Will 90% "Junk" Silver Coins Become Scarcer in the Future Due to Melting for Bullion??

Stuart · May 7, 2006 4:00AM

How many folks out there think that if we have a prolonged Silver commodity price increase, say in the $15-$25+ range, the resulting melting of today's common 90% "junk" silver coins to produce silver bullion for various uses may some day make these coins a whole lot scarcer than they are today?

Something similar happened to Morgan Dollars resulting from the Pittman Act of 1919 during which authorization was made for the U.S. Government to melt up to 350 Million Morgan Dollars for trade to export silver. This subsequently caused the 1903-S and 1904-S Morgan Dollars to become significantly rarer than their original mintage would indicate.

What do you my fellow forum members think about this? Inquiring minds want to know!! ...and so do I.

JJM · May 7, 2006 4:03AM

Yes, and the common Walkers, Franks, etc will always be just that, just melt value coins

DaveG · May 7, 2006 4:15AM

Personally, I'd like to hear from someone who works for a smelter who can confirm that these coins are actually getting melted.

I can see sterling silver and scrap getting melted so it's in a usable form, but isn't it very likely that the coins will simply get put into $1,000 face value bags and sold to "investors" rather than being melted? There does seem to be a very ready market for bags of silver coins, after all.

cladking · May 7, 2006 4:22AM

It's logical to assume that at some point there will start being heavier melting of silver coin.
Many buyers and most users need the silver as 999 so the refineries will probably begin melt-
ing coin and if these prices stay around then this melting could go on for years. It's relatively
simple to know what will get melted; whatever's available. This will be the type of silver still
circulating in the late '60's and BU rolls which have dropped under bullion value. Dealers will
also send in large quantities of silver and this will be even more interesting. After they pop
the quarters out of a collection which are worth a premium the rest will go into scrap buckets.
Some people will go through their accumulations and pull out culls and heavily worn coins for
melting.

Some coins are overrepresented in such accumulations because of wear, collector interest, or
just the era in which they were made. Large percentages of coins like '35-S dimes would be
destroyed because so many became worn but enough were saved to suppress the unc price.
'40-D quarters would be destroyed in very large percentages. In time even some of the truly
common dates could be significantly reduced. Keep in mind though that if there are a couple
million of a coin in unc then it's never going to be much appreciated in XF/AU. Many of the early
'50's dimes and quarters would fit this. Very common coins will remain mostly common simply
because so many will escape destruction through mere chance.

ar18 · May 7, 2006 4:30AM

At my coin shop the only thing going to the smelter and being melted is 80% canadian and sterling. The 90% is bought and then sold to others, I haven't seen any of it melted. My 2 cents.

Stuart · May 7, 2006 4:33AM

As I purchased bulk silver Mercury Dimes and Walking Liberty Halves in the past during the not so distant past $3-$5 silver price era, I was always tempted to (and often did) also cherry pick choice mint state 90% fine Silver 1962-1964 Franklin Halves and Washington Quarters to save them from the melting pot.

It was one small way that I could save a bit of numismatic beauty and history for the future.

Even though they are common date coins, to this day I still get enticed and mesmerized by the strong frosty white cartwheel luster of a choice unciculated 90% silver coin.

ar18: In reply to your previous post, I also have acted in a similar way (as mentioned above) for Choice Uncirculated 80% fine Canadian Silver Dollars because I have always felt that they were too pretty to be subjected to the melting pot. It wasn't long ago that I purchased these for slightly above melt at $2-$2.50 per coin ($3.30-$4.15 per OzT). If I remember correctly I believe that they have ~0.6 OzT Fine Silver in them.

Shamika · May 7, 2006 4:41AM

Clearly, "junk" silver will become more scarce. However, if these coins also become less desireable, prices will remain stable.

StrikeOutXXX · May 7, 2006 4:43AM

Personally, I believe there will be a small dent with current prices, PROBABLY not very noticeable in the long run.

If it gets up around $25 as you suggested, I think it will make a huge dent. $25.00 silver will make 90% bullion values around $2.00 for dimes, $4.50 for quarters, $9.00 for halves, and $20.00 for dollars.

Except for some key dates, the "Junk" would encompass nearly all Roosies, Washingtons, Kennedys, and Franklins under MS, most circulated Peace dollars, many Mercs between VF-G, and many G-4 Barbers, the list can go on.

I think many people here would say good riddance, as most of those above are only collected in MS-state, but what I worry about is the YNs of the future. Most of us started young collecting coins only worth a few bucks or face value, etc. If you cull some of the more popular collecting series for YN's, and make the most common obtainable grade of say Mercury Dimes a $40-50 AU piece, I think it is going to turn a lot of YNs off in the future. I can only hope those state quarters keep their interest, when in 2020, most 10 year olds won't be able to buy any silver coins if we sell off all the lower grades today.

Stuart · May 7, 2006 4:48AM

Shamika: Perhaps my use of the rather disparaging words "junk silver" in the title were not my best choice. However, one man's "junk" is quite often another man's (or woman's) "treasure".

As implied in my earlier posts in this thread, I personally do not feel that choice mint state (1962-64 and older) Roosevelt Dimes, Washington Quarters, Franklin Halves and 80% fine Silver Canadian Dollars constitute "junk silver". However, the potential indiscriminate melting of such coins may include them as "junk silver" when it comes to sending them to the smelter.

