The BLOCKHOUSE #6: Junk Silver – Good Value

By Victor Baca

I’m not an investment guy, or a banker or a financial advisor. My mama raised me better than that. I’m a hobbyist who had some fun getting some silver once and parlayed it into a house. Having silver actually jingle in your pocket used to be a common thing. You had real money, that bought real things. Now it’s the clunk of base metal and paper backed by nothing but a hollow statement about full faith and credit. Well, I don’t have much faith in the feds and their credit is spent.

I remember well the morning in 1964 when a U.S. Mint official presented the new American coinage on a morning news show. A bi-metallic coin with a copper core, clad with a thin nickel jacket was the new wave in circulating coinage. Much better than silver, he said. I thought he was crazy and I was only 12 years old! So this disclaimer claims my only monetary expertise is that a 12 year old is smarter than a treasury official with his hand in your coin pocket.

Why would you want to trade your labor for bits of colored rag paper, computer pixel money, and coins not even worth the metals they’re stamped from? Digital money is based on nothing but thin air and it can go out of favor quickly. When they start basing digital money on the image of the “Doge” internet meme, you know you might want to hedge your bets a little and start stashing forms of real money, “Junk Silver.” The term” Junk Silver” is not derogative. It’s simply the industry name for silver alloy that’s 90% silver with 10% copper added to harden it for monetary use and this form of silver coinage has no numismatic (coin collector) value. Junk silver, also called coin silver or sterling silver (92.5%), is the alloy we traditionally saw in U.S. coinage in everyday use before 1965. Silver (abbreviated Ag on the Periodic Table) is known as the “common man’s” money for a very good reason. It’s affordable and readily available.

There are good places on the internet that educate you on the intracies of collecting (“Stashing”) your physical silver. Your first place to get good information, as well as the official daily “Spot” price/ounce for precious metals is Kitco (Kitco.com). When I first looked them up I thought they must be some kind of hobby dealer! Turns out Kitco is the daily source for information on the precious metals market. Kitco has forums that can answer your questions, articles about the precious metals and markets, charts, and just plain good info.

The major bullion dealers have very good online presence and are great places to find information as well. APMEX (apmex.com), American Precious Metals Exchange, is an excellent online dealer. Another good major dealer is Johnson Matthey, commonly known as JM Bullion (jmbullion.com). Both accept all methods of payment. And don’t forget the corner coin shop. Develop a good relationship with your coin dealer and he, in turn, will often clue you in to product he might want to move and offer you a good price on it.

Bullion refers to gold, silver and platinum, and it will tell you up front, “.999 Fine Silver, 1 Troy Ounce, Sunshine Mint.” The “Hallmark” is considered as good as gold, and chiseled in silver, so to speak. It tells you purity, metallic content , quantity, and maker in a bar, ingot or round (a “coin” that’s not legal tender). Monetary value is not hallmarked because the “Dollar” value of bullion floats up and down with the latest spot price which is basically the daily price based on supply and demand. Honest money, simple as that. When there is a monetary value noted on bullion, like with the American Silver Eagle, our USA bullion Silver Dollar, the denomination is nominally 1 Dollar. You’ll buy one today and pay about 37 bucks for it.

Bullion, although it can take the form of a coin, is not normally considered circulating money. Bullion silver is refined to .999 Fine purity or above, and is often referred to as “Fine Silver.” Fine silver is much softer than copper-hardened, alloyed “coin silver,” and it would wear down very quickly if put in daily circulation.

If you apply yourself, it’s amazing how fast your stash can grow. The idea is to purchase consistently, every payday or, toward the end of the month, if there’s any money left over, purchase some extra silver with it. In your barter circles, let people know that you will accept silver in trade. In our old hometown, we had two coin dealers. If I had any extra dollars in my wallet, I’d walk into the coin shop and buy something, anything, as long as it was silver. It was fun, too. Hanging out at the counter, going through Walking Liberty silver Half Dollars and cherry picking the best ones. Prettiest coin I ever saw! But here were talking, cold hard investing in the End Time when the economy grinds to a halt under its own weight. The absolute basic Junk Silver would be circulated coins minted in 1964, the most common date for modern silver U.S. coin, and that’s what you want. Bang for the buck.

