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. . . Continued from page 1

So, now lets go through an example using a $1 Morgan which is listed in the 2007 Redbook as 412.5 grains, .900 silver, and .100 copper (copper being added to increase the hardness of the coin). Basically, this coin is 90% silver and 10% 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 oz. of pure silver. Using the avdp weight system on the copper, this is equal to 0.006 lb. of copper.

Using spot prices from 9/8/2006 of $12.16 per oz. of silver and $3.56 per lb. of copper, the metal values of the morgan silver dollar would come to $9.40 of silver and $0.02 of copper in each mint state coin.

$20 Gold Double Eagle Example

So how about a $20 double eagle? Again using the 9/8/2006 spot prices where gold is $609.60 per troy oz., the 2007 Redbook lists the double eagle as 516 grains, .900 gold, and .100 copper. But this is actually inaccurate because legislation allowed for up to 5% of the alloy to be silver, not just copper. So for this example, I will use .900 gold, .050 silver, and .050 copper.

After doing the appropriate conversions, the gold content comes to 0.9675 troy oz. of gold or $589.79 of gold. The silver content comes to 0.05375 troy oz. of silver or $0.65 of silver. The copper content comes to 0.0037 pounds or about $0.01 of copper.

Here are the equations I used for the $20 double eagle:
Gold equation: (516 x 0.9) / (5760/12) = 0.9675 troy oz.
Silver equation: (516 x 0.05) / (5760/12) = 0.05375 troy oz.
Copper equation: (516 x 0.05) / 7000 = .0037 lb

Everyone Gets a Cut

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% silver and expect to get these values. Selling these for melt value is a whole different story.

One dealer that I know of that buys 90% silver for melting told me that they basically just 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% to 98% of the spot price depending on the quantity of the metal. But don’t think you can skip the middle man and go straight to the refiner. The minimums required to sell directly to them are pretty high.

UPDATE: In December 2006, the U.S. Mint issued a rule that generally prohibits the exportation, melting, or treatment of United States one-cent coins (pennies) and 5-cent coins (nickels). A violation of these restrictions can lead to a fine of up to $10,000, imprisonment of up to 5 years, and forfeiture of the subject coins or metal.

The True Value of the WTC medallion!

Since both the gold and silver are basically pure with no alloy added, all we need is the weight of each metal. According to their website, both are 15 milligrams (mg) each of gold and silver.

Oops, this needs a new conversion I didn’t cover above. How many mg per troy oz?

Well, 1 mg is equal to approximately 0.0154 grains. So, multiply 0.0154 x 15 = 0.231 grains (yes, that’s less than ¼ of a single grain each of silver and gold!). Divide the grains by 480 (grains per troy ounce) = 0.00048 troy oz. each of silver and gold. That means there is 29 cents worth of gold and approximately ½ cent of silver.

So, each $29.95 WTC medallion "clad in 24 KT gold and .999 Pure Silver" has less than 30 cents worth of precious metals in it!

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Update since the original article was posted

Someone who read my original post sent me a real cool way to simplify weight conversions without having to do all the math. If you recall my WTC medallion example, it is clad in 15mg of 24k gold and 15mg of .999 fine silver. Since both metals are basically pure, all I had to do to calculate the weight of each metal was go to Google and type the following into the search box:

15 mg in troy oz

and out came the answer:

15 milligrams = 0.000482261199 troy oz

Multiply that by the price of gold and silver, add the two results together and guess what? It's still only about 30 cents worth of precious metal in the WTC medallion!

Just keep in mind that if you do use this Google calculator, you still have to multiply any answer by the finess of the metal whose value you are calculating.

So consider my original post as an academic exercise in how to do the calculations yourself. Personally, I plan to use the Google calculator going forward.