I'd like to get opinions from others to find out how other forum members feel about this. Thanks!

Baley · May 7, 2006 4:57AM

yes and good riddance.

and it's good to hear that copper and nickel prices will someday cause the melt of most of that "junk" too.

Stuart · May 7, 2006 5:34AM

Baley: I appreciate your "stirring up the pot" a bit to make this thread a bit more lively!!

morgannut2 · May 7, 2006 5:51AM

No-there isn't much melting going on at current high energy prices, from what I hear. Many investers prefer the baseline coin value of junk silver over the raw bars. Foreign coin silver and sterling is another story--it's was melted in the Hunt Brothers bubble, and I suspect is this will reoccur.

Baley · May 7, 2006 6:17AM

What I mean is: the more of that stuff that gets melted, the "neater" the remaining pieces will be.

So yes, they will become scarcer. Good thing, because junk is dreadfully common, now.

Bear · May 7, 2006 6:20AM

If junk silver is melted, it will raise

the value of the Mint condition specimins.

If silver goes to 25 dollars an ounce, then bar

the door Nellie, pretty near everything goes into

the old chicken pot. This is true if silver stays at that lofty

level for a number of years.

Stuart · May 7, 2006 7:13AM

Baley and Bear: I think that you guys are on the right track, and I agree with you that prolonged higher silver prices, if sustained at the $15-$25 pr OzT level, will have a natural winnowing out effect on U.S. 90% fine Silver coins currently being held for collector/bullion value that will probably send many more of them to the smelter, making the remaining coins more scarce, and possibly more valuable over time.

Morgannut2: You may also be right -- Only time will tell...

construct · May 7, 2006 7:39AM

How high of a grade will the bullion prices absorb. Right now, a Washington quarter is worth $2.50 melt. At the last show I attended, a dealer told me he bought a collection of Washingtons at melt. I offered bid on the 1937-S, which happened to be in VG. I paid $3.00. It's for my childhood collection of quarters I pulled out of circulation.

Now, if say all the Washington quarters after 1950 in less than EF were to be melted that means that the starting price on any available quarter 1950-64 will be $2.50 or $3.00, and all the YN quarter collections will be nicer since YN's won't be tempted by $1.00 coins out of bargain bins. I'm not sure that is necessarily a bad thing. Then when silver declines again to $5.00, those same quarters will drop in price to $1.00.

Which YN are we talking about who is going to be put off by collecting EF Washington quarters at a dollar a piece just because they have a tough time finding VGs for the same price?

As to the original question, of course they will become more scarce. They certainly won't become more common. But then, they couldn't get much more common! They're ubiquitous!

Barry · May 7, 2006 7:44AM

What happened in the 80s when silver was run up to $50? I wasn't actively collecting at that time, but recall stores pooping up and ads in the paper begging for silver.

Any estimates on how many Morgans, etc. were melted at that time?

ziggy29 · May 7, 2006 8:02AM

Yes, but for most of them, never so scarce that they'll be worth significantly more than melt.

lkenefic · May 7, 2006 8:19AM

<< <i>What happened in the 80s when silver was run up to $50? I wasn't actively collecting at that time, but recall stores pooping up and ads in the paper begging for silver.

Any estimates on how many Morgans, etc. were melted at that time? >>

I wasn't actively collecting either when the Hunt Bros tried to corner the market in silver...but I don't recall ANY stores pooping

Seriously though... Even at $50/oz...when silver tanked and quickly became 1/10th that price the cost of "junk" silver eventually came down as well. I was buying Walkers at about $3 each last year...I just sold some for $4.50 each to the same shop. The people buying junk silver back then didn't melt it at $50/oz...why would we be melting it at $25/oz?

Leo

samingeorgia · May 7, 2006 8:21AM

Has anyone done any studies on the natural attrition rate of coins over time? It's hard for me to imagine that there isn't a significant percentage of, say, 1916 dimes in landfills, buried in layers of dirt (or the deep blue sea), melted, or forgotten in somebody's attic. Irrelevant to collectors for common date coins - but serious business when you're talking about rarities such as the 1916-D.

It seems to me that there should be a way to estimate the loss rate and then adjust it for aberrations like post-1964 hoarding and price run-up manias like in the late 1970's.

eagle7 · May 7, 2006 8:26AM

Right now the silver bars, especially the 100oz are going to be melted. I dont think much bulk silver coin is going yet. But I agree with the others, at 25 an oz, they will go.

frankieboywonder · May 7, 2006 9:11AM

<< <i>yes and good riddance.

and it's good to hear that copper and nickel prices will someday cause the melt of most of that "junk" too.

>>

I really don't appreciate all the wonderful coins that I collect (moderns and base metal coinage) categorized and demeaned as worthless "junk." Give it a rest please!!

CarlWohlforth · May 7, 2006 10:08AM

I don't think much will be melted. I don't think much was melted during the Hunt brothers shot at cornering the market. Silver was higher then. People just traded the %90 silver coins as non-pure bullion. %90 silver coins are a well known and liquid form of silver so can easily trade.

Will 90% "Junk" Silver Coins Become Scarcer in the Future Due to Melting for Bullion??

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Will 90% &quot;Junk&quot; Silver Coins Become Scarcer in the Future Due to Melting for Bullion??

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Will 90% "Junk" Silver Coins Become Scarcer in the Future Due to Melting for Bullion??