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Thursday, April 10, 2014

Real U.S. Silver Money Would Consume Nearly Half Of The World's Mine Supply

Stephen St. Angelo, SRSrocco Report
Wednesday, April 9th

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