What are silver certificates?
Silver certificates in the context of the Silver Bullion website can refer to one of two types of silver certificates: The first type refers to silver certificates used to buy and sell physical silver without the need to move the physical silver. The second type refers to silver certificates or representative money used in the issuing of U.S. Dollars from 1878 to 1964.
Silver certificates: First type…
Silver certificates of this type allow the silver investor to buy and sell silver without the need to move the actual physical silver. Yes, it can save time and money associated with the transfer of actual physical silver, but like most other forms of paper silver, it leaves the door wide open for silver market manipulation and other abuses. It also exposes the holder of silver certificates to a great deal of risk when it comes to silver confiscation. In fact, the “Perth Mint Certificate Program (PMCP) is the only government-guaranteed silver-certificate program in the world” (Wikipedia). However, the true silver investor knows that even participating in the Perth Mint Certificate Program (PMCP) presents an unacceptable risk, because the guarantee that is provided by the Australian Government is just as strong as the relevant government itself. During times of great political and economic distress, you bet chances are good that they’re not going to honor such guarantees, even assuming that they did honor it at the time this was written. Be sure to have a look at the second type of silver certificates on the next page and you will see why such a guarantee is up to scratch at best.
Silver certificates: Second type…
Silver certificates of this type, issued from 1878 to 1964, provided the holders of these silver certificates with some level of confidence in the U.S. Dollar before 1968. The reason being is because these silver certificates were redeemable “…in the same face value of silver dollar coins, and later in raw silver bullion” (Wikipedia). However, since the year 1968 this type of silver certificates is only redeemable in Federal Reserve Notes (or fiat currency for that matter!). The relevant silver certificates are today useless to the silver investor in terms of its silver value, despite the fact that it is still accepted as valid legal tender. This is clear proof that a guarantee is only as strong as the entity that backs it.
The silver certificates mentioned above were issued after the enemies of the United States, domestic and otherwise, successfully enacted what is termed the “Fourth Coinage Act of 1873” that effectively demonetized silver by embracing the gold standard. It is also known as the “Crime of ’73” within certain circles. Now there is nothing wrong with having a gold standard as such, but when it is used to demonetize silver for one then it becomes a problem.