For a SG$20, most people who already want one, have one, or are not in a position to add one to their collection at the moment; either which way, demand is relatively unchanging and level. Since the supply is finite and available, there's no price rollercoaster.
The numismatic value far outpaces the bullion value for pretty much any SG$20. If a given date example was $1500 with gold at $1000 an ounce, and gold fell off a cliff to $250 an ounce, it doesn't mean the coin would suddenly drop in value to $375!
Compare this to, say, circulated silver modern coinage such as
Washington quarters. For the common dates, prices below XF tend to follow spot silver/bullion. If you have a roll of average-circulated common date silver
Washington quarters (currently worth $107 spot) and the price of silver falls by half, you now have a roll worth $53.50. The numismatic value of the coins is not greater than their bullion value.
There is a notable case: supply manipulation. Let's take a theoretical date of a popular, collectible silver coin with a mintage of 35,000,000 and a current bullion value of $10 in VF-20 and lower. Of those 35m, let's pretend that 10 million are still around in VF-25 or better, 20 million are VF-20 or under (i.e. junk silver) and 5m are unaccounted for. The value chart might look something like this:
G4-F12-VF20-XF40-AU50-MS60-MS65-MS67
10-10-10-30-50-75-115-240
with a VF-25 or better coin being at least twice as scarce as a VF-20 or lower grade example (20m vf-20 or lower left vs. 10m vf-25 and higher.)
An average coin dealer might have a junk silver tray or bin with a couple hundred of these theoretical coins in it, for sale at or just above the bullion price of $10. They might get sold to cull or type coin collectors, and a few will get melted, but most just sit there.
Next year, suddenly, without warning or reason, the bullion price jumps to $30 for that same hypothetical coin in bullion grades. Now every dealer is selling what they can out of that original junk tray and melting the rest, cashing in on the profits. Their MS, AU and XF examples of those coins are still sitting in their slabs (and correspondingly way more expensive) but they're melting those VF-20 and lower junk coins like nobody's business. In fact, they manage to melt 10 million of the 15 million originals that were left in VF-20 or lower condition before the price of silver drops down out of the stratosphere..no, crashes, really, back down to $10 bullion value for our hypothetical coin. Now that they're so doggone cheap, you decide to put together a nice circulated type set of those coins in, say, VF-20 condition, get that Dansco completed at last.
Only one problem. You can't find a lot of those formerly-$10 coins in VF-20 easily anymore. In fact, not in VF-20, nor any lower grade. Your dealer has slab boxes full of MS and AU examples for those coins, but if you want a nice, clean VF example you're going to be paying much closer to XF prices for it than you would have before. Across the country, collectors everywhere come to the realization that you just came to: that's one tough coin in circulated condition!
Now your value chart looks like this:
G4-F12-VF20-XF40-AU50-MS60-MS65-MS67
30-35-40-65-75-95-130-350
with a VF-20 or lower grade coin now being at least twice as scarce as a VF-25 or better example, thanks to melting. (5m VF-20 or lower grade coins left of the 35m minted vs. 10m VF-25 and higher.)
Those profit-hungry melters just created a date rarity for that date in circulated condition. Those VF20's and under are now surprisingly scarce, and correspondingly more expensive. More unfortunately for collectors, the higher grade coins went up, as well, because people who want to buy one in ANY grade are having to now buy those XF and MS examples (not only are they more available than your VF-20's, the price premium between, say, XF-45 and MS-65 is no longer nearly as steep as it used to be, meaning people start upgrading existing coins in their sets!)
Just some random "speculation" :)
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Posted 07/20/2015 8:50 pm
