HISTORY

The Comstock Lode, one of the greatest silver strikes in history, was discovered in Nevada in the late 1850s. The strike put downward pressure on silver prices worldwide. In 1878 Congress passed the Bland-Allison Act which required the Treasury Department to purchase large amounts of silver, and to strike it as coins. For reasons of economy, the Treasury chose to strike the silver as dollars.

When the dollar was minted in 1878, it was the first dollar issued for American commercial use since the last Seated Liberty Dollar of 1873. The Trade Dollar was minted during this time period but was intended to be used for trade in the Orient. The dollar was continuously minted until 1904 when the supply of dollars in circulation was high and there was an absence of silver bullion. Then in 1918, the Pittman Act called for over 270 million coins to be melted for silver content. In 1921, the coinage of the Morgan Dollar resumed for that year and was replaced by the Peace Dollar commemorative that would become standard issue. Since 1921, many Morgan Dollars have been melted. Melting has mostly occurred when silver prices escalated because these dollars yield silver bullion.

Caches of Morgan Dollars produced at the Carson City Mint were discovered and were sold to coin collectors by the federal government in the early 1970s. Many of these dollars were uncirculated and are called GSAs (named after the General Services Administration) and come in black plastic holders that mimic the holders used for proof silver Eisenhower dollars of the period. These have become collectible items within the GSA encapsulation.

MINTS

Mint marks appear underneath the tail feathers of the bald eagle on the reverse between the letters “D” and “O” in “DOLLAR”. Mint marks include:

• CC (Carson City Mint in Carson City, Nevada)
• D (Denver Mint in Denver, Colorado)
• O (New Orleans Mint in New Orleans, Louisiana)
• S (San Francisco Mint in San Francisco, California)

Note that the absence of a mint mark is indicative of a coin minted at the Philadelphia Mint in Philadelphia, Pennsylvania.

Grading Morgan Dollars

VF20 Very Fine: Two-thirds of hairlines from top of forehead to ear must show. Ear well defined. Feathers on eagle’s breast worn.

EF40 Extremely Fine: All hairlines strong and ear bold. Eagle’s feathers all plain but slight wear on breast and wing tips.

AU50 About Uncirculated: Slight trace of wear on the bust shoulder and hair left of forehead and also on the breast and top edges of wings.

MS60 Uncirculated: No trace of wear. Has full mint luster but may be noticeably marred by scuff marks or bag abrasions.

MS63 Select Uncirculated: No trace of wear, full mint luster, few noticeable surface marks.

MS64 Uncirculated: Shows a few scattered contact marks. Good eye appeal and attractive luster.

MS65 Choice Uncirculated: Only light scattered contact marks that are not distracting. Strong luster, good eye appeal.

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Imagine being able to roll-up your laptop like a Sunday newspaper. Nanotechnology makes that possible and would make laptop computers even more convenient to carry around. This technology can also be applied to solar panels so they could be rolled out on rooftops or wherever needed.

NANOTECHNOLOGY

Nanotechnology is the study of the controlling of matter on an atomic and molecular scale. Generally nanotechnology deals with structures sized 100 nanometers or smaller in at least one dimension, and involves developing materials or devices within that size.

The size, or lack of, a nanometer is mind boggling to me. A nanometer is equal to one billionth of a meter. Imagine taking a meter stick and cutting it up into 10,000 or 100,000 pieces. It is hard to grasp. Then expand that out into a million, then 500 million, and onto a billion pieces that get so small that it takes a 10,000X microscope to get a good look at them.

TOUCH SCREENS

These cheap, flexible touch screens made with silver and gold nanowires could be available soon in cell phones, computers, and more. The same technology could even be used in solar panels.

It’s a roll-to-roll process similar to printing newspapers, that makes it extremely fast and able to be done at very low cost.

Today, most touch screens and solar panels are glass-based. The hard, insulating glass helps protect and support the thin coating of electrically conductive metals. But glass is also brittle and heavy. When an object strikes a solar panel, or a person drops a cell phone, the glass can shatter.