Silver is your everyday spending money when the financial and money markets crash under their own mismanaged weight. There are lots of ads out there urging you to invest in gold (abbreviated Au on the Periodic Table). I think of gold as a compact storehouse of wealth. A place to “park” large stacks of silver as your stash grows. Silver is great for everyday barter purchases and the beauty of it is that you can move it into 1-ounce gold bars and gold coinage. If your stack of silver gets out of hand you can convert that value, compressed in a smaller volume of gold for more compact storage. If gold captures your fancy, get a gold pan and a copy of Washington State’s “Gold and Fish” pamphlet and get some. It’s almost everywhere, in streams and river banks. You just need to know where to find it. Gold is known as a “noble metal” it does not tarnish. You’ll know it when you see it in your pan, it’s heavy and sinks to the bottom of everything else in the pan. The rocky, sandy detritus washes away and there it is, little flakes and tiny nuggets. It’s a fever that even hydrochloroquine can’t cure!

Note that all precious metals are weighed in Troy ounces, based on 31.1 grams/ounce or roughly 10% heaver than the regular avoirdupois ounce. As far as investor’s “paper silver” goes, that’s totally out. I firmly believe when you invest in silver promised to deliver on demand at a later date, you’re rolling the dice. When you put your promissory note on the table, is the silver likely to be there? I believe the silver derivative market is vastly oversold. In other words, if everyone who holds Comex silver futures demands payment at the same time, there’s not enough physical available to cover the demand. Someone’s gonna be holding the bag and it ain’t gonna be you. We are talking strictly physical, hold it in your hand, solid silver. Like the old saying goes, “If you can’t hold it, you don’t own it.”

Like any other knowledge base, There’s a whole language attached to the precious metals market. You have the “spread,” “daily bid and ask” price, “Spot Price,” the percentage and quality of silver content in the product, and whether or not the silver is minted by official government mints, commercial mints or a producer of “industrial silver.” There are so many forms and purity values of silver that it can be daunting for the first time buyer. The main thing is that, no matter the source, the silver’s good stuff. But know that there have been instances (tied to the Chinese) of silver bars and rounds counterfeited and filled with tungsten, then passed off as the real deal.

If in doubt, just purchase a roll of 50 U.S. minted 90% silver dimes like we spent in the old days. No one’s going to counterfeit an old Roosevelt silver dime. Get the “average circulated” Roosevelt dimes, they’re the cheapest, or you can get a little classy and pick up a roll of 50 circulated Mercury Head dimes for a little extra. Just to show you how much our money has been debased since 1913, a face value $5.00 roll of 50 silver Mercury “average circulated” dimes now costs $125 dollars! Get the really nice Brilliant Uncirculated mixed-date roll and prepare to drop $550 dollars.

When I first started buying silver after the market crash of 2008, I asked a bullion dealer in my town for his rule of thumb for a poor boy like me. “Buy the cheapest you can get-Junk Silver-old fashion common-date U.S. dimes, half dollars and quarters. If you want pure silver, buy generic 1 ounce bars and rounds. You don’t need fancy, high premium, American Eagles or commemoratives. Just remember that silver is silver; get the cheapest types and you can’t go wrong.” He wasn’t wrong either, I ended up buying a house, using my appraised stash as the down payment.

You can buy “Rounds” and “Bars” of Fine Silver in 1 ounce forms that are produced by private commercial mints like Valcambi, JM Bullion, Sunshine Minting etc. Most private commercial mints sell through dealers and distributors. Privately minted bars and rounds represent good value and the content is .999 fine silver and above. Commercial mints are often contracted to supply planchets (basically, a precious metal slug) for official government mints to die stamp into coinage. You can even get special event commercial minted rounds like “It’s a Girl!” baby gifts, santa silver for Christmas, religious themed rounds etc. They often can be had for sale prices at coin dealers. I much prefer a beat up Morgan Dollar cull with a Carson City mint mark, or maybe a nice hand-poured 1-ounce “loaf” bar, but like the man said, “Silver is silver.”

