Collapse In Gold Prices And Coins

Gold and silver prices have only a small effect on coins that have numismatic values. An 1883-CC BU Morgan dollar, for example, is going to run you about $200 regardless of where Silver is trading. The reason is that the numismatic (collectability) value of the coin far exceeds its silver value. I strongly advise that one collect coins for numismatic, not metal, appreciation.

For very low grade common coins, metal prices will have a greater impact but if your goal is to track the price of silver or gold you can do so more cheaply by buying ETF's such as SLV and GLD through a brokerage. Those ETF's hold the physical asset so you are not exposed to CDN type risks. Both did fine during the 2008 crash.

That would be because people hoarded them because of their low mintage. That caused them to be more available in MS condition than the high mintages no one saved because of its mintage.

A challenge for Silver investors is that price trends play out over decades. As an example, it fell almost continuously from 1980 to 2000. Adjusted for inflation, someone who bought in 1985 is just breaking even today.

Coins with numismatic value, by contrast, have behaved more like stocks - far outperforming a metals investment over that 1985-2015 type period.

Trying to play the precious metals market is a sucker's game. Buying coins for numismatic value is not a sucker's game because just like all rare and beautiful objects somebody is willing to pay for them. Just watch Antiques Roadshow. Those values fluctuate as well.

I'd say it's a slow moving reaction to the drop in oil prices. Lower revenue for OPEC means selling assets like gold to pay the bills.

And rare bullion coins will go down too IMO. They're saleable assets too.

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" :)

Sooo.....

In the last Silver spike, we lost tons of junk silver coins to smelters?

And no way to measure?

Might be a good project for an intern, survey coin dealers, cash for gold people as to what and how many they melted in the last 10 years.