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- - Questions About Junk Silver? (http://goldismoney.info/forums/showthread.php?t=97752)

Mined Games | 01-05-2007 01:54 PM
Questions About Junk Silver? As far as I know it is legal to melt down 90% coinage for its silver content. Or is this a mistaken assumption? So if it is legal to melt down 90%, why would the treasury enact the recently passed ban on melting pennies and nickels for their metal content? Why would different rules apply to different types of US coinage? And another question- If the POS goes high enough to cause a new wave of people heading to the refiners with their bags of 90%, is there any chance that "junk" silver coins would become scarce enough to become valuable in terms of their numismatic value above and beyond their AG content? Thanks for any thoughts you may have on the matter.

Large Sarge | 01-05-2007 01:57 PM
Re: Questions About Junk Silver? Quote:
Originally Posted by Mined Games (Post 463999) As far as I know it is legal to melt down 90% coinage for its silver content. Or is this a mistaken assumption? So if it is legal to melt down 90%, why would the treasury enact the recently passed ban on melting pennies and nickels for their metal content? Why would different rules apply to different types of US coinage? And another question- If the POS goes high enough to cause a new wave of people heading to the refiners with their bags of 90%, is there any chance that "junk" silver coins would become scarce enough to become valuable in terms of their numismatic value above and beyond their AG content? Thanks for any thoughts you may have on the matter.
good questions, unsure on your first one. regarding the numismatic item, I guess it is theoretically possible, but a LOT of coins would have to melted, and then MS grading would still apply. so if a coin looks like $hit, it would still not be worth a whole lot over melt value IMO

Turner-son | 01-05-2007 02:05 PM
Re: Questions About Junk Silver? It is 100% legal to melt down 90% coinage. The rationale the mint is using to criminalize melting nickels and pennies is that those coins are used in day to day currency transactions, whereas most of the 90% has been removed from circulation. Thus, melting the latter has no effect on the amount of currency (coinage) available for normal transactions.

erichops | 01-05-2007 02:14 PM
Re: Questions About Junk Silver? The reason that 90% is not illegal to melt down is because the treasury does not care about it, 90% is not an essential part of the currency supply anymore. It has been 42 yrs since coinage was made with silver; so, during this time billions of dimes/quarters/ and halves have been made with much cheaper materials. Commodity prices will have to go up by a huge factor from here to make it worthwhile to melt the new, non silver, dimes,quaters and halves. That is why they did not make it illegal to melt any of those denominations. The silver coinage left in circulation is probably at best a thousandth of a percent, and the cost to make a dime/quarter and half is way below its face value. while some would like to make a conspiracy theory out of their decision to ban melting of pennies and nickels, it was simply a financial decision on their part. as it stands right now, it costs them more to produce a penny or nickel than what it is "worth" as money; if people start hoarding them and melting them, then they will have to continually produce ever higher quantities of them to keep enough in circulation. So, for every penny and nickel they make right now, they suffer a "loss"; they had no other choice but to do it. this was stopgap on the part of the treasury; they will sit for awhile and see what happens with commodity prices; if they stay high, they will eventually make the penny and nickel out of other metals that cost much less or, they will simply eliminate them. If they transition into other, cheaper prices metals, after a few years of getting billions of these new coins into circulation, they could care less what you do with your old pennies and nickels, just like they don't care about the 90% now. as far as numismatic value of junk silver if a lot of it was melted, I think that could be a possibility, but, only with coins that are not totally wore out. If you look at old Walkers, most of those look like total crap to me, but, you can get "junk" Franklins that look pretty good. So, I think that some junk 90% could have some numismatic upside, and some not.

erichops | 01-05-2007 04:40 PM
Re: Questions About Junk Silver? I think furious pete makes a good point, 90% has become a niche silver type all to its own. It has "value" to many, other than its silver value, for the SHTF scenario's and survivalist scenarios. And, some people just like to hold their silver in old coin form, which I guess is a form of numismatic value, even though it doesn't trade with an actual numismatice premium. I think it would take considerably higher silver prices to actually get it to the refiners. I doubt that much of it is getting melted in todays world, it just keeps getting traded around. I did see some information from someone awhile ago where an analyst had tried to do a credible analysis of what was melted and what was still out there, but I forgot what his conclusions were.

grapejelly | 01-05-2007 04:46 PM
Re: Questions About Junk Silver? some old-timers on this board have commented that huge volumes went to the smelter 1979 and later when silver really went up. Junk silver is a play on premiums which are currently zero but which can rise quite a bit. In 1999 they did rise a lot due to Y2K fears. And you always have a floor (spot price or slightly below). So it's a good speculation, methinks.

