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While silver investors continue to be discouraged about the low price, the market has experienced a fundamental change that needs to be understood.  Ever since governments removed silver from official coinage, over 50 years ago, the market has been supplemented by several billion ounces of silver.  The majority of that supply has been depleted.

The reason the United States and other countries stopped producing official silver coinage wasn’t due to any monetary conspiracy; rather it was based on a straightforward problem; supply versus demand.  Because industrial silver consumption had skyrocketed after World War 2, the silver market would have suffered deficits if the U.S. Treasury didn’t sell silver into the market.

It was quite simple; there just wasn’t enough silver to go around.  So, governments started to reduce, then eliminate silver from their coinage in the 1960’s.  A lot of this silver, known as “junk silver,” was either purchased by investors or remelted and sold back as supply into the market.  While there is no way of knowing how much of the older official junk silver remains in the market, the majority of it was recycled for much-needed supply.

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