So I keep hearing dealers talking about the melt value of a coin. And other people recommending to buy under the price of the current PM value. I was just wondering do people (not dealers) really find coins and bullion for these prices? I'm going to take the Morgan Silver dollar as an example, every store I have been too and the current auction prices has a regular non key date coin for at least $30. At least this is what I have seen, but according to melt value a Morgan dollar is only worth $23.95. Am I to understand that if I was to buy a Morgan dollar coin for $30 I'm overpaying? It sounds a little off to me and if I can really find Morgan dollars for $24 or under I would be buying ten of them everyday. I mean I do know that coins have numismatic value but according to some dealers and bullion buyers, a coin is only worth melt value. And to pay anything above melt value is a bad deal, so which one is it? Is a non key date coin only worth the current melt value of the PM?
Dealers will usually look to buy around melt (or below) and resell with at least a small collectible premium. One thing I've noticed is that even pure silver bullion sells for above bullion value. I mean at the time silver was $32-$33 per ounce, bullion bars and rounds on eBay were selling at $35 an ounce and sometimes higher. The seller ends up getting around bullion value after fees, but the buyer is willingly paying more. Makes you wonder.
Most larger dealers will buy common silver at 90% of melt. Since there is .7734 oz ASW in dollars and .7234 oz ASW in dimes, quarters and halves multiplying the daily silver price by factors of .70 and .65 respectively will arrive at a price most dealers will pay for common silver. Today's silver price is 30.89 so if a dealer bought and sold a common Morgan today the transaction should look something like this. Buy at 30.89*.7=21.62 and sell for 30 which gives a profit margin of 28%. Sounds fair to me.
The coin value and the metal value are 2 different things. Which ever is higher is what the coin will market for. When silver is low, the coin's actual supply and demand value between numismatists is used. As metal value goes up, it starts to overtake the coin's value, starting with the most common coins, and eventually more and more coins in general. Right now, most common coins are worth more as metal than as collectible. IMO, common silver dollars for more than a buck or two over spot is gouging with silver this high... Buyer beware. I know why stealers are marking them so high though. They probably bought most of them when silver was higher a few months ago.
Makes me fond of the days when you could pick common Morgans at $5 each from just about any local dealer. Sigh.
Doesn't make me wonder, it has always been that way and will always be that way. Spot price is meaningless when you get right down to it. The only meaning spot price even has is as a benchmark. And that benchmark is merely used to determine how much above or below that benchmark the precious metal will be sold for at any given point in time. Even on the commercial markets, there is a Bid and there is an Ask. Ask is always higher than spot, Bid is always lower than spot. You cannot buy at spot - never could. Hmmm - I used to buy 'em at the bank for a buck apiece.
I have no problem paying $30-45 for a nice non-key date silver coin. Provided on how it looks, but it just seems that all the stores I visit has a set price no matter what the current silver value is, it was making me wonder if thats just an average price of a silver coin. Thats pretty cool, I guess when silver became a hot commodity the coins went through the roof.
That makes sense, I guess that's why I stick to stuff with colectible value. =) Man, I can't even imagine that. I started buying them around 13 years ago when US silver was going at 5x face value. It pays to have been around longer I guess.
