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Mined Games | 09-19-2009 04:43 PM
Melt Ban On Junk Silver? Can anyone tell me when it became legal to melt pre-1965 coins for their silver content? I was wondering this because I wanted to be able to draw parallels to the current situation as regards the illegality of melting pennies for their copper content. Since the US Mint recently made it illegal to melt pennies, I was wondering if they did the same when silver coinage was eliminated in 1965? I think that the US is going to switch to steel pennies, as Canada has done, within the next several years. Once steel is introduced, does this increase the chances of the melt ban being lifted? Or is there some other factor that will decide when, if ever, the melt ban on pennies is lifted? I would appreciate hearing other GIMers opinions on this topic.

Cassius | 09-19-2009 05:10 PM
Re: Melt Ban On Junk Silver? http://coins.about.com/b/2006/12/14/...nd-nickels.htm According to this article, there was a silver coin melting ban in 1967-1969, and a penny melting ban in 1974-1978.

Meliorist | 09-19-2009 05:34 PM
Re: Melt Ban On Junk Silver? The Mint is required to produce coinage in adequate supply for commerce. It introduced the first melting ban in 1967 when it became apparent that it could not feasibly produce the amount of coins being taken out of circulation (from hoarding, but much with the prospect of melting). It ended when they made enough new coins (and ramped up production) to cover outflows from circulation. The current melt ban was introduced just a couple weeks after melting zincolns became profitable, which is no coincidence IMO (they could likely handle the outflow of coppers alone, because they only constituted ~15% of that in circulation). If they introduce steel pennies they'd probably remove the melt ban after a few years of production. That said, the government loves to keep people on their toes (the '67 ban was ground breaking). I also think a steel penny is retarded due to machining and energy costs. If they cared about efficiency they'd stop producing the penny and make the nickel aluminum (or steel).

47Protons | 09-19-2009 05:35 PM
Re: Melt Ban On Junk Silver? Even if the U.S. switches to some other metal for pennies, the ban on private melting might remain. The mint might decide to gradually withdraw old pennies from circulation, melt them down, and re-use the copper in other coins. This might be their cheapest source of copper. As long as they supply enough pennies (of whatever composition) to meet demand, there's nothing to prevent them from withdrawing old ones. It would be a better use of taxpayer's money than 99% of what the government does.

Sparky | 09-19-2009 07:29 PM
Re: Melt Ban On Junk Silver? What if they made melting 90% coins illegal again? (Why? Because they can.) That would be a blow to those holding only 90% in their silver hoard. (Disclosure: I hold my share of those pre-1965 gems...) One more reason to diversify.

phideaux | 09-19-2009 09:06 PM
Re: Melt Ban On Junk Silver? Quote:
Originally Posted by Sparky (Post 1929875) What if they made melting 90% coins illegal again? (Why? Because they can.) That would be a blow to those holding only 90% in their silver hoard. (Disclosure: I hold my share of those pre-1965 gems...) One more reason to diversify.
90% coins aren't in circulation (except by accident), so what would be the point? :confused_ma: If indeed there is a coming physical shortage (ala Butler), the case could be made that TPTB would want to encourage melting of 90%. But I certainly agree with diversification of holdings. various dominations of 90%, silver Eagles, Maples, rounds, bars, silver holdings at Goldmoney (to get it out of the country), etc all have a place in a diversified portfolio.

Curtman | 09-19-2009 09:24 PM
Re: Melt Ban On Junk Silver? IF they go to steel pennies there are going to be a lot of rust stains in urinals all over America. What purpose do pennies even have with the devaluing of US currency going on?

Cassius | 09-19-2009 09:29 PM
Re: Melt Ban On Junk Silver? I can't tell you what purpose they have but I can tell you the government and corporations would use removing them as an excuse to round up all prices, taxes, fees etc to the nearest nickel.

phideaux | 09-19-2009 09:44 PM
Re: Melt Ban On Junk Silver? First they've got to get rid of that stupid 9/10th of a cent at the fuel pump. :36_1_28::111:

eat_beef | 09-19-2009 09:52 PM
Re: Melt Ban On Junk Silver? Quote:
Originally Posted by Curtman (Post 1930007) What purpose do pennies even have with the devaluing of US currency going on?
Cover and concealment. If they pull the penny, a LOT of mouth breathers will awaken to the reality of inflation. Keep the penny in circulation, keep amerikan idol on, and keep 'em asleep.

goldminer | 09-20-2009 09:34 AM
Re: Melt Ban On Junk Silver? There was a melting ban during the period the coins were needed to be in circulation (dispite the fact that they were being pulled out. Once a sufficient number of clads were in circulation, the government had no more interest in the 90% coins and lifted the ban because it was more beneficial to the economy to have the silver on the market in other forms rather then be hoarded.

