What Are Melt Value and Spot Price?

Q: What does melt value or spot price mean?

Johnson Matthey bar, gold bullion, reliable bullionA: Bullion is a term that describes a common metal coin or bar. The value is derived almost completely from the price the actual gold or silver content could be sold for on the spot, i.e. the metal’s spot value. Common bullion items are American Eagles, Canadian Maples, Swiss Bars, and Johnson Matt bars. These items are valued at the spot price, plus a small premium for production at the mint and, most likely, a dealer markup.

A key to bullion is that a one-ounce bar has almost an identical value as any other one-ounce coin or bar, even if they were minted at different places in different countries. This is because their value is tied almost entirely to the amount of gold in them. One ounce is one ounce, period.

Numismatics, or collectable coins, typically carry a high premium above the spot or melt value of the coin. In other words, you pay a premium for the story of the coin in addition to the value of the metal. And when it comes time to sell them, most dealers will only pay you for the gold or silver content that could be derived from the coins by melting them down, i.e. the melt value.

The melt value is the value of the actual gold or silver in the coin. Dealers know they can melt a coin and recover a certain amount of money based on that alone. This is often the easiest way to value a coin and what many dealers will do when you try to sell them a collectible coin.