The new paradigm in coin valuations - PMV

[Guest Guest]

With the ever changing (normally upward) prices on physical silver and gold there is one crucial valuation factor completely overlooked in current coin books.

 

It would be really interesting to see how, for example, the price of silver today determines the actual price commoner coins like the 1952 crown is sold for.

 

In current coin books the value suggested on lower grades of this coin is well below the value of silver content in the coin.

 

What would be really valuable with an online catalogue is a "floor" put on the lower valued coins (grades) based on the day to day value of the silver or gold content they have when the value of the metal (PMV) exceeds the numismatic value.

 

As this "floor" rises so fewer and fewer South African coins (like Kruger and Union) will have REAL numismatic or collectable value based on the demand amount of precious metal in even a rare coin.

 

This is a reality we cannot escape - it is simply a reality, and we have to accept it. As inflation grows so the traditionally common silver and gold coins will, as a result, have a rising value in their precious metal content that is the lowest price you can expect to get on that coin if you sell it.

 

If we look at Hern's 2008 book on coins. The 1952 UNC Crown is valued at R70 and EF R55 .. and lower grades not even valued (BV). Try and buy one on BoB today for under R100 even in VG!

 

The 1952 UNC Crown is probably the stand out example of what I am talking about - as it is seen by older collectors as "very common" because nearly two million coins were struck and (paradoxically) because of its large size containing a large amount of silver (about 14 grammes or about a gramme under half an ounce of silver). As the silver price rises over US$30 an ounce (well over R200) you don't have to be a mathematician to see the glaring discrepancy in printed coin catalogues!

 

In the past some have argued that because the silver is only 50% the price paid will be discounted. As someone who sold a bucket load of silver coins back in 1980 for a fabulous profit I can tell you that that claim is completely unfounded!

 

The new paradigm...

When it comes to silver and gold coins I believe a new measure of value needs to be added - PMV - or Precious Metal Value. Hern refers to BV which I guess means Base Value.. PMV is far more accurate.

 

For example a gold sovereign right now has over US$320 of gold in it - why would you ever sell one for less? So the PMV value of any South African gold sovereign today is US$322 regardless of grade or year. (In other words any gold sovereigns valued below US$322 for their numismatic value would be seen as PMV).

 

A well designed on line catalogue should have PMV attached to any numismatic value on any grade of a coin that falls below the precious metal content of the coin (gold or silver). So any coin that is above the PMV value one day and below it the next would automatically have PMV replacing its numismatic value as long as the value of the precious metal content was above the Numismatic value.

 

The PMV value would be linked to its actual precious metal value at that time.

 

You would then have effectively two collectors markets... securing coins above PMV OR getting "cheap" coins at PMV prices regardless of year or grade. This would give new collectors a wonderful and inexpensive basis on which to start building their own coin collections. As new collectors gained confidence they could then start buying in the ABOVE PMV market and face less chance of being ripped off as they learn about their hobby.

 

PS You can't do this in a printed catalogue or with coins that are not in silver or gold... that's the BV (Base Value) market!

 

Kind regards

 

Scott Balson

Edited February 16, 2011 by ndoa18

[eZethu Coins 10]

I might be wrong but always though Hern's reference to BV means Bullion Value.

[Guest Guest]

What is bullion?

 

Could be but looked through the catalogue and could find no reference to BV. According to the dictionary BULLION is UNCOINED metal...

 

see: Definition of Bullion

 

Regardless, it is hardly bullion when a tickey is involved, a small amount of precious metal (silver) that could be used in the electronics to produce 1,000 IPODs, yes!

 

Kind regards

 

Scott Balson

Edited February 16, 2011 by ndoa18

[Cold Sea 6]

Hi Scott, am I correct in saying that your tacit suggestion is that if you cannot get "PMV", then rather melt it down.

[Guest Guest]

PMV - Precious Metal Value

 

Hi Derrick

 

Not at all!

 

You will always be able to get PMV because that is the inherent value of any coin (silver or gold).

