The term “Junk Silver” refers to dimes, quarters, and half dollarsminted in the United States of America before 1965. It’s also commonly referredto, as 90% silver, or Constitutional Silver. At Encore Gold and Coin, we thinkthat investing in junk silver can be one of the best and most rewarding ways toinvest in silver. Sadly, it’s often overlooked by many investors due tomisconceptions, and difficulty in understanding the amount of silver that isbeing purchased. In this post we will try to explain what we think the misconceptionsare about junk silver, and hopefully make it easier to understand.
The hardest part for many investors to understand about junksilver, is how much silver is in the coins they are buying. Customers willoften ask,” How many of which coins can be used to make an ounce?” The answer is that there is no perfect way tomake exactly an ounce. The easiest way to explain the silver content is that90% of the content of each coin is silver. When the United States monetarysystem was backed by precious metals, all the weights of the coins westandardized. So, if you had one dollar in face value it would weigh the sameamount no matter how that face value is comprised. For example, two quarters,and a half dollar would weigh the same as ten dimes. Five dimes and a half dollarwould weigh the same as four quarters, etc. and 90% of that weight is silver. So,for every dollar in face value, there is 0.715 ounces of silver. Therefore, theeasiest way to assess the number of ounces worth of junk silver you have, is toadd up the face value and multiply by 0.715. For example, if you have $47.60face value mixed in quarters, dimes, and half dollars you have 34.03 ounces ofsilver. (47.60 x 0.715 = 34.03).
Demystifying 'Junk Silver': Understanding Its True Value inSilver Content
Now that the math is out of the way, let’s get to anothermisconception about junk silver. Many new customers think that junk silver isonly for coin collectors, and not for investors. This is not true. Just becausejunk silver is comprised of older coins, this does not mean you are payingcollector value for them. Junk silver is priced in the same way as any otherform of silver. Which is, a value over the market price at which items arecurrently selling for, so the sellers or dealers can also make a profit. This renders junk silver as equally viable aninvestment option as any other form of silver.
In fact, when approached as a straightforward dollarinvestment with careful purchasing, junk silver can emerge as the optimalchoice among silver investments. Its value fluctuates depending on prevailingmarket conditions, sometimes boasting the lowest premiums while at other timescommanding some of the highest. The principle of supply and demand impacts junksilver more profoundly than other forms due to its finite nature. Despite theabundance of dimes, quarters, and half dollars minted before 1965, the overallsupply remains limited. In contrast, mints can continuously produce rounds,bars, Eagles, and Maples, introducing new ones each year. During market slowdowns, premiums typicallydecrease. Junk Silver, often misunderstood, experiences a reduction inpremiums, making it available at more favorable prices. Conversely, in times ofmarket prosperity, scarcity becomes more pronounced. Junk Silver, with itsfinite supply, rapidly diminishes, igniting heightened demand. Consequently,dealers raise their selling prices, leading to an increase in what they'rewilling to pay for it.
Beyond Collectability: The Investment Merits of Junk Silver
Now that we've established the silver content in junk silverand recognized its potential as an investment with strategic market timing,let's explore what makes it an exceptional mode of silver investing:versatility. Junk silver covers all bases of precious metals acquisition. Itserves as a straight dollar investment and appeals to collectors and historyenthusiasts. However, its true strength lies in its role as the ultimate formof barter. Many investors, concerned about the US economy's instability, turnto precious metals as a hedge against inflation. Junk silver operates similarlyin this aspect but also offers reliability in trade during dire circumstances.What if the dollar collapses entirely, prompting citizens to revert to silverand gold for barter, as they did for centuries before the 1930s? In such ascenario, junk silver reigns supreme. While bars may facilitate largertransactions and eagles and maples retain trade value, junk silver excels whenyou only need to exchange for small essentials like butter or milk. A dimebecomes the smallest, most easily authenticated piece of silver available.
Despite being often misunderstood, junk silver is far fromworthless. It meets every criterion a potential silver buyer might seek:affordability, demand, ease of trade, collectability, and historicalsignificance. Misconceptions about it may stem from its name. The term 'JunkSilver' hardly inspires confidence in potential investors; it suggestsleftovers or scrap metal. Hence, I prefer referring to it as '90% silver' or'Constitutional' silver. Ultimately, regardless of nomenclature, informedindividuals will recognize it as a valuable opportunity to accumulate silverthat may one day become scarce.
