The big melt is starting and that's a good thing!
2manycoins2fewfunds
Posts: 3,038 ✭✭✭
With gold crossing $1800/oz a lot of dead money MS/PR 69 First Spouse and $5 gold commemorative coins will begin to hit the melting pot.
This reduction in overhang and overall surviving populations will in time have a positive effect on remaining coins numismatic value beyond base gold value.
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Why would people feel the need to melt coins that are stamped with their metal content and weight?
Dead Cat Waltz Exonumia
"Coin collecting for outcasts..."
Also, what's so magical about $1800? It's not an all-time high.
Some will go into the pot but I imagine more jewelry and such will be done first. I guess it will also depend on demand. If I was a dealer and I could sell a 1oz gold coin for spot + an amount or sell just below spot to a smelter I’d sell the coin. Jewelry, on the other hand, is vastly overpriced anyway and they buy it at a discount so easier to just chuck it if it isn’t otherwise valuable.
It would be a complete waste of time and money to smelt coins. I trust the mint for known metal content in stamped coins over some guy who has a cube of unknown content, purity, etc.
$20 libertys that will not grade due to cleaning and other problems are getting melted too, what a shame
I thought folks were still lining up to buy U.S. mint gold at spot. Why bother melting it?
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"Numismatic categorizations, if left unconstrained, will increase spontaneously over time." -me
They often get melted simply because people want cash now..........the coin shops and pawn shops have learned to take their buy-sell spread money and run rather than hold a large inventory of coins and risk exposure to falling market.
$1800 price is simply the price point were many of the previously issued $10 first spouse or $5 gold commemorative coins start to reach break even..... ($900 per $10 FS coin or just under $450 for the $5 gold which have just under 1/4 oz. of gold content)
The higher gold moves from here the greater the incentive to unload these previously underwater coins.
People hate losing money and will hold a losing coin investment hoping for a chance to one day at least break even.
For a lot of people with gold at $1800+ this is the first chance in 8+ years to get close to $900 for generic $10 spouse coins or $450 for $5 gold commemorative coins................
A friend who runs shop pays 97 pct of melt on mod gold Commems (slabbed or raw) as the refiner pays him 98 pct. If able buy them from table at show at 95 pct choice hold them for inventory or flip.....some profit plus no risk on holding them.
Interesting, I guess this really is happening at some level. Is the material that's being sent to the refiners typically uncertified?
The refinery in my area has large garbage cans full of coins.
The coins are a known weight & purity and they are able to sell many of them in coin form.
They don't spend the time or energy required to melt them unless they have an order for bars.
My take- It depends on potential senders outlook / cash flow needs. I can see low end common Ugly stuff mod or classic but for me would really have to be hurting to send nice MS69 /70 slabbed coin or attractive USGTC to refiner.
Let’s say dealer picked up big estate deal lots of gold not worth much over melt and wholesaler friend had dozens slab boxes US coins 5pct back of bid the guy buried in estate stuff might flip some to buy pick out US coins below bid (He can sell for more) for show customers.
Frankly I am no fan of melting decent / nice collectible coins.
This thread makes me sad.
peacockcoins
Generally the melting starts when the discount of coins to spot price gets large enough to cover the cost of refining them into bars that sell for spot (by definition). This is usually caused by weak demand for coin but going forward don't be too surprised to see a stronger demand for 1000 OZ bars.
When the melting gets going it has always easily swamped the demand for bars because there are so many coins. As time goes by the number of coins dwindle and fewer are available for sale at any price.
Someone correct me if I'm wrong but I believe there has been a little melting since 2011 but it has been tapering off a little the last couple years. If gold prices remain strong or go higher the melting in it could go up quickly.
Really not a big deal.
It might be mentioned that there are anecdotal reasons to believe there has been extreme melting in 40% and 35% US coins in the last several months and some going back for years. There is suddenly a significant premium for nice BU 40% and specific dates of 35%.
There many not be so many war nickels as most think any longer. Nice chBU 40% has long been much scarcer than most realize.
Honestly, I have no emotional response to the melting of gold coins with no numismatic premium and dubious artistic or historical value. I believe we're talking about a very small percentage of the overall production in any case. But I understand that many people feel differently.
