The Treasure in So-called ‘Junk Silver’ Coins
These 90% silver coins don’t interest collectors but do appeal to investors.
Everyone knows the old saw about “One man’s junk is another man’s treasure,” and U.S. silver coins minted before 1965 are great examples.
These general-circulation half dollars, quarters, and dimes were minted of 90% silver, yet collectors call them “junk silver” because they aren’t rare enough to be of numismatic value.
These coins are of keen interest, however, to those who want to own precious metals as an investment that increases in value over time, a hedge against inflation, and a safety net in the event of a catastrophic collapse of the financial system and in the value of currency.
The coins are legal tender, widely recognized as official U.S. coins, and worth at least their face value. But they are much more valuable than the number struck on them because of their high silver content. Silver was worth nearly $27.70 an ounce on Friday, Aug. 7, and in times of global financial stress, the value of silver and other precious metals, fortunately, tends to rise in value significantly.
(What about the “silver” coins you might have in your pocket? As most of us know, they contain no precious metal. Silver coins were 90% silver from the 1792 Coinage Act until the 1965 Coinage Act. Since 1965, they have been made of 91.67% copper and 8.33% nickel — the only thing silver about them is their color.)
How many pre-1965 coins add up to an ounce of silver?
Since each 90% silver dime, for example, contains 0.0723 troy ounce of silver, it takes 14 of them to contain slightly more than one troy ounce of the metal. So coins with a face value of $1.40 are, by virtue of their silver content, actually worth nearly 20 times that, at $27.70.
A 90% silver quarter contains 0.1808479 of an ounce of silver, so 5.5 of them adds up to one troy ounce. Since you can't have half of a coin, rounding up means it takes six silver quarters to make more than a troy ounce.
To add up to an ounce of silver, it takes three pre-1965 half dollars,
six quarters, or 14 dimes.
A 90% half dollar contains 0.36169 ounce of silver, so it takes only three of them to contain more than a troy ounce of silver.
Half Dollars with a portrait of President John F. Kennedy Jr. were minted in 90% silver in 1964 (he was assassinated in November 1963 and the 1965 Coinage Act reduced the silver content). The coins were minted in 40% silver from 1965 until 1970. Additionally, 45 million 40% silver Bicentennial coins were struck between 1973 and 1976.
Where and how to buy 90% silver coins
Local coin dealers, like Pegasus Coin and Jewelry, sell these coins with the usual advantages of quick, personal delivery and an ongoing relationship. But, more importantly, Pegasus owner John Maben almost always offers prices that are better than what can be found online.
"Since opening the Pegasus Bradenton, FL, store, there hasn't been a single occasion so far where we were unable to beat a legitimate selling price found online for 90% coins," Maben said.
It’s also important to choose a dealer, like Maben, who is reputable and is an Accredited Precious Metals Dealer.
The premium that dealers charge for 90% silver coins over the spot price of silver usually is 3% to 4%.
But while most dealers now use calculations to figure out buy/sell spreads for 90% coins, some, like Maben at Pegasus, still use the old school method of simply stating that they buy or sell for "X" times the face value. Every day, for example, Pegasus states its spreads, such as buying at 19 times face value and selling at 20.5 times face value. If Pegasus is paying 19 times face value, it makes no difference if the customer is selling 10 dimes, four quarters, two half dollars, or any other combination totaling $1, the customer will receive $19 in exchange for $1 in silver coins.
Whoever you deal with, it’s an advantage to know the current so-called melt value of 90% silver coins. Here’s how to calculate that:
[Spot price of silver] x .723 x [total face value of dimes, quarters, half-dollar]
The intrinsic metal values of U.S. silver coins also are available on this page of the Numismatic Guaranty Corporation website.
Silver — and other precious metals, including gold and platinum — can be bought in bars and other forms. But 90% silver coins, in addition to the advantages mentioned earlier, can be bought by the bag but also can be bought in smaller quantities, like a roll or even individual coins. One typical way of packaging them is in bags of coins that add up to $100 face value, which on Friday, Aug. 7, were selling for about $2,300.
Whatever you decide, now you know why investors treasure “Junk Silver” coins.