Numismatic News - Dec. 12, 2006
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Weights can be confusing in numismatics
By Rich Hall
There I was, sitting in my family room watching the television, when I saw the ad for the first time. It was an ad for the National Collector’s Mint “2001-2006 World Trade Center Gold and Silver Clad Commemorative” medallion. This medallion has the WTC buildings that can pop up from the medallion. The buildings can also be knocked down. I wonder if they realized that? But regardless of how uneasy the theme of this medallion makes me feel, it got me to wondering about a specific part of the advertisement.
According to their advertising, the medallion is clad in 24-karat gold and .999 pure silver recovered from Ground Zero. The advertising leads one to believe that the gold and silver make this item more valuable. So how much is the gold and silver in the medallion worth? Or for that matter, how much is the gold and silver in any of our coins worth?
There are two things that you need to determine this: weight and fineness.
Fineness is the measurement of the purity of the metal. One method of describing the fineness of gold is the karat. This is the measurement of the proportion of gold in an alloy equal to 1/24th part of pure gold. For example, 12-karat gold is 12/24ths pure gold, or 50 percent pure gold. 22-karat gold is 11/12ths pure gold, or 91.7 percent pure gold. 24 karat is 100 percent pure gold (as in the new gold Buffalo bullion coin).
Fineness can also be stated as parts per thousand or 1/1000. For example, you can see $20 double eagles in the 2007 Red Book listed as .900 fine, which is equal to 90 percent pure gold. In the case of Territorial or Private gold, you will sometimes see “887 thous.” or “900 thous.” on the coin itself.
Bringing the two methods together, 22-karat gold is the same as being .917 fine, or 91.7 percent pure gold. This is step one to determine value.
Step 2 is to determine the weight of the metal in the coin. This is a little trickier to understand. There are two different methods of weights used depending on whether it is a precious metal or a base metal. Precious metals (i.e., gold, silver, platinum) use troy weights whereas base metals (i.e., copper, nickel, etc.) use avoirdupois weights, abbreviated avdp. Nickel can be a little trickier because in the early days of the U.S. Mint, it was considered a precious metal and used the troy system. Today nickel is considered a base metal and uses the avoirdupois system.
The most important thing to keep in mind is that regardless of which method of weights is being used, the one measurement that is equal in both systems is the grain, abbreviated gr. (i.e., 1 troy grain = 1 avoirdupois grain).
When looking at the daily spot prices of metals, you will find the precious metals quoted in troy ounces and the base metals per avoirdupois pound. So what you need to know is how many grains make up each of those units.
For troy weights, 1 pound (lb.) = 12 ounces (oz.) = 240 pennyweights (dwt.) = 5,760 grains (gr.).
For avoidupois weights, 1 pound (lb.) = 16 ounces (oz.) = 256 drams (dr.) = 7,000 grains (gr.)
Morgan dollar example
Now let’s go through an example using a Morgan dollar, which is listed in the 2007 Red Book as 412.5 grains, .900 fine silver and .100 fine copper (copper being added to increase the hardness of the coin).
The Morgan dollar is 90 percent silver and 10 percent copper. Using these proportions on the grains, the coin is 371.25 grains of silver and 41.25 grains of copper. Using the troy weight system on the silver, this is equal to 0.773 ounces of pure silver. Using the avoirdupois weight system on the copper, this is equal to 0.006 pounds of copper. Using a recent spot price of $12.16 per ounce of silver and $3.56 per pound of copper, the metal values of the Morgan silver dollar would come to $9.40 of silver and two cents of copper in each Mint State coin.
Here are the equations I used for the Morgan dollar:
Silver equation: (412.5 x 0.9) / (5760/12) = 0.773 troy oz. X $12.16 per oz. = $9.40
Copper equation: (412.5 x 0.1) / 7000 = .006 avdp. lb. X $3.56 per lb. = two cents
$20 double eagle example
How about a $20 Liberty Head double eagle? Again using a recent spot price of gold at $609.60 per troy ounce, the 2007 Red Book lists the double eagle as 516 grains, .900 fine gold, and .100 fine copper. But this is actually inaccurate because legislation allowed for up to five percent of the alloy to be silver, not just copper. So for this example, I will use .900 fine gold, .050 fine silver and .050 fine copper.
After doing the appropriate conversions, the gold content comes to 0.9675 troy ounces of gold, or $589.79 of gold. The silver content comes to 0.05375 troy ounces of silver, or 65 cents of silver. The copper content comes to 0.0037 pounds, or about one cent worth of copper.
Here are the equations I used for the $20 Liberty Head double eagle:
Gold equation: (516 x 0.9) / (5760/12) = 0.9675 troy oz. X $609.60 per oz. = $589.79
Silver equation: (516 x 0.05) / (5760/12) = 0.05375 troy oz. X $12.16 per oz. = 65 cents
Copper equation: (516 x 0.05) / 7000 = .0037 avdp. lb. X $3.56 per lb. = 1 cent
Selling coins to be melted?
Now, just because you know how to calculate the value of the metals in your coins, don’t go running out to sell your 90 percent silver and expect to get these values. Selling these for melt is a whole different story. One dealer that I know of that buys 90 percent silver for melting told me that they basically add up the face value of all the coins, and then multiply it by .715, which, in general, covers the wear on coins along with the dealer’s cut of the proceeds. When they sell it to the refiner, they actually get anywhere from 95 percent to 98 percent of the spot price, depending on the quantity they are selling. But don’t think you can skip the middle man and go straight to the refiner; the minimums required to sell directly to the refiners are pretty high.
Don’t like doing the math? North American Coins and Prices does much of it for you. In the 2007 edition, it lists Actual Silver Weight (ASW) for the Morgan dollar. This is 0.7736. No math required. The Liberty Head $20 gold piece is listed as having 0.9677 ounces of Actual Gold Weight (AGW). All you have to do is multiply these troy weights by the closing price of the metals on any given day.
Sound complicated? Now you know why the Krugerrand and American Eagle bullion coins were originally invented. Their even troy weights makes it easy. If gold closes at $609.60, that’s the value of the gold in the coin.
Belongs at the dollar store?
So, how much is the gold and silver worth in that World Trade Center commemorative “clad in 24 karat gold and .999 pure silver” being marketed by National Collector’s Mint for $29.95? Since both the gold and silver are basically pure with no alloy added, all we need is the weight of each metal. According to the firm’s Web site, both are 15 milligrams (mg.) each of gold and silver. Oops, this needs a new conversion I didn’t cover above.
How many milligrams per troy ounce? If you want to do the math yourself, 1 mg. is equal to approximately 0.0154 grains. Luckily there is a free tool on the Internet to make this easier. If you go to Google’s home page and enter “15 mg in troy oz” into the search box, you will get “15 milligrams = 0.000482261199 troy oz” as the answer. That means there is 29 cents’ worth of gold and approximately a half cent of silver. So, each medallion has less than 30 cents worth of precious metals in it.
Now aren’t you glad you paid attention in math class?
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