Yes, it is legal to melt U.S. silver coins, including pre-1965 “junk silver” coins such as dimes, quarters, half dollars, and silver dollars containing 90% silver. However, this was not always the case—melting silver coins was prohibited during a brief period between 1967 and 1969 due to concerns about the effects on the circulating money supply. However, since the 1970s, it has been legal to melt these coins.
In contrast, melting modern U.S. pennies and nickels is illegal because their face value is low relative to the metal content, especially with fluctuating copper prices. This restriction prevents hoarding and protects the coin supply needed for everyday transactions. Notably, silver war nickels from 1942-1945, containing 35% silver, are an exception to the general melting prohibition on nickels and can also be legally melted.
Although it is legal to melt 90% silver coins, collectors and investors often sell them as coins rather than melt them. ” Junk silver” coins often trade at a premium above their melt value due to their recognizable form and guaranteed silver content, making them easier to value and sell without incurring refining costs.
Why NOT Melt Junk Silver?
While it is legal to melt pre-1965 U.S. junk silver coins (those with 90% silver content), some argue that it may not be a sound practice from a practical standpoint.
Junk silver coins are highly liquid and are recognized instantly by buyers. Melting them down into bullion removes this advantage, and you would need to assay and certify the melted silver to sell it at market value, which complicates resale.
Refining silver from melted coins into bars or ingots can be costly. These costs may exceed any potential financial gain, especially given the premium that intact coins can command on the market.
Many silver coins trade at a premium above their melt value because they are well-recognized, easy to authenticate, and widely accepted by investors. Some junk silver coins have numismatic (collectible) value beyond their silver content. For example, rare dates, mint marks, or well-preserved coins can command much higher prices.
Melting coins would destroy their potential numismatic value, which could be significant in some cases. Collectors and investors prefer coins in their original form since they are trusted for their guaranteed purity and weight. Also, coins are easier to sell in small, known quantities.
Junk silver coins provide a hedge against fluctuating silver prices. Their premium value acts as a buffer in volatile markets. Even when the spot price of silver fluctuates, coins often retain or increase their premium value because they are recognizable and in demand. Melting them down exposes you to greater market volatility, as melted silver is valued strictly at spot price without any added premium.
They also command premiums that could be lost in the melting process, making them more valuable as coins than raw metal. Furthermore, the cost of refining and verifying melted silver adds unnecessary expense and complexity.