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 Replies: 14 / Views: 1,275 |
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Pillar of the Community
United States
1450 Posts |
As the spot prices of precious metals rise and fall, is it "reasonably accurate" to simply add or subtract the price difference of the precious metals x the metal % to arrive at a new "adjusted price/ value" for a coin? I guess what I am asking is, does numismatic value change in a direct relationship to metal prices, or do numismatic values increase at a greater rate than just the value of the precious metal component. I hope this makes sense to everyone!
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Moderator
 United States
6563 Posts |
Typically no
A coins value is based mainly on rarity and condition. Sometimes the silver content is worth more then the actual coin itself as with most circulated halves and quarters with normal mintages.
If you look in most books you'll see a B/V notation for value if the coin is under a certain grade. At that point it's pretty much worth Bullion Value.
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Moderator
 United States
16677 Posts |
I agree with GO.
swcoin.ecrater.com
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Bedrock of the Community
United States
19935 Posts |
The bullion value (melt value) is the MINIMUM a given coin is worth excluding numismatic value. The numismatic value will always follow the "market value" regardless of the bullion value.
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Pillar of the Community
 United States
1450 Posts |
I think you missed the point of my question so let me give you a scenario. Let's say a certain dime is valued at $50.00 and spot silver is $10.00.Part of that "coin value" is metal value and part is the value of rarity and/or condition. If overnight the spot price of silver doubles to $20.00(we all have our fantasies), the increase in the metal value (assuming it is a 90% silver dime) has increased by $9.00. Is the value of that coin now $59.00? or is it still $50.00? Or is it now maybe $65.00? How would you go about pricing that coin in that situation?
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Moderator
United States
6563 Posts |
The market value of the coin does not change unless the value of the silver supersedes the price of the coin. Thus it normally will never go up in price just because silver did. With junk circulated silver the prices fluctuate because the coin itself is normally worth less then the silver Hope that makes sense  |
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Pillar of the Community
United States
1450 Posts |
Yes, that makes sense. Thanks.
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Moderator
Australia
16808 Posts |
Theoretically, I'd agree with your premise, hockingzig. If the bullion value of a coin goes up by $9, then it's market value should go up by a similar amount. However, this assumes that coin collectors are logical.
A collectable coin has three theoretical components to it's value: face value, bullion premium and numismatic premium.
It's face value is the amount you'd get if you took the coin down to the bank and deposited it. For the most part, we don't have to worry about face value, unless the price of metal collapses to below face value, in which case everyone's hoards of "bullion-grade coins" would wind up getting banked or spent. If it's an unofficial or demonetized coin, then it's face value is zero.
The bullion premium is the amount above face value a jeweller or scrap metal merchant would give you for a coin. It's "bullion value" is the face value plus the bullion premium. Normally you can reckon "bullion value" simply by multiplying weight by spot price.
The numismatic premium is the amount above bullion value a coin collector will pay for that specific coin, or another coin just like it. This is the hardest component to measure consistently, because it depends on too many factors. Market value equals bullion value plus numismatic premium, but for high-grade and rare coins, the numismatic premium is so much larger than the other two factors that they can safely be ignored.
Theoretically, these three values are independent, but in practice they rarely are. In your example, a sudden increase in silver metal price would create a rush to buy silver, in any form, and that should flow through to increased demand for coins. It's highly unlikely that a coin with a market value of $50 before the rush would still be worth only $50 during the rush, but how much the numismatic premium changes is largely unpredictable, because it depends on the behavior of coin collectors and investors - who aren't renowned for being the most logical group of humans.
Don't say "infinitely" when you mean "very"; otherwise, you'll have no word left when you want to talk about something really infinite. - C. S. Lewis
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Pillar of the Community
United States
1571 Posts |
Hockingzig, I am no expert in either areas, but MY opinion, is that no matter where the bullion value goes in a coin, the MINTAGE, and SCarcity, plus the demand for that particular coin, ( all factors, such as a "key, or a simi-key, among other things, considered) will determine the value). The spot price will be only a part of the value , as related to the percentage of the metal concern in that coin. An Example: The silver Eagles rise and fall, according to the spot price, because they are bullion, coins, to start with. The case of a morgaan or other silver dollar will have only a percentage of the spot, again determined by the metalic content of the "silver" in this case. If you are an investor, then buy the silver, or gold, as the case may be, and don't worry about the numismatic worth of the "coin". The case is very similar, but same.
Dick
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Pillar of the Community
United States
533 Posts |
A good example is the 1921 Morgan dollar. When silver was close to $20, most '21's on ebay were going for around $30 each, now that silver is down around they are going for around $18-$20 like they should be. All the while the higher value Morgans stayed the same. Basically, in my experience, as the spot price approaches the numismatic value, the numismatic value will increase. |
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Moderator
United States
187702 Posts |
Very good analysis, Sap!  Quote:
Basically, in my experience, as the spot price approaches the numismatic value, the numismatic value will increase. That is how I see it. The melt value increases will ripple up towards the numismatic value. The closer the two are when melt value changes, the more likely it will affect it. Edited by jbuck
12/15/2008 2:03 pm
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Bedrock of the Community
United States
20753 Posts |
After over 60 years of collecting coins that is one thing that most dealers agree on. The price of metals has nothing to do with the prices of coins. I've heard people at coin shows say to a dealer something like shouldn't you be lowering all your prices since Silver is now so low. The answer is ALWAYS THE SAME. Coin prices have nothing to do with metal prices.
Many electronic stores sell Gold plated tipped cables. Did they raise the prices when Gold was high? There are auto parts stores by me and they have Gold or Silver plated battery terminals. Did they raise the price of those when those metals were higher? How about your Platinum plated razor blades? If cost more to feed cows so do they raise the prices of cow manure for fertizers?
Back to coins. Regardless of metal prices at coin shows, coin dealers, coin stores, the prices of coins are the prices of coins.
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Pillar of the Community
United States
4541 Posts |
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Rest in Peace
United States
9104 Posts |
If the collector value of a coin is $5, that doesn't change unless there'smore collector interest or the bullion value exceeds $5. If for example the bullion value of silver dollars rises from $10 to $15, it simple means that the ones that used to be worth $12 are now commons with the rest of the $15 ones.
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Rest in Peace
United States
9104 Posts |
An interesting aside. At one point silver got low enough that the face value of Canadian $5 and $10 coins were more than their BV. A consortium tried taking hundreds of thousands of dollars worth to Canada to deposit. They wouldn't take them at face. The mint finally agreed to take them at face value as payment for other mint products.
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Replies: 14 / Views: 1,275 |
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Posted 12/14/2008 9:57 pm
