What would happen if the US mint started accepting silver certificates again?

What would happen if the mint had a huge stockpile of uncirculated silver dollars and resumed redemption of silver certificates? I assume the price of silver cerftificates would skyrocket as they would become very rare. Silver coins' values would probably drop in value, especially the dates and mintmarks of the coins the government had stored away from decades. Silver bullion value would also drop. It would also be more common to see silver dollars in circulation.

What else would change? Personally I hope this never happens because it would lead to the destruction of millions of silver certificates.

To the naysayers: Of course this would never really happen, but it's fun to think about.

 

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Since the Silver certificate is no longer redeemable for silver since june '68, they would sell the silver dollars for their idea of a fair price like they did the GSA sales in 1972-74. You could pay in silver certificates, but they would only buy a fraction of a silver dollar being sold. don't worry , the silver certificates are safe.

 

As I said, this is a theoretical question and I know it won't ever happen. As I also said, what if it did happen?

 

If that ever happened, the US dollar and our economy will be turned on its head.

 

Would it? There aren't THAT many silver certificates extant. There would have to be billions of them to make a dent in the economy.

How many silver certificates are in existence today? An unanswerable question for sure.

 

It won't be the physical act of redeeming silver certificates that will affect the dollar and our economy, but the change of our money from fiat currency to precious metal backing. When legal tender notes were circulating with silver and gold certificates, those metal-backed notes carried a premium over legal tenders, whose value was only authorized by law. The value of our dollar will become increasingly volatile, affecting our trade balance with countries like China. It's hard to predict exactly how it would behave, but considering our debt is magnitudes higher today, it is unlikely to react positively to such news.

 

I'm not talking about returning to a silver standard, I'm talking about redeeming silver certificates and nothing more.

 

Another effect is that counterfeiters would start making silver certificates. I read that North Korea is very good at this despite being bad at pretty much everything else.

 

It depends if the notes are being redeemed for silver or called in similar to gold certificates in 1933. If you're referring to the first situation, the act of making SC's redeemable (for silver) is what creates the silver standard. The notes read "One dollar in silver payable to the bearer on demand." That meant one could take an SC to a bank and redeem a dollar's worth of silver. FRNs and SCs circulated together for more than half a century.

It would be no different today, except speculation in the precious metals market is much higher than it was during the time SCs circulated. Any statutory exchange rate set by the Treasury will be pushed up (or down) to the market price. We have a massive debt and owe money to nations like China that own large precious metal reserves and billions of FRNs. Redemption of silver will destabilize the current dollar (FRN).

 

Don't forget about United States notes with the neat red seal and serials.

 

I think there is a much better chance of Elvis Presley walking down the ramp of a freshly landed UFO on the White House lawn.

 

Did you guys see the video on yt where a guy goes to the bank trying to redeem his silver certificate? So funny

 

The mint has a huge stockpile of uncirculated silver dollars -- they are called American Silver Eagles. The mint will also accept your Silver Certificates at face value for those ASE's.

 

That's essentially what *did* happen in the 1960s. As the market price of silver rose toward and then above the official level of $1.29 per ounce, people were cashing in silver certificates for silver dollars at an incredible pace. If you didn't want to travel to the Mint yourself, there were folks advertising to buy silver certificates at $1.50 on the dollar in FRNs. Some dates of silver dollars did drop tremendously in value as large quantities were released from the Treasury--the 1903-O in particular went from a four-figure price to a one-figure price.

But, no, the value of silver bullion didn't drop. The Treasury hoards of silver dollars just weren't that big, compared to the size of the worldwide silver market; the market absorbed them all and kept right on rising. And silver dollars actually became *less* common in circulation--before the '60s, they'd actually circulated in the West, but they quickly became too valuable to spend.

If the Treasury somehow discovered a forgotten vault of old silver dollars today and decided to use them to start redeeming silver certificates again (not gonna happen, but let's pretend), the effect would basically be the same. Common beat-up $1 silver certificates would suddenly be worth $15+, and certain dates of silver dollars might lose some numismatic value. But, even if there were enough silver dollars to redeem every old silver certificate in existence, that probably wouldn't move the global market price of silver to any significant extent. And the better silver certificates, like 1928C-D-E notes and large-size notes, wouldn't be cashed in anyway--their numismatic value is much greater than that of a silver dollar. The larger fiat-currency-based economy wouldn't even blink.

 

The tellers and management don't realize it's regular money. The U.S. Government Stated that you don't have to turn in your old 100 dollar bills for new ones. So it goes that the one dollar silver certificates are legal tender and can be used as money any time or place. You'll get a funny look when you do that because they don't teach the tellers what money is. It's a shame.

 

Not all, but there are some banks where the vault teller will keep some of the older bills that come in to train other tellers what they are etc. Otherwise most tellers are completely clueless beyond what they normally see.

 

There is some training...but I will admit that it is minimal. I was a bank teller for a while and because of my knowledge, I was put to good use identifying "unusual" bills when they would come in.

You have to remember though...99.999% of the bills they see are what is currently commonly circulating. It's not sad that they aren't trained to readily identify that 0.001%. They are low level (and low pay) employees...it does not make business sense to educate them any more than they need to do their job. IMHO, spending money to ensure that bill they see 0.001% of the time is easy to identify is a waste of their money.

 

I live in a part of the world where there are mostly retired folks, even quite a few WWII veterans - so old bills are not quite so infrequent. Which is not such a bad thing for a collector like me with many good connections in my numerous financial institutions.