Today, in recognition of silver’s climb over $45 per ounce, let’s use the Way Back machine again – this time to 1967.
In an article in November 1967, the US Mint finally confirmed that they planned to melt silver coins, minted prior to 1965, beginning at the end of the year.
A couple of years earlier in 1965, the Mint had begun making clad coins. Both the dime and quarter dated 1965 and later no longer contained any silver, and the half dollar’s silver content was reduced to 40% rather than 90%.
Primarily, a scarcity in silver drove the change in the coins’ metal content in 1965. That scarcity plus the need for more coins for circulation had the Mint working 24/7.
In 1967, the Treasury Department decided to melt the ‘common’ pre-1965 coins that contained 90% silver to improve the governmental silver stockpile.
Through October 1967, the Treasury accumulated over 150 million ounces by collecting the coins returned to the Federal Reserve Banks.
With the removal of the ceiling price of $1.29 per ounce, silver’s rate increased to $1.89. Worried by the increase, the Treasury wanted to increase the government’s amount of silver such that they could more easily control the price points.
The Mint did not have a process, nor did they choose to develop one, that could count the number of coins being melted by year and mint mark in order to have an accurate population number.
As the article pointed out, without accurate population numbers, the numismatic value of the remaining, un-melted coins was difficult to determine.
Back in the mid-1960s, people hoarded silver coins expecting silver values to rise. But, in the early 1980s, when silver prices rose to almost $50 per ounce, much of the hoarded silver came onto the market to be melted. Some people even turned their silver tableware and silver service sets (tea, coffee, serving dishes, etc.) into cash.
Now, here we are again with silver rates climbing. Looking back at 1967, the silver rate of $1.29 per ounce would be $8.63 today (using the Bureau of Labor Statistics Inflation Calculator). The Treasury Department became worried when the rate per ounce grew to $1.89 ($12.65 in 2011 dollars) and began turning silver coins back into silver for storage. That sixty cent increase in 1967 equates to an increase of just $4.00, roughly, in today’s dollars.
On the first business day of 2011, silver prices per ounce ranged between $30.50 and $31.30. Now, less than four months later, the prices range between $44.20 and $45.50 increasing roughly $15 per ounce. (Today, the New York silver market closed at $45.23 per ounce.)
Not all, but in several cases, this fast upward climb in the silver rate makes silver coins, both 90% and 40%, more valuable as silver rather than as numismatic collectibles.
Though the Mint recently made it illegal to melt the penny and the nickel coins for their copper and nickel content, it is still legal to melt silver coins. Some early mint and proof sets (and later silver proof sets) are being cut open and the silver coins sold to be melted. Older silver coins in the lower grades are also becoming silver bullion.
Of course, like the Mint of 1967, no one is keeping track of how many and what years are being melted.
With today’s faster communication networks, the market’s supply and demand will correct the numismatic price points for the coins and sets that do not get melted. These prices will adjust more quickly than when silver was melted in the 1960s and in the early 1980s.
As a reminder, the dime, quarter, and half dollar coins prior to 1965 contained 90% silver along with the dollars of 1935 and older. The Kennedy half dollars, circulated, uncirculated and proof, for 1965 through 1970 contained 40% silver. In 1976, there were special bicentennial sets with a quarter, half dollar and dollar coin, each with 40% silver. In addition, the Mint produced commemorative coins and collectible sets containing silver coins since the 1965 introduction of the cupro-nickel clad metal content.
The next few years will certainly be interesting watching the values of silver, silver coinage and silver collectible sets. With coins being melted, a smaller supply will make the prices increase over time provided the demand is there.