One of the fastest-growing inflationary hedge investments today is junk silver coins.
These coins are an excellent choice for first-time buyers and seasoned silver investors alike.
Junk silver coins are pre-1965 U.S. quarters, dimes, and half-dollars. Although these coins are not technically considered bullion, all U.S. quarters, dimes, and half-dollars struck before 1965 were minted with a 90% silver content. The other 10% is copper, which helped harden the coins.
They’ll Call You "Mr. Money Bags"
Junk silver coins are most frequently bought and sold in bulk bags known as "silver bags". These silver bags contain an assorted combination of pre-1965 U.S. quarters, dimes, and half-dollars with a face value of $250, $500 or, most commonly, $1,000.
The most common junk silver coins contained in silver bags are quarters. A typical silver bag will contain 70% quarters, 20% dimes, and 10% half-dollars. Dealers often hold back dimes and half-dollars for their numismatic value.
A $1,000 silver bag weighs 795 ounces, regardless of whether it’s made up of quarters, dimes, or half-dollars. Because each junk silver coin is 90% silver by weight, there were 723 ounces of silver in a $1,000 silver bag when the coins were brand new. However, due to wear and tear over the decades, a $1,000 silver bag will net about 715 ounces of pure silver. And this is how the industry places a value on silver bags. The value of silver bags is based on spot silver prices, and moves up or down with the daily price of silver.
 | Pre-1965 U.S. quarters, dimes, and nickels and silver bags are also known as: |
| Junk silver Junk silver coins Junk bags Junk silver bags 90% silver coins 90% silver bags Silver coin bags Old silver coins Vintage silver coins Sterling silver coins |
In 1965, the U.S. government stopped minting quarters, dimes, and half-dollars with 90% silver and instead moved to a mixture of copper and nickel. As a result, investors began to hoard the pre-1965 coins for their silver content.
Hundreds of millions of dollars were officially melted down by the government decades ago. The surviving American silver coins are becoming more sought after with each passing day. Today, demand for these junk silver coins is at all-time highs with record-breaking prices.
The term "junk" was first used in the 1970s disco-era to describe a bag of average, circulated 90% silver coins. I find it interesting that they are called "junk" because these coins contain silver, a precious metal of real value, while today’s quarters, dimes, and half-dollars contain only copper and nickel, base metals of significantly lower value. Today’s coins are the real junk.
Advantages of Investing in Junk Silver Coins
Junk silver coins offer a few investment advantages over traditional silver bullion. To begin with, junk silver coins contain small amounts of silver, which would be ideal in a post-currency bartering economy.
Secondly, junk silver coins are the most cost-effective way to buy silver since there are no fees for refining or minting attached. With modern silver bullion coins and bars, a small manufacturing premium is always passed along to the investor. This is not the case with junk silver coins. These coins were made years ago by the U.S. Mint free of charge for use as currency. And at the end of the day, you get more silver for your investment dollar.
In past precious metals bull markets, silver bags have tacked on premiums of up to US$1.50 after only a few months. At times, however, premiums can rise to ridiculously high levels. For example in 1999, silver bags carried a 50% premium because of the Y2K scare.
After Y2K became a non-event, the premiums on silver bags collapsed. In the aftermath of Y2K, 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.
Another advantage to junk silver coins is they are legal U.S. tender and recognized all over the world. And this is how you could have. . .
Beat Inflation and Returned a 155% Profit While Holding U.S. Cash
To understand how this is possible, we need step back in time for a minute.
| |
| Year: | 1964 |
| Denominaiton: | $0.25 |
| Obverse Image: | George Washington |
| Reverse Image: | U.S. Presidental Coat of Arms |
| Metal Composition: | 90% Silver, 10% Copper |
| Total Weight: | 6.25 grams |
| Silver Content: | 5.625 grams |
Cassius Clay beats Sonny Liston. The first Ford Mustang rolls off the assembly line. Jack Ruby is found guilty of killing Lee Harvey Oswald. President Lyndon B. Johnson signs the Civil Rights Act of 1964 into law. The Vietnam war is raging. And Beatlemania is sweeping the United States.
Suppose you had acquired a cash investment of $100,000, denomination purely in 1964 U.S. quarters, put it in a safe place, and didn’t touch it until today.
Because of inflation, your $100,000 cash investment would have lost significant purchasing power. In fact, $100,000 in 1964 had the purchasing power of $684,494 today. However, the value of the silver contained in the 400,000 quarters would have beat inflation and yielded a significant return, as silver prices are much higher today.
Your 400,000 quarters would contain a little over 79,366 ounces of silver. At the top of the silver market last March, the value of the silver contained in your $100,000 junk silver coin investment would have been worth $1.7 million. Even at current silver prices of about $14 an ounce, the 79,366 ounces of silver contained in your 400,000 1964 quarters would be worth over $1.1 million.Junk silver coins are among the cheapest kinds of silver you can get today, and tend to be more available and easier to find today as dealers around the world are reporting record silver coin sales. These coins are an attractive choice for all investors and make investing in silver even more fun.
Good Investing,
Luke Burgess
Managing Editor, Gold World
Investment Director, Hard Money Millionaire
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