An oft repeated and very annoying lie in the coin business!

[Hepcat]

Consider. Refiners charge very substantial fees to customers for their services. Gold and silver scrap certainly can't be turned into 999 bars for free.

 

Yet never have I been offered silver (or gold) coins for less than the contained value of the metal. In fact, I daresay that for any collector to succeed in buying a silver or gold coin for a discount to its metal content is a rare happening indeed. Ebay once in a blue moon maybe?

 

Understandably coin dealers do this all the time since a major part of their business consists in buying coins at a discount, and then selling these coins at a premium. Even bags of the junkiest of junk silver coins are priced at a premium.

 

But nonetheless whenever the subject of mintage for collectors' coins is raised, dealers will pooh-pooh the published figures with the words "Oh but you can't go by those figures. So many of these coins have been melted down for their silver over the years that there's hardly any left."

 

Yeah, sure fellow. Pay a smelting/refining fee to melt down your coins when you never sell them for anything less than a considerable premium? Who are you trying to kid?

 

Jerks.

 

[coinman1794]

You are making false assumptions that the two businesses are related.

 

Rare coins are not traded on the basis of intrinsic value. They are bought and sold on collector demand. Gold coins are traded on melt value + collector demand due to the high price of gold.

 

Bullion dealers can sometimes offer their products below market because they bought them at a very low price and the price recently went up. That is how they create hype for their products.

 

Junk silver coinage trades at a premium over melt and is not technically bullion.

 

Finally, the mintage figures are not accurate due to massive melting campaigns.

 

 

 

 

[thebeav]

I remember back during the boom in 1979, refiners were backed up for a solid year. Of course, they were not melting rare coins. They were melting a lot of coins though. Dollars, 90, 40....it was all going in there.

 

Paul

[Hepcat]

You are making false assumptions that the two businesses are related.

 

They're related insofar as a silver coin originally issued for the collector market can decline to no worse than junk silver coin status.

 

Bullion dealers can sometimes offer their products below market because they bought them at a very low price and the price recently went up. That is how they create hype for their products.

 

What do you mean below "market"? Below the value of their contained silver? I'm sure I'm not the only one who would appreciate being tipped off when such sales occur.

 

Junk silver coinage trades at a premium over melt and is not technically bullion.

 

My understanding too.

 

Finally, the mintage figures are not accurate due to massive melting campaigns.

 

So why oh why would any dealer send silver coins to be melted down when a refinery pays him for only a certain percentage of the contained silver when he can always sell these coins as junk silver at worst? That collector coins have fallen victim to "massive melting campaigns" is precisely the oft repeated lie that dealers tell to talk up the price of the coins they have in inventory by attempting to convey a misleading impression of scarcity.

 

[bstrauss3]

Because the market for junk silver is a relatively recent invention

[Hepcat]

Depends upon what you mean by recent. Bags of junk silver coins had their own futures contract on the Comex back in the 1970's.

 

[coinman1794]

You are making false assumptions that the two businesses are related.

 

They're related insofar as a silver coin originally issued for the collector market can decline to no worse than junk silver coin status.

 

Bullion dealers can sometimes offer their products below market because they bought them at a very low price and the price recently went up. That is how they create hype for their products.

 

What do you mean below "market"? Below the value of their contained silver? I'm sure I'm not the only one who would appreciate being tipped off when such sales occur.

 

Junk silver coinage trades at a premium over melt and is not technically bullion.

 

My understanding too.

 

Finally, the mintage figures are not accurate due to massive melting campaigns.

 

So why oh why would any dealer send silver coins to be melted down when a refinery pays him for only a certain percentage of the contained silver when he can always sell these coins as junk silver at worst? That collector coins have fallen victim to "massive melting campaigns" is precisely the oft repeated lie that dealers tell to talk up the price of the coins they have in inventory by attempting to convey a misleading impression of scarcity.

 

 

I misunderstood your initial post. I thought you were saying that coin dealers never offer their products below their value, implying that there is someone else who does, and presumably bullion dealers. My mistake.

 

Below market....Bullion also trades at a premium over melt. Sometimes dealers will reduce their markup on the day of an upturn, enticing people to buy their bullion at closer to melt than is normally available.

 

Bullion dealers and coin dealers are two different things. Saying that rare coins can sometimes be worth melt is akin to saying that a classic car can sometimes be worth scrap.

 

There are published statistics on how many millions of silver and gold coins have been melted. These reports make an interesting read for any serious numismatist.

 

 

 

[thebeav]

So why oh why would any dealer send silver coins to be melted down when a refinery pays him for only a certain percentage of the contained silver when he can always sell these coins as junk silver at worst? That collector coins have fallen victim to "massive melting campaigns" is precisely the oft repeated lie that dealers tell to talk up the price of the coins they have in inventory by attempting to convey a misleading impression of scarcity.

