Junk silver is silver coins that have no value to collectors, as they have no numismatic value. The value of junk coins is solely derived from their silver content. People buy junk silver as a cheap means of investing in silver, as the price of junk silver is always around the spot price of silver.
Types of Junk Silver and How it is Sold
Junk silver coins typically contain 35%, 40%, or 90% silver content. They are very popular with silver investors that are looking to buy small quantities of silver as an investment. Not everyone can afford a monster box of American Silver Eagles (500 brand new coins from the US mint sold at roughly $16,000).
The most popular junk silver coins are 90% coins, from America, which were minted before 1965. Junk silver is often sold in bags based on the face value of the currency. For example, a $1,000 face value bag of pre ‘65 junk silver contains about 715 ounces of silver. Each coin contains an amount of silver relative to its face value, so 10 dimes would have the same silver content as 4 quarters.
Periods of Scarcity and Demand
It can at times of high demand be difficult to get your hands on these coins in the quantities that you desire. Since there are no new junk silver coins going into the market, you have to rely on resales, and when the market gets tight there are fewer resales and thus fewer buying opportunities.
Investors will often look out for bags of junk silver when there is a steep rise in the spot price. Sometimes bag price rises lag behind the spot price rises, so it is possible to grab a real bargain. Auction sites and forums are full of great deals if you have the patience to look around a while.
Junk silver can provide financial security for “a survival situation”. If the world economy collapsed, and we were totally invested in the banking system, we would lose our wealth. By owning silver outside of the financial system we have wealth with which we could trade and barter. Junk silver is a very popular vehicle to serve this purpose, as it is divisible down to very small denominations, such as a dime, making junk silver excellent for trade scenarios.
You are Buying Metal Not Coins
Junk silver is certainly one of the most economical ways for the retail investor to buy silver. Some investors are put off as the coins are not new and are not as pretty as the Maples, Eagles, Philharmonics and Britannia. Those that feel this way miss the point though.
The only reason to buy these coins is for the silver content, plain and simple. They are a way to get on the silver ladder and benefit from the inherent value in holding this precious metal as part of your investment portfolio.
Adding Junk silver to your holding is about as economical way to increase your silver holding and can be achieved by purchasing through online silver retail websites, through auction websites and forums, and even offline at coin shops and pawnbrokers.