Touch screens made from thin plastic coated with silver and gold would weigh less, take up less volume, be more flexible, and could be produced much more quickly than glass plates; up to 100 times faster in fact.

Even though the screens are made with silver and gold, they are still cheap. The total amount of precious metals in each screen is so small that it doesn’t significantly increase the price.

The connections between the silver nanowires are good, but the conductivity has been improved by fusing them together with tiny amounts of gold. They are also working on creating longer, thinner silver nanowires, which will make the screen even more transparent and improve conduction of electricity through them.

The thin metal mesh formed by the nanowires is flexible and sticks to a variety of materials. When applied to plastic, the material can be bent, flexed or dropped, and the screen won’t crack and will still conduct an electrical charge.

That’s a far cry from many glass-based touch screens, which have an unfortunate tendency to shatter on impact.

The silver nanowires could also be used as electrodes for solar cells that can turn light into electricity. Flexible silver and gold nanowire screens could replace the hard, glass-based electrodes.

Unlike many technologies that have a significant lag time between development and application, this technique could be used immediately. The same machines that produce tons of newspapers every day could instead assemble rolls and rolls of touch screens and electrodes for solar panels.

Several scientists agree that the consumers will likely soon see this research in a variety of devices. The products that come from this technology will indeed be very useful.

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 Reference:

Silver, Gold Makes for Cheap, Flexible Touch Screens

Certificates

The U.S. dollar has been issued as silver certificates in the past, each one represented one silver dollar payable to the bearer on demand. The notes were issued in denominations of $10, $5, and $1 and can no longer be redeemed for silver.

Accounts

Most Swiss banks offer silver accounts where silver can be instantly bought or sold just like any foreign currency. Unlike physical silver, the customer does not own the actual metal but rather has a claim against the bank for a certain quantity of metal. Many digital gold currency providers, such as GoldMoney, offer silver as an alternative to gold and work on a similar principle. Other electronic silver accounts include the eLibertyDollar and Phoenix Silver. Silver accounts are backed through unallocated or allocated silver storage. (Note: both eLibertyDollar and Phoenix Silver have shut down.)

Derivatives, CFDs and spread betting

Derivatives, such as silver futures and options, currently trade on various exchanges around the world. In the U.S., silver futures are primarily traded on COMEX (Commodity Exchange), which is a subsidiary of the New York Mercantile Exchange. In November 2006, the National Commodity and Derivatives Exchange (NCDEX) in India introduced 5 kg silver futures.

Firms such as Cantor Index, CMC Markets, IG Index and City Index, all from the UK, provide contract for difference (CFD) or spread bets on the price of silver.

Mining companies

These do not represent silver at all, but rather are shares in silver mining companies. Companies rarely mine silver alone, as normally silver is found within, or alongside, ore containing other metals, such as tin, lead, zinc or copper. Therefore shares are also a base metal investment, rather than solely a silver investment. As with all mining shares, there are many other factors to take into account when evaluating the share price, other than simply the commodity price. Instead of personally selecting individual companies, some investors prefer spreading their risk by investing in precious metal mining mutual funds.

Taxation

In many tax regimes, silver does not hold the special position that is often afforded to gold. For example, in the European Union the trading of recognized gold coins and bullion products is VAT exempt, but no such allowance is given to silver. This makes investment in silver coins or bullion less attractive for the private investor, due to the extra premium on purchases represented by the irrecoverable VAT (charged at 17.5% in the United Kingdom and 19% for bars and 7% for bullion products with face value, e.g. US Silver Eagle and Maple Leaf, in Germany).

Other taxes such as capital gains tax may apply for individuals depending on country of residence (tax status) and whether the asset is sold at increased value.

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Bars

A traditional way of investing in silver is by buying actual bullion bars. In some countries, like Switzerland and Liechtenstein, bullion bars can be bought or sold over the counter at major banks.

Physical silver, such as bars or coins, may be stored in a home safe, a safe deposit box at a bank, or placed in allocated (also known as non-fungible) or unallocated (fungible or pooled) storage with a bank or dealer.

