A recent addition to our inventory has generated both keen interest as well as renewed discussion on a quandary quite familiar to most professional coin dealers, namely:
to melt, or not to melt?
The remarkable item in question is a 52mm commemorative medal struck by the private Canadian Wellings Mint in 1965 to commemorate the life of Sir Winston Churchill.
As esoteric as the known bronze and silver strikings of this issue may be, our example is a virtually unknown version in solid 24K gold. Beyond being rare – most private gold issues such as these were struck strictly based on pre-orders, and thus usually number in the single-digits – based on the intense pressures of the booming gold market in the ensuing five decades since the medals were issued, our new acquisition is very possibly the sole surviving example.
So wherein lies the quandary here?
Namely, in the fact that as a fine gold medal of 143 grams, the actual intrinsic (or melt) value of the medal currently sits at just under $12,000. This is hugely-significant, as it presents an almost impossible bench-mark for even the most ardent collector of Churchill medallic history to chase. Thus, a coin dealer in my position is faced with a clear choice between two strategic options: hold out hope that a collector will attach sufficient value and appreciation to the medal that he or she will be willing to offer a price that meets or exceeds this current melt value (while also having the budget to actually do so!), or eliminate risk in a potentially volatile market and send the medal to the refiners.
I raised this issue in casual conversation with a good philatelic colleague earlier this week, and at the mere mention of possibly melting the piece was lightly chided (in my capacity as a representative of the numismatic side of the dealer community) as “never considering the history of items when we are quick to melt things”.
But is it really that simple? One of the key guiding economic principles in business as well as life that has stuck with me over the years is that of “opportunity cost”. In other words, the opportunities forgone and lost as a result of having made one particular decision over another.
Even in the best of times, coin dealers never have enough working capital. The “opportunity” cost of retaining this Churchill medal in inventory is the tying up of a significant investment, in hopes of what would inevitably be a very marginal return at best. Of even greater significance, however, is the risk involved in holding such material in a volatile gold market. To crystallize this point: if we look back five years ago on this date, the spot market value of an ounce of gold was approximately $1,500 CDN, or roughly 40% lower than current rates.
Thus, in the complete absence of any factors that would cause this commemorative medal to be any more or less desirable from the perspective of a collector of such things, its intrinsic value none-the-less increased in this comparatively short period of time by a staggering $4,900. ! Fabulous, one might think, from the perspective of the recent seller, however from the view of a coin dealer whose living depends on making the right decisions in a market area of extremely tight margins, this serves as a reminder of how quickly “speculation” can take an abrupt turn into negative territory.
All this to say, the pressures to melt such a medal, realize a small margin, and preserve the availability of precious limited operating capital is quite intense.
Melting History
But back to my colleague’s chiding comment about “melting history”. Is this really the case in this example? Some purists would enthusiastically concur; but objectively, could this really be said in the case of a privately-issued modern medal, with no official ties to either government or indeed, the commemorated subject matter at hand? As with many subjects, there is certainly room for engaging debate on both sides of the topic. I certainly would never be naive enough to deny that “sins of the historical melting pot” have not and do not occur.
Although only a young collector during the first great silver boom of 1980, etched in my memory are stories of people lining up at coin shops and refinery agents, waiting to melt not only their coins and old tea pots, but also the military and agricultural medals of campaigns and accomplishments of past eras, etc. Without a doubt, the unfortunate seduction of the record-high metal prices of the time did indeed temper the ethics and commonsense of what should and should not have been destined for the melt-pot. Indeed, my current quite passion of collecting sterling cigarette cases began in my early years as a sensitive and somewhat naive coin dealer. In those days (from the late 1980s into the 1990s), silver was cheap. No one cared about these neat and eclectic artifacts, and my conscience simply couldn’t let me send them off to the melt pot. In hindsight, I am glad that I made those decisions which set me on a particular collecting path I continue to enjoy, but honestly – had silver been much higher, and I hadn’t quickly learned to temper my enthusiasm for preservation with the realities of being in business, I would probably today be living under a bridge somewhere with cases of canned beans and my fabulous collection of cigarette cases.
But I have digressed here. Of the numerous similarities we numismatists share with our philatelic colleagues, one of the most striking differences is this issue of intrinsic value.
A stamp dealer who somehow ends up with $10,000 worth of a particular 8-cent stamp in his or her inventory has three clear paths from which to choose. One can either expand one’s Christmas card list to include the population of a small city, and use the stamps in the way they were naturally intended, or simply keep them in stock and hope to piecemeal them all out at a retail level by the time one reaches the point of “Freedom 95”. The only other alternative is to simply blow them out (to the extent that is even possible) at a massive discount, which would presumably result in an economic loss, once cost and effort is all accounted for. What one cannot do is immediately extract oneself from the tie-up of funds by either putting them into the fireplace, or presenting them at the local post office for cashing out at a cent under face (etc.).
As coin dealers, however, we are both fortunate and somewhat cursed to have to consider the bullion-value implications of everything we add or extract from inventory, and make both prudent and calculating timing decisions in how we handle complex coins and medals.
In the case of our impressive and possibly unique Winston Churchill Gold medal, with serial number “4”, I will respect the significance of the subject-matter at hand and the efforts devoted to designing and striking the piece by making a good-faith effort to find it a home in the hands of an appreciative collector (or indeed, an investor, if one is so inclined). At the end of day, however, there remains a 50/50 chance that we will make the strategic and necessary decision to send it to that great “historical melting-pot” in the literal sense. After 30 years of dealing you learn to trust your judgment on such things, and to continuously explore that comfortable balancing point between the stark realities of opportunity cost in business, and the ethical appreciation for the medallic and numismatic history that is all around us.
Sean Isaacs
Alliance Coin & Banknote 
Enjoyed your musings!