Millions of dollars in World War II silver recovered from deep ocean

I'm not comparing anything other than the fact that silver coins from the Bother Jonathon wreck were encapsulated by, not graded by, NGC, and those encapsulated, pitted, sea damaged, silver coins (not gold coins) were selling for extraordinary prices on eBay. So SILVER coins is all I am referring to. Since no silver Rupees will ever be placed on eBay or any other site from the City of Cairo shipwreck, no one can compare the two. All we can do is imagine what they would look like by comparing them to other SILVER coins recovered from shipwrecks ... and from my experience every TPG encapsulated shipwreck coin brings a higher price than an ungraded, or one not encapsulated by TPG.

 

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Ok so apples to apples (silver to silver), but how do you still compare 100 tons to the very limited supply of Brotha Jonathon?

 

Not comparing size or tonnage of the hauls in either shipwreck, just the effect of salt water on silver, and the fact that coins from shipwrecks have an allure that a comparable raw coin does not. The allure draws a higher bid, even with the damage from being on the bottom of the ocean for a century, more or less.

 

There might not have been a market for 100 tons of shipwreck silver, but it would have been easy money to take 1-10 tons of the best looking stuff and sell it for 2x melt.

 

Howdy folks,

Nice discussion. Alas, I too am in the camp that wishes they would not have melted them but can certainly understand their thinking. Oh, and if they waited this long to tell us, you know they made their decision with great deliberation.

Indeed, most often that much silver dumped on the market, even after being in saltwater, would depress prices. Basic supply/demand curve econ 101. However, something that I've been noticing in recent years gives me a bit of pause. I've seen most every passable shipwreck coin get slabbed or labeled or encapsulated or WTFever . . . and get sold for a bloody premium!! Rather than the newly found coins getting added to the existing supply of the same coins - to have that s/d price depressing impact - they've gone into a niche market by themselves.

Anyone else notice this? It's not unlike the special first strike labels that folks are paying a premium for . . .

and so it goes,

peace,

rono

 

Exactly. Finally these two understands what I've been saying. Supply vs demand drives the price to an extent, but shipwreck coins all have a special allure that draws people and drives the price independent of what the other raw, non exotic, coins of the same date/grade or better floating in the market. If they had just taken a small percentage to offer as shipwreck coins, they might have made another million off of those few conserved alone ... Because those buying such coins may or may not be collectors.

 

As far a dumping coins on the market and the affect on value, look at the 1950D Nickle. 2+ million made and immediately scooped up by speculators and only released in small quantities. This drove the price up beyond what it would otherwise have been. Then, when the demand diminished and the hoarded coins were released the price dropped to more normal levels. They're still rare, but not a rare as they once were.

It's not the number minted that establishes price so much as the number available. If the British had released some millions of the coins on the open market, the value of the existing ones would most certainly have dropped.

 

I really think you are putting way too much value on the shipwreck factor. That's an old timers mentality. A few decades back that had some merit to it but very few care about that anymore and they are a dying breed.

Even those that are still into shipwreck coins are finding it harder to continue on with all the latest shipwreck finds and soon-to be finds as deep sea technologies advance. In other words it doesn't even make sense anymore from a value/investment standpoint.

Then if you add more supply to an already downtrending market it only makes matters worse.

 

What is the "Brother Jonathon" repeatedly referred to on this thread? The 1865 S.S. Brother Jonathan Shipwreck? Ya, it carried Gold NOT Silver - and I see no price records for silver coins certified from that wreck. Whiff of Mel Fisher, eh? Can we see those purported wreck-salvage coins?

 

Exactly. POPULATION. These were common date, circulated Silver Rupees already designated bullion - nothing special. And now, after 70 years underwater, the wreck-silver was in considerably worse shape.

On another thread I identified a fantastic bullion piece that sold for Spot, basically. I'm therefore not convinced ALL wreck-silver is automatically worth the premium ... or the cost in handling, conserving and grading. 20th Century Silver Rupees? Nah. Scrap. Junk Silver. Bullion.