Various sizes of silver bars:

• 1000 oz troy bars – These bars weigh about 68 pounds avoirdupois (31 kg) and vary about 10% as to weight, as bars range from 900 oz to about 1,100 oz (28 to 34 kg). These are COMEX and LBMA good delivery bars.
• 100 oz bars – These bars weigh 6.8 pounds (3.11 kg) and are among the most popular with retail investors. Popular brands are Engelhard and Johnson Matthey. Those brands cost a bit more, usually about 40 cents to 2.00 dollars per troy ounce above the spot price, but that price may vary with market conditions.
• Odd weight retail bars – These bars cost less and generally have a wider spread, due to the extra work it takes to calculate their value and the extra risk due to the lack of a good brand name.
• 1 kilogram bars (32.15 ozt)
• 10 ozt bars and 1 ozt bars (311 and 31.1 g)

Coins and rounds

Buying silver coins is another popular method of physically holding silver. One example is the 99.99% pure Canadian Silver Maple Leaf. Coins may be minted as either fine silver or junk silver, the latter being older coins with a smaller percentage of silver. U.S. coins 1964 and older (half dollars, dimes, and quarters) are 25 grams per dollar of face value and 90% silver (22½ g silver per dollar). (All 1965-1970 and one half of the 1975-1976 Bicentennial San Francisco proof and mint set Kennedy half dollars are “clad” in a silver alloy and contain just under one half of the silver in the pre-1965 issues.)

Junk-silver coins are also available as sterling silver coins, which were officially minted until 1919 in the United Kingdom and Canada and 1945 in Australia. These coins are 92.5% silver and are in the form of (in decreasing weight) Crowns, Half-crowns, Florins, Shillings, Sixpences, and threepence. The tiny threepence weighs 1.41 grams, and the Crowns are 28.27 grams (1.54 grams heavier than a US $1). Canada produced silver coins with 80% silver content from 1920 to 1967.

Other hard money enthusiasts use .999 fine silver rounds as a store of value. A cross between bars and coins, silver rounds are produced by a huge array of mints, generally contain a troy ounce of silver in the shape of a coin, but have no status as legal tender. Rounds can be ordered with a custom design stamped on the faces or in assorted batches.

Exchange-traded funds

Exchange-traded funds (or ETFs) represent a quick and easy way for an investor to gain exposure to the silver price, without the inconvenience of storing physical bars. The silver ETFs are:

• iShares Silver Trust (NYSE: SLV), launched in April 2006 by iShares.
• ETFS Silver Trust (NYSE: SIVR), launched in July 2009 by ETF Securities.
• Central Fund of Canada (TSX: CEF.NV.A, NYSE: CEF), which has 45% of its reserves held in silver with the remainder invested in gold.
• In September 2006 ETF Securities launched ETFS Silver (LSE: SLVR), which tracks the DJ-UBS Silver Sub-Index, and later in April 2007 ETFS Physical Silver (LSE: PHAG), which is backed by allocated silver bullion.
• PowerShares DB Silver (AMEX: DBS), holds its worth in futures contracts for physical delivery, which are later sold to silver consumers in order to roll over expiring contracts to contracts further from expiration.
• ProShares Ultra Silver (NYSE: AGQ), seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of silver bullion as measured by the U.S. Dollar fixing price for delivery in London.

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Silver price

The price of silver has been notoriously volatile as it can fluctuate between industrial and store of value demands. At times this can cause wide ranging valuations in the market, creating volatility.

Silver often tracks the gold price due to store of value demands, although the ratio can vary. The gold/silver ratio is often analyzed by traders, investors and buyers. In 1792, the gold/silver ratio was fixed by law in the United States at 1:15, which meant that one troy ounce of gold would buy 15 troy ounces of silver; a ratio of 1:15.5 was enacted in France in 1803. The average gold/silver ratio during the 20th century, however, was 1:47. The lower the ratio/number;  the more expensive silver is compared to gold. Conversely,  the higher the ratio/number, the cheaper silver is compared to gold. Currently with spot gold at $1136.80/oz and spot silver at $17.70/oz the gold/silver ratio is at 1:64.3. So according to historical facts, silver is currently a bargain.

