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 Replies: 21 / Views: 6,959 |
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Pillar of the Community
United States
539 Posts |
so before anyone suggests I go look at the glossary...I already did that. Mine is a more subtle question of sorts.
Melt is defined as the intrinsic value of a numismatic item, whereas spot is defined at the bullion value of the metal. From what I can tell (and I am admittedly a newbie when it comes to collecting anything with precious metals) these terms get tossed out interchangeably. The definitions seem to also lend to that. When you look up the word intrinsic it has to do with the value of the item because of what the item is - to me that says how much is silver that day?
But again, this is a question not a criticism of the definitions. Aren't these terms the same thing. For the only intrinsic value of a coin (melt) would be either the face value (because it is stamped right on it) or the price of the metals included in the coin (and then wouldn't that be spot?
pardon my ignorance here. This may already be a well known and accepted usage amongst the serious in this area.
thanks for bearing with a noob on this topic
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Valued Member
United States
155 Posts |
I am also new at this. I use the terms in the same context but generally opt to use the term "spot" because that is what I'm comfortable with. Great question though and I look forward to the expert responses  |
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Valued Member
United States
438 Posts |
I'll take a shot at this...
Spot price is the value of one troy ounce of silver in the commodity markets. Google the name Kitco, and go to their website for up to date bullion quotes. The prices you see there are the spot prices.
Melt is the term to tell how much silver is in a coin. For example, the melt value of a standard half dollar is currently in the 22 times face value area, or $11. Melt value is a function of the wieght of the coin, it's fineness, and the current spot price. Many reference books can give you the actual silver weight of a coin, which can be used to figure out it's melt value. If a 10 Potty from the kingdom of Zamboni has an actual silver weight of 0.75 troy ounce and the current spot value is $30 per troy ounce, the melt value of that coin is approximately $22.50. US and world coins may trade at a slight premium or discount to their melt value, depending on the current market trends.
All of the above applies just as well to gold, silver, platinum, etc.
Hope that helps!
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Pillar of the Community
United States
3592 Posts |
I agree they are one and the same. Some have defined spot as what a dealer will pay on the spot, but that varies so much I can't agree.
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Pillar of the Community
United States
3294 Posts |
with 90% US silver coins, I think the difference between spot and melt is around 0.2% so I have no problem using them interchangeably.
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Bedrock of the Community
United States
10982 Posts |
Quote:
Melt is defined as the intrinsic value of a numismatic item, whereas spot is defined at the bullion value of the metal. This is incorrect. It's simple concept that is often misused by people, me included.  Melt is the value of the metal in any object. Spot is the price of the metal per troy ounce. There's nothing more to it. |
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Moderator
 United States
187862 Posts |
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There's nothing more to it. Yup... melt = spot x purity x weight Where 'spot' and 'weight' use the same scale (troy ounce, gram, etc.) and purity is any value between 0 and 1 inclusive. |
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Pillar of the Community
 United States
539 Posts |
OK, now maybe I am questioning the definitions in the glossary. I quoted the glossary for the terms and I see a big 'incorrect' from bherring (and I think jbuck is agreeing with that incorrect). So I am still a little sketchy on the usage. If spot is a dollar amount for bullion and melt is a dollar amount for the coin, should we use it interchangeably in the sentence, I sold the coin for $2 over melt or do we say we sold the coin for $2 over spot. I'm so confused
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Pillar of the Community
Australia
2830 Posts |
scroll down on the main CCF page, and find the current thread -
"Tired of Low Ball offers"
which examines this question from an entirely practical point of view.
It's worth reading.
if you think "melt" is simply spot x weight x purity,
then you are overlooking the fact that the market is a little more sophisticated, as the "Tired of Low Ball offers" thread will explain.
Spot price is for refined metal, in standardized weights, ingots, etc, from a reputable supplier, and in a major market place (many buyers; many sellers). Hence, the popularity of the Kruger-rand, and the Sovereign, and various gold coins.
Melt refers to the acheivable price - in the market place - devoid of numismatic, sentimental, or other premium. For coins, this will be similar to spot, because they are of calculable purity. Different for jewellery.
Where I live, there is still some alluvial gold to be found, but it is in tiny nuggets, often not much more than dust. A fossicker told me that if he gathers up his gold-dust any tiny nuggets, posts them to the nearest refinery in Sydney, and gets back the resulting ingots, then the fees are almost half of the spot price. Then he has to find a buyer ...
