In the "Big Silver Melt" of 1980, millions of dollars (face value) of junk silver coins (pre-1965 US dimes, quarters, halves) fell victim to refinery cauldrons. Many silver coin collectors and hoarders today lament the wholesale destruction of these US coins that represented the last physical manifestation of "real money" in this country.
A question that is commonly asked today on internet boards is why the coins were melted at all? Why didn't junk silver sellers find buyers who would've held onto the coins rather than toss them into the refinery cauldrons? To find the answer, we have to return to the turbulent days of 1980 as silver prices rose rapidly to peak at $50.
Coin dealers of the era relate vivid stories of long lines outside their shops with eager sellers looking to convert their old silver coins, jewelry, and silverware into fast cash. Many large stores had armed guards who'd only let a few customers in at a time to sell their goods. Multiple coin counting machines were constantly clanging nonstop as they busied about their task. However, as silver reached $50 US on the Wall Street trading floor, customers weren't offered more than the equivalent of $30 an ounce for their silver dollars and other coins. The reason being that the refineries, who were the dominant silver buyers at the time, weren't willing to pay more than this lower price due to the large inventory backlogs that afflicted them. For the part of the coin dealers, the necessity of cash flow and a fear of being caught with too much inventory in a volatile market, compelled them to take their profits each night. It was just too risky to hold onto the Morgan silver dollars, Walking Liberty halves, and Mercury and Barber dimes for too long waiting for willing buyers of these rare and beautiful coins.
As the price of silver skyrockets today, many wonder whether the surviving junk silver coins are destined to die by fire as their relatives did three decades ago. I believe this fear to be groundless due to the internet revolution which birthed sites like eBay. Today, when the average seller desires to sell his roll of Franklin halves, he doesn't automatically march to his local coin dealer. No, instead he goes online and uses sites like eBay. In a few minutes his auction is created, which in a few days will net him a buyer for his silver coins at melt pricing, and sometimes a few percent above. Other sites like Bullion Direct use a slightly different sales mechanism, but with identical seller-buyer matching results.
Due to internet technological innovations that allowed sites like eBay to proliferate and be used by the average American, the current silver price run will not feature long lines at coin shops and vats of melting silver coins. Instead, sellers will easily find willing buyers who will hold onto their new silver acquisitions as islands of security in a collapsing paper money world.
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