Current rate of 90% silver coin destruction

cladking

It appears as though a large percentage of the available above ground silver supplies
is in the form of 90% US silver. The refineries have been melting this for two years now
to feed the growing demand for industrial uses and for increased investment demand.

The '79/ '80 melt was frantic but quite short lived. It didn't get going well until early '80
and there wasn't a great deal before the summer of '79. It simply didn't last long enough
to have much effect on the availability of any specific dates or types with the possible ex-
ception of 40% silver halfs.

The current melt of 90% has been going on quietly for a couple years now. The '80 melt
probably got 25% of junk silver. How long until this melt exceeds it?

Perhaps another question might be if the supply of this silver slows because of reduced
availability of 90% or changing perspectives will a large increase in silver price become
immediately inevitable and will this increase melting sufficiently to actually affect availa-
bility of the types of silver that were circulating in 1964? How long until we might see
overlooked "common" silver coins gain significant premiums?

I'd venture the guess that melting can't increase sufficiently within four years to begin
this process.

Any thoughts or opinions?

collegecoincollector

interesting post, thanks for sharing. i'd bet the insane demand for ASEs is definitely causing some of it. didn't the mint make something like 30 million of them this past year?

Elcontador

I don't think the drop in the remaining supply of 90% silver coins will affect the price of silver at all. What % of silver does this comprise? I'll bet it's minimal. I'll bet the overwhelming majority of the metal is mined, and will continue to the the case in the future.

cladking

<< <i>I don't think the drop in the remaining supply of 90% silver coins will affect the price of silver at all. What % of silver does this comprise? I'll bet it's minimal. I'll bet the overwhelming majority of the metal is mined, and will continue to the the case in the future. >>




Sure it is but the deficit has always been made up by scrap.

Almost all silver today is either 999 1000 bars on the way to a buyer for industrial or investment
demand or is 90% US coin. The other silver has been destroyed or is so valuable it's unlikely to
be used as fodder for the refiners. This means that there is a huge shortfall based on refinery
demand. Look at it this way; if they're currently melting 5% of the total mintage of old silver coin
each year than half the world's above ground supply of silver will be depleted in ten years unless
there is a dramatic increase in production. Surely before that time there will be a shortage of sil-
ver flowing to the refiners simply due to the fact that it's mostly been already destroyed. This
is an unsustainable situation. So long as silver is cheap demand will be high and coins will get
melted in large quantity. Higher prices would increase flow of coin to the refiners but at some
point this source will be gone.

So will coins like 1940-D quarters or 1938-D dimes gain large premiums as lower grades all get
"consumed"?

291fifth

Are many 90% silver coins actually being melted or are they just being traded to investors/speculators in bags?

Is there any reliable source for melting information?

GrumpyEd

I wonder if the supply of silver being mined plus industrial silver that gets recycled really not meet what's used minus whats being hoarded.

melvin289

Back in the 80's, 82 I think, when the Hunt Brothers tried to corner the silver market, we were keeping all the silver we could get. Now, here it is 28 years later, they have been melting silver all along, and the silver we helt is still just worth melt. We felt sure that at the rate silver was being melted the high mintage coins had to rise in value but no such luck.

Ron

Steve27

I see a lot of silver being sold as "melt," but I don't see it being melted. Most gets resold to people hoarding silver.

Placid

I think if all the paper silver sold had to be replaced by physical silver then there might be a severe shortage.

ricko

I cannot prove this, but based on what I have been able to discover through research, the amount of silver coinage that actually reaches smelters is minimal. According to people at a couple of refineries, coin silver does not come in to them in large quantities. Neither a continuous flow nor periodic large amounts. They do get some. Cheers, RickO

tydye

The one guy I buy a lot of my silver from ships to a refinery every week. Lots of jewelry and 90%/40% coins. 999 rounds and bars. Silverware and other silver pieces. The amount of old antique silver tea sets, silverware etc bugs me more than the 90%. It all gets flattened prior to shipping. I buy as much as I can from him every week. And he does ship redistribute much fot he premium stuff (ASE, maples etc) But common 90%, jewelry, silverware - it really gets melted

gsa1fan

So are penny's the only coin illegal to melt?

GritsMan

I always enjoy CK's posts. I can't even speculate on rates of silver being melted, but my gut says that its hard to imagine the melting of 40/90% coins driving up prices of common dates. I just don't think there are enough collectors out there to see a shortage of currently common coins in "dreck" condition. I speak at schools a lot and often ask how many of the kids collected State Quarters. Usually, more than half raise their hands. I'll bet that VERY few have expanded into other coins, however, including silver dimes, quarters, etc... We'll all see!

