Junk Silver Coins

Junk Silver Coins for sale

Circulated 90% US silver coins, minted before 1965, are often called junk silver coins.  A "bag" ($1000 face) contains approximately 715 ounces of silver and generally tracks the spot price of silver. If silver goes up ten cents, a bag of US silver coins rises $70 or so; however, junk silver coin prices sometimes lag sharp spot price changes.

Why Buy US Silver Coins?

Although many investors buy junk silver coins as bullion investments, other investors buy junk US silver coins for "survival purposes." These buyers fear the worst for the dollar, that it will be printed until it becomes worthless. If this "worst-case scenario" were to become reality, then US silver coins would be used 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 the most dollars in circulation are not printed but are "electronic" or digital dollars, created by the Federal Reserve.)

Junk Silver Coins or Bullion Bars?

Although pre-'65 silver coins would be ideal for survival purposes, when junk silver coins sell at premiums below premiums on 100-oz silver bars and 1-oz silver rounds, junk silver coins hold greater upside price potential than .999 fine silver bullion products. At times, and especially during rising precious metals markets, circulated pre-'65 US silver coins pick up premiums.

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 fine silver bullion items can go. To support the assertion that bags of US silver coins hold greater upside potential than .999 fine bullion items, a little background on junk silver coin prices and silver prices is in order.

Over the last three decades, when precious metals enjoyed bull markets, US silver coins often achieved premiums of $1.20/oz to $1.50/oz over spot, sometimes as high at $2.50/oz. That is because many investors want silver in a form that they know is silver, and pre-1965 US silver coins certainly fit the bill.

In the 1980s, following silver's spike to $50/oz, industrial silver users implemented efficiency moves that slowed industrial demand for silver. Further, the rising prices of the 1970s had spurred efforts to mine more silver and to increase the recovery of silver in the secondary market. (Today, reclaimed silver is a major source of this essential metal.)

Because of these efforts, silver went into "surplus" in the 1980s, i.e., newly refined silver exceeded industrial demand. This caused investors to avoid silver in the '80s, except for a strong market in 1987. For most of the 1980s, investors were net sellers of silver, which resulted in huge quantities of junk silver coins being refined and converted into .999 fine silver. The Y2K scare caused another huge melting of circulated 90% silver coins.
 

Y2K Buying Spurs Junk Silver Coin Buyers

Fearing that the world's computers would quit working on Januarys 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 circulated US silver coins be 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 bought junk silver coins at whatever prices, and bags picked up 50% premiums. The Y2K scare showed just how quickly US silver coins can pick up big premiums and that premiums on 90% silver coins can rise while the price of silver remains stagnant. During 1999, the price of silver was essentially unchanged.

Silver Eagles, Silver Maple Leafs as alternatives

Other popular alternatives to junk silver coins during the Y2K buying were the US Mint's Silver Eagles. Silver Maple Leafs, which are Canadian silver coins minted by the Royal Canadian Mint were popular with Y2K buyers who lived along the Canadian border. Overall, Silver Eagles were much more popular and remain more popular today than Silver Maples 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 on US silver coins until they sold at discounts (below the value of their silver content). Untold quantities of bags were refined into .999 fine silver bullion, and now bags of pre-1965 US silver coins are in short supply.

Before Y2K, an order for 100 bags of junk silver coins could be filled with a phone call to any one of several wholesalers. By the first half of 2002, an order for 20 bags often took two or three phone calls.

While junk US silver coins held huge premiums during the Y2K buying frenzy, many CMIGS clients-at our urging-swapped their junk silver coins for 100-oz bars or 1-oz rounds and increased their silver holdings by 35% to 45% without laying out additional cash.

After Y2K became a nonevent, the premiums on bags of  US silver coins fell to where junk silver coins became cheaper than 100-oz silver bullion bars. Still, the potential for 90% silver bags to pick up big premiums justifies the buying of bags circulated silver coins by investors who can handle the bags' weight and bulk.