Silver: Rising prices over 80 years

This article was originally printed in Numismatic News.
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What a time to be working on my 27th book. The topic is bullion and in it will be in-depth analysis of silver, gold, platinum and palladium. Quite naturally, it covers coinage, but more in the sense of bullion coins than numismatic rarities – though with current prices involved, even a common pre-1965 Roosevelt dime is beginning to show surprising.

Let’s take a look at what happened to last year’s bullion coins (whose face value is making them stand out in a really different way).

Take the ordinary, circulated silver dollar (which has .7734 troy ounces of silver at your disposal if not worn. The April 25 price seen on Kitco.com was $47.41 a troy ounce.

That means the common silver dollar in circulated condition has at least $36.67 worth of silver in it. It’s evident that this is not likely to be the high point of the marketplace.

The lowly dime, with .07234 troy ounces of silver has almost $3.43 worth of precious metals in it; the half dollar is $17.15 and the quarter is half that or $8.57 per coin. For a short set of Washington quarters (1941-1965, not counting the 1950 overdate) that amounts to about 61 coins with a face value of just over $15 (and $523 worth of precious metal). In VF, these coins are bullion only with almost no numismatic attribute whatsoever.

It’s still a very collectible set, no longer out of circulation of course – but now it stands in the bullion camp. (In fact, not until MS-63 or so do the coins begin to take on real numismatic attributes: (The 1941-P quarter, mintage 79 million, starts to price something like this in MS-63 condition:

1941 Quarter

MS-63 $17.50
MS-64 $26.25
MS-65 $40.00
MS-66 $62.50
MS-67 $357.50
MS-68 $6,444.00

Those who remember the heady days of 1980 when silver had a high of over $50 an ounce (but an average for the year of $20.63, will note an immediate difference in this silver rally.

First, look at the average prices since 2008; its up and down, but steady in the period 2009-2011. It’s seen easily in the accompanying graph. The trend since 2009 is steadily upward, if more slowly than in the 1980s when the Hunt Brothers were behind a rapid change in this market.

These silver prices seem to be similar to rises for other commodities – and those prices show that the market is one of consumption.

Silver has been the subject of long-standing political drama. Silver and the so-called “Crime of ’73” was the dominant issue in American politics during the quarter of a century before the Gold Standard Act of 1900 put an end to the discussion, but not the dispute.

Gold’s monetary role remained contentious to the extent that Americans legislatively (and by executive fiat) lost the ability to own gold bullion (but not some gold coins) in 1934 – with some waging a battle into the early 1970s to regain the privilege (finally succeeding on Dec. 31, 1974).

Platinum and palladium are new to the scene – but the controversy is right here, right now – we’ll have a palladium bullion coin being merchandised probably in 2012 all brought to you by Act of Congress.

Congressional hearings held by Rep Ron Paul ought to be enough to persuade you that the Mint still needs basic marketing instructions. But at least with silver, they are selling into the market (though as a result of the jump over $40 an ounce, their pricing on silver proof sets is almost a losing proposition. (I’m sure glad I got my sets before the Mint stopped selling them temporarily, according the website.)