High Gold and silver price leading to destruction of coins.

[Austrokiwi]

 I am currently in Jordan.....and have been doing my usual rounds of Jewellery stores looking for the odd rare coin.  Normally each jeweller has a bag of gold and sometimes silver coins in stock. The coins in the bags having been purchased from customers. In the past often most of the coins are Jordanian produced replicas  (most often Sovereigns in 21 kt  and countermarked) with the odd genuine treasure,  but this visit: all but one jeweller have "come up empty".  With the high gold price I expected to see more coins not less. What is now clearto me is with the very High gold price, gold coins are being used as a bullion source, in greater numbers, by manufacturing jewellers.   I am here one more week so will head off to the gold and silver market ( usually a very expensive and not particularly good source of coins).

[Figleaf]

It sounds like many of the re-melted coins are Jordanian imitations. If so, good riddance. Also, the coins that are closest to bullion value should be those with the lowest numismatic value (Kruger rands, pounds). Not too much numismatic damage here either.

Peter

[Austrokiwi]

One trip I showed pictures of coins I was looking for   It became evident that one jeweller had just melted down several 1860 -1870 vintage Australian Sovereigns. Another trip I picked up a very High grade 1874 Greek gold coin.   The replicas are not like chinese fakes by law they are counterstamped and only a fool would mistake them for genuine, they aren#t made to decieve they are made to satisfy traditional demand for gold coins

[Figleaf]

Pretty bad stuff. With all the information available it is surprising that they would destroy value like that.

Peter

[Ukrainii Pyat]

Up until the Lebanese civil war of 1975- weren't a lot of fakes being made there?  If a sovereign is 21 karats, somebody is making a profit on a coin that should be 22 karats.

[Md. Shariful Islam]

Things are opposite here. When the price of silver was cheaper, I could find silver coins in jewllers shops. Now a days they are no longer easy to find. Jewellers who saved them are now making money by asking for abnormal price as they are not available that much or to all jewellers. I guess when the price started rising from $16 an ounce they started melting them and now they have finished the job. We have to wait untill new hoard are discovered.

Islam

[Austrokiwi]

Up until the Lebanese civil war of 1975- weren't a lot of fakes being made there?  If a sovereign is 21 karats, somebody is making a profit on a coin that should be 22 karats.

I can't comment on Lebanon. In Jordan  Gold coins are sold by fine weight not numismatic value. So a 21 Kt replicas are sold at lower prices than a 22 kt genuine coin.  I added one of the jordanian replicas to my collection a few years ago. As for  Figleafs comment suggesting that:with all the information about those high value numismatic coins shouldnt be destroyed :that information just is not known in Amman by the people I buy off......In five years I am yet to find a coin dealer in Jordan. The general fact is people are not aware of value in old coins and it is comparable to the process that sees archaeological treasures ending up being traded to Israel (to be discovered as major rarities).  I would note few western jewellers know the numismatic value of coins

[Dave13]

Hi, I live in the north east of England and I have a local coin shop that used to have silver coins on trays to buy the other week when I was in looking around there was hardly any silver coins the owner actually said there's not many coins because they are melting them down for bullion. I suppose in the due course of time the numanistic value of coins in collections will go up because they must become harder to find.
Dave

[Figleaf]

Yes, in theory when supply goes down, price goes up. In practice, the relation is not so direct. For one thing, prices are sticky downward. Once a price has been set, it is difficult to get it down, even when a new supply of coin comes to market, e.g. from a ship wreck or forgotten archives. Therefore, there may have been supply "hanging over the market" that prevents a price fall. Another thing is a change in demand. If more people start playing electronic games rather than collect coins, demand will fall and price will remain sticky. It can also work the other way. If cataloguers will split a type in two, demand will in principle double.

There is also an emotional factor: people may feel protective over a coin with a story: it was their father's lucky coin, they found it themselves or the patina appeals to them or that scratch makes the portrait look like it's winking. You notice the sale, not what people are doing with their coin.

Peter

[Prosit]

Another factor (I think) is inertia.  I have collected a long time and am used to Silver prices not being a factor.  When I see plain common Silver crown sized coins for $40 US...I just can't convince myself (emotional part) they are worth that.  Fact is at this time, I will not give that high price for a Silver coin I want (inertia), I will collect elsewhere until the price comes down or I get used to the higher prices, neither of which I think will happen soon.  If there are a lot that feel like that, then there is some unmet demand and the current high Silver coin price is actually lower than it could be.

Complicated and a lot of interacting factors.

Dale

Yes, in theory when supply goes down, price goes up. In practice, the relation is not so direct. For one thing, prices are sticky downward. Once a price has been set, it is difficult to get it down, even when a new supply of coin comes to market, e.g. from a ship wreck or forgotten archives. Therefore, there may have been supply "hanging over the market" that prevents a price fall. Another thing is a change in demand. If more people start playing electronic games rather than collect coins, demand will fall and price will remain sticky. It can also work the other way. If cataloguers will split a type in two, demand will in principle double.

There is also an emotional factor: people may feel protective over a coin with a story: it was their father's lucky coin, they found it themselves or the patina appeals to them or that scratch makes the portrait look like it's winking. You notice the sale, not what people are doing with their coin.

Peter