A milk-spotted silver Vienna Philharmonic coin. (Flickr photo by Silver Torch66, used under CCBY license)
For at least the past decade, articles have appeared periodically in the numismatic media about the issue of white-colored discoloration, known as milk spots, that appear on some modern silver coins. The issue has also figured prominently in the numismatic blogosphere, where it is a hot topic of discussion among collectors and silver stackers, who often express their anger, irritation, and frustration about seeing their coins develop these spots.
But considering how important the issue is in terms of its impact on the value of coins and the market for them, it is striking that milk spots have not received a lot more attention in the numismatic media. That may be because unlike collectors, who are usually eager to discuss their experiences with spots, world mints and coin dealers tend to be much more reluctant to address the matter.
These annoying spots occur in an entirely random and unpredictable way. They may appear right after the coins are struck, or develop over time, and they may be anything from “a single spot, multiple spots crossing the field and devices, or in large blotches consuming significant portions of a coin’s design,” according to Coin World’s Paul Gilkes in a December 2012 article.
U.S. Mint
The Coin World piece discusses the views of then–quality division chief at the U.S. Mint, Stacy Kelley-Scherer, who said the problem has plagued American Silver Eagles virtually since their inception in 1986. In the article the Mint acknowledges the problem of spots but said they have not found a way to prevent them from occurring. Mint spokesman Michael White, when interviewed for the present article on February 14, 2017, said, “We are examining our process thoroughly and are committed to producing the highest quality coins.”
These spots also occur on coins produced by other major world mints, as discussed below. Moreover, sometimes milk spots are only visible with magnification such as under a loupe. And while mints have concurred that they cannot prevent them, and the grading companies can’t always remove them or prevent them from reappearing, it does appear that good storage methods (such as using Air-Tite capsules and storing your coins in as inert an environment as possible) can help to reduce the chance of spots from developing.
Silver is well known to react chemically in response to the environment, especially in humid conditions, and many collectors work hard to try to keep their coins protected against the elements as much as possible. The wide variation in views on milk spots probably has something to do with the prevailing weather and levels of humidity where the coin buyers live, and with how they store their coins. But no matter how you store them, it is not possible to entirely prevent the spots from developing.
Milk spots can occur on both bullion and collector coins struck in Proof and Burnished Uncirculated finishes, but they are substantially more common on bullion silver coins with .999 or higher purity, and are not seen on older coins with alloys, such as pre-1964 U.S. silver coins. They do, however, sometimes appear on modern U.S. commemoratives, which are 90% silver, likely because the planchets are prepared the same way as those for eagles.* Veteran coin dealer Julian Leidman, who has handled the sale of major rarities, said that he sees the spots on modern coins, but almost never on older issues. He agreed with the view that the problem seems to be related to planchet preparation and rinsing.
While some have questioned whether there is some connection between silver purity and milk spots, the general consensus is instead that the spots result from something in the production of silver planchets before coins are struck. In particular, the cause of the spots is believed by many to be “detergent residue that isn’t rinsed off before the .999-silver planchets hit the annealing furnace. As the cleaned silver planchets get heated to scorching temperatures exceeding 1,000 degrees Fahrenheit, any leftover detergent solution is inadvertently baked into the surface of the coin,” and the chemical reaction from the detergent on the coin “may take weeks, months, or even years to surface,” according to Joshua McMorrow-Hernandez in his January 2015 CoinWeek.com article.
World Mints
Erik H, a poster at Mint News Blog, said recently that his worst experiences have been with Canadian bullion issues (Maple Leafs, wildlife series) and with African Elephant coins from Somalia purchased since 2011, as well as with some 2016-W American Silver Eagle burnished coins.
Milk spots have been reported in lower numbers for coins from certain mints, such as the Mexican and Chinese mints and the Perth Mint, although this is a matter of some contention among collectors who discuss the issue on coin forums. A poster on one forum said he had not seen them on his Perth Mint coins, but then someone else chimed in to note that they have seen them on Perth coins, and quite often in fact. In addition, it appears that milk spots on Perth coins are seen more often on coins from recent years as opposed to earlier issues.
