President Kennedy was the last U.S. president who defended the traditional role of silver in U.S. coinage. His successor, Lyndon B. Johnson, sowed the seeds of future inflation with his "guns and butter" spending policies (paying for rising war and welfare costs at the same time).
Barely 20 months after Kennedy was killed in November, 1963, silver demand rose so fast that Johnson opted to take silver out of most U.S. coins.
On June 23, 1965, while signing the Coinage Act of 1965, Johnson proudly stated that he made "the first fundamental change in our coinage in 173 years. The Coinage Act of 1965 supersedes the act of 1792. . . . Since that time our coinage of dimes, quarters, half dollars and dollars have contained 90 percent silver. Today, except for the silver dollar, we are establishing a new coinage. . . . The new dimes and quarters will contain no silver. They will be composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper."
Despite saying that "silver consumption is now more than double new silver production each year," he defied all laws of economic supply and demand by adding, "Our present silver coins won't disappear and they won't even become rarities. . . . 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."
Johnson was very, very wrong. Today, the price of pre-1965 "junk" circulating silver coins is about 18 times their face value. A 1964 dime trades for about $1.80, while most U.S. dimes minted after 1965 are worth just 10 cents.
About the Author: Mike Fuljenz
Mike Fuljenz is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the NLG award winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.
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