what is constitutional silver

Natashya

3 min read

·

26-12-2024

1

0

Share

Constitutional silver is a term used to describe silver coins and bullion that are considered to be in accordance with the legal tender laws of the United States, particularly those predating the abandonment of the silver standard. While there's no official designation of "Constitutional Silver" by the U.S. government, the term broadly references silver coins minted before 1965 and certain types of silver bullion. Understanding its significance requires exploring the history of American monetary policy.

The Silver Standard Era and its Legacy

Before 1971, the United States operated under a system where the dollar was backed by both gold and silver. This meant that the government promised to redeem paper money for a fixed amount of these precious metals. The Coinage Act of 1792 established the bimetallic standard, defining the legal weight and fineness of gold and silver coins. This act, and subsequent legislation, laid the groundwork for what many consider "Constitutional Silver."

This era saw the production of numerous silver coins, including:

• Morgan Dollars (1878-1904, 1921): Known for their iconic design, these dollars are highly sought after by collectors.
• Peace Dollars (1921-1935): Featuring a design symbolizing peace after World War I, these are another popular collectible.
• Pre-1965 90% Silver Coins: This includes dimes, quarters, half dollars, and half dimes that contained 90% silver before the composition changed in 1965.

These coins, minted during the period when the U.S. adhered to, or at least purported to adhere to, the silver standard, are often referred to as "Constitutional Silver" because their minting was authorized under the constitutionally-derived legal framework.

Why is Pre-1965 Silver Important?

The significance of pre-1965 silver coins extends beyond numismatic value. Many believe they hold intrinsic value due to their high silver content. The shift away from silver-backed currency in the mid-20th century reduced the silver content of circulating coins. Consequently, pre-1965 coins are attractive to investors and collectors alike due to their:

• High Silver Content: As mentioned, pre-1965 coins are 90% silver, making them a valuable source of the precious metal.
• Collectibility: The rarity and historical significance of certain coins further enhance their value.
• Hedge Against Inflation: Some view silver as a hedge against inflation, believing that its value will increase as the purchasing power of fiat currency declines.

Beyond Coins: Constitutional Silver Bullion

The term "Constitutional Silver" isn't strictly limited to coins. It can also encompass silver bars and other bullion that meet specific purity standards. These bars are often purchased by investors as a way to diversify their portfolios or as a store of value. However, it's important to note that the "Constitutional" aspect primarily refers to the historical context of silver's role in the U.S. monetary system, not to any specific regulatory certification for bullion.

Investing in Constitutional Silver: Considerations

While investing in silver can be lucrative, it's crucial to understand the risks involved. Silver prices fluctuate based on various economic factors, including supply and demand, industrial usage, and investor sentiment. Before investing in constitutional silver, or any precious metal, it's essential to:

• Conduct thorough research: Understand the current market conditions and price trends.
• Diversify your portfolio: Don't put all your eggs in one basket. Spread your investments across different asset classes.
• Store your silver securely: Proper storage is crucial to protect your investment from theft or damage. Consider using a reputable storage facility or a home safe.
• Consult a financial advisor: Seek professional advice before making any significant investment decisions.

Conclusion: Understanding the Term and its Implications

"Constitutional Silver" serves as a shorthand for silver coins and bullion that are linked to the history of the U.S. monetary system and its earlier reliance on precious metals. While there's no official governmental classification, the term's use highlights the enduring interest in pre-1965 silver coins and the ongoing appeal of silver as an investment and collectible asset. Remember that investing in precious metals always involves risk, and careful research and consultation with financial experts are vital.