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Junk Silver - The Ultimate Guide To Buying/Investing

Close up of silver Mercury dimes
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First, let’s start with why anyone would want to buy junk silver. Based on our definition, Junk Silver is just a word-phrase coined by investors to describe a circulated silver coin but has no value other than the silver metal used to mint the coin. Meaning junk silver has no value as rare coins.

Junk Silver As An Investment

But, coins marked as ‘junk silver’ have value because of the silver metal used to create the coin. And, precious metal investors love silver because junk silver coins can be viewed as a substitute for bullion bars, the American Silver Eagle, or silver mining stocks.

As with all investors, the main goal is profiting from your investments. An investor profits from junk silver dollar coins in two ways. The most common idea is profiting from the rising price of silver. When an investor buys a batch of junk silver and the price of silver rises, the investor can cash-out and profit from her investment.

The second idea and less common, is profiting from the spread of the coins. Usually, the price of junk silver coins trades in a -5% to +5% of the spot price of silver. So, if an investor found a seller willing to sell at a -5% of silver spot and turned-around to sell to a buyer willing to pay +5% of spot, then the investor would realize a profit.

When precious metals enjoyed bull markets, 90% silver coins often achieved premiums of $1.20/oz to $1.50/oz over spot, sometimes as high as $2.50/oz. So, it’s easy to see how an investor could profit from an increase in silver spot price or from the spread.

Ninety percent silver United States coins

The word "junk" refers only to the value of the coins as collectibles and not to the actual condition of the coins; junk silver is not necessarily scrap silver.

The Most Common Junk Silver Coins

The most commonly collected U.S. junk silver coins are the Mercury dimes and Roosevelt dimes, Washington quarters, and Franklin half dollars, and Kennedy half dollars, which were minted by the United States Mint in or before 1964. These coins have a 90% silver composition (“coin silver”).

When minted some coins contain 0.7234 troy ounces of silver per dollar of face value. In practice, the silver content is usually assumed to be 0.715 ounces because circulation erodes the coins despite the minting. Less common junk silver is the Kennedy half dollars from 1965 to 1970, which contained 40% silver.

The value of silver content is one reason investors buy junk silver coins. The percent of silver is less likely to come into question than pricing, than silver bullion bars, which require certification and authenticity tests. A “bag” of junk silver, ($1,000 face) contains approximately 715 ounces of silver. And, it will generally track the spot price of silver. If silver goes up to ten cents, a bag of 90% silver coins will rise $70 or so; however, prices sometimes lag sharp spot price movements because of the liquidity of junk silver coins.

Coins

  • (1942-1945) Silver War Nickel 0.0563 Oz. of Silver
  • (1916-1945) Mercury Dime 0.0723 Oz. of Silver
  • (1946-1964) Roosevelt Dime 0.0723 Oz. of Silver
  • (1932-1964) Washington Quarter 0.1808 Oz. of Silver
  • (1916-1947) Liberty Half Dollar 0.3617 Oz. of Silver
  • (1948-1963) Franklin Half Dollar 0.3617 Oz. of Silver
  • (1964) Kennedy Half Dollar 0.1479 Oz. of Silver
  • (1878-1921) Morgan Dollar 0.7735 Oz. of Silver
  • (1921-1935) Peace Dollar 0.7735 Oz. of Silver
  • (1971-1976) Eisenhower Dollar 0.3162 Oz. of Silver

How To Buy Junk Silver

A “bag” of junk silver, ($1,000 face) contains approximately 715 ounces of silver. And, it will generally track the spot price of silver. If silver goes up to ten cents, a bag of 90% silver coins will rise $70 or so; however, prices sometimes lag sharp spot price movements because of the liquidity of junk silver coins.

When bags of circulated 90% silver coins can be bought - at about the same premium as 100-oz bars, or even at small premiums over 1-oz silver rounds - bags should be the first choice for many investors because of the reduction in price when an investor buys in bulk.

Choosing between junk silver coins or bullion bars is largely a matter of an investor’s goals, resources, and storage space. Although before 1965, silver coins would be ideal for survival purposes, junk silver coins sell at a premium, or below premiums on 100-oz bars and, 1-oz rounds.

It’s important to know, junk silver coins hold greater upside price potential than .999 fine silver bullion products. At times, and especially during rising precious metals markets, circulated U.S. silver coins pick-up premiums much faster than other investments in silver. However, .999 fine bullion items (1,000-, 100-, and 10-oz  bars and 1-oz rounds) can be produced at any time; as a result, there are limits to how high premiums on .999 fine silver bullion items can go. 

