Since ancient times, silver has been a representation of value, wealth, and money. The earliest known coin was made of electrum, a gold-silver alloy. It was made by Lydia around 750 B.C.
In the Bible’s Genesis (13:2), almost 800 years earlier, Abraham’s wealth is described as “very rich in cattle, in silver, and in gold.”
Beginning around 3000 B.C., silver was traded by weight, or shekels. However, the marking of the electrum coinage in what is now western Turkey is what really started the rise of silver as a payment and early investment method.
Silver was first mined in western Turkey because it was much more common than gold. However, the Greeks made mining a fine art at Laurium, not far from Athens today. According to the Silver Institute, a trade group in the industry, the Laurium mines probably produced about a million ounces of silver annually between about 600 and 300 B.C.
Later, there were mines in Spain that produced enough silver for nearly a millennium to meet the needs of Carthage, the Roman Empire, and eventually most of the world, as well as those of southern Germany and the Austro-Hungarian Empire. According to the majority of current estimates, mining operations produced approximately 1.5 million ounces of silver annually between the Laurium era (600 B.C.) and 1500 A.D.During this time, approximately 31.5 million ounces were produced.
A New World was discovered by exploration voyages at a time when the silver production of the Spanish, South German, and Hungarian mines was decreasing. They achieved greater success than they could have ever imagined given that one of the goals of their journey was to locate additional sources of gold and silver.
The Conquistadores made good on their investment in a fleet of vessels designed to transport the riches of South and Central American silver mines and fill the coffers in Madrid when they discovered silver as the first metal in New Spain.
By the middle of the 1530s, Mexico City had its first mint, known as a Casa de Moneda, and more quickly followed throughout the expanding Spanish empire. The Spaniards struck Pieces of Eight coins to fill the hulls of the wooden boats used to transport the mother lode back to Spain, and it was decided that the new world would give up its bounty to the Royal Treasury of Castille.
Good Spanish records and three central locations indicate that Mexico produced approximately 1.5 billion troy ounces of silver between 1500 and 1800. Additionally, the Potosi region of Bolivia produced approximately 1.5 billion troy ounces to supplement Mexico’s output. And Peru produced an average of 3 million ounces per year, or 600 million ounces, from about 1600 to 1800. This puts us right at the beginning of the 19th century when the American discovery of the Comstock Lode disrupted the precious metals market.
Today, 58 nations mine silver, including Canada, the United States, and Mexico. Gold, on the other hand, is mined in 76 nations. In total, 24 times more silver has been mined than gold.
Silver bullion and coins have always played an important role in the portfolios of many investors and collectors.
Some common-date silver coins have a higher numismatic value than a bullion-like item. This was especially true in 1980 when the Hunt Brothers tried to take over the silver market. This caused the price of silver to rise to nearly $50 an ounce. At that time, 704 million 1964 Washington quarters from the Denver Mint suddenly had a value of more than $8 each because of their metal content. That particular coin was nothing more than a spacer with no real value up until that point. Even the most common silver coins now had significant value due to the bullion content on their own. More importantly, it became a collectible and bullion investment.
Coins, in contrast to stocks, do not rise in value as stocks do. They only come in a certain quantity, and the government manufacturer moves on to the next issue at the end of the year after minting the current one.
If there is sufficient demand, fixed supply creates scarcity, which is what drives the coin industry.
The Constitution of the United States of America prohibited the issuance of “money” other than gold and silver because the authors were concerned about the colonial experience with currency labeled “Not worth a Continental.”Copper coinage could still be issued for change, as the Mint Act of 1792 called for gold, silver, and copper coinage just three years after the Constitution was adopted. Alexander Hamilton’s expansive vision was complemented by Jefferson’s ideas about how a currency system should be managed in the original Mint Act of 1792. The United States’ coinage system underwent very little change during its first 100 years of existence. The nation’s minting and coinage laws were fundamentally altered only after the Coinage Act of 1965 was passed.
The Founding Fathers expressed concern about how to legislate the composition of money even before the Constitution was signed.
For the purpose of valuation, Hamilton suggested using a ratio of 15:1 between gold and silver. Although Hamilton’s economic analysis was correct, by the time the law was passed, the world price-to-silver ratio had fallen to about 15.5:1, making silver too cheap. Quickly produced coins were withdrawn from circulation. The imbalance remained uncorrected until the beginning of the 1830s, which explains the limited availability of gold coins at the time.
The original coinage system, which existed from 1792 to 1828, is described as “a discreditable failure” by Neil Carothers, whose book Fractional Money is still considered a classic more than 80 years after it was published. Carothers put it succinctly: “Spanish coin could not be driven out until the mint provided domestic coins in abundance.” The Spanish pillar dollar remained the primary unit of value. In fact, the pillar dollar was still accepted as currency until Congress changed the law in 1857 and made it illegal to use the coin.
In an effort to rebalance the market, the Coinage Act of 1837 set the price of gold at $20.67 an ounce (or it’s equivalent) and the value of silver at $1.29 an ounce. Gold’s value remained constant for nearly a century (although President Roosevelt revalued it in 1933). The silver price wasn’t as fortunate.
Under the initial components of this system, citizens had the right to make a deposit of gold or silver bullion at the mint, and in return, they received a full measure of precious metals coinage minus the cost of making it. Thus, currency supplies could be controlled by the population and the government. The privilege of depositing these metals was referred to as “free coinage,” although the Mint did charge a small fee for the privilege. Despite the fact that millions of ounces of silver were purchased and turned into coins, as all of the warnings in the 1860s suggested, the price of the gold continued to fall as the market flooded with silver. The Mint bought silver, turned it into coins, got the coins back, and then made more coins. It seemed like a loop. In point of fact, the figures for the mintage of silver dollars are meaningless due to the organized melting and recoining of noncurrent coins. The situation is the same with subsidiary coins.
To meet the demand for small change, subsidiary coinage (the half dollar, quarter, 20-cent piece, dime, and 3-cent silver coin) was produced.
Silver dollars made a statement about politics.
The Bland-Allison Act, over President Rutherford B. Hayes’s veto, brought the production of silver dollars, which had been suspended in 1873 for use in circulating coins, back to life in 1878. The remaining provisions of the Coinage Act of 1873, on the other hand, remained unchanged.
The Treasury purchased silver through resumption legislation, which led to the production of coins. The coining stock was eliminated when silver was required; The Pittman Act led to the loss of millions of silver dollars during World War I.
For those involved in the mining and production of silver, price support was provided by President Franklin Delano Roosevelt’s “New Deal.”They required it. Silver fell from its peak of $1.29 in 1874 to a low of 24.5 cents an ounce in 1933 and a high of 65 cents an ounce in 1900. According to the Director of the Mint’s 1933 Annual Report, the Mint purchased 1.3 million ounces of silver at an average cost of 27 cents an ounce. Even during the Great Depression, it was estimated that 24.2 million ounces of silver were used in the arts.
According to the 1934 Annual Report of the Director of the Mint, the Mint and Assay offices of the United States were authorized, acting under the Executive Proclamation of Dec. 21, 1933, to receive domestically mined silver for four years at a price equal to the monetary value (64.6%), compared to an open market price of 43 cents.
After that, miners received an additional boost in addition to the price subsidy. On June 19, 1934, a silver purchase act was approved, directing an expansion of the silver monetary stack. The goal:
increase it to a quarter of the gold stock in the money.
What follows is characterized as a significant change by the 1934 Mint Report: Additionally, this act authorized the coinage of standard silver dollars, directed the issuance of silver certificates in opposition to silver bullion, and authorized the President’s proclamation of the nationalization of silver on August 9, 1934.