I received a couple of questions from a reader the other day pertaining to junk silver, both of which vexed me a bit. Here they are from Michael S:
Regarding the Junk Silver Market
- When junk silver coins went out of circulation in the years following 1964, where did they go? Of course, some of the coins were held privately, but, over time, much of it had to be accumulated institutionally, and at significant capital cost. And today, when you buy junk silver, it comes in a nice canvas bag, inspected and counted. So some institution maintains a market in it. The coins in canvas bags have to originate somewhere? Where? What institution or institutions maintain this market?
- If you go to a coin dealer today to buy junk silver, he likely does not stock it and has to buy it somewhere for you, where it is stocked (and stocked at significant capital cost), and offered for sale. So there has to be one or more institutions involved in maintaining a junk silver market and stocking it for sale. What institutions? Where is this market?
Though I had never really thought about it, it has been my understanding that the US Mint takes care of circulating coinage. I made a quick trip to the Mint’s FAQ page and picked this up:
What happens to United States coins that are no longer fit for circulation?
- Those coins are classified as “uncurrent” or mutilated. Mutilated coins are coins that are chipped, fused, and not machine countable. Mutilated coins are only redeemable through the United States Mint.
- Uncurrent coins are coins that are worn yet recognizable as to genuineness and denomination, and are machine countable. Uncurrent coins are redeemed by the Federal Reserve Banks, then forwarded to the Mint for disposition.
- All uncurrent or mutilated coins received by the Mint are melted, and the metal is shipped to a fabricator to be used in the manufacture of coinage strips.
So this kind of answers the questions, but not entirely. I know readership is a little low right now because we’re just starting out, but if any of you have answers or insights into this, we’d appreciate your comment or email. Thanks! J.