 

PMV coins will become the spawning ground for new collectors ... just holding the PMV coins guarantees that they have a floor in redeemable value - based on the silver and gold price (which is continually going up). As a result PMV coins are the safest and most practical way for new collectors to start building a collection without any of the normal risks associated with collecting.

 

From a 1952 B UNC Crown to a 1938 shilling in VG.

 

What I am saying is two things.

 

1) The PMV coins are a great place to start your hobby and

2) PMV is a growing investment (perhaps better than some rare coins if you put thousands of rands into bulk buying of silver at PMV prices).

 

If you look at BoB you will have seen number of collections of "cheap" silver coins for sale - all with the weight of silver listed in them. Most are now starting to be sold at premiums on the PMV value.

 

Let me give you a couple of recent examples: Collections & Lots - 500 grams of Silver coins Lot No 2 was sold for R1,420.00 on 30 Jan at 17:46 by coins4africa in Stilfontein (ID:31769696) (250g of silver coin sold for just over R1,420).. that's about eight ounces of silver sold for just about R180 per ounce .. what a bargain - and what a great way to start a collection!

 

or:

 

http://www.bidorbuy.co.za/jsp/item/Item.jsp?Trade_TradeId=32939376 (12 crowns sold in one lot at R119 each or R1,428 for the set - only missing 1954 and 1959) which comes to about R254 per ounce - marginally over the PMV value.

 

I was an active bidder in both these auctions and only the high cost of overseas postage on the weight stopped me bidding higher.

 

I have many kilos of old silver South African coins now - mostly (by weight) under PMV. If I was a new collector and had the winning bid on the first example above I would have the makings of a collection without any downward risk!

 

Kind regards

 

Scott Balson

Edited February 16, 2011 by ndoa18

[Cold Sea 6]

Hi Scott,

 

I hear your argument, but you are referring to smelting values and not collectors value. We do not buy collectible silver cutlery and tea sets by weight, but by collectable value. The collectors will determine the real collectors value over time, not by quoting Kitco prices on an hourly basis. If you want to collect silver, then buy fine ounce bars. Your proposed method will only end up in bucket loads being smelted at a discount price in any case, as a reserve price will not do with these items.

Edited February 17, 2011 by Cold Sea

[Pierre_Henri 35]

Be VERY careful...

 

Hi Scott

 

BV = Bullion Value

 

That is the melting value of the silver (or gold) on that day.

 

But be very careful...

 

In your example of a good silver bullion buy here ...

 

Collections & Lots - 500 grams of Silver coins Lot No 2 was sold for R1,420.00 on 30 Jan at 17:46 by coins4africa in Stilfontein (ID:31769696)

 

Look very closely - some of the coins are NOT SILVER - they are base metal coins. In the top row, for example, two if not more, of the coins are nickel and NOT silver coins.

 

So the seller stating a weight for the lot is on VERY SHAKY ground - as he or she is selling come coins that, how should I put it nicely, are not pulling their weight ...

 

Pierre

Edited February 17, 2011 by Pierre_Henri

[republikein 10]

I cannot agree more!

[Guest Guest]

Mixed lots

 

Pierre Says

Look very closely - some of the coins are NOT SILVER - they are base metal coins. In the top row, for example, two if not more, of the coins are nickel and NOT silver coins.

 

Hi Pierre

 

I totally agree with you - even still the price paid would be lower than the PMV of all the coins as a lot.. which include a Kruger coin... as a new collector who cares if it is not UNC... actually having a Kruger coin (holding history in your hand) is one of the great drawcards for new collectors.

 

The sale price of R1,420 probably takes into account the handful of non silver coins in the lot and I do agree the seller incorrectly described the total package!

 

Perhaps that was a less than perfect example... but I believe the concept works!

 

Kind regards

 

Scott Balson

Edited February 17, 2011 by ndoa18

[jwither 12]

The US "Red Book" lists the melt value of US coins using one or possible several different silver prices. But since the Hern catalogue already states the silver weight of every coin, its easy enough for anyone to perform the calculation on their own, regardles sof what in accurate values are listed.

