Silver crossed an interesting milestone recently. Now one dollar in so-called “junk silver” U.S. coins costs more than $30.
“Junk silver” refers to U.S. dimes, quarters and half dollars minted before 1964. They’re only called “junk” because they have no numismatic value and are sold solely for silver content.
These pre-1964 coins are 90% silver and weigh 25 grams per dollar in face value. So 10 dimes, for example, weighed 25 grams when minted. Theoretically those 10 dimes contain 22.5 grams of silver – or about 0.723 troy ounces – but because they’ve been circulated, most dealers assume they weigh 0.715 troy ounces.
Or, to look at it another way, if you have $1.40 worth of these coins, that amounts to about one ounce of silver.
Here’s a chart that shows the value of just one of these dimes since 1981:
Basically all you are really looking at is the price of 0.0715 ounces of silver, but it’s interesting to see it in the context of the face value of the dime. For example, a gallon of gasoline might have cost $2 10 years ago. That would have been 4 silver dimes or 10 non-silver dimes.
Now with gasoline above $4, you would need 40 non-silver dimes. But now only two silver dimes would more than pay for that gallon of gas.
Here’s a look at the same chart for the late 1960s into the late 1970s. That silver dime gained a lot of ground as the U.S. went off the gold standard and a nasty bout of inflation began.
(Yes there was a 1980 surge in the price of silver which I did not show because I was really more interested in the prices before and after that bubble.)
Is Junk Silver Worthwhile?
Just checking some prices I note that this junk silver tends to sell at or just above the spot price depending on how much you buy. Bullion coins and bars, on the other hand, command a much higher premium - at least right now.
Why? I’m not sure but in many ways the silver content in junk silver coins is theoretical. First of all, melting them down is illegal. And even if you could, there is still 10% copper in there. How much effort and expense would it take to convert 90/10 silver/copper alloy into .999 fine silver? I have no idea, but it must cost something.
On the other hand, precious metal coins designed for circulation have almost always been alloys, including the U.S. gold coins that circulated many years ago.
Anyway, at current silver prices, the pre-1964 dimes are worth more than $3. And that’s not chump change.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.