The Perth Mint has also taken steps to both identify and try to tackle the problem. Two years ago officials at Perth said that, after ruling out suspicions of “poor water quality and crucible contamination,” that “an accumulation of microscopic silver chloride debris are responsible for leaving the blotches.” As a result of these findings, the mint implemented some measures to reduce the frequency of the spots, including “routine cleanings of its airline filters so as to remove any oil and water build-up” and “replacement of its air conditioning filters” to eliminate the chances of “airborne microscopics” appearing in any of the areas where coins are made.
Those efforts appear to have been successful in reducing the number and frequency of milk spots on coins from Perth, but according to many posters at the SilverStackers forum, the issue continues to plague coins from this mint. I found their comments surprising, since I have not seen a lot of spots on Perth coins I have purchased.
Royal Canadian Mint
No one who buys modern silver bullion coins from a variety of mints would likely disagree that coins from the Royal Canadian Mint are the ones that are most likely to have or develop spots, with American Silver Eagles likely coming in second. RCM coins, including especially Maple Leafs and other RCM bullion coins such as the various wildlife issues, are seen rather often to spot after the buyer has had them for some time, or may appear in unopened rolls or boxes when opened. Spots are not seen nearly as often on RCM collector coins, but many of the non–Maple Leaf pieces are struck in limited numbers and sold at higher premiums than straight bullion coins, especially after they sell out from the mint, which makes spots on them more of an issue.
The RCM’s leadership has indicated that coins like Maple Leafs are bullion coins purchased for their silver content, and that there is simply no way to prevent the spots from occurring. Longtime world-coin dealer John Winkelmann said in a widely mentioned comment from a letter sent to other coin distributors:
Here is the short explanation. We just had a meeting with the Mint about this 10 days ago. The white stains (or “milk spots”) result from the planchet (flan) cleaning and preparation process. Some Silver Maple Leaf coins have them (SMLs), some do not. This is the Mint’s official position: The coins are bullion coins. They are not collector coins. They are sold as one ounce of silver. The Mint knows that there is a problem. The problem has existed since 1988, when the SML coin was first introduced. The Mint says that there is nothing that they can do about the problem.
But in addition to the fact that, as noted, spots appear on RCM wildlife issues, which carry numismatic premiums, there are some earlier Maple Leafs that were minted in the hundreds of thousands that also command retail premiums.
The interesting thing is that despite this situation, the Maple Leaf remains the world’s second-best-selling silver bullion coin after the Silver Eagle. At the same time, milk spotting on RCM coins is significant enough that it does seem to have had an impact on buying habits, but how much of an impact is unknown.
Grading Companies
And this raises the issue of how milk spots impact a coin’s value. On a common bullion coin, or a graded one in around MS-67 or below unless a scarce date, spots do not have a substantial impact as far as reducing a coin’s value, since those coins trade for their metal content. But for rare and/or high-grade coins, spots definitely reduce a coin’s value, and the grade assigned to it by the grading companies if spots are present when the coin is graded, as the companies explain in their policy statements.
In addition, for more valuable coins there is basically a two-tier market for those with and without spots, which some have compared to the two-level market for pre-1933 U.S. gold coins for those with and without red spots (or with and without CAC stickers), or U.S. copper coins with and without black spots.
NGC says that it will factor milk spots into its grading of modern silver coins as it does for black spots on copper coins and red spots on gold coins. Large spots and those that are very distracting will result in lower grades, and if a coin has heavy spotting, it may receive a details grade with a notation about environmental damage. PCGS says spots “are not really part of eye appeal, but they are part of the grade and grade deductions are made similar to those for marks or hairlines.”
As for professional removal of the spots, PCGS has a special $5 spot-removal service for modern silver coins but cannot guarantee it will be successful. The company says that with American Silver Eagles, it has found that spots can be removed from Proof coins in about 80% of cases, while for bullion pieces, spot removal is successful in only about 10–25% of cases.** NGC notes that while in some cases spots can be minimized, there is no effective method of removal that will not damage the coin, and both companies will not honor their guarantees on holdered coins that develop spots after they are graded because they consider it a form of environmental damage.
Outlook
When it comes to milk spots on modern silver coins, the old adage “Where you stand depends on where you sit” is apt. If you have been buying silver bullion and/or collecting such coins by date and series for years, and you have not encountered a lot of spots, it is likely you are not especially concerned with the issue, or perhaps need to look at your coins more often.