[Guest Guest]

If I had an online coin catalogue ...

 

Hi John

 

I do agree with what you say but printed books are outdated technology when it comes to coin collecting.

 

Back in 1979/80 I used to get the newspaper every day and see where the silver price was going... by the time I read the price it was many hours out of date.

 

Today we live in the now and I refer to online silver and gold prices many times each day - right now silver is close to its 30 year record high at over US$31.70. Thank G-o-d.. I can't imagine waiting for the newspaper each morning!

 

PMV....

Precious Metal Value is, I think you will agree, very different to bullion value (BV - Hern). A coin can never be BULLION grade because, at best, it can only be 80% silver in South African coinage. No bullion is ever sold at such low grades.

 

Thus PMV.. (even the dictionary supports my argument - BULLION IS NOT COINS).

 

Let's think ahead a bit...

 

On Heritage I can list all my valuable coins and check out info on them online, based on recent auctions, through their website. Useful stuff.. but only a part of the story...

 

Knowing computer databases (as I do) I see an enormous evolution for a new breed of online coin catalogues.

 

Collectors will be able to list many thousands of coins by year and estimated grade (if not slabbed).

 

As the PMV rises so the automatic valuation of their entire collection will be summarised with a single ever changing value - just like the Perth Mint do right now on their Bullion Wealth Tracker that we both currently use. Where the PMV exceeds the numismatic value this will automatically take over - ie you don't have to laboriously go through Hern's book and work out the value of each individual coin in your collection. Why do you think personal online trading has taken over from the old computer spread sheets investors used to rely on - which were preceded by hours of laborious (there's that word again) calculations using a calculator and paper.. Convenience and immediacy ...

 

Can you think of one serious collector/investor who would not jump at the opportunity of having the automated facility of updating the value of their entire collection each day on tap? From day to day he/she would have a REALISTIC valuation of their hobby/investment.

 

I can't... but then I am just a creative forward thinker

 

I rest my case when I suggest the online likes of BoB, Heritage and eBay have changed forever the face of coin collecting... convenience and immediacy...

 

Kind regards

 

Scott Balson

Edited February 18, 2011 by ndoa18

[Cold Sea 6]

Smelting or melting

 

If you happen to Melt your 1960 five shillings, you will end up with a blob of half copper and half silver.

 

However, if you happen to Smelt your five shillings, you will go through a process of seperating the metals, and end up with a purer blob of silver. Not sure what is meant by melt value, but smelting would attract process costs.

Edited February 18, 2011 by Cold Sea

[Guest Guest]

Don't try this at home kids

 

What is the melting point and boiling point of silver?

 

melting point = 1235.08 K, 962 ºC, 1571 ºF

boiling point = 2485.15 K, 2212 ºC, 3571 ºF

Source: Answers.com - What is the melting point and boiling point of silver

 

Kind regards

 

Scott Balson

[Pierre_Henri 35]

Stop the lorry - be careful ....

 

 

A coin can never be BULLION grade because, at best, it can only be 80% silver in South African coinage. No bullion is ever sold at such low grades.

 

Scott Balson

 

Scott

 

Things in SA are (I think) different to Australia.

 

When selling silver in the South Africa - the best price one can get from the big buying companies (as far as I know) is currently R3.50 per gram for 80% silver. That is about half the "newspaper" price (the international spot price for silver).

 

They (the smelters) say that there are so much costs involved in the refinery of the silver (so that they can resell it to say the jewellers) that paying anything more than 50% of the true value (spot silver price) would be NOT worth their while.

 

So even coin dealers are currently selling to these "smelters" at hopefully 50% of true spot silver prices because that is the best they can do.

 

So when investing in silver, one must take these "other costs" into account, or otherwise you will burn your fingers so badly, that you will NEVER touch precious metals again for a VERY, VERY LONG TIME.

 

Do not read me wrong - gold and silver are a good investment on the long run, but take GREAT care everyone ...

 

Pierre

[Guest Guest]

Counter offer to refinery sales....