From September 2005 onwards, the price of silver has risen fairly steeply, being initially around $7 per troy ounce,  but reaching $14 per oz for the first time by late April 2006. The monthly average price of silver was $12.61 per troy ounce during April 2006, and the spot price was around $15.78 per troy ounce on November 6, 2007. As of March 2008, it hovered around $20 per troy ounce. However, the price of silver plummeted 58% in October 2008, along with other metals and commodities, due to the effects of the credit crunch. It has recovered since then, but has yet to surpass its pre-credit, crunch high of $20.92 per oz.

Factors influencing the silver price

Private and institutional investors

• From 1973 the Hunt brothers began cornering the market in silver, helping to cause a spike in 1980 of $49.45 per troy ounce and a reduction of the gold/silver ratio down to 1:17.0 (gold also peaked in 1980, at $850 per troy ounce). In the last nine months of 1979, the brothers were estimated to be holding over 100 million troy ounces of silver and several large silver futures contracts. However, a combination of changed trading rules on the New York Mercantile Exchange (NYMEX) and the intervention of the Federal Reserve put an end to the game.
• In 1997, Warren Buffett purchased 130 million troy ounces (4,000 metric tons) of silver at approximately $4.50 per troy ounce (total value $585 million). On May 6, 2006, Buffett announced to shareholders that his company no longer held any silver.
• In April 2006 iShares launched a silver exchange-traded fund, called the iShares Silver Trust (NYSE: SLV), which as of April 2008 held 180 million troy ounces of silver as reserves. 

The CFTC publishes a weekly Commitments of Traders Report which shows that the four or fewer largest traders are holding 90% of all short silver contracts. Furthermore, these four or fewer traders were short a total of 245 million troy ounces (as of April 2007), which is equivalent to 140 days of production. According to Ted Butler, one of these banks with large silver shorts, JP Morgan Chase, is also the custodian of the SLV silver ETF. Some silver analysis has pointed to a potential conflict of interest, as close scrutiny of Comex documents reveals that ETF shares may be used to ‘cover’ Comex physical metal deliveries. This leads analysts to speculate that some stores of silver have multiple claims upon them.

The use of silver in items such as electrical appliances and medical products has increased since 2001. New applications for silver are being explored in batteries, superconductors and microcircuits, which may further increase non-investment demand. The expansion of the middle classes in emerging economies aspiring to Western lifestyles and products may also contribute to a long-term rise in industrial usage. Even so, due to the advent of digital cameras the enormous reduction in the use of silver halide-based photographic film has tended to offset this in the short term.

References

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People in the older times did not use any form of currency to purchase the things they needed. They just traded their goods at the market place and exchanged things they had for things they wanted or needed. As time passed, people began to learn the value of currency. They started to use money as an instrument to purchase goods and services. Because silver has always been considered a valuable commodity, they minted silver coins as their first currency many hundreds of years ago.

Roman silver coins served as an important means of political propaganda. The Romans also used silver coins as a powerful way of paying their legions. These coins were used for most daily transactions by administrators, traders and for army pay. 

In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nation’s coinage until its use was discontinued in 1965.

Paper Silver

Paper silver or silver futures can be a confusing subject for many people. After all, what does it have to do with how to buy silver? To understand silver futures, one needs to understand what a futures contract is.

What is a Futures Contract?
A futures contract is a contract, traded on a special stock exchange called a futures exchange. The idea is to buy or sell, what is called, a certain underlying instrument, in this case silver, at a certain date in the future, at a specified price. Basically it is a bet that something will be worth something at sometime in the future. This gives new meaning to the word nebulous as no one can predict with accuracy what the value of a commodity will be at some date in the future. You can, of course, find heaps of experts that give advice or guidance but, intimately, no one really knows what the price is going to be.

Obligations of a Futures Contract
A futures contract is different to an option. Whereas with an option the holder simply has an option to buy or sell, the futures contract contains, as part of the contract, an obligation. You are required by law, in other words, to pay.