 

 

Personally, I have never heard this'lie' from a dealer. But, if you would research the price of 90 vs the silver spot, you would find that the 'premium' or 'discount' as the case may be, will vary wildly through history. After spending 40 years in the business, I saw many periods where bags traded at a massive discount.

You seem to be stating that this was not possible.

 

Paul

[Hepcat]

After spending 40 years in the business, I saw many periods where bags traded at a massive discount.

 

You seem to be stating that this was not possible.

 

I would love to be tipped off whenever either junk silver coins or commemorative gold or silver coins trade at even a small discount let alone a massive discount to spot. I'll believe it when I see it.

 

Now realistically you are always going to pay a premium on minted coins, so assuming it was about 3% more....

 

[thebeav]

 

I would love to be tipped off whenever either junk silver coins or commemorative gold or silver coins trade at even a small discount let alone a massive discount to spot. I'll believe it when I see it.

 

Where were you in 1980 ? Spot was 50 bucks, 90 was 29x......That's 6 K a bag below melt. If you wanted to refine it, you got paid a percentage and the balance a year later. Fun wow.....

Same thing happened about 8 or 9 years ago.

You have to be a newbie to think this never occurs......

 

Paul

 

PS- This isn't going to happen at 16 dollar spot......

[asdfgh]

I agree with the original post. I was told that my full bags of war nickels were worth 75% of the silver in them because of the cost of refining. It took a little bit of checking around and I sold them for spot. No one melts coins. They probably are not available because of hoarders that put away bags. All that silver is out there and when the price shoots up, it comes out of the woodwork.

Sure there might be times when large 1000 oz silver bars are in such demand for export that melting might happen. I general there is always a pretty good demand for bags of silver coins so why would anyone melt them.

[Hepcat]

I would love to be tipped off whenever either junk silver coins or commemorative gold or silver coins trade at even a small discount let alone a massive discount to spot. I'll believe it when I see it.

 

Where were you in 1980 ?Spot was 50 bucks....

 

Certainly unwilling to buy silver at those prices! Even assuming I had the money to burn which I did not.

 

90 was 29x....That's 6 K a bag below melt.

 

I don't understand the 29x part. And are these bags $500 or $1000 face value ones?

 

Same thing happened about 8 or 9 years ago.

 

PS- This isn't going to happen at 16 dollar spot....

 

Too high or too low? Does junk silver sell at a discount to contained silver when silver is really down in the dumps or when it's at nosebleed prices?

 

You have to be a newbie to think this never occurs....

 

Given the presence of very substantial refining or melt fees, I'm actually surprised that coin dealers don't or can't offer coins at a very slight discount to silver spot prices more often. That's really my point in this thread.

 

As far as being a newbie is concerned, while I've been following precious metal prices and other metal and mining stock prices closely since my college years in the early seventies (it's been at least part of my job since 1977), I admit I only look at coin prices sporadically.

 

[thebeav]

Discounts occur when the price runs up, usually quickly.

As I explained in a previous post, refiner finalization payments were 1 year behind in 1980. Who would pay spot when you're not going to get paid for a year?

If the price collapses, everyone wants in and the premiums increase.

 

Paul

[coinman1794]

I agree with the original post. I was told that my full bags of war nickels were worth 75% of the silver in them because of the cost of refining. It took a little bit of checking around and I sold them for spot. No one melts coins. They probably are not available because of hoarders that put away bags. All that silver is out there and when the price shoots up, it comes out of the woodwork.

Sure there might be times when large 1000 oz silver bars are in such demand for export that melting might happen. I general there is always a pretty good demand for bags of silver coins so why would anyone melt them.

 

I wonder if war nickels in bulk would be more expensive to refine due to the substantially lower silver content of 35%.

[World Colonial]

I wonder if war nickels in bulk would be more expensive to refine due to the substantially lower silver content of 35%.

 

There are much better coins to hoard for silver than war nickels.

 

Per my post in the other similar thread, I also know there aren't anywhere near enough collectors for most of this material. I agree that speculators hoard many coins for silver or for potential future sale, but still believe there is no reason to believe (at all) that just because a coin is worth a premium that it won't end up being melted.

[Hepcat]

...but still believe there is no reason to believe (at all) that just because a coin is worth a premium that it won't end up being melted.

 

Huh?! Well that's just it. A coin can't be "worth" a premium if it's not selling for that premium. And if the coin is selling for a premium, or even a very slight discount to its metal value, why would anybody in their right mind melt it down and settle for a substantial discount from the contained metal value of perhaps 10%?

 

 

 

 

 

[World Colonial]

...but still believe there is no reason to believe (at all) that just because a coin is worth a premium that it won't end up being melted.