Weatherman | 01-05-2007 10:27 PM
Re: Questions About Junk Silver? Quote:
Originally Posted by furious_pete (Post 464108) I really dont believe that that much 90% has ever been melted (or 40% or even 35% nickels). The government created a public good when it minted those coins and it's not in anyone's favor to destroy them. They are worth much more as coin silver than 100 ounce bars. Purity is guaranteed and they are universally recognized and easily traded forms of silver to any bullion dealer. I keep hearing vague refrences to the "great silver melts" of decades past but never any hard facts to back up the conjecture. I have personally dealt with two refiners who have no problem buying all the 90% or 40% you can throw at them. They dont melt it though - the coins are easier to turn around and resell in bag form, and the margins are just the same as if they melted them down. Some of the cull coins are certainly melted but pretty much everything else is intact. It's far more profitable to melt crap silver that is illiquid (not easily sold) in its current form - bent spoons, damaged silverware, private mint garbage, junk sterling jewelry, etc.
My guess is that when silver again thrusts sharply higher, it will be worthwhile for enterprising people to create really good fakes using silver plated lead. After a few are discovered, all bullion bars or coins will be suspect. That is when the lowly 90% coins will really shine and their premium will substantially improve.

lhslancers | 01-05-2007 10:30 PM
Re: Questions About Junk Silver? Quote:
Originally Posted by grapejelly (Post 464215) some old-timers on this board have commented that huge volumes went to the smelter 1979 and later when silver really went up. Junk silver is a play on premiums which are currently zero but which can rise quite a bit. In 1999 they did rise a lot due to Y2K fears. And you always have a floor (spot price or slightly below). So it's a good speculation, methinks.
If you are worried about a price floor go for 40%. :D

Goldhedge | 01-05-2007 10:34 PM
Re: Questions About Junk Silver? Article I Section 10 of the US Constitution "No State shall make anything but gold and silver coin a tender in payment of debt." To my way of thinking, Silver 'junk' coin is Constitutional money. Why would you want to melt down the only real money in existence???

Lackluster | 01-05-2007 10:37 PM
Re: Questions About Junk Silver? Don't I recall JoeJeweller saying they haul 90% to the smelter by the bushel? I could be wrong, maybe he'll chime in here.

etc | 01-05-2007 10:45 PM
Re: Questions About Junk Silver? > That is when the lowly 90% coins will really shine and their premium will substantially improve. Good point here, same applies to 1 oz rounds, too. Fake silver bars aren't exactly news here - I heard it was done in late 70's, too.

Weatherman | 01-05-2007 11:07 PM
Re: Questions About Junk Silver? Quote:
Originally Posted by etc (Post 464598) > That is when the lowly 90% coins will really shine and their premium will substantially improve. Good point here, same applies to 1 oz rounds, too. Fake silver bars aren't exactly news here - I heard it was done in late 70's, too.
Some 1 oz rounds have already had counterfeit problems. Imagine how much worse that could be when the price of silver is high enough to attract the pros in China or Russia? http://goldismoney.info/forums/showthread.php?t=75216

etc | 01-05-2007 11:15 PM
Re: Questions About Junk Silver? I wasn't aware it was possible or feasible to counterfeit 1 oz generic rounds, I thought they were too thin to withstand any kind of tampering with. Can you cite any examples? That is one advantage of American Silver Eagle - while I don't care for them, they are thinner, and have a wider diameter of almost 40mm vs 38mm of generic 1 oz rounds. (It's kind of a PITA as they don't fit in standard tubes) I do not see how it's possible to forge it without damaging it. How can you? Drill in the side of it, take out some bits of silver and inject some lead? But then you damage the ridge. Unless of course you mint your own with a lower fineness, say only 80% fine, but then you can always check for the weight / size ratio and determine density, not to mention it won't look like 9999 silver. A 9999 silver coin 38mm in diameter must have a certain density, if lead is added, one of the variables will change - e.q. same size, but different weight, or same weight but different size. If you substitute one metal with another, even a more expensive one, one of the size/weight/density variables must change. I expect someone to make machines to probe coinage, take all these measurements like size/weight/densitity, color maybe, and ascertain within a fraction of a second if it is legit. H3ll, if silver coinage ever takes over this paper nonsense, you can come up with truly sophisticated analysis machines, much more so than what's currently intalled in payphones and soda machines. Huge bars OTOH, seem easy to forge even for amateurs, especially if the audence is a silver bar amateur (like me). I would be afraid to accept one as payment because I wouldn't know what to look for to detect a counterfeit as I don't know what a good one looks like. They do have their place of course. Their niche is to settle large transactions between banks, not really for transactions between individuals. Or else if I wanted to mint my own coinage, I would get bars.

