Junk silver refers to the silver alloy contained in coins whose collectible or numismatic value does not exceed the bullion value of the silver in such coins. Such coins are also not in circulation and can be damaged or worn out or even in a fair condition. People invest in junk silver coins as a hedge against inflation. Investing in junk silver is like investing in silver, a precious metal, at very cheap prices. Junk, by the way, refers to the collectible value and not to the condition of the coins.
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Types of Junk Silver Coins
All pre-1964 American dimes were made of 90% silver and 10% copper – and junk silver investors hunt for such coins. These dimes have a collectible value as well and therefore are very valuable. Likewise, all American quarter-dollar coins that were made between 1932 and 1964 contain the same silver-copper ratio that the pre-1964 dimes do and naturally these quarter-dollar coins are highly sought after by investors. Investors go after the following coins, which contain 90% silver (except where specified):
- Morgan and Peace dollars
- Liberty head Barber
- Walking Liberty
- Franklin and Half-dollars
- Liberty Head Barber
- Standing Liberty quarters
- Washington quarters
- Winged Liberty Head Mercury dimes
- Roosevelt Dimes
- Jefferson Nickels (35% silver)
- Kennedy half-dollar (40% silver)
These are the most valuable junk silver coins around. All investors must conduct a thorough research before they go out and hunt for or buy junk silver coins. People also look for valuable junk silver coins in churches, on hills (armed with a metal detector), at mark-up stores, schools, parks, etc. Advanced investors search for coins around the world, and such collection strategies are tackled in a separate section below.
The Junk Silver Economy
The price of silver these days (March 2012) is around $35 per ounce and one ounce equals 28.35 grams. This translates to $1.23 per gram.
Now, let’s take a Mercury dime, which weighs about 2.5 grams. 90% of such dimes are silver and this gives us a value of: 2.5 grams × 90% × $1.23 = $2.77
So, the junk silver content in one Mercury dime is worth $2.77 at current silver prices and if an investor gets such coins for less, he makes a killing. So, to value their junk silver investment, investors must calculate:
- The percentage of silver alloy in the coins
- The weight of the coins, and
- The market rate of silver
Why Invest in Junk Silver?
Investing in precious metals like silver and gold is like buying insurance against economic collapse. The world economy is passing through an uncertain phase and there is war, strife or downturn in almost every country. Investing in precious metals act as a hedge against inflation and can be invaluable in bad times.
The most important reason to buy junk silver coins is because investors are getting them at up to 50% of precious metal rates. Smart investors typically buy junk silver coins at 25% to 50% of their bullion value. Think about it, should an investor not buy a precious metal if he gets it at 50% to 75% below its market rates?
Junk coins will continue to be valuable. Also, their authenticity cannot be disputed ever. Each coin is literally certified by the government.
An investment in junk silver coins need not be large. People can keep buying as and when they have surplus funds.
Investors can convert their collection into a business by starting an online junk silver trading center where they can quote your very own buying and selling rates. Of course, these investors must have enough capital and a huge collection of coins to start such a business.
How to Collect or Buy Junk Silver Coins?
- Start by checking in churches and schools or advertise requirements on sites like Craigslist.com.
- Most antique stores stock such coins and such stores do not change prices based on current market rates of silver and investors can take advantage of this fact.
- Gas stations stock up a whole lot of coins. Investors can visit gas stations and try to find some.
- Investors can also find coins in flea markets, garage sales, and used goods markets.
- Investors can advertise on country-specific eBays and try and source coins with silver content from all over the world.
- The last option is to buy a metal detector and head for the hills and parks.
Investment in Other Precious Metals like Gold
Buying junk silver coins scores over investing in precious metals like gold that are available on an over the counter basis. The biggest advantage is that an investor must buy these precious metals at current market rates. In contrast, an investment in junk silver is at up to 50% of the market rate of silver. Second, the investor has to buy a minimum quantity and all precious metals are pricey. So, an investment in precious metals eats away into capital and any dip in value spells a loss. In contrast, investors can as much junk silver as they can afford and not be worried about a fall in silver’s market price because they anyway purchased the coins real cheap.
This is what you need to know about investing in junk silver. If you have not started, you should do so now to take advantage of the huge price differential. Sooner or later this investment is sure to catch up and that is when the price-market rate differential will narrow down. Before this happens, you must latch on to the market and buy as many junk silver coins you can get. You have everything to gain and nothing to lose.