Coins as an Investment? An Inheritance? Part II

Silver dollars like these rose in price from $1.80 to $50 from January 1979 to late 1979 causing many great coins to be melted down for their intrinsic value.
Silver dollars like these rose in price from $1.80 to $50 from January 1979 to late 1979 causing many great coins to be melted down for their intrinsic value.

I have found coins to be both a good investment and effective as a hedge against inflation. Looking at the value of the dollar today, as opposed to its superior purchasing power during the Clinton years, it is rather depressing. Land and solid assets have proved to have been a good bet. Bullion buyers are now reaping great rewards as did the gold bugs and silver traders of 28 years ago.

In bad times, bullion is a good bet. The tricky part is knowing when to buy and when to sell. Dumb luck was the key to my little successes in late 1979 and early 1980. In late summer 1979, my cousin was in Texas on business for his company. He called me and said, "Jimmy, there is a lot of talk about silver and the Hunt Brothers. They say that silver is going sky high, and we should buy all we can."

Gold coins like these rose in price from $35 per ounce to $1,000 an ounce between 1971 and late 1979. Then it fell again to below $200 an ounce in bullion value. Too many
Gold coins like these rose in price from $35 per ounce to $1,000 an ounce between 1971 and late 1979. Then it fell again to below $200 an ounce in bullion value. Too many of these went into the melting pot.


One ounce silver bars and rounds were selling for $1.80 plus a little for handling. I already had a collection that contained about $1,000 in silver at face value. I bought up more material as it came my way from local small-time dealers, who were part-timers for the most part. My family had been in the antiques business for a while at this point. Now that I think of it, we had been at it for 17 years by 1979.

During the course of time, we had picked up a lot of scrap silver and just tucked it away. In those days, people were selling silver flatware services for six, eight, or twelve people for next to nothing. Modern people had no time to polish silver, so they stored it away or sold it. Ugly or generic patterns of knives, forks, and spoons could be had for 25˘ to $1 at almost any flea market. In Norton, Massachusetts, there was a huge weekly flea market held every Sunday. One of my friends found two Paul Revere spoons there.

During the 1960s, I cherry picked Norton and other flea markets buying a Calder pewter porringer for $15 (which I later sold for $375), a portrait of Lafayette painted by Gilbert Stuart in 1824 or 1825 for $15, samplers for $10 to $25 dollars, nice candlesticks for $50 and a nice tiger maple spoon-back Queen Anne chair for $60. I also bought early coverlets for $20 and silver dollar size world coins for $2 to $5 each. Mexican eight real coins of the 1830s to 1890s were selling for $2. Pieces of eight picturing Charles III, Charles IV, and Ferdinand VII of Spain were bringing from $6 to $10.

Even gems like this 1799 silver dollar went into the melting pot.
Even gems like this 1799 silver dollar went into the melting pot.

Everything was as cheap as dirt. My father received two silver dollars in his pay envelope every week from the late 1940s through 1964, and I was telling everybody, "Hey, these are the good old days!"

The point is that I amassed this treasure as a coin collection, along with the antiques and scraps of silver, without thinking about bullion at all. During the late summer and fall of 1979, silver started creeping up in value. I kept on buying it as it came along without thinking too much about it. Then something happened - silver and gold began leaping up in value - just as my cousin had predicted.

I had bought common gold coins from 1966 to 1979 for the collection, because I liked the way they looked mounted in the vinyl 20 pocket pages of my many albums. By 1979, I had a couple of hundred gold pieces from all over the world in all sizes and shapes.

This Gilbert Stuart
This Gilbert Stuart portrait of Lafayette (circa 1824) was bought for $15 at the Norton Flea Market. It was a very good buy.

Silver moved from a couple of dollars an ounce to $10, $12, $18, and then $20 an ounce. "Wall Street Week" on PBS began to discuss the rise in gold and silver to a large degree. The Hunts were not named in the early part of this crazy market although everybody in the world of finance, numismatics and bullion-related businesses knew about the Hunts' wanting to corner silver and the fact that they had to come up with a huge amount of it by a certain date.

When Porter Whitney of Massasoit Coins of Foxboro, Massachusetts offered me $18 on the dollar for silver, I decided to cash in. I sorted out lower grade coins of no real numismatic value from the collection of material I had put together over the last 17 years and dumped it for $18 on the dollar. I ended up with a nice little bit of change. I had bought some huge five-ounce Panamanian coins and dumped them. Then silver went to $20, $30, $40 and $50 an ounce. I kept vetting out silver and selling the lesser material from the collection which was of a greater value as bullion than as collectible coins.

This Queen Anne spoon-back chair was bought for $60 at the Norton Flea Market in the 1960s.
This Queen Anne spoon-back chair was bought for $60 at the Norton Flea Market in the 1960s.

My dad asked me to sell his silver material. I did, and he was a happy man and bought a nice, and almost new, Ford van for cash.

I was telling my friends to sell like crazy. Most of them did. Actually, all but one of them did. He got very greedy. In early 1980, silver and gold began a slight decline. The boom was almost over.

Then I got a phone call from a friend. She said to me on this particular Sunday in early February of 1980, "Jimmy, I got a guy here from New York. He's got a big Lincoln Continental with a trunk filled with bread bags filled with hundred dollar bills. He's paying $28 on the dollar for coins, and he's paying well for scrap silver too."

