Question about the effect of silver melt

Discussion in 'Coin Chat' started by tudrfl5, Sep 25, 2012.

  1. tudrfl5

    tudrfl5 New Member

    What I am curious about is your thoughts on the effect of silver melt on numismatic values. I am new to coin collecting and have inherited my grandfather's coin collection. It is difficult to see his collection from the perspective of silver melt value. The numismatic value is much more interesting, but it seems that there are only a few "key dates" that people are interested in. Am I incorrect about this? If this has been addressed in another thread, any redirection would be appreciated. Thank you for your help!
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  3. Hobo

    Hobo Squirrel Hater

    What dates, mintmarks and denominations do you have?
  4. tudrfl5

    tudrfl5 New Member

    Well, the collection is quite extensive and some are rare (numismatic value is greater) -like 1909 S-VDB, and "rare" nickels, dimes, quarters, dollars, etc. I don't have the complete collection yet. There are complete books of denominations and I have had a couple people look at it and help me to understand what is in it, but I am just beginning.
  5. tudrfl5

    tudrfl5 New Member

    I am interested in adding to his collection rather than selling it. However, just buying coins for the "silver melt" value seems a little absurd to me. Although it seems I have probably done this already. However, if the silver melt effects numismatic values significantly, "common dates" could gain in value?

    GDJMSP Numismatist Moderator

    It doesn't. You see, nobody knows exactly what coins get melted because the people melting them don't keep track of what dates/mint marks get melted. So if a coin is known to be a common date, it will stay known as a common date. At least for your lifetime.

    The thing that gives coins their numismatic value is the lack of availability for that given coin, or popularity. Without one or the other, or in some cases both, of those 2 things coins will have little numismatic value.

    Take the '09-S VDB cent for example. You can buy a 100 of them on any given day. So rather obviously the coin is readily available. But, it is extremely popular so it has a high price - numismatic value.

    Or as another kind of example you can look at the 1904-O Morgan. Prior to the 1960's that coin was thought to be downright scarce because of melting in the early 1900's and they carried a high price. But in the '60s thousands of them were discovered and because they were then readily available prices dropped like a hot rock.

    So as long as coins are readily available, and not extremely popular for whatever reason, they will have little numismatic value.

    There are also examples of coins where the entire mintage was less than 35 coins. But yet those coins can be purchased for melt value because the coins are not popular.

    Popularity plays a much bigger role than most people give it credit for. I once bought a coin from the 16th century where only 2 were known to exist in the entire world. I paid less than $2000 for that coin. And it was a high grade example.
  7. tudrfl5

    tudrfl5 New Member

    Very interesting. Thank you for the explanation. It is a little mind boggling that popularity rather than rarity is the driving factor. How does this guide your choices in expanding your collection? I am at a loss.

    GDJMSP Numismatist Moderator

    Not really. You see, a general rule in order for coins to bring high prices they can't really be rare because there has to be enough of them to go around before people will care about collecting them.

    Now I'm not talking about coins that cost a high 6 figures or more. The really expensive coins are ego coins, coins where the money doesn't matter because the buyer won't miss it. I'm talking about coins that cost 4 figures or 5 figures. Coins that collectors can actually buy. With those kind of coins there has to be enough of them to make a market in them, or prices won't go anywhere. If the coin is so rare that there are only a few known to exist, nobody cares because they know they can never own one.

    But if there's thousands of them out there, like there is with the '09-S VDB cent, then everybody wants one. They know they have to pay for it, but it's probably the most popular Lincoln cent there is so they pay it anyway.

    Also there is more than one kind of rarity, there is absolute rarity where only a few coins exist. And there is condition rarity, where there are thousands and thousands of the coins available, but limited numbers in higher grades. The '09 Lincoln, there's over a thousand in MS65 Red and above. Plenty more in Red/Brown or Brown. But in Red, the coin can bring $5,000.

    There are other coins where there is nowhere near that many available and yet they bring a fraction of that price because people know they can probably never own one.

