Should You Own Junk Silver Coins?
Do junk silver coins have a place in a well-diversified portfolio? Yes! But you decide for yourself.
What is Junk Silver?
The term "junk silver" came into use way back in the 60's. Coin dealers would use the term to describe silver coins that had no numismatic or collectible value. Coin dealers were not at all interested in these coins because they could not profit from them at the time. Hence, the term "junk silver" meant "little worth" at the time. Over the years, the silver in these "junk coins" started having significant worth. Now, dealers view these coins differently.
Late 1979, there was a huge buzz about the price of silver and gold. Several times a day you would hear the latest prices on the local news stations. The price of silver and gold were going up fast. Around that time I sold $35 of pre-1965 junk silver coins for $775 to a couple who was advertising in a local newspaper classified ad. Not a bad profit for coins saved as a 10 year old paper boy.
Reasons to buy Junk Silver
Most of the reasons to buy junk silver, as opposed to other types of silver, start out like this "If the financial system collapses..." or "If the dollar becomes worthless because of inflation..." etc. Here are some of the reasons to buy a bag of junk silver along with my comments on each:
- Premiums for junk silver are low.
Maybe so, but premiums are on both sides of a silver transaction. If you buy silver, you pay the premium. If you sell silver, you receive the premium. When you buy and sell is probably just as important as the type of silver you buy. Also, premiums are different depending on who you buy from and who you sell to. You shouldn't buy silver based on premiums alone.
- If the dollar becomes worthless, junk silver coins would be more easily accepted as payment. They are more recognizable than any other silver coins since they have been used in general circulation for so long.
Sure, this may have value in the financial collapse scenario. But what are the chances of that, especially for baby boomers.
- If the dollar becomes worthless, you could use these junk coins for small purchases. Silver eagles or silver rounds would be too large to buy, say, just a loaf of bread. Also, wouldn't you need to make change for silver eagles?
I'm half survivalist and half pragmatist. Even I have a hard time buying into this one. Really... what are the chances that this scenario will come into play.
- Junk silver actually has "nominal" value. For instance, a junk silver dime is "worth" 10 cents according to the U.S. government.
Would someone ever really spend a junk silver dime now? I know I wouldn't.
A Bag of Junk Silver Coins
- Junk silver coins hold up to wear better than silver eagles or silver rounds.
Really? I'm not sitting around rubbing my coins together over here. They will sit here until I sell them. There will be no additional wear on my junk silver at the time of sale.
- Junk silver is really hard to copy or fake.
So, it's easy to copy or fake other forms of silver?
There are many of these "reasons" to buy junk silver floating around the Web. But lets cut to the chase...
Full disclosure, I still have $75 (face value) of junk silver coins from when I was a paper boy. I'm glad I have them. Would I buy more? Probably not. But I will continue to buy silver on a regular basis to add to my well-diversified portfolio. I personally like American Silver Eagles.
This is my recommendation regarding junk silver (if you live in the United States): Just do it!
Buy a bag of 90% junk silver coins! Any one. One is enough.
Junk silver, just like any physical silver, will act as a store of value outside the banking system and an inflation hedge. In addition, it will give you some possible minor fringe benefits as stated above. If you feel that silver is a good investment, just buy one bag of 90% junk silver coins. If you have a lot of money buy a bigger bag. If you worry about hyperinflation or think the world is coming to an end, buy even more. But only if it gives you piece of mind!
Even though I am a survivalist at heart, the decision whether or not to buy junk silver coins is not a "life or death" decision. Don't sweat the small stuff. Keep it simple. Silver IS savings. Enjoy your life.