Saturday, October 20, 2012

Coin Collectors Melting Coins For Precious Metal Value

As you may be aware, the prices for both gold and silver have skyrocketed over the past few years, reaching record high levels. Coin dealers, jewelry stores, and pawn shops are all doing brisk business in buying gold and silver coins from collectors looking to cash in. Many of the gold and silver coins they take in are melted down for their precious metal content.

One advantage to melting down old coins that the pure bullion is much easier to sell than trying to sell the coins themselves to a narrower market of coin collectors. In many cases, the precious metal value of the coin surpasses its value to coin collectors. This is particularly true in cases where the coin is in poor physical condition, making its collectible value low. However, the metal content of the coin is still worth something.

As a result of soaring precious metal markets, the metal in U.S. nickels and pennies is now worth more than the coin's face value. A cent, comprised mainly of zinc, has a scrap metal value of around 1.1 cent, while a nickel (75% copper and 25% nickel) is worth almost 7 cents. As of 2006, it is now illegal to melt down pennies and nickels for their metal content. However, it remains legal to melt other coins containing gold or silver.

Which coins contain precious metals? In the United States, gold coins were in standard circulation until 1933, when other metals replaced gold. Silver coins were produced through 1964, and are still commonly found in pocket change and cash registers across the nation. It is legal to melt down these silver dollars, half dollars, quarters, and dimes for their precious metal content. There are also a number of foreign coins that contain gold, silver, or other precious metals.

The melt value of older coins – in particular, those containing gold or silver – is frequently many times the face value of the coin. For example, a 1942-1945 nickel has a silver value approaching $2. The 1971-1976 Eisenhower Dollar (40% silver) is worth more than $10 in silver content, despite its face value of $1. Meanwhile, a 1849-1854 Liberty Gold Dollar has a face value of $1.00, but a gold value of $80 or higher. If you are interested in investing in coins for their precious metal content, it's best to focus on those containing high percentages of gold or silver, but which are relatively common and therefore don't command a premium when sold to coin collectors.

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As a coin collector, your collection's value may benefit from the melting of precious metal coins even if you don't partake in the practice. This mass melting of U.S. coinage is said to increase the value of the remaining coins. The melting of thousands of coins increases the scarcity of those remaining, driving up their value.

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