Silver could hit $150 this year

What Was The Price Of Silver In 1980?

In 1980 silver prices dectupled""increased ten times their previous levels. Ever since the Great Depression the United States had held two billion ounces of silver in the U.S. Strategic Stockpile.They issued metal loans""loaning silver out at a certain interest rate in return for IOUs stating that the metal would be returned. In this way they kept silver prices low""any time the price escalated the government stepped in and watered the prices down by creating more "paper silver." In other words, the government loaned out, over time, two billion ounces of silver metal in return for two billion ounces of paper silver (IOUs).

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Eventually the contracts came due""and nobody had the silver metal. - Full Text

On the veracity scale, this author's convoluted masterpiece may even rank below the tungsten-plated bullion conspiracy. It took a literal act of congress to engage in any activity effecting US Silver inventories. Congressional and Senate authorizations pertaining to all sales, auctions, internal transfers, and coinage legislation are matter of official public record. Legislative proposals involving US Silver inventories were vigorously contested as congressmen fronting for the commercial Silver lobby, collided with their counterparts representing the interests of US mining districts. Because these debates were media-worthy events, most of this information was also available to John Q Public through newspapers and contemporary periodicals.

Fortunately we don't have to parse through 60 years of official documentation and press releases in order to track the gradual erosion of US Silver stocks, organizations like the Silver Institute have already done the heavy lifting.

All bolding on this page is mine.

Link to ex-quotes beginning with 1950 - 1960.

Price History 1950 to 1960

The U.S. Treasury had a silver inventory that, as of 1950, stood at 2 billion ounces. Furthermore, Treasury policy was to buy domestically mined silver at 90.5 cents per ounce and sell silver at 91 cents, effectively putting a cap on the United States market price of silver.

How did the Treasury cap the market price of Silver? Through officially sanctioned market interventions - the direct sale of US Silver reserves on the open market. The gubmn't didn't have to hide it's price manipulation.

Here's President Johnson announcing the end of Silver usage in US coins on July 23, 1965.

"If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content." - Full Text

Of course he was eventually proved wrong, but that's another story in itself.

1960 to 1965

For decades, the Treasury had been a net buyer of silver. By 1960, it had become a net seller. In 1960, the Treasury sold 22 million ounces of silver in bullion form, and used another 46 million ounces in coinage. The next year the Treasury had to sell 63 million ounces of bullion and use another 56 million ounces to replace silver coins that had been taken out of circulation by investors. That year, 1961, the Treasury realized that it would run out of silver for use in coinage and as a reserve against silver certificates unless it took drastic measures to begin phasing silver out of currency. In 1961, the Treasury ordered $5 and $10 silver certificates out of circulation, freeing silver reserves held against these bills and reducing the public’s call on Treasury silver. In November 1961 the government also suspended silver bullion sales by the Treasury at the formerly fixed price of 91 cents.

Once the Treasury stopped selling at that price, market quotes for silver quickly rose. In June 1963 the Treasury also replaced the $1 silver certificate with Federal Reserve notes. By 1963, silver prices reached $1.29, the monetary value of silver in coinage. At prices above this level, holders of silver certificates would have been able to redeem them for more valuable silver, under the now-defunct silver certificate legislation. (The other trigger price the Treasury worried about was $1.38, at which level it was profitable to recycle coinage for its silver content.)

During this transition period, the U.S. Treasury still had to keep the silver market well supplied, in order to keep the silver market relatively calm until it had completed the withdrawal of silver form its currency. In late 1963 the Treasury resumed its silver bullion sales, as part of this effort. Over the six years between 1960 and 1965, the Treasury sold a total of 342 million ounces of silver bullion. It used another 814 million ounces of silver in coinage during this same time. In total, the Treasury used 1,156,000,000 ounces of its silver reserves. Much of this silver, especially the bulk of it used in coins, found its way quickly into the hands of investors. Government steps to remove silver from the currency led investors to conclude that the price of silver would rise sharply once the Treasury no longer was supplying the market with such large volumes of the metal.

Working with a [post war] inventory of approx 2 billion ounces, periodically the US Treasury was required to mint and issue additional Silver coinage to accommodate general economic expansion and population growth. The author claims that by 1980, the entire US Silver stock of 2 billion ounces had been depleted through a series of surreptitious loans in exchange for somebody's IOU's. How is that even remotely possible given that 814 million ounces were siphoned off in coinage programs from 1960 - 1965 alone. Not to mention the inventory draw-down from two decades of open market sales. Many of us own these coins today...Silver dimes, quarters, half dollars...so yes, they really were minted, and yes, they actually are composed of 90% Silver...and no, the remaining 10% is not an amalgamation of paper certificates and IOUs

The United States Strategic Silver Stockpile was established in June of 1968 with the transfer of 165 million ounces from the US Treasury. You can track this transfer, and research annual supply levels here. Prior to June 1968, US Silver stocks were held in custody by the Treasury Dept.

In 1982 following a series of auctions, senate legislation banned further sales from the strategic stockpile. The reserves were frozen at 139.5 million ounces. Three years later, a subsequent bill was passed authorizing the Treasury to appropriate the remaining 139.5 ounces as working stock for the American Silver Eagle Bullion program, and by September of 2002, the US stockpile was empty. At this juncture Uncle Sam was forced to secure Silver for his national coinage programs in the open market, where he competes for price and supply with every other fabricator and industrial end user. Coincidentally (I think not) October 2002 marked the beginning of current bull market in Silver.

A quick word on those alleged "2-3 billion oz in certificates floating around the COMEX that didn't have physical backing."

Certificates and IOUs don't float around the futures exchange....collateralized commodities contracts do. Commercial hedgers and speculators open positions by placing real capital on account in the amounts needed to satisfy initial margin requirements. Try collateralizing a Comex contract to trade 1MM ounces of Silver with a 3rd party, unsecured debt obligation (IOU)...ain't gonna happen. Besides, even if you could trade with IOUs (which you can't) on a percentage basis maybe 3 - 5% of Comex contracts ever require physical backing.

The vast majority of futures trades are purely speculative 'bets' on the direction of prices...with no physical delivery. You guys know this, I know this, and every market participant buying a futures contract knows this. Going in, approx 95 - 97% traders intend to close out their positions prior to contract expiration and settle their profits and losses in cash before First Notice Date...that's the deadline for closing a commodities contract. There's nothing fraudulent about entering a futures contract to sell x-ounces of Silver without the having the ability to deliver the underlying commodity. It only becomes a matter of fraud or default if traders hold open positions beyond First Notice Date without the ability to deliver the physical commodity. When traders know they lack the ability to deliver, they simply close-out their positions ahead of the FN deadline.

This is how the game is played, and it's the same for any commodity traded on the futures exchange, Gold and Silver aren't unique in this regard. Don't mean to be rude, but the author displays a profound ignorance with respect to the workings of the futures market.