Mint

This article was originally printed in Numismatic News.
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The unprecedented gain in silver in 2010, which topped out Dec. 29 at $30.59 an ounce, a gain of more than 79 percent over the past year, emphasizes the historical point that silver, the gray noble metal, has serious significance with American coin collecting.

Its current price means that a cull silver dollar has over $23 in precious metal within it. A common date Washington quarter (say 1964, mintage (P&D combined) 1.2 billion) has $5.50 worth of metal in it.

And it means that a set of Roosevelt dimes, 1946-1964, some 47 coins, has over $100 in bullion value before you start considering any numismatic attribution. So, for example, a 1945-S Mercury dime in MS-65 (carrying a retail price in one recent ad in Numismatic News of $20), now has 10 percent of its worth tied up in bullion value.

Silver has been a symbol of wealth, of value, and of money, since ancient times. The earliest known of all coinage – that of Lydia (circa 750 B.C.) – was made from electrum, a natural alloy of gold and silver combined. Earlier (by almost 800 years), at the beginning, in the Bible’s Book of Genesis (13:2), the wealth of the patriarch later known as Abraham is described as being “very rich in cattle, in silver, and in gold.”

Silver was traded by weight (known as shekels) starting around 3,000 B.C. (or about 5,000 years ago), but the marking of the electrum coinage in what is modern day western Turkey (then called Lydia) is what truly began the rise of silver as both a method of payment, and as an early investment.

Being far more plentiful than gold, silver was first mined in western Turkey, but the Greeks brought mining to a fine art form at Laurium, not far from present-day Athens. From about 600 B.C. to 300 B.C., the Laurium mines probably produced about a million ounces of silver a year, according to the Silver Institute.

Later, there were mines in Spain that, for nearly a millennium, produced enough silver to satisfy, first, the needs of Carthage, then Roman Empire.

Silver was the first metal discovered in the New World by the Spanish conquistadores. By the mid 1530s, a Casa de Moneda (literally “house of money”), or mint had been built in Mexico City – the first in the New World. The New World gave up its bounty to the royal treasury of Castille with pieces of eight – the better to fill the hull of the wooden ships.

Three centralized locations, and good Spanish records, suggest that Mexico produced about 1.5 billion troy ounces of silver between 1500-1800; that the Potosi region of Bolivia also produced around 1.5 billion troy ounces to complement Mexico. And Peru, from about 1600 to 1800, averaged 3 million ounces a year or 600 million ounces, taking us to the cusp of the 19th century when the American discovery of the Comstock Lode created a disorderly displacement in the precious metals market.

The total silver produced from the dawn of history until this year is over 40 billion troy ounces. Silver today is mined in 58 countries including Mexico, the U.S. and Canada. In 2009 (the last year for currently reliable statistics) about 179 million troy ounces were mined.

Through the years, silver coins and silver bullion have been an important component of many collector’s and investors portfolios. Some common-date silver coins have had more value as a bullion-like item than for numismatic worth. This was particularly true in 1980 when the Hunt Brother’s attempt to corner the silver market brought the price of silver up to nearly $50 an ounce, at which time 1964 Washington head quarters (mintage 704 million pieces from Denver Mint) suddenly found that their metal content gave them a worth of more than $8 a coin. (Silver peaked at $48 an ounce)

Over the years, millions of ounces of silver were purchased and turned into coin, but as all of the warnings in the 1860s suggested, as the market flooded with silver, the price of the metal continued to go down. As the years progressed, the Mint bought silver, turned it into coin, received the coin back, re-coined it, and the process seemed circular.

In fact, this melting and organized melting of uncurrent coin makes silver dollar mintage figures meaningless; the same is true for subsidiary coinage. A significant portion of the coins minted were melted, another significant portion was taken out of circulation by coin collectors – hence Mint Director Eva Adams’s ire at those she thought caused the coin shortage of the 1960s.

The discovery of silver at Nevada’s Comstock Lode was an event of world monetary significance when it was made public in 1859. It changed the way that nations looked at precious metals and set the standard for multiple generations of world finance.

By the time of the New Deal, President Franklin Delano Roosevelt offered price support for those in the business of mining and producing silver. They needed it. From a price in 1874 (high) of $1.29 (the low that year was $1.25), silver went into a decline that reached 65 cents an ounce in 1900 and a low of 24.5 cents an ounce in 1933.

The 1933 Annual Report of the Director of the Mint says the Mint purchased 1.3 million ounces of silver at an average cost of 27 cents an ounce and even in the midst of a Great Depression, silver used in the arts was estimated at 24.2 million ounces.

Given all this, how many U.S. silver coins are there? How much was produced? Billions of pieces, even after the great coin melts of the 1960s through the 1960s. Here’s a convenient summary:

U.S. Silver coinage Manufactured
(1794-1970)

Type Number of pieces
Dollars 855,661,153
Trade dollars 35,965,924
Half dollars 1,790,917,250
Quarters 4,449,108,957
20 cents 1,355,000
Dimes 10,055,455,835
Half Dimes 97.605,388
3 cents 42,736,240
Total: 17,337,804,747
Silver-clad halves: 859,367,297

Source: Treas. Doc. 3256, Annual Report of the Director of the Mint for the fiscal year ended June 30, 1971 (1972) at table 1 (p. 162)

Now, of these, how many did the Mint itself melt through the years:

Type Number of pieces
Dollars 325,437,470
Trade dollars 1,721,332
Half dollars 171,608,886
Quarters 282,924,148
20 cents 411,298
Dimes 337.500.473
Half Dimes 1,348,669
3 cents 21,805,398

What appears to be substantial numbers melted: dimes (highest), 20-cent pieces (lowest) is something of a misnomer and really doesn’t give a full picture of what the melts done by the Mint actually did to the total coinage supply available (both to circulation, and to collectors). My table shows more accurately the impact:

These numbers will prove useful when looking toward coins that belong as a part of your rare coin retirement planning right now.

Here are the bullet-point lessons from the melt calculations.

• More than half of all the Trimes (three cent silver) was melted (most of it in one year, 1883).
• Nearly a third of all 20 cent pieces were melted down by the Mint.
• Nearly 40 percent of all silver dollars (and 1 in 25 Trade dollars) were melted
• Almost 1 in every 10 half dollars was melted
• About 4 percent of all dimes were melted

With a few exceptions, the date or type of what was melted is unknown. The Pittman Act of 1918 resulted in the melting of more than 270 million pre-1904 silver dollars. (There were no silver dollars made between 1904 and 1921).

These melt numbers also do not include the massive numbers melted in the 1960s and 1970s both by the Mint and by private firms.

Silver is an alluring metal. It caught the political climate of the 19th century at the right time. When William Jennings Bryan, the Democratic Nominee for President in 1896 gave his “Cross of Gold” speech, he was arguing for an expanded role for silver coin and bullion in the monetary system.

“Having behind us the producing masses of this nation and the world, supported by the Commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”

It turns out that gold was not necessarily the big winner in that debate. The marketplace also gives its kudos to silver.

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