or silver even if they are a little less than spot and not junk. With the volitility of these metals (especially silver) you might find they are quickly more than spot price. That would be okay for collecting, but not for cashing in on the precious metal price.