Wiser minds prevailed, in this case.

 

Exactly!

I also read Brotha Jonathon had only gold, but wasn't sure so I didn't question Ed's nonsense about it also having silver. I knew I should have called him out again.

From what I read, Brotha Jonathon was only 1000 US minted gold coins vs 100 tons of nasty silver rupees. Yea nowhere near the same thing.

 

Really? How do you know this?

Cleaned, circulated Silver Rupees currently sell ~45% over Spot on eBay, (USD$ 28.98/ozt, then net 15% = $24.63) Salvaged Rupees would not be not 'cost-free' either. Can you tell us the whole cost, best estimate?

From their fee schedule, it looks like NGC would charge a minimum of $43. for a single Rupee! Yes, I'm sure a bulk-rate would be lower, lol. But I honestly doubt they'd professionally recommend cleaning these coins, for profitable resale.

Let's say 100 metric tonnes = 8,000,000 (1) Rupee coins.

1) What was the upfront salvage cost, in Sterling, per Rupee?
2) Next, what would basic conservation cost (cleaning, sorting, grading) in UK, 8 mln coins, per?
3) Then, what would it cost to professionally grade 800,000 rupee coins, in Sterling, per?
4) Lastly, what would it cost to sell (package, ship, etc.) 800,000 coins, per?

I imagine this folly might also be an accountant's nightmare. Easy money, for whom? The coins are OBVIOUSLY corroded! I've no doubt there'd be howls of protest in Parliament, if millions of Pounds in taxpayer money were wasted on such a foolish endeavor.

As for Silver Rupees from the S.S. City of Cairo: a little birdy tells me not all were melted; yes you can make an offer, contacting people who handled the bullion. What you'll pay, that's TBD; call it 'market' (black or grey, I won't say.) Real value? Anything can be sold on eBay: try your luck!

 

Look at this issue the other way around. Before 1933 gold coins were relatively common and priced at face value. In 1933, the price of gold had raised to $20.67 per ounce and FDR mandated that all gold coins be turned in*. This had the effect of making all gold coins, rare or not, now rare and worth much more than face value. Therefore, reducing the population = raising the value; the corollary is that increasing the population = reduction in the value.

*the gold "confiscation" exempted gold coins held in jewelry, as keepsakes and in coin collections. And nobody came knocking on your door to check on you. It's just that you could no longer use the coins in commerce. You could still get $20 in a trade-in for your gold Double Eagle at a bank, even though the official value of gold had risen to $35 in 1933. Few people had enough assets to hold on to mass amounts of the coins; it's estimated that >95% of all gold coins were turned in and melted.

 

It seems most if not all of your questions are predicated on an assumption that the coins must first be conserved, cleaned, sorted, and professionally graded.

If I was involved in this situation, here's one way I might have handled it. I would have made a public offer to sell any size lot over 1 ton at a fixed price of 2x spot to any buyer that had a desire to purchase such a lot. If nobody wanted it, oh well, at least they would have been offered a chance before it went off to be melted.

 

They may have looked into that and realized (or told) no one would buy the junk for much over spot. They may have contacted people they thought would be interested and were rejected for all we know. My guess is that they at least thought about it and decided melting it cause there just wasn't any value outside of melt value.

Making a public offering would have also cost money. Advertising, preparing for delivery, attorney fees (large deals of 1+ tons would probably require some attorney involvement).

 

Bingo! It's probably as simple as that.

I believe in free markets, price discovery, and numismatic demand.

So I'm all in favor of DOS auctioning their share of the coins, packaged and sold as wreck-silver ... if that's what THEY want to do. I also believe that, as a for-profit capital venture, they wish to maximize their gain and will legally do whatever to realize that end. Why would anyone believe otherwise?

http://www.bbc.com/news/world-africa-32316599

Didnt happen. So - why haven't they packaged any candy for the addicts, yet? Well kids, it's pretty easy to grasp why: just do the math.

