relationship of spot price to numismatic value?

I'm not sure if this is the right area of teh forum to ask this question, but it seemed to be the most pertinent...

The value associated with a coin surely has to do with grade, collector interest, and rarity, but what about the underlying metal content of the coin?

For example, many consider (myself included) that most roosevelt dimes are basically bullion, but Morgans are considered collectibles. If the price of silver goes up, then those dimes go up in value with it. But the Morgan may not see the same increase.

Are there any kind of calculations that take into consideration the increase or decrease in the spot price when determining the collectible value of a numismatic coin? Or is the "interest" factor somehow connected to the spot price?

It seems to me that a drastic increase or decrease of the price of the metals would possibly increase or decrease the "interest" factor, which would then increase or decrease the numismatic value... How far off am I on this thought?

 

Log in or Sign up to hide this ad.

I would say that Morgans in particular demand a premium over spot that Roosevelts never really got.

 

The only direct relationship of spot to numismatic values is the floor it puts on precious metal coins.

A jump in gold prices to $5,000/ounce wouldn't have any effect on the value of a 1933 double eagle.

 

Exactly. The coins can't get less valuable than the spot price...but from there they go up based on collectibility alone. For example, there is no "spot price" difference between a 1893-S and a 1921 Morgan Dollar. One sells for over $100K in MS63 while the other is around $30 or so. Both command a premium over spot but there is no formula to determine how much. The value of a coin is determined by the supply and demand of the coin itself...the metal value simply creates a minimum value.

Going back to the 1893-S vs. 1921 example. Well circulated 1893-S Morgan's still sell in the thousands but circulated 1921 Morgan's sell for spot value because they are no longer of significant demand in that grade to command a premium.

 

Ok, thanks to everyone for the consideration of my question. But I'd like to reference the above response for further discussion.

There are some minds that like just the plain commodity, and then there are those that like coins. Those that get into the physical commodity will most likely, IMO, also move into coins... first for the bullion value (like roosevelt dime) and then into numismatics (like Morgans). But those that are only into numismatics, may only use bullion as a diversified investment.

I would speculate that as more people get into silver bullion investment, then the progression of interest will lead to numismatics. I would also think that there would be a significant delay of silver price peak to the peak in interest for numismatics... perhaps a year or so.

I'm trying to picture the scenario in my mind:
- Silver goes up and catches many people's attention and they start to invest in the bullion products.
- Some will only trade paper, but others will take physical possession.
- As a whole, those that take physical possession will find it difficult to acquire everything that they want, and will look for substitutes, such as junk 90%.
- As the price continues to rise, the supplies dwindle, but the interest will not decline. This is the point when I think numismatics will begin to see increased interest.
- Being that numismatics hold their value and are not affected drastically by the underlying metal spot price, even more interest will come when gold and silver reaches a peak and begins to steadily decline in price.
- People will sell their physical bullion and move into the numismatics for which they have been steadily acquiring a taste.
- Then, as more people see that numismatics are increasing in price, they could begin bidding up the prices even more... especailly when they see the metal prices continue to fall.

This is just my speculative prognosticating, and perhaps I'm painting too rosy of a picture of a potential scenario. But, I do think that there is going to be some kind of relationship between commodity price and numismatic price. Albeit, it will not be directly correlated on a simultaneous basis. In my scenario, there will be a delay... like overlapping sine waves of different amplitude and frequency