Anybody know the answer to this?

[jim4silver]

My question is why did the US make a silver dollar that contains .7734 of an ounce of pure silver, while one dollar's worth of silver dimes, quarters and/or halves only contains .723 of an ounce of pure silver? The industry uses .715 but that is to account for some wear on the coins in that they are minted at .723.

If a person was living back when both were still "currency", it would have been much smarter to keep one's wealth in US silver dollars vs. smaller coins because in the end you would have almost 8% more silver in your possession. Not that anyone paid attention to this issue back in the day. But I have yet to see an explanation for this difference of silver weight in the coins.


Jim

 

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[Pa_Dirtfisher]

This is like the penny made before 83 have more copper value then newer ones but still the same face value. Great question to which I have no idea. Maybe its like the old saying "More bang for your buck"

 

[Mackaydon]

jim4silver,
When currency (all silver coins) were in circulation, the best strategy would have been to dump it all during the first quarter of 1980 (before March 27). As silver rose from $6 per ounce in 1979 to over $48 early the next year, it became obvious that the 'bubble' would have to burst. Those who still held their wealth in silver after March 27, 1980 probably still regret that decision today.
Don.....

 

[jim4silver]

jim4silver,
When currency (all silver coins) were in circulation, the best strategy would have been to dump it all during the first quarter of 1980 (before March 27). As silver rose from $6 per ounce in 1979 to over $48 early the next year, it became obvious that the 'bubble' would have to burst. Those who still held their wealth in silver after March 27, 1980 probably still regret that decision today.
Don.....

Don,

The time period I was referring to was before the 1930s when they still minted US silver dollars. By 1980 there were no circulating 90% coins except for those lucky CRHers would find (much like today, although I am sure the hunting was better in 1980).

I do not think that your analysis takes into account the loss of buying power due to monetary inflation. Further, when PM haters make such claims they always assume that when said smart person dumps their silver in 1980 they will automatically place said fiat into some investment vehicle that yields the maximum return. For example, people who pump stocks always use some index's great return to show how much you would have made, ignoring that most average joe's are in specific stocks that don't necessarily go up like the index does, etc. But even if your view IS correct, I was not buying silver back in 1981 (still in junior high) or even 2000 (unfortunately for me). Also, 1980 is often brought up assuming everyone bought at the top. Or that those buying in the past years bought in spring 2011 with their life savings.

PS. What about the fact that silver is at or below its cost of production right now?

Just my opinion.



Jim

 

[bradley1719]

As Nitric said, it all goes back to the beginning.....

In 1794 when the US decided to make its first dollar coin, the main coin being used at the time was the Spanish colonial dollar which was the 8Reales coin. The US needed something to replace this and in order to gain adoption decided to make our dollar roughly the same size.

1791 8R Carolous IIII Coin:
Size: 39 mm
Purity: 90%
ASW: .7797 ozt.

1794 US Flowing Hair Dollar:
Size: 39 mm
Purity: 89%
ASW: .7731 ozt.

So as you can see, the dollar was very close to the 8R coin. HOWEVER, at that time our other smaller denominational coins were made larger than the current versions.

1794 Flowing Hair Half Dollar:
Size: 32.5 mm
Purity: 89%
ASW: .3866 ozt (half of the dollar amount)

1796 Draped Bust Dime:
Size: 19 mm
Purity: 89%
ASW: 0.0774 ozt (one tenth of the dollar amount).

So in the beginning it all worked out correctly. But around 1853, the US decided to put less silver in their smaller denominational coins. However, they kept their dollar the same size for whatever reason. At that point, a silver dollar had more silver than the same face value amount of smaller denominational coins.

1853 Seated Liberty Half Dollar:
Size: 30.6 mm
Purity: 90%
ASW: 0.3599 ozt (46.6% of a dollar).

So it wasn't always true that a silver dollar had more silver than two halves or four quarters. That only happened after roughly 1853. My guess is that the Morgan and Peace silver dollars were left the same because these were not the most commonly circulated coins. The majority of them sat around in banks. I would guess that the bankers understood the differences and preferred to hoard these over hoarding smaller denominational coins. But that is just a guess.