lhslancers | 09-20-2009 10:02 AM
Re: Melt Ban On Junk Silver? Quote:
Originally Posted by eat_beef (Post 1930046) Cover and concealment. If they pull the penny, a LOT of mouth breathers will awaken to the reality of inflation. Keep the penny in circulation, keep amerikan idol on, and keep 'em asleep.
Mouth breathers.:ok:

latemetal | 09-20-2009 10:05 AM
Re: Melt Ban On Junk Silver? Whatever happened to the half cent, large cent, two cent, three cent silver, three cent nickle, and half dimes coins?:ok: If its good, it goes bye-bye.:ok:

Tallships | 09-20-2009 10:06 AM
Re: Melt Ban On Junk Silver? Quote:
Originally Posted by Cassius (Post 1930019) I can't tell you what purpose they have but I can tell you the government and corporations would use removing them as an excuse to round up all prices, taxes, fees etc to the nearest nickel.
I would have to carry a calculator with me everywhere to make sure every purchase I made rounded to my favor (down). Imagine what this could do to market trading. we could make a round-down carry trade.:cooler:

Tallships | 09-20-2009 10:08 AM
Re: Melt Ban On Junk Silver? I wonder when they will put a burn ban on paper fiat to keep people from using it in the fireplace to heat their houses.

phideaux | 09-20-2009 10:20 AM
Re: Melt Ban On Junk Silver? The amount of 90% junk silver still in existence is negligible, This article is a 3 years old, but given the massive fiat creation since then it makes the amount of junk silver remaining even less significant. Junk silver is so small, IMHO it's not even on the TPTB's radar. What's the Story on Silver Coin Melts & Coin Premiums? By: Charleston Voice From what I can gather the best informed and collective opinion is that $500 million (face value) in pre-1964 90% US silver coins remain in existence. They have not gone into the previous silver melts. I believe those remaining to be in very 'safe hands'. This best guestimate is outside of the number of silver dollars remaining. I say this because those that held back in the 1980 melt have since 'camouflaged the pre-1964 coins with bullion eagles, bars and other bullion-related silver. It is those latter categories that will go into a future melt before the "junk" pre-1964 coins. I don't plan to ever sell my "junk" silver coins for fear I could never buy them back! I don't trade the G/S ratio with them; I sit tight. Plus, the halves I could never replenish w/o paying a premium over dimes & quarters today. Talk about a core portfolio! The irony is that today's silver bullion items are probably fabricated in large part from re-cycled pre-1964 coins melted in the 1980s! With silver currently at $13.03, Tulving (just to use an example benchmark) is buying junk silver coins @$8,838 per $1,000 face circulated bag ($8.84/oz.). The silver melt value with silver at $13.03/oz. would be $9,316 (.715 X $13.03). Tulving is selling those same circulated bags @$9,188. When silver certificates were being redeemed by the Fed they were being exchanged at $1.29 per dollar. What occurred, was that typically you had a "market maker" in your community who was paying, say $1.15 per dollar, and then would make the trip down to the nearest Federal Reserve Bank and redeem them in bulk @$1.29, but were not redeemed in silver coin, but in FRN's! Today they are just another FRN backed by nothing. This is what will occur, in my opinion, when the silver and gold ETFs blow up, or the government confiscates the ETF's metals - - your ETF shares, never being redeemable for the metal in the first place, will then even lose their supposed backing, and FRNs will be your only choice of weapons. You will be happy because you received the gold or silver paper dollar price equivalent, but not the real thing. But, then, unless you have a physical stash of silver, you'll have to just be a spectator as the silver price continues on into the next galaxy. Bye-bye. Putting the $500 million pre-1964 silver coins in perspective to today: The 2002 State Quarter production for the five states and both Philadelphia & Denver mints was 3,313,704,000 billion quarters. Just that one year's production of quarters only was more than $800 million. And that's not counting the additional dimes. Half dollar production has not been considerable. Subsequent years' productions have run apace of that. State quarters are being hoarded by the bag lot indicating Americans' ignorance of sound money vs. clad sandwich coins. These present day hoarders are to get a rude lesson in sound money vs. counterfeit when their quarters not only don't appreciate in numismatic terms, but actually buy less and less at their corner 9-11 store. These slugs will be plentiful for decades to come. I don't know the total market capitalization for the silver mining stocks, but SSRI alone is about $1.2 billion with resources indicated to be 850M/ozs. PAAS is $1.5 billion with measured and indicated to be 242.3M/ozs. Silver mine production in 2005 was 641M/ozs. and demand was 912M/ozs, the difference being made up from "above ground stocks". Now, with nearly 70% of new silver coming from copper, zinc, nickel and other mining operations, the beauty in all this is that weaker copper and other industrial metal prices (recession?) will result in less silver being mined. You can do the math. You can add up the official US Mint numbers to determine the precise silver eagle production since 1986, but I'm gonna make a wild guess of 7M/year; so, for ten years a round-house number 70 million have been minted. All are Uncirculated, and aside from selected issues like the 1996, have no numismatic value which enables the 'collector urge' in some of us to be satisfied by putting together a date set. The 1900 US census tells us the population was 76,212,168. This year we crossed 300 million, about a fourfold increase. In 1902 when we were still on the bimetallic standard, US quarter production was 18.5 million for the year. That's about one silver quarter for every fourth person. A hundred years later we're minting over five counterfeit quarters for every person. And, this in an age of credit cards! Now, I don't know where this exercise has lead us, except to point out two things: If we are to restore our freedoms and lost liberties, one element is essential for our survival and that is freely circulating specie. The second necessity is the full restoration of our 10th Amendment, ensuring a state's sovereignty with reserved powers not delegated to the federal government. A Constitutional Convention is not required nor desired, only recognition and adherence to same by our state legislatures is necessary. Our slide into socialism and total government has gone on longer than most of us would have imagined. So, if sound money should circulate once again in our land, silver and gold coins will be saved (not hoarded) for the honest money characteristic. Their purchasing power will increase and not be inflated away with ever increasing issues. We will again be an honest people and vigilantly enforcing an honest government. I cannot say I am optimistic we will return to that culture in any of our lifetimes - a culture that would prefer one honest quarter for one in four than today's people who will take five dishonest ones for every man, woman and child. The 1902 quarter has no debt, whereas the 2002 quarters are all debt tokens which must be paid. Colin collecting has taken a big hit these past thirty years, brought on by the "big melt" of 1980. Youngsters no longer have a circulating pool to which they can defer and find their starter coins. The number of retail coin dealers has shrunk. Even in Charleston there is no major retail coin dealer. When gold and silver prices roar it will be the pawn shops who will 'make the market' and folks are going to get ripped off. In summary, it's taken me a lengthy dissertation to get to why "junk silver" (pre-1964) might offer you, or your descendents the best deal for generations to come. An uncirculated (brand new) 1902 Philadelphia quarter goes for $200, one from New Orleans will run you somewhere under $500, and a San Francisco will cost $500. Higher uncirculated grades will go for several thousands. Spend a minute checking prices here. Keep in mind that there was nothing unusual in the mintages of 1902, in that period it was just a routine production year. Dump your state quarter slugs, and as part of your silver accumulation program, convert to "junk silver" coins. How many rolls of uncirculated quarters from the 1960s do you have? Ben Franklin halves? Too bad, because due to the high mintages of the period many went into the Big Melt, and today are at stiff premiums. Right now the 90% silver coins are at about a 1 1/2% discount to melt (see above Tulving prices). Watch the large refiners for backlogging silver to be refined. Three months seems to be their tolerance. How one does that, I don't know, but when they get backed-up look for silver to correct sharply. I know one thing: I sure wish my Dad had set aside a bag or two of 1962-D quarters that I could sort thru and pull out some MS-67 grade coins that today sell for $9,000 EACH! Heck, I'd settle for MS-65's at $40 each; that's $1,600 a roll! Those melts are nasty, but also an opportunity for the initiated. http://news.silverseek.com/CharlestonVoice/1163381566.php

