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The Value of Junk Silver Coins

Affordable, Desirable, Fun

By Luke Burgess
Friday, July 29th, 2011

Get ready for a near-term 50% spike in silver prices...

The price of silver just dipped back below $40 an ounce.

But a rapidly widening gap between global supply and demand threatens to lift silver prices to the $60/oz level in the near future.

Interested investors should not hesitate. A surge in demand for silver as a safe haven has boosted premiums for bullion coins and bars...

But in today's Wealth Daily, I'll show you one of the cheapest and easiest ways to own silver right now.

One of the best ways to get the most silver for your dollar right now is to buy junk silver coins.

Junk silver coins are government-minted currency coins that have no numismatic or collectible value except the value of the silver bullion they contain.

Prior to the mid-1960s, governments including the United States and United Kingdom used a percentage of silver in their minted currency coins. These coins contained between 35% and 90% silver.

august 2011 junk silver coin
1964 U.S. Washington Quarter — 0.18 oz. of silver

The most commonly owned junk silver coins today are pre-1965 U.S. coins.

Although these coins are not technically considered bullion, all U.S. quarters, dimes, and half dollars struck before 1965 contained 90% silver; the remaining 10% is copper, which helped harden the coins.

These coins differ from silver bullion coins. Precious metal bullion coins are measured in standard troy ounces and are .999 fine or 99.9% pure silver.

Current Value of U.S. Junk Silver Coins
Year Coin Silver Purity Silver Weight (oz.) Face Value Silver Value*
1942-1945 War Nickel 35% 0.05626 $0.05 $2.25
1916-1945 Mercury Dime 90% 0.07234 $0.10 $2.89
1946-1964 Roosevelt Dime 90% 0.07234 $0.10 $2.89
1932-1964 Washington Quarter 90% 0.18084 $0.25 $7.23
1916-1947 Walking Liberty Half 90% 0.36169 $0.50 $14.47
1948-1963 Franklin Half 90% 0.36169 $0.50 $14.47
1964 Kennedy Half 90% 0.36169 $0.50 $14.47
1965-1970 Kennedy Half 40% 0.14790 $0.50 $5.92
1878-1921 Morgan Dollar 90% 0.77344 $1.00 $30.94
1921-1935 Peace Dollar 90% 0.77344 $1.00 $30.94
1971-1976 Eisenhower Dollar 40% 0.31610 $1.00 $12.64
*based on $40 silver

Junk silver coins have become quite popular as a way to own silver affordably, and this has inspired many to go treasure hunting in coffee cans and car ashtrays.

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.

july 2011 junk silver bag Silver Bag Face Value Silver Purity Silver Weight
$100 90% 72 ounces
$250 90% 179 ounces
$500 90% 358 ounces
$1,000 90% 715 ounces

You don't have to buy a whole bag of these coins; you can buy them individually from most coin dealers.

In fact I just went to my neighborhood coin shop yesterday morning and picked up a handful to show you what they look like:

august 2011 junk silver coins

I find it interesting that these coins are called “junk,” because they contain silver, a metal known as a store of value and wealth since the dawn of humanity. Today's currency coins are mainly copper and nickel, base metals of significantly lower value. It seems to me they are the real junk.

Hundreds of millions of dollars of U.S. 90% silver coins were officially melted down by the government decades ago. The surviving American silver coins are becoming more sought after with each passing day.

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Advantages of Investing in Junk Silver Coins

Junk silver coins have been recently intriguing investors for a number of reasons:

Low Premiums

The premium on junk silver coins has increased a bit over the past few years. But junk silver still commands a much smaller premium compared to .999 bullion coins.

In past precious metals bull markets, silver bags have tacked on premiums of up to $1.50 after only a few months. At times, however, premiums can rise to ridiculously high levels...

In 1999, silver bags carried a 50% premium because of the Y2K scare. After Y2K became a non-event, the market was flooded with junk silver coins, and thousands of bags were melted down, which means there are even fewer junk silver coins available today.

Divisibility and Liquidity

Junk silver coins can be more easily spent or traded in very small amounts. In contrast, minted silver bullion coins are rarely smaller than a troy ounce.

Meanwhile, minted gold bullion (and other precious metals) is highly valued in even small amounts. A 1/10 ounce American Gold Eagle coin, for example, is currently valued at nearly $200.

Legal Tender Status

Government-minted junk silver coins retain their legal tender status. And because the coins are official legal tender coins, they are widely-recognized and less likely to have their value disputed than silver rounds or bars.

For these reasons, junk silver coins have become popular among survivalists.

In the event of a currency collapse, silver coins like these will no doubt provide a good, viable alternative as a store of value.

Junk silver coins are ideal in a post-currency bartering economy.

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.

With low premiums, good liquidity, and recognition, junk silver coins are an excellent choice for first-time buyers and seasoned silver investors alike.

Good investing,

Luke Burgess
Analyst, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits

P.S. Most U.S. junk silver coins have been taken out of circulation. But every once in a while, you can find one... Here's a great tip on finding junk silver coins among the rest: Instead of looking at the face of each and every coin for the year, look at the coin's rim. The metal on the rim of the copper-plated coins rubs off quite easily, and you can see the copper shining through.

Here's what I mean:

august 2011 jsc1

Old U.S coins contained copper only as a hardener, so the rims of junk silver coins will be pure silver:

august 2011 jsc2

Many times, a junk silver coin will stick out like a sore thumb among the rest...

august 2011 jsc3

Happy hunting.


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