Both parties of a futures contract must fulfill the contract on the settlement date unless you opt to roll over in to the next months contract. Then cash is transferred from the futures trader who sustained a loss to the one who made a profit. Most futures trading is done on a cash settlement basis these days.

What are Silver Futures?
Silver futures are simply futures contracts where the commodity is silver. This is usually in the form of weight.

Futures contracts, or simply futures, for silver are usually 5000 troy ounces, One would trade in parcels or multiples of 5000 troy ounces, and the exchanges clearinghouse would act as counterparty on all contracts, setting margin requirements, and so forth.

Silver futures and options, currently trade on many exchanges around the world. In the U.S. it is primarily traded on COMEX (Commodity Exchange), a subsidiary of the New York Mercantile Exchange. Other major trading countries all have own futures and options (called derivatives) trading floors.

In short, silver futures are a bet that the price of silver is going to be at a specific price at some time in the future. This could be a high or a low price. If you are wrong you have to cough up the money, if you are right, you get the funds to the value of the current silver price on settlement day from the other trader

How Does a Silver Futures Contract Work
You simply agree to buy, say for example 5000 ounces of silver, in three months to the day at 16 dollars per ounce on that day. That future date is called the delivery date or final settlement date. The pre-set price is called the futures price. The price of the underlying asset on the delivery date is called the settlement price. If an ounce of silver on that day is worth 20 dollars, you win as you are only paying 16 dollars for an ounce of silver that is considered to be worth 20 dollars. You would have made 4 dollar an ounce profit, and the seller loses as you are only paying 16 dollars for something that is worth 20 dollars. If the price of silver goes down in the interim to 13 dollars, then you will find yourself paying 16 dollars for something worth only 13 dollars. That is a nasty situation to say the least. You will have lost money! Of course you do not get the silver. It is all a cash transaction so you cannot, if you lose, collect the silver and hold onto it in the hope it will go up again and you can sell it. However you can roll it over into another contract.

The big issue here is the leverage. You don’t have to pay up front all that you are buying, only a percentage of between 1 and 10 percent. Of course if you win you can win a lot of money. Most people lose and that means they do not just lose the percentage of dollars they put down but the entire amount they bet.

You have to have sufficient funds to back up your call so you can ride out the dramatic changes that can occur from one moment to the next.

This is all done on a cash basis in most markets and in practice you would be working with a dealer so there is no “taking the silver and run.”

This explains why silver futures traders are usually professional dealer with large capital bases who are buying and selling for large institutions, and even they can lose big time.

Quite honestly you would probably have a better chance of winning at the casino.

Conclusion

There are pro’s and con’s to each type of silver mentioned above, and as a footnote I have attached a link to a story that explains the recent accusation of JP Morgan’s manipulating the silver futures market.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_%26_Adrian_Douglass.html     What do you think about this?

Reference:

Silver Futures

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What Is A Reserve Currency?

A reserve currency, or anchor currency, is a currency which is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, such as oil, gold, etc.

This permits the issuing country to purchase the commodities at a marginally lower rate than other nations, which must exchange their currency with each purchase and pay a transaction cost. For major currencies, this transaction cost is negligible with respect to the price of the commodity. It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others.

History Of Reserve Currencies

Reserve currencies are widely recognized and used for international transactions. From a 1700 – 1900 historical perspective it has been argued by numerous monetary historians that the UK pound, French franc and Dutch guilder in the 1700s were in effect parallel reserve currencies. The fact that money in those times consisted of precious metals and was not printed on notes supports this. In the 1800s a similar picture was in place with the US dollar, Russian ruble, and the unified German Reichmark, being added to the list in the very late 19th century.

However, the modern conception of an international currency as a store of value for the international reserves of central banks and governments is a relatively recent development, arising only in the 19th century coinciding with the emergence of the international gold standard in the decades leading up to the First World War.

After World War II, the international financial system was governed by a formal agreement, the Bretton Woods System. Under this system the US dollar was placed deliberately as the anchor of the system, with the US government guaranteeing other central banks that they could sell their US dollar reserves at a fixed rate for gold. European countries and Japan deliberately devalued their currencies against the dollar in order to boost exports and development.