Weiss

I used to think that 90% was simply bagged and traded. Why bother melting it when the market was already there. But apparently that's just not true. ETFs, other huge investment and industrial buyers of silver (including governments coining NCLT silver coins) require .999 silver, and most require 1,000 oz bars. I'm confident that there will always be enough common date 90% to fill holes in albums for collectors. But 90% also serves a purpose for individual investors. And as 90% marches towards extinction, I can only see two outcomes: either the individual investor will abandon 90% in favor of private bars/rounds or NCLT like the maple and the eagle (in which case 90% will sell at a discount), or investors will recognize the benefits of fractional, collectible, face-valued 90% (in which case 90% will begin to sell at the high premium I believe it deserves).

ziggy29

<< <i>I don't think the drop in the remaining supply of 90% silver coins will affect the price of silver at all. >>

I wouldn't think so either. At most, heavy melting might *eventually* create a slight numismatic premium over melt for "junk" silver coins but even that's probably quite a long way away. At the point where the coins start carrying a numismatic premium, you'd probably see the melting slow down.

ambro51

I would imagine generic low grade walkers will be among the most melted,

Weiss

<< <i>I would imagine generic low grade walkers will be among the most melted, >>



Frankies and silver Roosevelts?

Overdate

There was considerable melting of 90% silver coins and war nickels long before the 1979-80 spike. In the mid-to-late 1960s, silver coins were being pulled out of change by the public and sold to dealers/smelters for relatively small premiums. If I recall correctly, there was even a ban on silver coin melting for a few years until the supply of clad coins was sufficient for normal commerce.

pennyholic

This topic got brought up on Cointalk and the point made is yes many were melted and many are still being melted but do you know have much a million is? How about millions of millions that how many coins some of these mintages have. http://www.cointalk.com/t99325/null

cladking

<< <i>This topic got brought up on Cointalk and the point made is yes many were melted and many are still being melted but do you know have much a million is? How about millions of millions that how many coins some of these mintages have. >>



Nearly 300,000,000 ounces of physical silver has been set aside just for
the Silver ETF in the last couple years. If it all had to come from dimes it
required well over 4 billion of them. This would be a very large percentage
of every US silver dime ever made. When you consider that large percen-
tages were already previously destroyed it would have been impossible
to recover this much silver from dimes alone. This gives you an idea of the
scope of this destruction.

It is a fact that most above ground silver is in the form of US silver coin.
How much of this is being melted at the current time is largely conjecture
but there is ample anecdotal evidence that it's been ramping up a long
time now to supply the growing investment demand for the metal. When
these are gone the only viable source for silver for this purpose will be
newly mined silver.

The implication seems to be whether we like it or not we'll be living hand
to mouth on silver production/ consumption with very little set aside by
investors and speculators. 300,000,000 ounces isn't even a six month
supply now days.

It is simply incredible that this situation has developed in this way and it
may have profound implications about the future availabilty of some US
silver coins. You can't make a 1943-P nickel rare by melting but you can
achieve a situation where the price won't come down even if the silver
price does. You can make the prices of many coins of the '40's and '50's
mimic those of far scarcer coins.

ambro51

I think when most citizens think "selling silver" all then think about is the old coins in the drawer. I doubt too many tea services hit the furnaces these days..


BUT, if youve ever had a bunch of ultra common worn smelly ugly walker halves...just of what good ARE they, anyway?

Overdate

<< <i>BUT, if youve ever had a bunch of ultra common worn smelly ugly walker halves...just of what good ARE they, anyway? >>



Well . . . you can use them to brush up on your painting skills.

SaorAlba

<< <i>So are penny's the only coin illegal to melt? >>



Nickels cannot be melted either, but I am not sure if that is just for current Jeffersons or also covers Buffs and Liberties as well.

Overdate

I read that war nickels are exempt from the melt ban.

tydye

<< <i> doubt too many tea services hit the furnaces these days..

>>




Several of the large rubbermaid containers are filled with this stuff weekly at a shop near me. Sold as scrap.

cladking

<< <i>

<< <i> doubt too many tea services hit the furnaces these days..

>>




Several of the large rubbermaid containers are filled with this stuff weekly at a shop near me. Sold as scrap. >>



Everyone had some of this around the house in 1979 but most
of it has been destroyed since then. They do still make it though
and people do replace old sets sometimes.