The main difference between investing in bullion bars instead of junk silver is solving the issue of space. Junk silver requires much more storage space than bullion because of the purity of bullion versus junk silver. Junk silver is usually 90% silver, whereas bullion can be 100%, thus saving space.

Buyers can expect to pay a little more for half-dollars than for dimes or quarters because of the higher silver content as well as half-dollars are much more popular. Yet another reason for the demand for half-dollars is fewer half-dollars were minted than dimes or quarters.

Although many investors buy junk silver coins as bullion investments or collectibles, other investors buy junk 90% silver coins for “survival purposes.” These buyers fear the worst for the dollar. They fear the dollar will be printed until it becomes worthless. If this “worst-case scenario” were to become reality, then U.S. 90% silver coins would be used for the purpose they were originally minted: as money.

The history of paper currencies has been to print until those currencies become worthless. Actually, today most dollars in circulation are not printed but are “electronic” or digital dollars, created by the Federal Reserve to increase the supply of money, which many argue increases inflation.

Investment silver fine bullion coins

Various governments mint, or authorize the minting of, silver bullion coins with a nominal face value in the national currency.

Junk Silver Coins Or Silver Bullion Bars?

Choosing between junk silver coins or bullion bars is largely a matter of an investor’s goals and resources. Although before 1965, silver coins would be ideal for survival purposes. Junk silver coins sell at a premium, or below premiums on 100-oz bars and, 1-oz silver rounds, junk silver coins hold greater upside price potential than .999 fine silver bullion products.

At times, and especially during rising precious metals markets, circulated U.S. silver coins pick up premiums. However, .999 fine bullion items (1,000-, 100-, and 10-oz bars and 1-oz rounds) can be produced at any time; as a result, there are limits to how high premiums on .999 fine silver bullion items can go.

To support this assertion - bags of 90% silver coins hold greater upside potential than .999 fine bullion items - a little background on junk silver prices and silver prices must be shown. Over the last three decades, when precious metals enjoyed bull markets, 90% of silver coins often achieved premiums of $1.20/oz to $1.50/oz over spot, sometimes as high as $2.50/oz.

This is because many investors want silver in a form they know is silver, and pre-1965 U.S. 90% coins certainly fit the investors’ objective by numismatic value. Following silver’s spike to $50/oz in the 1980s, industrial silver users implemented efficiency moves that reduced industrial demand for silver.

Furthermore, the rising prices of the 1970s had spurred efforts to mine more silver and to increase the recovery of silver in the secondary market. Today, reclaimed silver or recycled silver, is a major source of silver - the essential metal for industrial consumption. Because of these efforts, silver went into “surplus” in the 1980s. Meaning, newly refined silver exceeded industrial demand. This caused investors to avoid silver in the 1980s, except for a shortly-lived strong market in 1987.

But, for most of the 1980s, investors were net sellers of silver. Selling resulted in huge quantities of junk silver coins to be refined and converted into .999 fine silver. Meanwhile, the Y2K scare in 2000, caused yet another huge melting of circulated 90% silver coins. Buying spurs junk 90% silver began when fears of the world’s computers would stop working on January 1, 2000.

Many people began preparing for the worst. And, fears were accelerated, as highly respected economists issued warnings and wrote books on the coming collapse. Entire newsletters were dedicated to educating people: how to prepare. One recommendation was circulated instructed people, 90% silver coins should be stashed away so the coins could be used as money when banks closed and ATMs no longer dispensed $20 bills.

Consequently, people bought junk 90% silver coins at whatever prices, and bags picked up 50% premiums. The Y2K scare showed just how quickly 90% silver coins can pick up big premiums and that premiums on 90% silver coins can rise while the price of silver remains stagnant - during 1999, the price of silver was essentially unchanged.

And then, on January 3, 2000, as soon it became evident the world’s computers were not going to fail, investors began selling. And, sellers continued throughout the year, even in 2001. As the sell-off continued - forcing down prices on 90% silver coins until they sold at discounts - some junk silver sold below the value of its silver content.

In addition to the sell-off, untold quantities of bags were refined into .999 fine silver bullion. Therefore, bags of pre-1965 U.S. silver coins were in short supply. After the Y2K crash became a nonevent, premiums on bags of 90% silver coins fell to record lows. Junk silver coins became less expensive than 100-oz silver bullion bars. Indeed, the potential for 90% silver bags to pick up big premiums justifies the buying of bags circulated silver coins by investors who can manage the bags’ weight and bulk.

