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Gold/Mining/Energy : Silver prices -- Ignore unavailable to you. Want to Upgrade?

To: goldsheet who wrote (6107)	11/9/2002 2:09:50 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 8010

Bob, Thank you much. That gives me some entry points. ...If silver coinage had less bullion in it than face, then silver certificates would have the same problem, with the result being that both would be exchanged for better "good money" which would be either gold coinage or gold certificates. About the only thing you didn't address is a quantification of this effect. Do you have any idea what the maximum historical discount percentage of face was represented by the silver bullion value, especially between 1913 and 1968? My interest is not in the actual exchanges that occurred, but in their degree of theoretical discount of silver from face. Regards, Don

To: goldsheet who wrote (6107)	11/9/2002 8:51:29 AM
From: Don Lloyd	Read Replies (2) \| Respond to of 8010

Bob, Your posts and references have been invaluable and I've already ordered three books as a result this morning. Amazon's one-click purchase is the greatest thing since sliced bread. (if the stock to buy actually exists). Under a bimetallic standard, silver coin got pulled according to Gresham's Law when it was devalued. The face value was higher than the silver value, so folks exchanged it for gold coin where a $10 gold coin actually contained $10 worth of gold. Silver coin disappeared for monetary reasons in 1837, 1853, and 1873. Now for bullion reasons, silver would disappear when the bullion content of a dollar was higher than $1.00. Subsiidary coinage contains .7234 ounces, so once silver got over $1.38 per ounce coinage would disappear from circulation, which for all practical purposes has been every year since 1964. Theoretically, pre-1982 copper cents should disappear from circulation if copper ever gets above about $1.50 per pound. I have a problem with part of this. There's no question that if the silver content is worth significantly more as bullion, then the coins will be melted. However, there is no first order reason to exchange a silver coin containing low priced silver for full valued gold, as both will buy their face value worth of goods due to legal tender laws. A second order reason would be that you would want to hold the coin whose bullion content would be more likely to go above face value, but that means that the other one would be the one that actually circulates preferentially. Moreover, bar silver will be brought to the mint to coin as the silver is worth more as a coin than it is as bullion. Net net, it seems to me that low spot silver prices result in lots of silver in coin circulation, while gold coins will be hoarded waiting for them to go to a premium to face. Regards, Don