Silver Coin Demand – A Historical Perspective
The United States Mint used a staggering 550 million ounces of silver to produce nearly four billion 1964 dated dimes, quarters and half dollars.
In contrast, the U.S. Mint sold a “record” 44 million one ounce American Silver Eagle coins in 2014.
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The Decline and Fall of Silver Coin Demand in the United States
The United States was once a nation so rich in silver that in 1918, in accordance with the Pittman Act, it was able to melt down 280 million Morgan Silver Dollars then in general circulation and ship the silver bullion to England as a favor to Great Britain to alleviate her silver shortage. The Pittman Act also provided a subsidy to the Nevada mining industry that would be called upon to provide the silver to have replacement silver dollars minted.
Until 1965, billions of ounces of silver freely circulated in the everyday pocket change of Americans as dimes, quarters, half dollars and dollars consisted of 90% silver. Nearly five hundred and fifty million ounces of silver were used by the United States Mint to produce 1964 dated dimes, quarters and half dollars (see mintage chart below).
Dimes, quarters and half dollars like these once circulated freely in the United States.
The End of U.S. Silver Coin Mintage – 1965
The United States enjoyed and eventually, however, abused the advantages of wealth and luxury. Guns and butter U.S. deficit spending in the mid 1960’s ballooned on outlays for the Vietnam War, the Great Society, the Cold War and the Space Race.
In 1965, the U.S. dropped silver from its coinage.
Under the Bretton Woods Agreements of 1944 (Bretton Woods Hotel pictured above) the U.S. dollar was named the world’s reserve currency that was convertible into gold by central banks upon request.
During the mid 1960’s the signatories of the Bretton Woods Agreements
started to worry that the United States’ “exorbitant privilege
” that allowed it to go in to debt for free
by having the world’s reserve currency was being abused. European central banks began making increasingly larger requests to convert their dollars into gold at the United States Treasury causing President Richard Nixon to shred the Bretton Woods Agreement and to close the gold window on August 15, 1971.
Despite President Nixon’s 1971 assurances that severing the tie between the dollar and gold would not cause prices to rise, the 1970’s were fraught with inflation that didn’t subside until the early 1980’s after the Federal Reserve raised interest rates to nearly 20%.
Return to the Gold Standard? 1981-1982
In 1981, serious consideration was given to re adopting some form of gold standard when a Gold Commission was appointed by the Reagan administration. Congressman Ron Paul, a member of the Gold Commission, and 1982 New York gubernatorial candidate and businessman, Lew Lehrman published a case in support of returning to a gold standard.
Skip the Gold Standard, Mint the Gold and Silver Coins
A gold standard was ultimately rejected by the Gold Commission but Congressman Ron Paul’s suggestion that the United States mint gold and silver coins was adopted.
In 1986, the U.S. Mint begin producing gold and silver coins for the first time since 1934 and 1970, respectively (while the U.S. ceased minting 90% silver dimes and quarters in 1965, 40% silver half dollars were minted from 1965-1970).
American Gold and Silver Eagle coins have been minted continuously since 1986 and although are considered legal tender, are produced for investors and collectors, not for general circulation.
U.S. Silver Coinage Demand Perspective
Demand for American Gold and Silver Eagles Coins
Demand for American Silver Eagle coins has risen sharply since the finacial crisis of 2008, setting all time sales records in 2013 and 2014 of over 40 million coins each year.
Sales of one ounce American Silver Eagle coins set a record for the second year in a row in 2014.
Sales of American Gold Eagle coins peaked in 1999, partially in response to Y2K fears.
Sales of American Gold Eagle coins have subsided in recent years and were down 44% in 2014 from 2013.
Comparision of Silver Demand for American Silver Eagle Coins vs. Silver Demand for 1964 U.S. Dimes, Quarters and Half Dollars
Sales of American Silver Eagle coins set an all time record in 2014. Indeed, investment demand for silver coins around the world has surged in recent years with significant sales growth at the United States Canadian, Austrian, Chinese and Perth mints.
Silver coin sales at the major government mints have surged in recent years.
While American Silver Eagle sales growth has been impressive, the amount of silver used to produce American Silver Eagles in 2014 was de minimis compared to the amount of silver used to mint 1964 silver dimes, quarters and half dollars.
The U.S. Mint used a staggering 550 million ounces of silver to produce 1964 dated dimes, quarters and half dollars.
Three of the 3,980,912,742 silver coins produced by the United States Mint in 1964.
Ron Paul’s Idea X 400 Million
The entire mintage of four hundred million American Silver Eagles from 1986-2014 has required less silver than the nearly five hundred and fifty million ounces of silver needed to produce 1964 U.S. dimes, quarters and half dollars.
Over 400 million ounces were used to produce American Silver Eagles from 1986-2014. Nearly 550 million ounces were used to mint 1964 dated dimes, quarters and half dollars.
The amount of silver used to mint American Silver Eagle coins was a small percentage of the total 2013 global silver mining supply (the 2014 global mining supply is estimated to be about the same as 2013).
Number of U.S. Dimes, Quarters and Half Dollars Produced in 1964 and the Amount of Silver Used in Their Mintage
Four Billion Silver Coins Minted in One Year
The United States Mint produced nearly four billion 1964 dated silver coins using nearly 550 million ounces of silver. Sales of American Silver Eagles would have to rise more than 12 fold from 2014’s record pace to equal the prodigious U.S. silver coin mintage of 1964.
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