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.
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.
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.
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.
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).