But that does not appear to be the case for many buyers, based on the frequency with which the issue is covered in coin forums, especially from those who have purchased a lot of American Silver Eagles and bullion coins from the RCM. It is also likely that one of the reasons coins from the two North American mints have higher rates of spotting is simply that they are the mints that strike the highest number of silver bullion coins.
This is an important issue for collectors, especially given the rise of collecting silver bullion coin series, the increase in the number of such coins issued, and the increasing tendency of mints to market low-mintage bullion issues as collectibles. Major world mints impacted by milk spots would do well to develop alternative methods of planchet production that reduce the chance of spots developing.
For now, it appears that milk spots are having a moderate impact on the market by reducing the value of some coins and possibly deterring buyers, especially of certain issues. The mints seem to have made a cost-benefit calculation that dealing effectively with the issue costs them more than continuing with the status quo. Those that have tried, like the Perth Mint, have simply not been able to eliminate the problem altogether. But if not addressed more forcefully, the issue is likely to have a greater impact on silver bullion coin sales and the market for those coins in the coming years. ❑
APMEX carries silver bullion and numismatic coins from around the world.
Louis Golino is an award-winning numismatic journalist and writer specializing on modern U.S. and world coins. His work has appeared in Coin World, Coin Week, The Numismatist, Numismatic News, and COINage, among other publications. His first coin-writing position was with Coin Update.
* The fact that older silver coins do not spot (but will tarnish and develop other problems) seems to be related to how coins were produced in the past. It seems that the chemicals used in the past couple decades when rinsing the silver planchets for modern silver coins were not used on older coins. In addition, spots do not seem very common on silver rounds from private mints, which reinforces the notion that it is related to some chemical or detergent used in the planchet-preparation process at major world mints.
** This information appears in John Mercanti’s book American Silver Eagles: A Guide to the U.S. Bullion Coin Program (Whitman, 2016).
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I personally have decided that the spots must be related to environmental issues, possibly involving EPA oversight and/or environmental cost of disposal. Or, maybe related to the cleanser becoming too contaminated. In any case, I’m sure the problem could be alleviated if regulations or costs were not a hindrance.
Dusty- If gov’t regs are the issue, then how to do explain the fact that countries with their own legal regimes and regs also produce coins with spots? Coins from all the major world mints spot to one degree or another, and they have their own environmental policies and regs.
Louis, Are you suggesting that little third world coin production facilities are also having the same problems? As far as I know they’re all using Varsol to clean oil and grease from silver planchets.
Well, some Libertads have them, and they are definitely not third world. I am saying countries like Mexico have their own environmental regs, not ours, and they still have the spots. Or China, which I have little doubt has far more lax environmental regs, and they certainly exist on Pandas.
Louis, I would simply like to know what cleaner the US Mint uses, in addition to their drying procedure. Also, what type of grease and where and why it’s used on the precious metal during or after the forming procedure prior to to planchet production.
Does the grease on the planchets originate at the machinery and therefore a byproduct? If so, I’m almost certain that the grease we use in American is a product of China. In my own experiences, I have noticed a difference in greases which all claim to be the same, but one is a product made in Mexico, while the other is made in China. I can’t put my finger on it, but something is not the same in the two. However, as you say, even Libertads have problems. But, first things first. Also, the problem could be as simple as adding an additional rinsing(s).
It may be that all the mints are using the same procedures since they appear to getting information from each other. I think I may have just stumbled onto an important clue here.
Thanks for your comments, Dusty. I wonder what accounts for the wide variations between mints when it comes to milk spots? And why do collector coins issued by say the Mint of Poland or the French Mint and numerous private mints not spot? Must be different procedures and chemicals.
Great article. I try to get as many as possible to boycott mints that have a flippant attitude like the RCM, yet charge a hefty premium over spot for their bullion series. I don’t own a single item from the RCM. Their attitude sucks!