I suppose first it is the removal of many monuments and statues across the country and now reading about melting commemorative gold coinage. Just kind of bums me out is all.
peacockcoins
We have been sending numerous commemorative $5 to smelter every week for years. I’m sure we have not been alone. Would rather keep the classic gold in stock.
A: The year they spend more on their library than their coin collection.
A numismatist is judged more on the content of their library than the content of their cabinet.
I loved buying the commemoratives at or under spot. Hopefully those days are not gone.
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Partly because the premium is higher on new, novelty items with pretty girls, birds, skulls and zombies, dragons, horses, race cars, beer, anything but a first spouse or some obscure clip art motif.
The profit from refining, minting, and distribution exceeds the cost.
Liberty: Parent of Science & Industry
I'm the same way. Most are common enough and pile up in dealer inventory, so it's not a huge deal if a percentage is melted. Plus many of the people who don't like to see these coins melted wouldn't buy them even if they had the funds.
@braddick I understand the statue/monument connection, but don't think it's quite the same. Those statues are more unique (not like the thousands of coins that are virtually identical). Plus many of those are public as opposed to these coins which are private property (so I can be ok with someone choosing to melt their privately owned coin while someone destroying a public piece without input from the public is very different).
The melting of modern mint products doesn't bother me at all. That stuff will eventually find its way back to the mint to be something else that, hopefully, I like.
The old stuff, gold or silver, is a bit of a bummer to me, though. I collect that stuff and maybe I would have wanted a shot to own it.
Maybe people will start melting damaged 90% gold and low grade ultra common St. Gaudens double eagles.
The demand for many recent or very common date older gold coins from actual collectors is probably very low right now. Coins that fall into this group are likely to be looked at in the same way as most gold jewelry purchases ... get them to the smelter fast and avoid the risk of a drop in the bullion price. If the dealer buying this type of material does not have sufficient demand from "stackers" it is off to the refinery they go.
Maybe the reduced supply will create actual numismatic premiums in the future.
All the other stuff they take in like jewelry, PC boards, silver flatware, dental gold etc. need to be refined to a known weight and purity, that stuff needs to be done first to be able to sell it. Coins (unless damaged) are the last things in the melting pots.
I would be willing to bet that if for some strange reason the coin market got red hot and and circulated coins were twice the value of the silver/gold content refiners nation wide would dump millions of them back on the market.
But will current collectors live long enough to ever see those premiums?
I just got a call from a fellow with a strong foreign accent, asking for gold but wanting it melted so he would not pay taxes taking it out of the country. I referred him to a local jeweler
Which would you rather have storage wise: $1 million melt value in low end common gold (90%) or $1 million in refined .999 gold? Ingots also take up less space.
The impact from melting can have a significant impact on some of these moderns as total populations are low typically 5,000 or less.
This discussion relates only to modern non classic coins and only those MS/PR69 or lower.
Just for fun look at SOLD/COMPLETED auctions on Ebay for "spouse $10 gold -70"
A lot go for well under spot when fees are considered..............
When nobody cared that a twenty dollar gold piece was twenty dollars.... it was common change in an uncommon era. Now that it's "fifty" ... it's still not collectible, it's malleable, at a higher price. Fortunately the eagle carries a premium. It's those gold buffaloes and spouses that are in danger. 24k baby.
I agree with everything that’s been said above with one addition: Of any series that deserves to be melted I can think of no more deserving candidate than the gold spouse!
Liquid molten gold spouse.
These could be real sleepers if demand/collector interest developed. It probably won’t happen in our lifetimes.
If something has no premium to spot, that says that supply exceeds demand. We're not in danger of running low on common Saints anytime soon, no matter the price gold rises to, IMHO.
I would prefer the pre-33 US minted gold coins. Easy enough to stack/tubes, sufficiently small metal quantities for personal transactions, and I know exactly how much gold is in a Saint Gaudens Double Eagle (.9675 oz) for example.
If you had a million in junk/pre-33 US gold now, would you sacrifice some of the value by way of the costs associated with smelting? Unless we're talking about assayed/otherwise trusted bullion producers, there is also the trust/metal verification factor. I would have much less confidence doing a personal transaction with a guy who smelted gold in his basement for example vs. payment via a Saint.