Above all, watch those “Premiums!” The premium is the price you pay over and above daily silver value; it is, in essence, the profit margin that you give to the dealer on the sale. Premiums go up or down depending on the demand or popularity of certain pieces of bullion or coins. For instance, an American Silver Eagle has one of the highest premiums out there, while the same quality and weight of silver found in Austria’s official government minted bullion, the handsome silver “Philharmonic,” has a much smaller premium. Back in the day, I got the itch for the coinage of my ancestors, Mexican silver bullion, the 1-ounce Libertad. My dealer didn’t move much Mexican silver, so he sold it to me at a really good premium. Today, Mexican Mint silver Libertads, and Aztec themed coins like Cuahtemocs and 1968 Olympic 25 Peso pieces are sought after and very popular. The premiums are through the roof. Almost all nationalities have minted their own domestic silver coins and the silver content can vary depending on the mint.

Silver buyers who look at the precious metal as simply a store of value tend to favor basic pre-1965 (1964 and earlier dates) American coinage. These days, pocket money is actually made from “base metals” usually worth far less than the nominal “face value” of the coin. Low premium junk silver is your best bet when stashing silver to be used when traditional fiat (paper) money is replaced by the “precious metals” like gold, silver and platinum when the people decide they don’t want to be tracked by every digital transaction. Usually at this point, inflation has so eroded the value of the buck that it would take a wheelbarrow filled with Dollar bills to buy a double tall latte and a scone. It’s happened in the past and will again.

There’s a very good reason the federal government is having Mexico stop border caravans arriving from Venezuela. Venezuelans know all about wheelbarrows full of cash to buy a loaf of bread. And they know the early stirrings are already happening here in the USA. So we keep them out and stifle their warning cries.

The Dollar is sitting on the edge of this devaluation and the pressures of rampant inflation, the push to digital currency and out- of-control government spending can easily topple the Dollar as the world’s reserve currency. Pretty colored rag paper is all it is. Once the world decides that “the full faith and credit of the U.S. Government” means nothing because so much has been printed or created out of thin air that it’s value could easily drop even below that of a square of toilet paper. For instance, how much is an illegal alien worth? Not much in today’s dollars, only about a quarter of a million!

Since 1964, a “quarter” isn’t worth a quarter anymore. It’s become a base metal coin based on paper fiat money. You spend a “quarter” like it’s a quarter of the value of a silver dollar, when its base metal content is actually way below any junk silver coin of the same denomination. Sooner or later that fact will catch up with us and a “real” quarter minted in 90% silver becomes a valuable piece of money again. It’s really not worth more now than it was then, only the dollar’s value is dropping relative to it. For instance, if a silver dollar bought you a box of ammo in 1872, it would still buy a box of ammo in 2021.

There are 2 exceptions to the current U.S. coins which are actually worth more in metallic weight than their nominal denominations: nickel and copper. A pre-1982 U.S. 1-cent “Penny” coin is worth 3 cents, composed of 97% copper weight, and a 5 Cent nickel in current circulation has a metal content worth 6 to 7 cents on today’s market. So, stash those old pennies and any and all nickles, they’re worth more than their face value in metal weight! If you should come across World War Two (1942 to 1945) minted nickles, they will contain 35% silver, because at the time elemental Nickel was a highly valued war material. If you should come across a 1942 Nickel with the mint mark that’s not silver (the change was made right about mid- year in ’42), it will be found just to the right of the Montecello building on the reverse side of the coin. A typical silver “War Nickel” will have a large “P,D or S” mint stamp between the Montecello dome and “e pluribus unum” on the upper reverse side of the coin. If you find one in your change-it’s a keeper!