Silver Coin Melt Value Calculator

Another resource that a junk silver investor needs is a melt value calculator. This online calculator will figure out the value of the silver coins in any amount input into the online interface. You can customize the calculator to figure the value of coins at different market prices. The current market price is displayed in a graphic that covers a one-month investing period.

This allows you to find out your current investment value without having to have multiple browsers open. With a silver coin melt value calculator, you can determine the price at which you will make an acceptable profit. It will also allow you to figure out what quantities of coins you should be looking for to turn the type of profits you want. This is another must-have resource for the serious junk silver investor.

Should I buy Junk Silver Coins?

If you’re looking to invest in precious metals but don’t have a lot of money to buy gold coins, platinum coins, or other types of more expensive bullion items, then junk silver coins may be worth buying. There are many advantages to buying junk silver coins. In addition to their relatively low nominal cost, an old junk silver coin is just that - money. It can be spent like any other coin.

Some people prefer to buy junk silver if they are ever in a dire situation in which they would need to barter silver coins for survival items like food, water, blankets, lodging, or other necessities. There is also the remote - but nonetheless possible - the chance that the price of silver could drop below the face value of the coin. In that case, the coin still has guaranteed legal-tender monetary value.

Another benefit to buying junk silver coins is that they enjoy a crossover market with coin collectors. Many collectors seek such silver coins - even common date, low-grade pieces - to fill holes in albums, folders, and displays. There is also the possibility that a keen-eyed collector (or silver stacker) may spot a valuable error or variety on one of these junk silver coins.

It would be a worthy find that might make the coin redeemable for far more than its intrinsic bullion value. It’s a question of whether you would rather buy silver at the lowest possible premium or pay a little more but also enjoy better liquidity. Gram for gram, silver bars as well as silver rounds are usually cheaper than legal-tender silver U.S. coins.

This is so for a variety of reasons, including low production costs and processing fees. There is also a much smaller pool of collectors and potential buyers. If you’re looking for the absolute cheapest method to buy silver, silver bars and rounds are often the way to go.

But silver coins, for their slightly higher price, offer many things a silver bar can’t. For one, coins are legal-tender money while bullion bars aren’t. You really can’t pay for a meal at a restaurant with a silver bar. You can’t trade silver bars at your bank to deposit funds into your savings account. But with silver coins?

You can do all those things and a whole lot more because they’re real, hard money. You may not wish to spend your silver coins at face value. But if you have to, you can. Silver coins are also much more widely recognizable to buyers than silver bars. Some folks may not trust buying a silver bar - especially one from an off-brand. This can make a silver bar harder to sell at fair market value, especially if you’re trying to sell to someone outside the bullion industry.

But a 1939 Mercury dime, 1946 silver Washington quarter, 1947 Walking Liberty half dollar, 1958 Franklin half dollar, or Kennedy half dollar? You can bet your bottom dollar that virtually everybody will recognize those coins and understand their inherent value.

Is It Better To Buy Junk Silver Or Bullion?

It all depends. First, let’s differentiate junk silver and bullion here for the purpose of answering this question. Technically all coins with precious metal content could be considered “bullion.” For the sake of clarity, we’ll classify junk silver as something distinct from investment-grade, high-purity silver bullion.

Most silver bullion coins are sold in weights of no less than one ounce. That’s much heavier than the amount of pure silver in a dime, quarter, half-dollar, or even a standard pre-1971 silver dollar. So, you will usually have to pay more in the absolute sense per coin to buy silver bullion coinage versus what you might spend buying individual silver dimes, quarters, half dollars, and silver dollars.

Of course, most silver bullion bars and coins have higher precious metal content than the typical 90% silver junk coin. This can mean paying a lower numismatic premium gram for gram per coin than you might spend on buying smaller pre-1965 silver coins.

Still, junk silver coins have their own neat perks. They are nostalgic. They can be easily spent as money, which could become useful in emergency scenarios or disasters. And 90% of silver coins do have a numismatic crossover appeal that helps to widen their market base (and enhance liquidity).

Conclusion

The prices of silver coins are all over the board. Some are really cheap while others are quite expensive. However, price alone may not dictate what silver coins you should buy. You might care less about the price of your silver coins and rather spend more attention buying a certain type of silver coin.

As silver investing goes, sometimes it’s not just about stacking the tallest pile of silver at the lowest price. It’s also about buying a certain type of silver coin - or silver product - you like and have faith in as an investment. They can act as a hedge against inflation over the duration of months, years, or decades.

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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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