 

Hi Pierre

 

Maybe things have changed in SA... I remember in 1980 I got the PMV for all my silver - not a %. That was the height of the silver squeeze when Bunker Hunt was trying to corner the market.

 

If I was going to sell silver coin (50% and 80%) I would probably do so on eBay where prices on coins nearly always exceed their PMV. Selling to a refinery is, in my view, like buying from a boutique shoe shop - they both take massive profits.

 

If anyone has bulk silver they want to sell to refinery at 50% of true silver spot prices I will here and now offer a 20% premium of 60% and pay postage to Australia and still expect to make a very handsome profit!

 

Kind regards

 

Scott Balson

Edited February 18, 2011 by ndoa18

[jwither 12]

Scott

 

Things in SA are (I think) different to Australia.

 

When selling silver in the South Africa - the best price one can get from the big buying companies (as far as I know) is currently R3.50 per gram for 80% silver. That is about half the "newspaper" price (the international spot price for silver).

 

They (the smelters) say that there are so much costs involved in the refinery of the silver (so that they can resell it to say the jewellers) that paying anything more than 50% of the true value (spot silver price) would be NOT worth their while.

 

So even coin dealers are currently selling to these "smelters" at hopefully 50% of true spot silver prices because that is the best they can do.

 

So when investing in silver, one must take these "other costs" into account, or otherwise you will burn your fingers so badly, that you will NEVER touch precious metals again for a VERY, VERY LONG TIME.

 

Do not read me wrong - gold and silver are a good investment on the long run, but take GREAT care everyone ...

 

Pierre

 

This is why I would not buy coins like this for their metal content or any other coin that is not liquid as a bullion substitute. I consider SA coins a poor bullion substitute as I do most others. The price offers you quote are pathetic and personally, I think anyone who sells for that price is getting ripped off. Recently, I sold a small group of primarily SA Union low grade silver coins for about 80% of spot. How is it that these coins sell for more in the US than SA? It does not make any sense because these coins are also melted and not sold to collectors because no one would want them.

[collectors investments 10]

Hi Pierre

 

In Johannesburg there are a number of refineries (smelters) that pay 15% under the spot price for lower grade silver (50 & 80%).Higher grade silver (90%+) they pay 10% under spot.

 

They require you to have at least a few kilograms of silver to do business.They are not going to deal with every member of the public who has a handfull of silver coins.

 

The cost of refining has to be taken into consideration when investing in silver coins.

 

The % refining cost is much less for gold(3 or 4 %).If silver rises substantially in value hopefully we will see a decline in the % cost of refining silver.

 

Kind Regards

 

Bruce

[Guest Guest]

Pmv

 

Damn looks like no-one is going to take up my 60% offer now.. :wink:

 

Seriously, I have no doubt that the PMV of any silver or gold coin is a realistic base value for that coin regardless of grade or denomination. In just a few weeks silver has climbed from US$26.50 to over US$32.50 - a jump of US$6... or over 20%. In my view silver will still jump by at least 100% this year.

 

Kind regards

 

Scott Balson

Edited February 19, 2011 by ndoa18

[Cold Sea 6]

PMV on Ebay

 

Scott says

If I was going to sell silver coin (50% and 80%) I would probably do so on eBay where prices on coins nearly always exceed their PMV

 

If you happened to be a respected eBay seller, selling individual coins, you may well get melt plus a premium.

 

Jwither's and Bruce's first hand account of the junk market, as well as Pierre's red flag tells us that start-up collectors should tread carefully when buying small bulk.

Edited February 20, 2011 by Cold Sea

[Guest Guest]

Using PMV to kick start a hobby

 

Hi Derrick

 

Jwither's and Bruce's first hand account of the junk market, as well as Pierre's red flag tells us that start-up collectors should tread carefully when buying small bulk.

I can't think of a more secure way of starting a coin collection than buying fifty plus old South African silver coins for near PMV.

 

As you mention single coins often get above PMV and then there is the postage issue.

 

If someone can think of a less risky way of kicking off your hobby I would love to hear it!

 

Kind regards

 

Scott Balson