Remember: the cost-basis must included all salvage costs (millions of dollars?), per coin sold or melted.

Let's assume a 50/50 split of 8,000,000 Silver Rupees recovered. Remember: the cost-basis must included all salvage costs - millions of dollars? - per coin sold. (Maybe they dont have to pay taxes either.) For snits &giggles, let's say DOS decides to sell 10% of its best 4 mln: 400,000 coins will be selected for grading.

How much does that processing cost?

Next: what would it cost to conserve one coin?

Again, keep adding all costs: cleaning, grading, slabbing, etc.

After all stages of this endeavor are paid for, does a $50.-60. Cost-Basis per coin sound right, in the ballpark? Feel free to give a detailed cost summary otherwise, with real numbers from a salvage op.

Would YOU spend that, to "numismatize" a cruddy, common date Silver Rupee bought at a yard sale for $2-3 of your own money? Really?



What would the market value of that coin (above) become, cleaned and sold... with tens of thousands just like it?! What profit could DOS presume to realize, all costs factored?

Value: USD $5,000... just because someone says so? LOL!
http://www.blshk.com/onlinestore/onlinestore_oldindiansilver_coinpage1.html
(Call it "wreck silver" and maybe the fools will line up: Easy Money, pal! I saw it on the Internet, too. Then again, maybe not)

otoh NGC says $36. (too high!); eBay implies ~$10.-12. in current junk silver auctions. Junk Silver Rupees aren't selling for 2x Spot retail now anyways!

Thinking it thru, who believes adding 400,000 - 800,000 cleaned Silver Rupees to eBay wouldn't tank premiums on that type of junk silver, seriously?

 

I noticed this thread from 2013; fair to compare the differences?
https://www.cointalk.com/threads/61-tons-of-silver-pulled-from-shipwreck.233549/

Around the same time from the SS Gairsoppa, recovered Silver Ingots were also melted (Sunshine Mint) then sold as retail bullion, readily available today. Odyssey Marine kept 80% of the silver, apparently, but admitted they'd invested MILLION$. Got to factor all those costs, in full.

At wholesale, after further transport and minting costs, I doubt selling that Silver was 'easy money' for OM either but we'd have to examine the expense reports in detail.

Currently, at a premium of just 32-33% of Spot on eBay - resellers are realizing a premium of just 14-16% over Spot after auction fees, April 2015. That's certainly NOT easy money in my book.

At volume and retail, did the 10 Ozt SS Gairsoppa ingots ever sell for 2x Spot, at release maybe? Old threads suggest NO WAY.

By contrast, salvaging and smelting 100 metric tonnes of loose corroded alloy Silver coin (from the SS City of Cairo: far deeper, and farther at sea) would be much more expensive, I suppose - not cheaper.

 

I suppose people here have no idea how "lucrative" salvage ops aren't, in fact.

OM's share (80%) of the bullion recovered from SS Gairsoppa was valued at $80 mln; however, the upfront COSTS were $27 mln and a syndication deal ($30.5 mln) split their take.

OM Net: $28.2 mln on 2,792,000 Ozt Fine Silver.
OM's net revenue, per Ozt Ag recovered: $10.09/Ozt
Easy Money? I don't think so. But if salvagers could make a numismatic profit, they'd certainly try.

The OM company's 10k reports "We have experienced a net loss in every fiscal year since our inception except for 2004"
http://ir.odysseymarine.com/secfiling.cfm?filingID=1193125-14-101158

Who actually commissioned & paid for the SS Gairsoppa commemorative ingots/coins, initially?

"Today, the Sunshine Mint has been commissioned to take the precious silver that was excavated from the Gairsoppa and turn it into 10 troy ounce bars and 1 troy ounce rounds."