Money Wise

90% Silver Coins Summary from CMI


Junk U.S. 90% Silver Coins

Also called "Circulated" Silver Coins

Junk U.S. 90% silver coins, often called circulated silver coins, minted before 1965 are a popular way to buy silver bullion. A "bag," ($1000 face) contains approximately 715 ounces of silver and generally tracks the spot price of silver. If silver goes up ten cents, a bag of 90% silver coins rises $70 or so; however, junk silver coin prices sometimes lag sharp spot price changes.

Why Buy Junk 90% Silver Coins?

Although many investors buy junk silver coins as bullion investments, other investors buy junk 90% silver coins for "survival purposes." These buyers fear the worst for the dollar, that it will be printed until it becomes worthless. If this "worst-case scenario" were to become reality, then U.S. 90% silver coins would be used the purpose they were originally minted: as money.

CMIGS hopes that Americans never see the day that their once proud dollar becomes worthless. Yet, we are aware that the history of paper currencies is that they are printed until they become worthless. (Actually, today the most dollars in circulation are not printed but are "electronic" or digital dollars, created by the Federal Reserve.)

Junk Silver Coins or Bullion Bars?

Although pre-'65 silver coins would be ideal for survival purposes, when junk silver coins sell at premiums below premiums on 100-oz bars and ,1-oz silver rounds , junk silver coins hold greater upside price potential than .999 fine silver bullion products. At times, and especially during rising precious metals markets, circulated pre-'65 U.S. silver coins pick up premiums.

On the other hand, .999 fine bullion items (1,000-, 100-, and 10-oz bars and 1-oz rounds) can be produced at any time; consequently, there are limits as to how high premiums on .999 fine silver bullion items can go. To support the assertion that bags of 90% silver coins hold greater upside potential than .999 fine bullion items, a little background on junk silver coin prices and silver prices is in order.

Over the last three decades, when precious metals enjoyed bull markets, 90% silver coins often achieved premiums of $1.20/oz to $1.50/oz over spot, sometimes as high at $2.50/oz. That is because many investors want silver in a form that they know is silver, and pre-1965 U.S. 90% silver coins certainly fit the bill.

In the 1980s, following silver's spike to $50/oz, industrial silver users implemented efficiency moves that slowed industrial demand for silver. Further, the rising prices of the 1970s had spurred efforts to mine more silver and to increase the recovery of silver in the secondary market. (Today, reclaimed silver is a major source of this essential metal.)

Because of these efforts, silver went into "surplus" in the 1980s, i.e., newly refined silver exceeded industrial demand. This caused investors to avoid silver in the '80s, except for a strong market in 1987. For most of the 1980s, investors were net sellers of silver, which resulted in huge quantities of junk silver coins being refined and converted into .999 fine silver. The Y2K scare caused another huge melting of circulated 90% silver coins.

Y2K Buying Spurs Junk 90% Silver Coin Buyers

Fearing that the world's computers would quit working on Januarys 1, 2000, many people began preparing for the worst. Their fears were exacerbated as respected economists issued warnings and wrote books. Newsletters were dedicated to teaching people how to prepare. One recommendation was that circulated 90% silver coins be stashed away so that they could be used as money when banks closed and ATMs no longer spewed $20 bills.

Consequently, people bought junk 90% silver coins at whatever prices, and bags picked up 50% premiums. The Y2K scare showed just how quickly 90% silver coins can pick up big premiums and that premiums on 90% silver coins can rise while the price of silver remains stagnant. During 1999, the price of silver was essentially unchanged.

Y2K Buyers Start to Sell

On January 3, 2000, as soon it became evident that the world's computers were not going to fail, investors began selling, and they sold throughout the year and into 2001, forcing down prices on 90% silver coins until they sold at discounts (below the value of their silver content). Untold quantities of bags were refined into .999 fine silver bullion, and now bags of pre-1965 U.S. silver coins are in short supply.

Before Y2K, an order for 100 bags of junk silver coins could be filled with a phone call to any one of several wholesalers. By the first half of 2002, an order for 20 bags often took two or three phone calls.

While junk 90% silver coins held huge premiums during the Y2K buying frenzy, many CMIGS clients-at our urging-swapped their junk silver coins for 100-oz bars or 1-oz rounds and increased their silver holdings by 35% to 45% without laying out additional cash.

After Y2K became a nonevent, the premiums on bags of 90% silver coins fell to where junk silver coins became cheaper than 100-oz silver bullion bars. Still, the potential for 90% silver bags to pick up big premiums justifies the buying of bags circulated silver coins by investors who can handle the bags' weight and bulk.

A Little More Information About Junk Silver Coins

When minted, a bag of 90% junk silver coins contained 723 ounces of silver, but because of wear a smelted bag of dimes or quarters will net about 715 ounces. A bag of half-dollars will net a little more, maybe 718-720 ounces because half-dollars did not circulate as much as dimes and quarters.

Buyers can expect to pay a little more for half-dollars than for dimes or quarters because of the higher silver content and because half-dollars are more popular. Also, fewer half-dollars were minted than were dimes and quarters.

When bags of circulated 90% silver coins can be bought at about the same premium as 100-oz bars, or even at small premiums over 1-oz silver rounds, bags should be the first choice for those investors who can handle the bags' bulk and weight.

CMIGS ships from Phoenix all bags of junk silver coins it sells. CMIGS does not drop ship 90% silver coins. (In fact, CMIGS rarely drop ships any orders.) A drop shipment occurs when the selling dealer has another dealer ship to the buyer. This saves the selling firm postage.

CMIGS does not drop ship because we go though all 90% silver coins before shipping and replace any excessively worn or otherwise damaged silver coins. Furthermore, we do not ship in $1,000 bags because they are heavy and burdensome. When a client buys $1,000 face 90% silver coins, CMIGS ships in two new $500 bags.