With that, I got busy. I called my friend Doug and told him to get all the silver he had bought together and get down to my house with it right away. I told him that I thought that the bottom might drop out of the market any day and that this was the time to dump whatever he had. Within 15 minutes he was there with his little hoard.

My folks were hunting up scrap silver from every box, drawer, and any other place where bits and pieces were jammed. The antique shop was searched, and I savaged the coin collection once again. Within a half hour, a substantial pile of silver material was collected.

My pal Dave's William and Mary Chocolate Pot, which was rescued from the melting pot, was bought by me for $700. It was made by William Faudrey in London in 1697 and is still a star of my silver collection.
My pal Dave's William and Mary Chocolate Pot, which was rescued from the melting pot, was bought by me for $700. It was made by William Faudrey in London in 1697 and is still a star of my silver collection.

The knock came on the door and there was Kit and a husky fellow I had never met before and would never see again. He was polite and direct. Doug counted out his material and was paid. He smiled a lot.

Our material was tallied, weighed, and paid for. Then the husky fellow said, "The due date to fill the silver contracts is almost here. We still need more."

Then he said, "Do you know of any others who might have some material?"

I told him that I did, but I could not give him his name. I then said that I would call this individual and see what I could do.

After half-a-dozen rings, my friend (I'll call him Rudy) answered the phone. "Rudy, how much face value do you have in silver?"

Knowing my voice, he blurted out, "I guess about $32,000 or so."

I pounded the keys on my calculator and said, "I got a guy from New York here who will give you $896,000 for it in cash. He needs it to fill some silver contracts. He'll pay cash for it."

"Sorry, it's not enough. I tell you it's going to hit $100 an ounce, Jimmy. I'm hanging on!"

"Don't be dumb," I yelled into the phone. The market will crash when these weird contracts are filled. It will all be over, Rudy."

Quality coins of this sort are always a good buy. Many were melted in 1979-1800.
Quality coins of this sort are always a good buy. Many were melted in 1979-1800.


"Jim, thanks, but no thanks. Good-bye."

Needless-to-say, the market did crash after the Hunts made good on the 60 million ounces of silver they had to come up with, and Rudy's coffee cans just got rusty in the cellar of his Rhode Island home.

Twenty-odd years later his estate sold the cans of bullion coins for somewhere around $150,000.

Another crazy thing that happened during that very crazy time was that great silver objects and coins were melted into bars and ingots. Silver dollars of great antiquity, reaching back into the 1790s, early European crowns, and other great coins which had been around for centuries were melted down in seconds. In the United States, this was the third grand melting of silver. Silver in the untold millions in face value were melted down under the provisions of the Bland-Allison and Pittman Acts.

I know people who worked for some of the major reprocessing plants who cried when they saw what was brought up to be tossed into the retorts. Many fantastic numismatic and antique treasures were lost forever in the melting pots.

During what I call the "Silver Crazies," I bought one of the really great museum-quality prizes of my silver collection. I walked into the shop of one of my closest friends in the autumn of 1979. I saw him red-faced and upset. "What's up?" I asked.

With that, he held up the most beautiful silver object I had ever seen and bellowed, "Do you know what this is?"

"Sure," I answered. "It's a William and Mary silver chocolate pot of about 1690."

"It's 1697, and you are right. Do you know what some fool just asked me?" Not waiting for an answer, he bellowed, "He wanted to know what it weighed! He wanted to melt it down!"

"How much is it?" I quickly asked.

"It's $700."

"I'll take it," I said. In fact, at this moment, 28 years later I'm staring at it right now. It is a thing of beauty spared now for these 310 years. Those times were crazy, and we are going to see them again. Be careful of what you give up for melting.

If you want to catch up with me during the coming month, I'll be in the following venues. On Sunday, October 28, I'll be at Ernie Botte's Westford Coin Show at the Westford Regency Inn on Route 110 in Westford, Mass. Just take exit 32 from Route 495 and you'll locate Route 110. Show hours are 9am-3pm.

On Sunday, November 4, I'll be in Dedham at Richard Murphy's N.E.S.S. Coin and Stamp Show at the Holiday Inn which is near the junction of Routes 1A and 95. Show hours are 9am to 3pm.

On Sunday, November 11, I'll be at Ernie Botte's Auburn Coin Show in Auburn, Mass. at the Elk's Hall on Route 12 right next to the Hampton Inn. To get there, take the Massachusetts's Turnpike to exit 10 and Route 12 is right there. Show hours are 9am to 3pm.

On Sunday, November 25, I'll be back in Westford at Ernie Botte's Westford Show at the Westford Regency Inn. I have a lot of new material - books and books of new coins and stamps. Come and take a look. Happy Thanksgiving to all of you.

James C. Johnston Jr. was born in the historic Oliver Pond House in Franklin, MA where he has lived for 63 years. He holds B.A. and M.A. degrees in history and is the author of several books. He has also written more than 2,000 articles and monographs in The Numismatist, Linn’s Stamp News, The Milford Daily News, and many other publications.

Johnston was a teacher in the Franklin system for 34 years and has been associated with Johnston Antiques since 1962. He is a well- known appraiser of antiques, books, fine arts, stamps, and coins. He is a founding member of the Massachusetts Suburban Antique Dealers Association, a member of the American Numismatic Association,The Collector’s Club of New York, and the American Philatelic Society. He has also been President of the Franklin Historical Society since 1985.

Johnston is also a well known lecturer whose topics cover a wide range of social history, antiques, coins, stamps, and the fine arts as well as politics and political and military history.

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