Rabu, 03 Agustus 2022

Don't Buy These Silver Coins

Over the past few decades, one of the most popular physical silver assets among amateur investors has been so-called "junk silver coins." It's ironic that these mostly silver coins are called "junk," because today's currency coins are mainly copper and nickel — base metals of significantly lower value.
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Don't Buy These Silver Coins

Over the past few decades, one of the most popular physical silver assets among amateur investors has been so-called "junk silver coins."

Junk silver coins are government-minted currency coins that have little to no collectible value, but instead are valued for the silver they contain.

Prior to the mid-1960s, governments including the United States and United Kingdom used an alloy mixture that contained silver in their minted currency coins. Generally, these coins contained between 35% and 90% silver.

The most commonly owned junk silver coins, however, are pre-1965 U.S. coins. And when most people talk about "junk silver coins," they're mostly referring to U.S. quarters, dimes, and half dollars struck before 1965. These coins are made of an alloy of 90% silver and 10% copper.

Other commonly owned junk silver coins include Kennedy half dollars from 1965–70 and Eisenhower dollars from 1971–76, which are 40% silver, and nickels minted from 1942–45, which are 35% silver.

U.S. Junk Silver Coinscsd

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Junk silver coins became a popular way to own silver affordably, especially following the rise of the internet marketplace, which connected buyers and sellers from all over the world.

Bullion dealers sometimes sell junk silver coins in bulk bags called "silver bags." The silver bags are sold to investors with a specific face value, but they are priced based on the total weight of the bag's silver content.

A bag of 90% silver coins with a face value of $500, for example, contains about 358 ounces of pure silver. So a dealer would sell a $500 bag of junk silver coins based on the spot price of 358 ounces of silver, plus his cut.

More often than not, however, people buy much smaller quantities. So bullion dealers also sell junk silver in coin rolls and individual coins, which are also sold to investors with a specific face value but priced based on silver content.

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It's a bit ironic that these mostly silver coins are called "junk." That's because today's currency coins are mainly copper and nickel — base metals of significantly lower value. It seems to me they are the real junk.

Finding 90% silver coins in circulation today is nearly impossible. Hundreds of millions of dollars of U.S. silver coins were officially melted down by the government decades ago. The surviving American silver coins have been picked out of circulation by coin hunters and counting machines.

One of the main reasons junk silver coins became so popular was their price. The premium on junk silver coins used to be among the lowest of silver bullion products.

But now that has changed.

Today major bullion dealer Apmex is selling 90% dime rolls for $8.50 over spot. Meanwhile, most .9999 fine silver rounds and bars from private mints have premiums under $5.

While fiat currencies have consistently been destroyed by inflation throughout history, silver will always have intrinsic value — and can act as a medium of financial exchange when paper money is obsolete. But if you were looking to invest in silver today, junk silver coins are not ideal due to their elevated premiums.

Until next time,
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Luke Burgess

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