Numismatic Value Relative To Price Of Ag.

zerozero- actually what happens is that when the bullion value of a coin exceeds its numismatic value, the coin becomes valued at the bullion value. Circulated coins still are worth their numismatic value unless bullion has surpassed it. They will not decrease in value due to high value of bullion metals. Additionally, Mint state coins will not increase in value if bullion rises in value. They still retain their numismatic value, but also have a bullion value. So ultimately a coin has the value of what is higher: either its bullion or numismatic value.

The numismatic values of coins can be altered by rising bullion values only if a bunch of a coin is melted. Therefore fewer would be out there, and value would increase if there is collector demand.

Just for the sake of clarity, here's an example: say you have a silver crown coin that is VF and its numismatic value is $15. It will still be worth $15 until the silver in the coin rises above $15. Then it would be whatever value above $15 that its silver content reaches. Then say that many of this coin are melted by people (or are in some other way removed from the market) and there is demand for the coin. The numismatic value may even become $20 if there are fewer out there and there is collector demand.

There are always exceptions, but I mainly agree with archraz. Let's go with Mr. Finger's example. If silver was $100 a slabbed morgan would be worth more than the $100 assuming that it's in a good MS grade. But your going to have a hard time selling them for more than $100. If it's a key/rare coin then they will hold their value and possibly increase. A lot of the lower grade (less than AU) morgans would get melted because morgans are plenty full and common.

Thanks for the replies so far.

I guess the economics of the whole issue get a little wacky towards the extreme end of the spectrum (i.e. silver spot = $100) but it's interesting to think about it.

Personally, I'm just trying to get a feel for the dynamics of the situation in more "down to earth" terms...

...maybe as silver spot reaches $20 or $30/ozt.

In that case, I can easily see junk Morgans going for slightly less than spot and the MS stuff holding their premium.

But now the melting issue is another question: I just *assumed* it was illegal to melt US coins inside the US. Maybe some Canadian collector might send his Morgans to the refinery but do the members here think it's possible that Americans would also melt their Morgans.

Seems almost sinful.
:)

I have bought dimes, nickels, quarters and halves under melt regularly but not Morgans. Morgans always seem to go for 1 to 2 dollars above melt in VG or better.

It is not illegal to melt noncirculating US coins. Anything with silver content is considered to be noncirculating. They are not necessarily melted though either. One vehicle for silver investment is face value bags. My local dealer will sell $100 face in silver dollars for some silver value multiplier of face value. This is also done with halves, quarters, and dimes but they are not mixed with dollars since the dollars have a slightly higher silver content.