The U.S. Treasury would consume nearly half of total mine supply if U.S coins contained silver. Prior to 1965, the U.S. Mint included silver in its coinage. The U.S. dime, quarter and half-dollar consisted of 90% silver. However, today they are nothing more than base metal slugs.
If we look at the table below, the U.S. Mint produced 10.6 billion coins in 2013:
The U.S. Mint shipped 1.9 billion dimes and 1.06 billion quarters in 2013. According to the U.S. Mint Annual Report, it cost $75 million to produce these dimes and $97 million for the quarters (based on Cost of Goods), for a total of $172 million in 2013.
The next two images show how much silver was contained in each coin prior to 1965:
Prior to 1965, the U.S. Dime contained 0.07234 troy oz. of silver and the quarter, 0.1808 troy oz. If we apply some simple calculations we have the following:
2013 Dimes: 1.9 billion X .07234 troy oz = 137 million oz
2013 Quarters: 1.06 billion X 0.1808 troy oz = 191 million oz
Furthermore, the U.S. Mint sold a total of 43.5 million oz of American Silver Eagles in 2013 (bullion, collectable sets & proofs). So, if the U.S. Treasury still produced 90% silver dimes and quarters including the total sales of American Silver Eagles, the U.S. Mint would have consumed 371.5 million oz of silver in 2013.
Thomson Reuters GFMS estimates that total global silver mine supply to be 814 million oz in 2013, up 27 million oz from a total 787 million oz in 2012. There are two important take-a ways here:
1) If the U.S. Mint produced Real Money Silver Coins, it would consume 46% of total mine supply.
2) This 371.5 million oz figure of 2013 U.S. Silver Coins (based 90% silver content in dimes & quarters), there would be no silver available for investment demand
GFMS put out a Silver Market update in Nov, 2013. From this report I estimated the total demand figures for these categories in 2013:
2013 Industrial applications = 471 million oz
2013 Jewelry & Silverware = 245 million oz
2013 Official Coins = 115 million oz
2013 Photography = 56 million oz
2013 Producing de-hedging = 35 million oz
2013 Total Demand = 922 million oz
GFMS estimated that total silver supply as follows:
2013 Mine supply = 814 million oz
2013 Scrap supply = 234 million oz
2013 Govt sales = 7 million oz
2013 Total Supply = 1,055 million oz
If we subtract total demand from supply, we get an estimated net 133 million oz (1,055 million oz supply minus 922 million oz demand = 133 million oz). GFMS classifies this surplus as IMPLIED NET INVESTMENT.
Now, if we take the total amount of silver consumed minting dimes and quarters in 2013 (based on Pre-1965 coinage), it would equal 328 million oz. We must remember, the American Silver Eagle sales are included in the Official Coin category by GFMS, so we must exclude it from the estimated 133 million oz silver surplus.
2013 Estimated silver surplus = 133 million oz
2013 U.S. mint consumption = 328 million oz (based minting 2013 quarters & dimes at 90% silver content)
2013 Estimated Silver Deficit = 195 million oz
So, if the U.S. Mint still produced 90% silver dimes and quarters, it would need to acquire an additional 195 million oz from above-ground silver stocks… AND THIS IS ONLY ONE COUNTRY!
Not only would the U.S. Mint need to access more silver to mint its dimes and quarters, there would be no silver available for INVESTMENT PURPOSES. Which is the very reason gold and silver paper prices are heavily manipulated.
As I stated above, it cost the U.S. Mint $172 million to produce base metal slug Dimes and Quarters in 2013. If these coins contained 90% silver, the cost would be a staggering $7.8 billion or 46 times the value.
Even though the world forgot the value of real money… they will soon be reacquainted.
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