value of coin v. value of metal

Let’s say a coin’s precious metal content is valued higher than its denomination.
A retailer would accept it at face value only.
A numismitist would take metal content, condition, rarity, etc., into account before assessing market value.
How does a bank value it?

Face value only.

Why would the bank be different than a retailer?

Anyway, due to Gresham’s Law (bad money drives out good), the bank will never or rarely see the coins. People will hoard them or sell them for their metal content.

Look to see how many silver or gold coins are still in circulation.

Right next to ZIP!

The first person to notice it is silver or gold??? will take it out of circulation. Very few silver and NO GOLD coins get into circulation as they are held by those who know their value.

This actually happened in Canada in the 70’s thanks to the Hunt Brothers. When they drove the price of silver to $50/oz. (real money in those days) many older Canadian coins - quarters and dimes - were actually worth more for their silver. People began to hoard them and sell the to unscrupulous dealers.

It was illegal to melt down those coins in Canada, but not in the USA. The Canadians and Americans had an agreement that they would turn back people caught bringing large quantities of coins into the US. (and alert the Canadians). I remember a newspaper report of one fellow who had hidden the coins in his car’s engine compartment and the bag started leaking. When he was turned back, he left a trail of loose change back to the Canadian side.

However, most of the meltdown worked, I assume. Nowadays, it is very very rare to find quarters or dimes circulating that pre-date about 1968 when the silver content was taken out. Before that, I remember you would find quarters so old (20’s or earlier) they were almost worn smooth and illegible. As for nickels, you can still find the ones dating back to before QEII - including the steel ones from WWII when nickel was in short supply.

Even coin dealers/collectors don’t necessarily add collector value when buying these days. I just sold nearly my entire collection, and because gold and silver are at such high prices now, few people are willing to pay a premium on top of the melt value unless the coin is truly scarce or is slab graded a minimum of MS-63.

It’s not just gold and silver. This happened just a few years ago when the zinc content of pennies outstripped their face value. Some guy bought truckloads and melted them down. The government quickly put a stop to it. I believe that nickels are the current loss leader for the US Mint. However, this was a couple years ago. Maybe the price of zinc has fallen since then.

It was the price of copper that went up and caused a law to be made that you couldn’t melt cents or nickels.


Nitwit Nate has a silver quarter that’s worth $.25.

Collector Clyde has a silver quarter that’s worth $.25 plus some combination of personal/community fascination, historical interest and at least some, but not necessarily all, of the silver’s value.

Felon Felix has a silver quarter that’s worth its weight in silver.


What’s Hoarder Harold’s silver quarter worth? Assume that neither he nor his hoarding progeny will ever relinquish it to Nate, Clyde, Felix or their like-minded kin. If it’s lost to the world, does it lose its value in the world?


Not too many of the coins are melted down. Well, at least in the USA. Dudes wanting to buy silver bullion often buy bags of circulated silver coins. Same with gold coins, to a lesser extent. Even if the coins have no collector value, a coin with $5 of silver in it is worth slightly more than a lump of silver (both having the same amount of filver), or to put it another way, a bag of coins containing $1000 worth of silver will sell for slightly more than a silver bar with the same amount of silver.

I’d beg to differ. I’ll wager that 90%+ of all silver coins sold for their silver value in the last year have been melted.

Why would Clyde’s quarter not have at least all of the silver’s value?

As money, it has value as a medium of exchange. As a collector’s item it has numismatic value. As a commodity, it has market value. But Harold’s quarter is only worth the value Harold gives to walking into his vault and looking at it, until either Harold offers it for sale, or someone steals it and Harold claims it on his insurance.

Good call. Because I misread Chefguy…

Not sure how I got confused. Chefguy is perfectly clear.

From what my dealer was saying, it sounds like China is buying up a lot of it.

So in the days of gold coinage, did the gold value of the coin correspond 1:1 to the face value of the coin?

IOW, would a $5 gold coin contain $5 worth of gold (more or less)?

That may be true, but China doesn’t want bags of US silver coins. After the coins get melted, the refinery turns the silver into .999 pure bars(or whatever is needed by the end user).


But, when the world price of gold went past that point, you could sell the $5 gold coin for more–say perhaps $6. That’s why the US(and others) went off the gold standard.

Yeah, that’s what I meant. Either that, or they’re buying back older Pandas and commems. He wasn’t real clear on it.

Wait a minute. Doesn’t the gold standard mean that the value of the dollar itself, as a unit, is tied to the value of gold? “Dollars” are a measurement of gold, in effect. A five-dollar gold piece can’t be anything but five dollars worth of gold.