I think most are referring to established smelters/assay companies and not some random guy in his basement. There are costs with smelting, but there are also costs associated with storage. In bulk the latter are likely more expensive hence the incentive for melting.
This could make a fun project for Laura/Legend. Now that the numismatic premiums have been largely eroded by increased melt value, she could buy up all the dreck/CAC rejects (for common date Saint double eagles, etc.). She could then melt them and sell them for bullion or a small premium over for .999 ingots.
I think the OP's thoughts are predicated on the volatile nature of PM and the spot market, premiums and demand. what he mentioned, Gold Spouse and $5 Modern Commems don't have a very robust resale market, despite the push-back I expect after his post. those half ounce and one ounce medals from the early 1980's also fit in here. people just aren't running in to buy them. they probably are, however, running in to sell them once the spot price gets high enough.
to me that means that a dealer may be able to buy them at a good price but maybe not sell them before an anticipated drop, which means he'd lose money. so he sends them to the smelter. it is good, sound business.
I question the downside of melting things that never should have been made to start with (99% of modern commems). Add to that no numismatic premium (or negative numismatic premium) and I see no reason they shouldn't go live another life as something useful. Loosing a few double eagles is slightly regrettable, but in reality they're not exactly rare. For some of these issues, mathematically it gets pretty close to zero before demand catches up to supply.
Unless population reports and official mintages are updated with the number of coins removed from the market, there will be little positive effect on the value of the remaining coins. Rarity is based on known numbers.
The price of gold is set by faith, or lack of, in the currency it is priced in.
Fair enough regarding the trusted ingot source.
This would be a fun problem to have:
Based on $1800 per ounce, you need 555.55 oz of gold for a million bucks. That would be 575 Saint Gaudens double eagles (rounding up to a coin) vs. 556 1-oz square ingots (rounded to the ingot). I'll leave it to the architects to determine how much square footage of storage that requires, but I don't think the difference in required storage space (coin vs. ingot) would equal the costs for smelting.
Even if the pop reports were updated, I don't see much effect on prices for an issue where (say) 10,000 were minted, 5,000 were reported melted, and still only 1,000 people (or fewer) want to own one (for reasons other than gold price speculation). The reduction in pop numbers might induce some buying by speculators betting on a continuation of that trend, but any premium from that would be short-lived as unwanted coins would hit the market to take advantage of it.
Amazing. It gets up there in price and every thing comes out of the woodwork. FWIW right about now
Ingots are easier to counterfeit. I'd much rather have several rolls of AGE's that a single big gold bar.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
For what is worth we had t> @ifthevamzarockin said:
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Refiners are not in the business of holding coins in inventory hoping for a price rise..........................
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It may take some time but there are many example where posted original mintages are known to poorly reflect surviving numbers. Value is a product of demand in relation to current available supply not original mintage..
In time we may be in a world where almost all available examples of some moderns are only MS/PR70s.
Whether in that world there is an increased numismatic premium.............well only time will tell...................
Loosing a few double eagles is slightly regrettable.
it's only regrettable from a nostalgic standpoint. when you look at a lot of U.S Gold, absent the bullion value there is little Numismatic value left. in a way, melting them and reducing the extant numbers is helpful to that.
I'm still unable to access the agree/like/lol function or post images. I agree with Braddick. Melting is obviously permanent but predicated on the trend of the moment. What I find interesting is what many consider crap today will eventually be collectible in the future. In the early 20th century, ancients were all the rage and the modern coinage of the day was rarely given a second thought... Think of some of the Barber coinage, Victorian and Edwardian coinage. Who would have guessed then how rare and highly prized the 1905 half crown would be today?
So what is melted today because it is currently not fashionable to collect will be the subject of significant criticism in the future. And it seems to be happening even with some of modern Franklin Mint sets from the 1979-1988 time frame. Collectors can call it crap... But the best evidence suggests that the tide is turning.
Experience the World through Numismatics...it's more than you can imagine.
I'm no architect but due to golds density I would be willing to bet it wouldn't require too much more space than a ASE monster box to store 575 Saints......not quite there yet so without some math (which I'm too lazy to do) I cannot completely confirm.
OK edit, looks like it would require about 12% larger box size than that of the ASE.
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Does he get more moderns with fineness and weight printed on them? Or more classic coins without fineness and weight printed on them?