Since Monex founder Louis Carabini began acquiring US silver quarters, dimes, and halves in 1966, bags of ‘junk’ coins have proven invaluable for investment and as a hedge against a range of challenges, from currency debasement and inflation to various fiat currency failures. Today, explore why 90% US silver coins are considered a top safe-haven alternative money.
With a 5000-year track record, silver stands out as the world’s best form of money. However, as a unit of monetary exchange, pure silver lacks durability compared to 90% silver, which includes copper as an important strengthening alloy. This gives 90% silver coinage an advantage over pure bullion pieces for everyday use and handling. And, at ‘one-nine’ .9 fineness, U.S. coinage strikes a balance of purity and necessary copper-strengthening components.
On average this century, bags of silver coins have been valued at 5% over 1000 oz bullion bars per ounce, and as high as 30% more in recent shortages. Thus, they are rightly seen more as “gems” than as “junk” as they are fondly referred to. The reference to U.S. coinage as ‘Junk Silver’ originated in the 1970s Illustrating that value perception is subjective.
Back in the day, much of U.S. coinage was sold in coin shops based on collector value. Hobbyists purchased them for placement in date-series coin sets. With the exception of Monex, which experienced robust investor demand, these dealers melted coins that did not have adequate collector value, meaning a numismatic premium over the rising silver melt value. The term “Junk” evolved from this point of view, distinguishing coins destined for display cabinets from those thrown in the ‘junk bag’ for melting or bulk sale to market makers like Monex. And with that, the coin dealer phraseology stuck in the marketplace.
One obvious unique benefit of pre-1965 silver coins is that they cannot be made anymore. Therefore, during periods of high demand, the purchasing value of a silver bag can substantially exceed its silver content, offering owners a windfall to arbitrage by exchanging it for bullion. Conversely, if demand falls below the melt value, these coins tend to be melted down into bullion bars, effectively taking them out of the market, reducing supply, and establishing a value floor near melt.
As far as a tangible medium of exchange, you cannot find more readily recognizable and acceptable money than old U.S. silver coins. Pre-1965 halves, quarters, and dimes are, without a doubt, the old-school certain answer for safe-haven money with deep-rooted nostalgia, along with the added unique benefit of having a limited supply.
For investors, it certainly makes sense to buy and sell silver coinage in larger bulk quantities to achieve the best price efficiency. Full bags of 90% silver coins consist of approximately 715 ounces of silver, having a $1000 face value, and weighing about 54 pounds. Monex also offers bulk pricing in a more portable and convenient half bag of junk silver with about 357.5 ounces of silver, a $500 face value, and weighing about 27 pounds. No room in your attic to hide bags of silver? Monex’ Brink’s storage option provides greater acquisition capacity. Call your Monex account representative today to discuss the ins and outs of silver coinage investing.
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