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<p>[QUOTE=&quot;Jamericon, post: 1498037, member: 18294&quot;]The Treasury valued its monetary silver at $1.29 per ounce. For every ounce they acquired, they minted $1.29 worth of silver dollars that they held in reserve for $1.29 in silver certificates. The 1934 Gold Reserve Act ended the requirement that they mint silver dollars, and from then-on the Treasury simply stored their silver as bullion.</p><p><br /></p><p>The Treasury never really paid $1.29 for their silver, but actually paid quite close to the going market rate at the time. This often meant they purchased silver for 50 or 60 cents per ounce. The balance to $1.29 they booked as seignorage, essentially a fancy word for inflation.</p><p><br /></p><p>For much of the time the Treasury issued silver as money, they were the only demand for domestic production of the metal. They essentially made the market. By the 1950s, industrial and scientific advances had discovered greater uses for silver in fields such as electronics and photography. The was a marked increase in the demand for silver and a rapid ascent in the metal&#039;s price. Eventually that price exceeded $1.29, which meant the Treasury was losing money by paying $1.33 per ounce, for instance, and booking it as $1.29.&nbsp; </p><p><br /></p><p>The Treasury was also losing money because the public was redeeming silver certificates for silver dollars, and then selling the dollars for bullion and making a profit. They realized they could do the same thing by selling their silver stocks on the market for a profit. They ceased issuing silver certificates in 1964, stopped redeeming them for silver dollars in 1967, and instead redeemed then for silver granules. In 1968, they stopped all together redeeming silver certificates for silver and started redeeming them for Federal Reserve notes and United States notes.[/QUOTE]</p><p><br /></p>

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