In the late 1960s and early 70s the system suffered setbacks due to problems pointed out by the Triffin dilemma, a general problem with any fiat currency under a fixed exchange regimen, as the dollar was in the Bretton Woods system.

Recently, nations, especially in Asia, have been stockpiling reserves at levels previously unknown, especially in US dollars, in an effort to strengthen export competitiveness by weakening their own currencies, and also to contain quick and large inflows of capital and buffer against financial crisis such as the Asian financial crisis.

On June 16, 2009, Russian officials suggested that they may invest more of their reserves in their BRIC partners. However the final BRIC communique did not mention the issue and so the Brazilian real closed lower against the Dollar.

On 7 September 2009, the United Nations conference on Trade and Development issued a report that blamed the dominance of the dollar for playing an important role in the recent build-up of global imbalances.

A brief account of the long history of reserve currencies and draws attention to the interesting phenomenon that, as in the case of the position of a country being the superpower of the world, it seems to be a “natural cycle” of around 100 years long. This has held true ever since the middle of the fifteenth century, with the Portuguese supremacy spanning about 1450-1530 to the Spanish (1530-1640), the Dutch (1640-1720), the French (1720-1815), the British (1815-1920) and the US from then(1920-?).

Potential Replacements As The Reserve Currency

There are several possibilities of a replacement. It could go back to a gold standard, remember that the main reasons the US dollar became the reserve currency was that it was not not only backed by gold,  it was also redeemable in gold.

China’s yuan, known officially as the renminbi could be a contender as well as the Japanese Yen or the Euro, but a more likely scenario than a single currency is the possibility of a basket of currencies called an SDR could be next in line.

So What Are SDRs?
From the International Monetary Fund:

“The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. The SDR also serves as the unit of account of the IMF and some other international organizations”

Or, in plain English, an SDR (Special Drawing Right) is an artificial, not an actual, currency. SDRs were originally fixed at a rate of 1 Dollar (or 0.888671 grams of fine gold), but now they’re made up of a weighted basket of currencies, currently:

• 44% US Dollar
• 34% Euro
• 11% Japanese Yen
• 11% Sterling

SDRs are often referred to as ‘paper gold’ and are confined to computerized transactions.

References

Wikipedia

What is A Reserve Currency?

The World’s Reserve Currency

In line with that train of thought, I would like to present the following:

We all hear the newsies and economic forecasters referring back to the depression in the earlier part of the 20th century. But what was going on beforehand? Something I ran across recently was The Free Silver Movement. Sounds good, right? Well, this happened in the 1870’s.

Here is a synopsis:

During the last quarter of the 19th century, “Free silver” meant that silver bullion could be brought into the mint and exchanged for silver coins. The math was 3.7125 grains of silver could be exchanged for $1 silver dollar.

In 1873 Congress enacted the Coinage Act of 1873, which included no provision for the coinage of silver. Silver’s market value was much higher than the mint price so no silver coins were being minted. The Coinage Act of ’73 would later be condemned as the “Crime of ‘73”.

There were two sides to this story, on one hand we had the working people (populist), farmers, miners and such, who wanted to be able to conduct trade in silver dollars. In their view, silver would add to the money supply in such a way as to raise prices [of their goods and services] and reduce their debt burden.

The other side which consisted of bankers and elite, believed doing so would devalue their holdings. The world was rushing to a gold standard that left little room for silver. From 1850 to 1872 the market price for an ounce of silver stood above $1.32.

The free silver movement enjoyed limited success in Congress. In 1878 Congress enacted the Brand-Allison Act, which required the Treasury to coin between 2-5 million dollars worth of silver coins per month. In 1890 the Sherman Silver Act required the Treasury to purchase $4 million dollars worth of silver per month, and issue silver certificates.

The Sherman Silver Act was blamed for a crisis of confidence in the American monetary system. President Cleveland, a staunch advocate of the gold standard, prompted Congress to do away with the silver purchase provisions in the Sherman Silver Act.