The local gold buyers know this, and will accordingly offer a price well below spot for the unrefined gold. The fossicker is forced - by the market - to take this price, because no better option exists.
If you want to call that "melt", or something else, I'd be interested to read why.
and thankyou Weavus for asking the question.
Peter in Oz
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Pillar of the Community
 United States
2448 Posts |
Well, yes and no! Author of "Tired of Low Ball Offers". Oh, and for the record, I really want to transform my gold not sell it.
Just don't confuse the terms "Melt Value" with "Melt Market Price". When you deal with a specific set of buyers on any specific day, the "Market Economy" sets the Melt Market Price" for the value of that metal. Intrinsic value will generally, unless you have some way of inducing a "feeding frenzy" ("Oh Louis?, Louis?---Now Billy Ray!") , will usually always be higher than the market value of the metal.
Market economies (to me) are the purest form of market. Think of it like a farmer taking a truck of tomatoes to the market. When he arrives, his price will be dictated by what the current market will bear.
I know that a lot of folks will argue that the metal market is not a pure market economy because of dealers organizations setting prices; and you're partially right. However, the market is continuously self correcting because of us novices. We're the levers that "up" the prices forcing the pros to increase melt value market prices.
Forgot about "Spot" bherring hit the nail on the head in it's simplest term.
Edited by carmykle
02/08/2011 8:49 pm
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Bedrock of the Community
United States
11951 Posts |
For me .. When you call a coin shop and ask what they are paying for silver eagles. They may say "spot" for silver eagles. They will say spot, because the price of silver goes up and down. If they told you $30.00 for the ASE but by the time you got to the shop, silver drops to $29.00 they would be obligated to buy yours at the quoted price of $30.00. For me "melt" means the silver value of a particular coin. Something like this. How much is my Morgan dollar worth, at the $30.00 spot price of silver, the melt value for your dollar is $22.50 The numbers I use here .. are just for a example. I also think this is the same as bherring1964 said. P.S. I wanted to add, for "melt" you may hear "your coin is only worth melt" meaning there is no numistic value for your coin over the amount of silver it contains. Edited by GR58
02/08/2011 9:51 pm
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Valued Member
United States
186 Posts |
When I MELT my M&M's... I get a SPOT on the sofa? Does that answer it?
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Bedrock of the Community
United States
10982 Posts |
Quote:
Melt refers to the achievable price - in the market place - I can't speak for Australia, but in the U.S. this is incorrect. 'Melt' is the value of the metal in the piece. It changes with the spot price but has nothing to do with what the market will pay. For example: I take a sterling silver tablespoon to a scrap metal dealer. On the day I take it to them, the silver spot price is $29/oz (29 USD per troy ounce). The tablespoon is weighed and it weighs 2 troy ounces total. It's melt value is $29 X 2 X 0.925 (sterling silver's fineness) = $53.65. The dealer (and all other dealers in U.S) only offer me $35! Does that mean the melt value is $35? No. Does that mean it's a lowball offer? No. Does that mean the melt value of my piece is not $53.65? No. It means dealers will only pay $35 for my tablespoon and thus sets the market wholesale price, which in this case is 65% of 'melt' and very typical. Spot is the price of metal per unit (usually troy ounces). Melt is the value of the metal in the piece. Regardless of what the market will pay, the melt value changes only with the spot price. |
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Moderator
United States
187862 Posts |
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... and I see a big 'incorrect' from bherring (and I think jbuck is agreeing with that incorrect). Yes, I agree with him completely on both his original post and the one above. I think the post above is the best summarization in the thread. |
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Pillar of the Community
United States
539 Posts |
thank you for the summary. I do get it now! May I ask one other thing? Can one of the moderators look at the glossary and perhaps revise the definitions. I don't know if the explanations there are the same ones described here by jbuck and bherring. and if these are the acceptable ones, then perhaps a change/clarification to the glossary is in order. Again, I'm asking not demanding. I just wanted an explanation and I did indeed get a good one. thank you again.
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Moderator
United States
187862 Posts |
I think the definitions are okay, but I will run it by the rest of the staff to see if we can make them clearer.
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Replies: 21 / Views: 6,959 |
Posted 02/08/2011 4:17 pm