 

[Mackaydon]

Jim,
I started collecting silver (to fill my Albums) in the 50s. In the 50s, silver dollars were not a problem to collect; simply ask the bank teller for a roll of them. (Silver was then priced between about 75 cents to $1.00 per ounce.) In 1964 I bought all the JFK halves I could--I worked at a bank-- (sold the last ten rolls a couple of years ago at $41 per).
The 'loss of buying power due to monetary inflation' was not on my mind during my collecting days. The value of those coins, which I still have, was the enjoyment I took in collecting; and viewing them today--remembering how I collected them over 50 years ago--by sorting through my dad's change each day after he returned from work.
All the best,
Don.....

 

[bradley1719]

Don,
PS. What about the fact that silver is at or below its cost of production right now?

Just my opinion.



Jim

I don't believe in "cost of production". If Wendy's says it costs them $5 to make a burger and McDonald's says that it costs them $1 to make a burger, how does that really tell us what the cost of a burger should be? If Mine A says it costs them $20 to mine an ounce of silver and Mine B says it costs them $6 to mine an ounce of silver then what does it really cost to mine silver? How could you ever come up with a true "cost of production" figure? It is all relative to each individual mine.

10 years ago the price of silver was around $6.20. So the "cost of production" back then would have been roughly around $6 in order for miners to make money.

That is 3 times less than today's numbers. Do you really think the cost to produce silver has jumped 300% in the last 10 years? If so, why? What factors have contributed to this huge increase in the cost to mine silver?

 

[jim4silver]

I don't believe in "cost of production". If Wendy's says it costs them $5 to make a burger and McDonald's says that it costs them $1 to make a burger, how does that really tell us what the cost of a burger should be? If Mine A says it costs them $20 to mine an ounce of silver and Mine B says it costs them $6 to mine an ounce of silver then what does it really cost to mine silver? How could you ever come up with a true "cost of production" figure? It is all relative to each individual mine.

10 years ago the price of silver was around $6.20. So the "cost of production" back then would have been roughly around $6 in order for miners to make money.

That is 3 times less than today's numbers. Do you really think the cost to produce silver has jumped 300% in the last 10 years? If so, why? What factors have contributed to this huge increase in the cost to mine silver?

Bradley,

Thanks for your research into the dollar issue! Good info.

As far as cost of production, when you say you "don't believe in the cost of production", do you mean you believe silver is "free for the pickens" or that mining companies misstate their cost of production?

I am no expert on mining PM's, but even an elementary analysis will lead one to conclude it costs money to run a mine. How much? I don't know. There are some primary miners (see below link) that say 16 is all in cost. Some non primary miners might not be dependent on their silver income since they are primarily mining other metals, but don't think that reduced income has NO effect. I would imagine companies that are not primary miners are still making less on the silver they mine, even though perhaps they are not dependent on it. At the end of the year this will mean less profits than if silver were selling for, say 26 or 30 or 35, etc. Sort of like if your grandparents always send you 1000 every Christmas, when they stop sending you will notice (if you are a kid).

When you see a mining company say their cost of production for silver is something like, say 5 dollars per ounce, why not look at their past few years financials and see how much "profit" they made. If their P/E ratio is negative, then ask yourself "how can their cost of production be 5 bucks, when they lose money in a year? Is it just one year they lost money, or over several years, and even some of those years where say silver was 26 per ounce. Some mining companies were not making a profit when silver was 26, so how they survive now I don't know.

From what I have read, over time many mines have the "easy find" metals depleted and have to go deeper or into more hard to reach places. Plus (up until a few months or so ago) fuel prices had been going up quite a bit (double from 2008). Oil will probably go back up after the elections next month (just my opinion).

I cannot say definitively what it costs to mine silver or gold, but I can read a company's balance sheet. The proof is in the pudding as they say.

Meanwhile, give this a listen. It is an interview with the CEO of one of the largest primary silver miners in the world (not some dumb ass silver pundit guru magic man spouting info out of his a$$).




Just my opinion,

Jim