Still hooked after all these years

Silver passed $15 a troy ounce yesterday. As someone who has watched daily fluctuations and been fascinated by them since 1968 when $2 seemed like a high price, this milestone seems significant.

Sure, the price has been higher before, but it rarely has stayed there. Each time silver pokes its head above $15, it gets my redoubled attention.

This morning as I write this, I was thinking in old-fashioned terms born when we didn’t have nice and handy one-ounce bullion coins.

I often still think in terms of $1,000 face value bags of U.S. dimes, quarters or half dollars struck 1964 and before.

It is in these terms that I measure everything.

The old rule of thumb for these bags is there are 715 troy ounces of silver per bag. Anyone looking up the weight of coins might pipe up that the books say that the coins add up to over 723 ounces, what gives?

The difference is a factor for wear. Indeed if all the coins were uncirculated, there would indeed be 723 ounces of silver in the bag, but since uncirculated coins would more likely trade for a numismatic premium, average wear was taken into account in the development by coin dealers of this handy rule of thumb.

This means a bag currently has a bullion value of $11,046.75, or roughly 11 times face value at the current $15.45 silver price.

So, $1 in standard .900 fine U.S. silver coin is now worth a minimum of $11.

You might wonder why my starting point was 1968. Well, until 1967 the U.S. Treasury controlled the price of silver just as it did the price of gold. It was in that year that the price was freed up and market forces began taking the value beyond the $1.2929 official ounce price. I was aware of silver's price before 1968, but it was in that year that I developed the habit of looking up the price every day in the morning newspaper that I delivered.

In that year, it had gotten really interesting and a record of $2.56 was achieved. That seemed amazing to me and I was hooked.

I still am after all these years.