Junk Silver Coins
Silver coin melt value is most often used in connection with junk silver coins.
Silver Bullion Baseline PriceThe silver spot price and London fix price for silver are benchmark (wholesale) prices of 1,000 oz. silver bullion bars with a three-nines-fine (99.9%) silver bullion fineness (purity). The spot price emanates from COMEX silver futures agreements ... that specify 5,000 oz. of silver. London Bullion Market Association (LBMA) rules stipulate that a good delivery silver bar weigh 1,000 oz. (silver fix price). Please visit the following pages to learn how these two primary silver bullion benchmark prices are discovered:
Do you use silver coin melt value calculators on the Internet?
Some websites use uncirculated silver weights of junk silver coins to calculate silver values. Due to years of handling, formerly-circulated silver coins contain less silver than when they were minted.
For example, the silver weight of an uncirculated pre-1965 US dime is 0.0723 troy oz. However, the silver weight (average) of a circulated pre-1965 dime is 0.0715 troy oz.
Sometimes current spot prices are used to estimate silver coin values. This approach assumes refiners are willing to pay spot prices for scrap silver coins. That is not the case. They must pay less than the spot prices if they want to remain profitable.
If one or both of the errors listed above are incorporated into a silver coin melt value calculation, the resulting price will likely be higher than a refiner is willing to pay.
Hierarchy of Silver Bullion Coin ValuesTypically silver bullion coin prices fall within the hierarchy listed below. Silver coin prices, beginning with the least value and progressing to the highest value, are as follow:
Dealer PricesSilver bullion dealers use the spot price and daily fix price as baselines to price their products. If you monitor dealer prices, you’ll notice that they change in accordance with the spot or daily fix price. However, dealer prices are a little higher since they add a premium to the benchmark price to cover their costs and make a profit. Bid (buy) and ask (sell) prices quoted by silver bullion dealers vary by dealer. A buy price is what an individual dealer is willing to pay for a specific silver bullion coin. The ask price is a dealer’s selling price for a particular silver coin. Visit here for more details concerning how silver bullion dealer prices are determined.
Refiners - Silver Coin Melt ValueRefiners also use the silver spot price as a benchmark to price scrap silver coins. Their buy prices, as you probably expect, are below spot prices. Since these silver coins are alloys, refiners also incorporate the copper spot price into their calculations. The current manganese price is also used if they are buying Jefferson Wartime Nickels.
Junk silver coins are alloy coins. This means they contain copper in addition to silver. In the case of Jefferson Wartime Nickels, a second alloy - manganese - was added during the production process.For example, let’s assume you own 1,000 pre-1965 US dimes (90% silver, 10% copper) with a total face value of $100 ($.10 x 1,000). Each dime in average circulated condition contains 0.0715 troy ounces of silver. Therefore, the gross silver weight of your dimes is 71.5 ounces (1,000 x 0.0715). Please visit here for details about the silver content in coins.
At this moment in time on June 18, 2012, the silver spot price is $28.68. If that price is multiplied by the gross silver weight ($28.68 x 71.5) the silver spot value is $2,050.62. Then add $1.871 for the copper content and the total price is $2,052.49. Now we have the baseline value of your coins.
Junk Silver Coins - Mercury Dimes
Note:1 A pre-1965 dime contains 0.008 troy ounces of copper. So 1,000
dimes have 8 ounces of copper (1,000 x 0.008). Eight troy
ounces equal 0.548571 pounds.
The price of copper is $3.40 per pound. If the copper weight in
pounds (0.548571) is multiplied by the copper price ($3.40), the
copper spot value (on June 18, 2012) is $1.87.
Is It Legal To Melt US Junk Silver Coins?I have not read any US Mint (Treasury Department) rules that explicitly permit the melting of pre-1965 formerly-circulated junk silver coins. However, the Professional Coin Grading Service (PCGS) website has a good article about the massive numbers of junk silver coins melted a few decades ago and its impact on silver coin collecting. One could deduce from the article that melting junk silver coins is allowed. Nevertheless I would certainly want convincing proof from the refiner that it’s currently permitted. Mandates can and do change. An interim ruling was issued by the US Mint in December 2006, and affirmed it in October 2007, making it illegal to melt currently-circulating pennies and nickels. The US Mint took this action because the coins’ base metals had become more valuable than their face values (i.e. 1-cent, 5-cents). People were removing pennies and nickels from circulation and selling them to others who melted them to harvest their base metal contents.
Another reason, in addition to the PCGS article, I suspect melting junk silver coins is okay is the US Mint’s exemption of Jefferson Wartime Nickels from its melting prohibition ruling. See language in grey box below.
Jefferson Wartime Nickels
31 CFR Part 82.2 Exceptions (c) (3) (d):
The prohibition contained in § 82.1 against the exportation, melting, or treatment of 5-cent coins shall not apply to 5-cent coins inscribed with the years 1942, 1943, 1944, or 1945 that are composed of an alloy comprising copper, silver and manganese.
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