To Melt Or Not To Melt?

Each country has different laws regarding if and when it is legal to deface, mutilate, melt down or otherwise render unfit for circulation the coinage.

In Britain, as in most monarchies, it has traditionally been seen as a serious offence; I believe it was still considered treason (punishable by death) to deface the king's portrait on a coin until the 1800s. Britain's current law, which you quoted above, is a legacy of those times. Many of the Commonwealth Realms (Canada, Australia, New Zealand, etc), whose laws are based on British Common Law, have similarly strict anti-melting laws in place.

America, on the other hand, has surprisingly lax laws. Anyone can do whatever they wish to their coins, with no penalty; the only exceptions on the books at the moment are placing advertising stickers on coins and the current ban on melting 1 cent and 5 cent coins.

Laws of one country are completely irrelevant outside that country's borders. Once British coins leave British territory, they are no longer protected by British law. Anyone in America can melt British coins down until the cows come home, with no fears of a knock on the door by MI6 agents. American citizens only have to obey American laws, not British ones, and American laws don't say anything about not melting British coins down. Here in Australia I can even melt down non-Australian coins from other Commonwealth Realms, because there's no Australian law saying I can't. This is the case in every other country, including Britain, I am sure.

Even British citizens can travel to America and melt down British coins there, with no fears of reprisal. If Britain has laws prohibiting you taking British coins with you with the intent to deface them, then you'd better make sure you don't do that; America has such laws in place regarding 1 cent and 5 cent coins, so it wouldn't surprise me. An analogy: many countries in the Middle East have laws against alcohol consumption. Does anyone outside those countries feel compelled to obey their anti-alcohol laws? No. And citizens of those countries can travel abroad and drink as much as they please, without fear of arrest on their return home.

As for your main point, that we as collectors should mourn every time a coin is melted, it is true up to a point. Sure, future generations of collectors are going to curse our bones for allowing all these precious coins to be melted down, but they're not here right now - we are. Protecting the coins that exist today is our responsibility, and if we're serious about it then we've got to put our money where our mouth is. If the collectors of today aren't prepared to pay substantially above bullion value for "melt-grade" coins, then to the melters they will inevitably go. This is the way it has been, ever since coinage was invented.

Greshams law at work in numismatics.

Wanting silver (and gold) is not greed. Not by any stretch of the imagination. It is common sense survival, preserving ones earned wealth.

The price of silver and gold are not going up, the buying power of your fiat Federal Reserve Note is going down. It has lost 98% of it's buying power in less than a century, thanks to the Federal Reserve.

Ponder that for a moment. For what you could buy a 100 of for X amount of $ in 1913, you can now only buy 2 of with that same X amount of $...

Now compare the cost in ounces of silver those items cost, both in 1913 and 2011...

I understand your passion for numismatics. I love old coins too. I also love antiques and classic cars. It pains me to see historical objects and vehicles destroyed, but that's life. If you want to direct your anger at anybody, direct it towards your government. They are the ones who debased your dollar so severely that your coinage is worth more as scrap than its stated face value.

I just realized I drifted this thread a bit off course, my bad. Sap summed it up basically perfect, can't really add anything. One point he made I feel deserves reiteration...




That said, there is a whole lot more hoarding going on than actual melting right now (that could very well change). The people who are hoarding don't want to exchange their precious metals for fiat paper dollars. That would defeat the purpose of owning precious metals.

I think part of the confusion here lies in the multiple meanings of "melt". Yes, it can mean turning a coin into a raw metal form but it is also frequently used to indicate spot silver value, aka "melt value". A coin still has a melt value regardless of whether it is ever melted. The silver boom of 1979-80 did see the mass melting of many US coins but the number melted by private hands pales in comparison to the number of coins melted by the US Mint through the years.

Nowadays, few coins are actually melted. Face value multiplier bags have become a very popular way of investing in silver bullion. The coins have a known weight and purity so there is no need for assaying expenses and it is easier to sell off coins than it is 100-1000 ounce bars. As for the melting of foreign coins by US collectors, that does not happen too much either due to non-standardized silver quantities in world coins that would lead to higher assay costs.

As long as there is fear about our currency we will see high prices for bullion. The trick is knowing when to jump ship.