grapejelly | 01-05-2007 11:19 PM
Re: Questions About Junk Silver? I think small bars are okay. There are various tests that are not difficult -- specific gravity is easy to measure or calculate (from displacement of liquid and weight) and there is the sound test. I am sure an acoustic test can be done very easily but meanwhile there is the "hold up to the ear and ring it with something metal" test which seems pretty good. There can be excellent counterfeits of silver rounds or small bars or anything but it would be hard/impossible for them to pass the sound test and most won't even have the right specific gravity as this is not so easy. With gold you have to use something like tungsten which is very dense and you again have many issues but it is possible although once again, some sort of acoustic test could be done fairly easily I think.

etc | 01-05-2007 11:25 PM
Re: Questions About Junk Silver? Sound test - got to remember that. Good point.

grapejelly | 01-06-2007 09:32 AM
Re: Questions About Junk Silver? I have a relative who is a physicist and he immediately suggested the sound test. I am sure that as things heat up, someone will come out with a simple inexpensive device to measure the percussive acoustic signature of silver or gold and tell fakes. This should be very easy. The thing is that chemical elements can't be faked all that easily. We're just talking expense here. Obviously you could drill tiny holes into krands or silver rounds and assay if you really had the money to do so. When it pays to counterfeit it will pay to take electronic countermeasures and the counterfeiters don't have a chance, unlike countefeiters of currency (North Korea is said to make a virtually perfect US$100 bill.) You can't fake chemical elements all that easily.

Mined Games | 01-06-2007 09:33 AM
Re: Questions About Junk Silver? Thanks for everyone's great contributions. The reason I thought that so much 90% ended up being melted is because there is a need to accumulate 1000 0z. bars which serve as the exchange medium for the big money silver traders. When Comex warehouses start to drop in inventory and need an injection of liquidity it is these mega bars that are required for transactions. Does this make sense?

grapejelly | 01-06-2007 09:40 AM
Re: Questions About Junk Silver? Quote:
Originally Posted by Mined Games (Post 464878) Thanks for everyone's great contributions. The reason I thought that so much 90% ended up being melted is because there is a need to accumulate 1000 0z. bars which serve as the exchange medium for the big money silver traders. When Comex warehouses start to drop in inventory and need an injection of liquidity it is these mega bars that are required for transactions. Does this make sense?
I imagine it does. Good point. Also, for industrial uses, I am sure buyers want pure silver .999 bars. The 90% junk must be cleaned and refined in order to be salable in the industrial markets.

Satyr | 01-06-2007 11:07 AM
Re: Questions About Junk Silver? Quote:
Originally Posted by Weatherman (Post 464588) My guess is that when silver again thrusts sharply higher, it will be worthwhile for enterprising people to create really good fakes using silver plated lead. After a few are discovered, all bullion bars or coins will be suspect. That is when the lowly 90% coins will really shine and their premium will substantially improve.
I don't think this will be a problem. If you had a piece of lead in the same thickness and diameter as any silver round or numismatic coin, it would be effortless to bend with the mere use of your hands. Lead is far softer than silver. So, fake rounds really wouldn't be a problem. It's the drilled, filled, and capped bars (mostly 100 oz and up) that would be hard to detect. Even if fake rounds were made of steel and plated with silver, a simple magnet to the coin would be a dead give away as to what's really inside.

etc | 01-06-2007 03:36 PM
Re: Questions About Junk Silver? The fact that a paper currency is so much easier to forge than a metallic one underscores yet another advantage of Real Money. A belligerent country could easily economically devastate its opponents by printing tons of currency and throwing it from the helicopter so to speak. Watch a gallon of milk cost $10,000. The FRN is a loosing proposition no matter how you look at it.

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