The year 1971 continued the inflation of 1970, with
the value of precious metals advancing each
month. The public believed that silver would continue to rise, and the search for earlier silver coins
in change grew more intense.
Melting of silver coins was allowed and the value of each ounce of silver advanced. Speculators
and investors crowded the market and the demand was stimulated further as more
people learned of the increasing value of each U.S. silver coin struck before 1965.
For gold it became necessary to first advance the
value of an ounce of gold from the original value of $35. As it got to $42 at
the end of 1970, President Nixon "closed the gold window," so that the Treasury could officially raise the value
to $42 per ounce. With the window
closed, gold was no longer sold by the United States. Gold certificates,
earlier redeemable for an ounce of gold at the U.S. Assay office, were no
All these inflation-motivated actions caused a
temporary halt on
the dollar and its redemption. Only in
special cases were foreign government
obligations met with gold for notes, bonds or certificates. These actions, that
made gold and silver more valuable in comparison with the dollar, slowed for a
short time the drain on the United
States’ supply of gold.
Counterfeiters, especially those dealing with coins from
outside of the United States, found it easier to make coins of a given weight
with a lower gold content. These false coins continued to be a problem on the
market. We never returned to having imports of gold coins limited, but at the
Custom House they were examined more carefully,
and the flow of counterfeits was somewhat restricted.
Educated dealers, collectors, pawn brokers and
precious metal dealers formed alliances to try to deter the false coins from
the market place, including through the Professional Numismatists Guild. But
the precious metals market was too large for the relatively few dealers who
were knowledgeable to control the problem. The Congress
of the United States had meetings to investigate how to stop these counterfeits
from continuously flooding the market,
weakening the value of genuine pieces and causing losses and disillusionment among collectors. It took
Congress, until 1973 to call a major meeting of hobbyists to testify and
suggest remedies to the abuses that were plaguing all hobbies, not just mumismatics. I will say more about
that meeting when I get to the happenings of 1973.