The Silver Institute - Price History

From the end of World War II until the early 1960s, fabrication demand for silver rose strongly. This period witnessed the rebuilding of Europe and Japan, and a tremendous push worldwide toward electrification, housing construction, and consumer durables. Many electrical appliances, as well as electrical generation and transmission systems, use silver, which was one of the major factors behind this extended boom in industrial silver usage. At least as important was the advent of mass market photographic products, which sharply increased the use of silver in photographic films and papers.

There was another reason why fabricators were eagerly turning to silver during this period. 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.

In this way, the U.S. Treasury was the buyer or seller of last resort in the silver market, by virtue of the Silver Purchase Act of 1934 (itself one of a series of such laws extending back to the 1870s). The 1934 law authorized the Treasury to buy silver either until:

This purchase program remained in effect, in essence, until 1961. During the intervening 28 years, the Treasury acquired 3.2 billion ounces of silver. About half was acquired in the first four years, from 1934 through 1937, and the other half between 1937 and 1955.

A good portion of this silver was acquired from U.S. mines: 880 million ounces, or nearly all domestic production from 1937 to 1955. About 110 million ounces were purchased during the first three months following passage of this legislation in 1934. The law prohibited Americans from owning non-monetary silver, and directed them to sell it to the Treasury. A great deal of silver was also imported. Between 1934 and 1939, nearly 2 billion ounces of silver came from other countries. Market prices ranged between 25 cents and the ceiling created by the Treasury’s set price of 90.5 cents during these years, but spent most of the time below 75 cents. U.S. fabrication demand (excluding coinage), which totaled 1.8 billion ounces from 1935 through 1955, was met by imported silver.

By 1955, the demand for silver was great enough to push market prices above the Treasury’s 90.5 cents purchase price. Since the Treasury was a seller at 91 cents, the price remained around this level for several more years, as the Treasury’s reserves were depleted. While the 1934 law directed the Treasury to buy silver with an eye on boosting the silver price to $1.29, the Treasury’s policy during the late 1950s was designed to keep silver prices below the point at which coins would be melted down, to allow time for the Treasury to extricate itself from the silver market.

Treasury reserves peaked in 1959, when the U.S. Treasury had 2,060,000,000 ounces on hand, and another 1,331,000,000 ounces were outside the Treasury in circulating coinage, for a total of 3,391,000,000 ounces.

In summary, the post-war period saw silver demand rise sharply, while mine production and other supplies were relatively stable. The U.S. Treasury sold tremendous amounts of stockpiled silver during the years after 1955, in order to keep the price of silver below its "monetary value." Additionally, the actual growth of the overall economy increased the need for circulating coinage. One reason for the Treasury’s sales was straightforward: if silver’s market value rose above its monetary value, $1.29 per ounce, holders of U.S. silver certificates, one form of currency in circulation at the time, could trade in these $1, $5, and $10 bills in exchange for silver bullion. Also, there would be an enormous incentive for individuals to melt down the silver coins in circulation.

Had the Treasury not been present as a seller of silver, market supplies from other sources would have been hard pressed to keep pace with the growth of fabrication demand, and the price of silver most likely would have risen sharply during the late 1950s and early 1960s.

1950 to 1960 | 1960 to 1965 | 1966 to 1970 | 1971 to 1978 | 1979 to 1980 | 1981 to 1990 | 1990 to 1999 |
2000 to Present

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