Most preppers prefer junk silver dimes, quarters and half dollars as the best bet when stashing silver coinage as a hedge on inflation and for barter spending. It finds its real price when based on what it will buy rather than what it’s “worth.” When paper “fiat” money loses all value, silver and gold will hold their own since their value is based on the content of precious metal in each coin.

Finally, never forget-one thing you never want to do to any coin is to clean it. Today’s cheap coin could become tomorrow’s collector’s item. If you clean it, or polish it, it’s value drops dramatically. “Dirty” silver coins having tarnish often carry a premium above and beyond. “Tarnished” silver coins with cobalt and/or colorful “rainbow” tones jump in value dramatically. In today’s market, coins known as “culls” are sold dirt cheap, because they’ve been cleaned/polished, drilled for a neck chain, defaced, or so worn they look like slugs. Culls may look shabby, but in terms of buying power, they represent a low premium bargain. Silver is silver…

Silver coins and bullion are fun and interesting to collect. They hold value and some examples are downright beautiful. In 1917, the U.S. Mint produced the most controversial coin ever to come out of the minter’s dies-the Standing Liberty Half Dollar. Miss Liberty shows her nude right breast, protected by the shield of America. Outrage among the public caused her to gain a modest breast covering. Find an original and consider yourself very lucky. Because it was he first run of the new Half Dollar, a lot of people saved them and they are more common in good grades than you might think.

There are also quite a few beauties in more demure modern bullion and coinage. Check out the British Brittania, the original “Freedom Girl” round, the Silver American Eagle, the Walking Liberty half dollar, and the beautiful Lady Liberty on the

1921-1935 Peace Dollar…all of them lovely ladies, indeed!

If you’re wanting to stash silver in whatever form suits you, don’t forget the other “precious metals” you might need to protect the stash: Brass, Lead and Blue Steel!

 

FORMS OF PRECIOUS METAL COINS, ROUNDS AND BARS

Junk Silver: 1964 and earlier American circulated coinage

Silver Dollar (carries a high premium) Silver Half Dollar

Silver Quarter Silver Dime War Nickels

 

Pre-1965 Junk Silver American Coins: Silver Content by Troy Ounce (Known as”‘Melt Value”)

Silver Eisenhower Dollar (40% Silver Content): 0.3162 Troy Ounce Silver Franklin Half Dollar (90% Silver) : 0.3617 Troy Ounce

Silver Kennedy Half Dollar, 1964 (90% Silver): 0.3617 Troy Ounce Silver Kennedy Half Dollar, 1965-1970 (40% Silver): 0.1479 Troy Ounce

Silver Washington Quarter (90% Silver): 0.1808 Troy Ounce Silver Roosevelt Dime (90% Silver): 0.0723 Troy Ounce

Note: The above are alloyed with copper for hardness in circulation

 

Silver Bullion: Refined, unalloyed, Silver content .999 fine silver

Silver American Eagle, (U.S. Mint) .999 fine U.S. Silver Dollar

Silver Bar (Commercial mint) .999 fine silver. Available in various weights Silver Round (Commercial mint) .999 fine silver. Available in various weights

Foreign Silver bullion (British Royal Mint) .999 fine silver (i.e. British Brittanias), rounds and bars

Other mints like the Royal Canadian Mint and quality commercial mints have acheived .9999 purity (4 nines fine)

 

Numismatic Silver Coins

These are what most of us think of as “coin collector” items. They can be in any form and you really need to be savvy when buying. Your best bet is to buy the encapsulated and professionally graded coins in rectangular plastic sealed cases called “slabs.” Also pick up a current copy of a coin collector’s price guide. If you shop wisely, there are still bargains to be found if you want a nice “slabbed” coin. Look for BU (brilliant uncirculated) common date silver coins that were taken from the mint bags and have a nice frosty, “minty” sheen to them. They are definitely “fungible” (readily sold and traded).