 

Huh?! Well that's just it. A coin can't be "worth" a premium if it's not selling for that premium. And if the coin is selling for a premium, or even a very slight discount to its metal value, why would anybody in their right mind melt it down and settle for a substantial discount from the contained metal value of perhaps 10%?

 

 

 

Read Condor101's reply in the other topic. HIs reply is the correct reason. There are so many of the coins you are implicitly referring to in existence that there aren't enough retail buyers to absorb them.

 

I have coins I bought in the past that I could in theory dump on eBay but it isn't worth the bother of wasting my time to list them to realize such a pittance. I presume this is equally true of many if not most contributors on this forum and PCGS.

 

It is somewhat different for dealers since it is their livelihood but its still likely to sit in their "junk bins" or take up space in their shops for years if not more before they can get rid of it. They aren't about to list them on a website either. The most realistic option is to sell them to silver buyers (if it is silver) and that's what they usually do.

 

US circulated silver from the 1940's to 1960's, there must be hundreds of thousands to millions of them for (practically) each and every date. The Red Book or other price guides may list them at a premium but if you have dozens, hundreds or thousands of them, who is going to buy it and how long will it take you to get rid of them at anywhere near their supposed value? A collector (as opposed to "investor") only needs one for their set.

 

The same applies to many (maybe most) 20th century circulating world coins (whether base metal or otherwise). Likewise for US and world NCLT and proof sets. Mints crank this stuff out in much higher supply than the real collector base for it. In the US, a lot of it is bought by non-collectors and "flippers" but ultimately, there isn't a market for the supply of any coin which is larger than the collector base who wants it.

 

Long reply but the summary answer is that sometimes, these coins aren't worth more than the metal content if no one wants it and the opportunity cost of spending the effort and the holding period makes melting it the more practical option.

[bourse28]

I have been offered 97% of melt for slabbed mod gold coins MS69 - MS70 (and these were supposedly friends of mint) as "the refiner pays 98%." Another excuse used one time "its a jewelry piece (circ $2.50 Indian). The dealer offered $40, I sold it at the coin club for $100 (this was circa 1989). Just shop your material around.

 

When you hear that its time to shop around the bourse room or list the material on ebay. I get low ball offers all the time - from people coming up to my table at shows, on ebay, etc. I have learned to either ignore them or reply with seems like an automated response "unless the item is BIN / Make offer, its already at our best price."

 

With the analytical power of Coin Facts and Ebay, one can research what an item went for at auction and list it themselves. I do this all the time (researching selling prices) to beat the competition as to price if possible.

 

 

[bourse28]

I agree with the original post. I was told that my full bags of war nickels were worth 75% of the silver in them because of the cost of refining. It took a little bit of checking around and I sold them for spot. No one melts coins. They probably are not available because of hoarders that put away bags. All that silver is out there and when the price shoots up, it comes out of the woodwork.

Sure there might be times when large 1000 oz silver bars are in such demand for export that melting might happen. I general there is always a pretty good demand for bags of silver coins so why would anyone melt them.

 

Yes it sounds like they were giving you a line. Shop them around or list on ebay after researching what similar material is going for. I believe they offered you that to flip them on ebay intending on opening the bidding at melt after they bought it from you for a song.

[bourse28]

Buyers sometimes use all sort of stories to get good price on deal.

 

A guy in my coin club several years ago bought a raw collection of commems, 60-70 coins I believe in the last few minutes of a show he was set up at. Most dealers had packed up and left and others were packing. A couple came to his table with a box of Unc Classic Commems in paper envelopes in a coin box most likely something they had inherited, etc.

 

He looked at most of them, they were gem unc, many with super luster and or toning. He said "let me check market teletype" turned his back looking at CW like it was some teletype, shrugging his shoulders and then offered $60 a coin "everybody knows I am high buyer on these." which was accepted after some urging of the reluctant husband by the wife when the cash was laid on the table (it was all he had). Consumating the deal and got outta there asap. The coins were submitted to PCGS and almost all came back in the MS65-67 range. The Spanish Trail came back MS66, a couple of Oregon Trails got MS67.

 

IHe won that months Viking Award at the coin club meeting (as you know they were pillagers) after standing up in front of the club and telling the story. He did flip some of the coins at sheet some bringing several hundred dollars each. He said he had to close the deal quickly before somebody noticed and tried to horn in. The fact many dealers had left, the bourse room was almost empty, and others pre-occupied with packing up and getting outta there was a factor allowing this to happen for him. One fellow in the club did tell him off and was cussed out. I thought they would get in a fight. After that he did not return to club meetings and has since moved to Cali. I was surprised he had the gall to tell such a story in front of the club. Obviously he acquired many of the conis for like 5c on the dollar. He said "I had a horrible show up to that point, could not sell anything and then like divine providence......"