Louis’s excellent article piqued my curiosity, and I’ve spent several hours over the last few days trawling the Internet for crumbs of information. I found an interesting Silver Stackers thread in which Bron Suchecki, formerly of the Perth Mint, provided electron-microscope photos of milk spots from the PM’s research department. Their theory (at least at the time of the 2015 post) was that there are different types of milk spots, and that each type results when a tiny piece of debris settles on the coins’ surface and causes silver chloride crystals to accumulate around it. (The link: http://forums.silverstackers.com/topic-59730-exclusive-to-silverstackers-electron-microscope-images-of-white-spot.html) The PM’s then-director of marketing added the following statement, which does not seem to have been updated since 2015: http://forums.silverstackers.com/message-754761.html#p754761
Despite the lack of a more-recent update (at least that I’ve been able to find), I imagine that Perth Mint is working doggedly on the problem, even if no one else is. Imagine the sales potential if a mint could guarantee their silver coins against milk spots! Or perhaps a TPG will beat them to it and discover a way to treat and/or slab modern silver coins in a way that guarantees they’ll never spot but doesn’t damage, cloud, or discolor the coins’ surfaces in any way.
On a slightly different tangent, I wonder if advances in nanoparticle coatings might bring an answer. There seems to be a lot happening in that field, with researchers pursuing every imaginable application: anti-corrosion, anti-bacterial, you name it.
Sounds like there is a business opportunity for a planchet manufacturer to use a process that does not result in milk spots to enter the market. Current manufacturer(s) need some motivation to improve the process.
Your article prompted me to go and look and my silver. All my coins/medals/rounds are placed in air-tites upon receipt if they don’t already come in their own capsules. The worst are the RCM Wildlife series coins. One of the Owl coins has two ginormous milk spots that totally detract from the coin. My wife thought there was moisture in the coin capsule due to the size of the spots but I opened the capsule and looked at the coin under a magnifying glass–definitely milk spots.
Several of the Australian Crocodiles are showing some spots as are the Kangaroos. The ASE’s are hit and miss. The best are the Philharmonics and the Noah’s Ark coins and the Currency of the Apocalypse silver rounds (Zombuffs, etc…), all have no issues.
Overall, I’m disappointed, especially in the RCM bullion as they have some really nice designs but the numbers with milk spots now appearing is unacceptable. I can see I am going to have to change my buying habits. I’m really going to be mad if the Tuvalu Star Trek Enterprise silver develops spots, so far they are unaffected.
Thanks to everyone for their comments. It is very helpful to know what kind of experiences people are having.
You folk with milk spots are not doing to bad. Ive just checked my maples I got double cream cant wait to see if it goes sour.
Louis, great article, thanks. Please check back with PCGS as I am receiving conflicting information about cleaning the milk spots. They quoted me $20 per coin plus a % of coin value. I purchase coins from Ebay and I have noticed lately that autographed coins are plagued with spots. When I inquired about saving the slab with the autograph, PCGS staff said no, it would be damaged and they do not have a label to replace it with. Bottom line is don’t purchase autographs with too much of a premium. I agree with you that the environment is the biggest issue with spots. Using Silica gel will help greatly with the moisture issue.
I’m a little late to the discussion. In the past month, I have noticed milk spots on many of my modern silver coins. Most of these coins I paid 1.5 to 2 X the price of silver, some considerably more. At this point, who would buy these coins for more than silver price? It is completely ugly. I will never buy a modern silver coin. Junk silver at best.
This is very disappointing! It’s the modern day melting it basically reduces the amount of quality coins… the worst part is if it takes years you may not know until you get older which sucks if u want to sell around retirement. I have had huge problems with maples, britanias, and philharmonics. I have not had problems with Eagles I collect the proofs and they all look like the day I bought them. The RCM attitude makes me not buy their products. I understand it’s bullion but paying a premium one should expect some pride in workmanship!
i no longer buy any royal minted coins
all my maples, a few of my brit sovereigns, and all of my perth coins have milk spots
oddly enough, my phil harmonics, eagles, and all of my generic rounds do not. a shame really, because the designs and premiums often make them attractive, but if im collecting for bullion then im going to stick with stuff that doesnt turn ugly through no fault of my own.
also, the noah ark amrenian coins are are the brightest and best in my collection for some reason lol
Milk spots destroy value …. period. That mints do not take this issue seriously is disturbing. In my mind this problem is avoidable. I believe it’s as simple as cleanliness in process. High volumes mints seems to produce the most milk spots; Perth, RCM, China, US. Low volume mints like Mexico, Armenia and private mints have less occurances. I’m a Libertad guy and find almost all my coins are spot free. I have made the mistake of thinking I’m getting a bargin buying a milk spotted coin at a discount. If these spots grow or become more prominent, I’ll have no one to blame but myself. Grabbing more silica gel tomorrow. Louis .. another fantastic article.