    It never guided mine at all. I collected what I liked whether it was rare or not. But a lot of the coins I collected there were almost always less than 1,000 known to exist in all grades combined. And usually a lot less than that. But not a lot of people collected the coins I did, so the prices were cheap compared to what most really popular coins cost.
  9. easj3699

    easj3699 Well-Known Member

    well a couple years ago i was buying graded morgan dollars ms 62 = $32 ms 63 $37 ms 64= $42. now those same coins are selling for 30/40% more because the price of silver has gone up and now most regular morgans are going for $27 ish. so yes the price of silver can play a part
  10. mmablaster

    mmablaster Member

    Many silver coins have been melted down. The Pittman Act story is interesting, Many coins were melted in the 80's when silver rose dramatically. There really aren't any reliable numbers on how many silver coins have been melted down, though some people can guess. In terms of value, it has more to do with popularity than anything else.

    If I were you, I would learn more about the coins you have. I'd keep the collection in a very safe and secure place and try not to tell any random people or acquaintances about it.
  11. desertgem

    desertgem Senior Errer Collecktor Supporter

    A factor that has to be considered, although there is no clear factual backing, is the number of coin collectors in the future. Some dealers say the number is increasing and they are selling more $1000+ than ever before, but they do not seem to separate the god bullion coins from those. Bowers says the average age of a coin collector is between 55 and 65 in his estimate. Stamp collecting faced a similar problem years before coins, and the number of stamp collectors has decreased. Coin and stamp forums have helped encourage new collectors.

    If the number of collectors decrease significantly in the future, the demand for coins will decrease also. As the perfection of counterfeits becomes better than the detection, less will be interested. Perhaps the collection of sealed "slabs" of DNA will become the collectible, with TPG certification that the sample came Einstein's brain ( for example), and will outsell the 1909SVDB :) The future is fickle.
  12. buddy16cat

    buddy16cat Well-Known Member

    I think what a collector is interested in really depends on the individual collector. Key dates are dates that are rare and are usually the last dates a collector gets to finish a set. As far as silver melt value, I think the value of the coin is determined by silver melt if the numismatic value is lower than the melt value. If silver drops significantly below the numismatic value, this value may apply to the coin. That is a good question though, especially coins that seem to sell at multiples of melt or a certain amount over melt. Does the value of the coin change when melt value changes? I don't believe it does, I think it is one or the other. The good thing about silver coins that have value to collectors is that if the price of silver falls, you still have coins collectors want. Collector value is generally more stable it seems. One issue is that you often pay retail value for them and sell them at wholesale and I would imagine it takes a long time for the retail price you paid to equal the wholesale price unless you got a really good deal.
  13. tudrfl5

    tudrfl5 New Member

    Fascinating discussion! GDJMSP - I am starting to understand how popularity/demand is correlated with numismatic value. If the coin is very rare, there won't be a demand because the opportunity of actually owning one is slim. (Am I on the right track here?). As you mentioned, the 1909 is more attainable to more people, yet not as common (for comparison's sake) as penny minted in 1980, which is "too common" to have extra numismatic value.

    Of course, being so new to this, I did not know that there were coins that were minted in such few numbers. Are these foreign coins?

    To some extent, I guess I am trying to determine what it is that I am actually collecting. To collect for silver melt value just seems a little mundane. It has been fascinating to learn about coins and collecting.
  14. GDJMSP

    GDJMSP Numismatist Moderator

    Some are, but some are US coins, though they are not coins minted for circulation. Some US Proofs have very low mintages, some US pattern coins have very low mintages. Same for foreign coins.

    But then there are the coins that were minted for circulation, with maybe not high not but reasonable mintages, but today there are few of the coins known to exist. Some are expensive and some are not, for the reasons already discussed.

    Then you have coins like the 1804 dollars, and they are not even real coins, only 15 are know to exist, and yet some are worth well over a million dollars each. To me that makes absolutely no sense at all. But such is life.
  15. tudrfl5

    tudrfl5 New Member

    Where can I find more about these coins?
  16. rickmp

    rickmp Frequently flatulent.

  17. tudrfl5

    tudrfl5 New Member

    I just purchased one this week! :)
  18. GDJMSP

    GDJMSP Numismatist Moderator

    If that faint noise I hear is the dollar signs clicking like a slot machine wheel behind your eyeballs - you need to stop them from spinning before they go - clunk ;)
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