Melting makes coins rarer, but does it matter?

(Image courtesy www.pcgsblog.com)

The spot price of gold and silver has been impacting the price of many collectible but not truly rare coins for years. Now it appears there is a growing trend among some coin dealers to abandon numismatic coins entirely, focusing on bullion trades instead. These dealers no longer put much effort into selling coins with modest collector premiums, simply sending them to be melted. This creates an interesting scenario. Future rarity is being created, especially among coins issued in recent years.

Yes, circulating silver coins of 1964 and earlier have been melted for years. This implies some coins that once were common should become rare. But it hasn’t happened. Supply appears to be endless, but it isn’t. There is presently a declining number of collectors, which means there is less demand for the surviving examples, encouraging melting even more of them.

This will change when the pendulum swings in the other direction, which it historically does. Part of the problem is the vast number of continuing made-for-collector pieces being issued by the U.S. and foreign mints with no regard for any secondary market. Another problem is the rise of digital currencies, which are used by younger people. These same individuals have no interest in using physical cash. Why would they collect it? There are challenges for the future, but there are a lot of people who still use and want to use physical cash. The challenge for organized coin collecting is to attract them.