United States 90% silver coins were minted to be used as money, were used as money, and could be used as money again. Minted before 1965, they are calledjunk silver coins because they have no collector or numismatic value. The coins are bought and sold for the value of their silver content.
When minted, a bag of 90% junk silver coins contained 723 ounces ofsilver, but because of wear a smelted bag of dimes or quarters will net about 715 ounces. A bag ofhalf-dollarswill net a little more, maybe 718-720 ounces becausehalf-dollarsdid not circulate as much as dimes and quarters, and, therefore, did not suffer as much wear.
Because a “bag” ($1000 face) contains approximately 715 ounces ofsilver, it tracks the spot price ofsilver. Ifsilvergoes up ten cents, a bag ofUS silver coinsrises $70 or so; however, when junk silver coins are in short supply their premiums can increase.
Why Buy US 90% Silver Coins?
Although many investorsbuyjunk silver coinsas bullion investments, other investorsbuyjunk US silver coinsfor “survival purposes.” Thesebuyersfear the worst for the dollar, that it will be printed until it becomes worthless. If this “worst-case scenario” were to become reality, US silver coinswould be used for the purpose they were originally minted: as money.
CMIGS hopes that Americans never see the day that their once proud dollar becomes worthless. Yet, we are aware that the history of paper currencies is that they are printed until they become worthless. (Actually, today 98% of the US money supply, dollars in circulation and available to be spent, are not “printed” dollars but are digital or electronic dollars.)
Junk Silver Coins or Bullion Bars?
Although pre-’65silver coinswould be ideal forsurvival purposes, whenjunk silvercoins sell at premiums near the premiums on100-oz silver barsand1-oz silver rounds,junk silver coinshold greater upside price potential than .999 finesilverbullion products because at times, and especially during rising precious metals markets, circulated 90% US junk silver coinspick up huge premiums as the supply of junk silver coins is limited.
On the other hand, .999 fine bullion items (1,000-, 100-, and 10-oz bars and 1-oz rounds) can be produced at any time; consequently, there are limits as to how high premiums on .999 finesilverbullion items climb. To support the assertion that bags ofUS silver coinshold greater upside potential than .999 fine bullion items, a little background onjunk silver coinprices and silverprices is in order.
Over the last four decades, when precious metals enjoyed bull markets,junk US silver coinsoften achieved premiums of 20% to 30% over spot. During the Y2K scare (discussed below), junk silver coins carried a 50% premium over bullion products.
In the 1980s, followingsilver’s spike to 50/oz, industrialsilverusers implemented efficiency moves that slowed industrial demand forsilver. Further, the rising prices of the 1970s had spurred efforts to mine moresilverand to increase the recovery ofsilverin the secondary market. (Today, reclaimedsilver remains a major source of this essential metal.)
Because of these efforts,silverwent into “surplus” in the 1980s, i.e., newly refinedsilverexceeded industrial demand. This caused investors to avoidsilverin the ’80s, except for a strong market in 1987. For most of the 1980s, investors were net sellers ofsilver, which resulted in huge quantities ofjunk silver coinsbeing refined and converted into .999 finesilver. The Y2K scare caused another huge melting ofcirculated 90% silver coins.
Y2K Buying Spurs Junk Silver Coin Buyers
Fearing that the world’s computers would quit working January 1, 2000, many people began preparing for the worst. Their fears were exacerbated as respected economists issued warnings and wrote books. Newsletters were dedicated to teaching people how to prepare. One recommendation was that junk US silver coinsbe stashed away so that they could be used as money when banks closed and ATMs no longer spewed $20 bills.
Consequently, in 1998 and 1999 people fearing Y2K boughtjunk silver coinsat whatever prices, and bags picked up 50% premiums. The Y2K scare showed just how quicklyUS silver coinscan pick up big premiums and that premiums on 90%silver coinscan rise while the price ofsilverremains stagnant. During 1999, the price ofsilverwas essentially unchanged.
Silver Eagles, Silver Maple Leafs as alternatives
Other popular alternatives to junk silver coins during the Y2K buying were the US Mint’sSilver Eagles. Silver Maple Leafs, which areCanadian silver coinsminted by the Royal Canadian Mint, were popular with Y2K buyers who lived along the Canadian border. In the US, Silver Eagles were much more popular and remain more popular today than Silver Maple Leafs.
Y2K Buyers Start to Sell
On January 3, 2000, as soon it became evident that the world’s computers were not going to fail, investors began selling, and they sold throughout the year and into 2001, forcing down prices onUS silver coinsuntil they sold at discounts (below the value of theirsilvercontent). Untold quantities of bags were refined into .999 finesilverbullion, and now bags of pre-1965US silver coinsare in short supply.
Before Y2K, an order for 100 bags ofjunk silver coinscould be filled with a phone call to any one of many wholesalers. Now, an order for 20 bags often takes two or three phone calls.
Whilejunk US silver coinsheld huge premiums during the Y2K buying frenzy, many CMIGS clients–at our urging–traded theirjunk silver coinsfor 100-oz bars or 1-oz rounds and increased theirsilverholdings by 35% to 45% without laying out additional cash.
After Y2K became a nonevent, the premiums on bags ofUS silver coinsfell to wherejunk silver coinsbecame cheaper than 100-ozsilverbullion bars. Still, the potential for 90%silverbags to pick up big premiums justifies the buying of bags US silver coinsby investors who can handle the bags’ weight and bulk.
A Little More Information About Junk Silver Coins
Buyerscan expect to pay a little more for half-dollars than for dimes or quarters because of the highersilvercontent and because half-dollars are more popular. Also, fewer half-dollars were minted than were dimes and quarters.
When bags ofcirculated US silver coinscan be bought at about the same premium as 100-oz bars, or even at small premiums over 1-ozsilverrounds, bags should be the first choice for those investors who can handle the bags’ bulk and weight.
CMIGS ships from Phoenix all bags ofjunk silver coinsit sells. We do not drop ship90% US silver coins. (In fact, CMIGS rarely drop ships any orders.) A drop shipment occurs when the selling dealer has another dealer ship to thebuyer. This saves the selling firm the cost of shipping..
CMIGS does not drop ship junk silver coins because we go though all90% US silver coinsbefore shipping and replace any excessively worn or otherwise damagedsilver coins. Furthermore, we do not ship in $1,000 bags because they are heavy and burdensome. When a clientbuys$1,000 faceUS silver coins, CMIGS ships in two new $500 bags.
Buying Junk Silver Coins at CMI Gold & Silver Inc.
If you would like more information on junk silver coins or would like to discuss any aspect of investing in silver (or gold), call us at 800-528-1380. We take calls 7:00 am to 5:00 pm MST, Mondays through Thursdays, Fridays 7:00am to 3:00 pm.
For more details about buying, selling and trading precious metals at CMIGS, see .