Meliorist | 09-20-2009 10:30 AM
Re: Melt Ban On Junk Silver? Quote:
Originally Posted by 47Protons (Post 1929759) Even if the U.S. switches to some other metal for pennies, the ban on private melting might remain.
It might, but this would be unconstitutional and without precedent. The Mint normally has no enumerated power to restrict what people do with their money. This ban authority only held under the extreme circumstance where they could not perform their duty without such a ban in place. In Canada it's a completely different story. There the government owns all currency and it's a crime to destroy/deface (but not to export...which is why .999 nickels are flowing into the US). Their mint has been running a reclamation program for maybe five years now with great (financial) success.

Mined Games | 09-20-2009 05:31 PM
Re: Melt Ban On Junk Silver? Thanks everyone for contributing to the discussion. I guess what it comes down to, is that the melt ban will be lifted when the amount of copper pennies in circulation has been reduced to a negligible level. In the meantime, the smart ones are taking advantage of the relatively high percentage that is now in circulation. It won't be long before Uncle Sam starts to ramp up its copper bullion recovery efforts, and once that happens, you'll see a marked reduction in the percentages.

phideaux | 09-20-2009 05:58 PM
Re: Melt Ban On Junk Silver? I actually pulled a wheat penny out of my change yesterday. People must be cracking open their piggy banks and penny jars to get everyday spending money. The economy is doomed. :marchmell

Meliorist | 09-20-2009 06:00 PM
Re: Melt Ban On Junk Silver? Quote:
Originally Posted by Mined Games (Post 1931105) It won't be long before Uncle Sam starts to ramp up its copper bullion recovery efforts, and once that happens, you'll see a marked reduction in the percentages.
Why do you think they will? Have they ever done so before? Has any official or congress critter hinted of or proposed such recently?

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