So, what is the relevance of this today? Well, interestingly, I think it may exhibit the same issue we are trying to address at SilverCoinCommerce™ How do we determine the worth of a dollar? And who has control over this value? Obviously, we feel the same about paper and digital creation of money, as the Bankers might have thought about silver back during this time. They thought it would de-value their “gold backed” dollars. And they were probably right. But silver still takes effort to get out of the ground and has proven, through time and utility, that it has real, tangible value, digital and paper dollars –don’t-.

The bigger, and more inherent point, is that SilverCoinCommerce™ is, and always will be, good for us common folk.

Pete Skenandore
Via ProBlogPartners™

Why we stopped using silver

The only reason that Americans stopped using silver in our daily commerce is that the American Dollar had became so devalued that the silver in the coins was worth more than their face value. So in the mid-1960′s the government needed to stop making most of the coins out of silver and use just base metals like copper and nickel in order to get the cost down. Due to this, your parents and grandparents hoarded these more valuable coins and removed them from circulation. These very same 90% silver coins are currently worth more than 12 times their face value. So every dollar in face value of these coins is worth more than twelve paper dollars according to today’s spot price of $17.07/oz. From the given trend in value, what do you think will be worth more in the years to come? The 1 dollar face value of 90% silver or 12 paper dollars? Since the trend is your friend, it points to the 1 dollar face value of silver.

History repeats itself

Now, less than 50 years later, the government is in the same boat again. The US dollar has continued to devalue so much during this brief time period that some of these base metal coins are worth more than the face value. Up until 1982 the penny was 95% copper and 5% zinc, this was changed to 97.5% zinc and 2.5% copper at that time to keep cost down. The nickel, which is currently made of 75% copper and 25% nickel, will most likely being targeted for a composition change in the near future since its current metal value is worth about five and a half cents, or 110% of face value. So it costs the government more in raw materials for the coin than it’s face value is worth. Once you include the fully loaded manufacturing expenses, the cost of producing each nickel is approximately 9 cents. Not a good business practice if you want to stay in business. Now don’t go out and melt down all your nickels and take them to the scrap yard to make your 10% profits just yet. The government is way ahead of you, in 2006 laws were created that made it illegal to melt pennies and nickels. It is also illegal to export these coins for melting. Travelers may legally carry up to $5 in pennies and nickels out of the USA, or ship $100 of these coins out of the country “for legitimate coinage and numismatic purposes.” Violators could pay up to $10,000 in fines and spend up to five years in prison. Plus, you get the added bonus that the government will confiscate any coins or metal used in melting schemes.

Face Value vs. Weight

There are 2 easy ways to potentially use silver in today’s marketplaces and as usual there are advantages and disadvantages of each.

Face Value: Faster, but lose a little accuracy. Today’s silver spot price of $17.07/oz. calculates out that 90% junk silver coins are currently worth 12.348 times their face value. While the spot price and the conversion calculations are accurate, you lose some resolution in the fact that you don’t know the exact weight of each coin. Most of these coins have been used in circulation and therefore some of the silver has been removed from normal wear and tear. Therefore each coin of the same denomination could have a slightly different weight.

Weight: Slower and a scale will be needed, but more accurate. With the weight method, you don’t even need to count the face value, just make sure it is 90% silver and start stacking it on the scale. Start out with the bigger coins and fine tune it with dimes until you get the weight in ounces needed.  Just make sure that you are using Troy ounces. I have pasted the definition of a Troy Ounce below, if you come across a word on this site and are not familiar with its meaning, there is a good chance that it is on our definitions link that can be found at the top of the home page.

TROY OUNCE: A measure of weight. A Troy ounce is different from the ounce most Americans are accustomed to (the Avoirdupois ounce). There are 12 Troy ounces in a Troy pound, and one Troy ounce is equivalent to 1.333 Avoirdupois ounces. So, if you buy one Troy pound or twelve Troy ounces of silver, don’t expect it to weigh in at one pound on your bathroom scale, because it won’t. One troy ounce equals 31.1035 grams or 480 grains. One troy ounce equals 1.09711 avoirdupois ounce.

Either the Face Value or Weight method will work, it is just a matter of personal preference or the availability of a scale.