Black and white picture of coins stacks, shallow depth of field.
When you step into the world of precious metals investing, you’ll hear a variety of terms thrown around. If your goal is to invest while saving money, “junk silver” will certainly be one of these terms. What does this mean, and can silver really ever be junk?
These are important questions when you’re just starting out in silver investing. While bullion coins and bars might seem like the only route for investment, there are many other options out there. Knowing how to identify the best of these options is essential for making informed decisions.
This guide will dive deep into the world of junk silver and whether it’s a smart investment. You’ll be able to make a more knowledgeable decision on whether to buy this “junk” and what value you can expect. And if you’re still interested by the end of the guide, there are plenty of options available!
When you hear someone refer to silver as “junk,” they could mean a variety of things. Some people use this term when they really mean “cull coins.” The cull designation means that a coin is in generally poor condition or has significant flaws.
Junk silver is actually an informal term referring to silver coinage that has no value outside of its precious metal content. Collectors and investors typically give this label to various coins produced before 1965 due to their silver content.
A variety of coins fall into the “junk” category. The following is just a small sampling of the most popular coins with this designation:
These junk silver coins are so popular because it’s still possible to find them in pocket change. Since many people are hoarding them, though, finding such specimens has become more difficult. Additionally, mintage numbers were comparatively low before 1965.
Some experts only use the “junk” terminology when referring to silver coins containing 90% of the precious metal. Coinage like the Jefferson Nickel and post-1965 Kennedy Half Dollars, for instance, contain much higher levels of copper.
The reason so many people seek out junk silver basically boils down to “silver is silver.” While this is technically true, it’s important to note that not all items containing the white metal are created equally. There’s a lot to be said for condition, purity and collectability.
Referring to coins that contain silver as “junk” is somewhat misleading. The truth is that any type of silver holds value. If you buy a fake bullion bar with a thin coating of silver, for instance, even that small amount of the exterior still holds value. You can say the same for old circulated coins.
To put it simply, junk silver is valuable. When silver hovers around $26 per ounce, a 1964 Kennedy Half Dollar has a value of about $9.50. This is a pretty great markup considering you’d only get 50 cents worth of value by spending it in a store.
You need only look at eBay to learn that the “junk” designation does little to reduce value. In fact, a roll of Roosevelt dimes sold for nearly $105 during July 2021 when the price of silver was $26.24 per ounce. At that price, the spot value is less than $95.
This means even junk silver can carry a substantial premium.
If you’re still paying a premium when purchasing silver designated as “junk,” what’s the point in even buying it? After all, these coins earned the designation based on the belief that they’re more affordable than buying silver bullion coins and bars.
As stated earlier in this guide, though, many people simply believe “silver is silver.” In reality, bullion coins and bars have higher precious metal content. They are also usually in much better condition since they’ve rarely been in general circulation.
Here are a few of the major disadvantages of buying junk silver that you typically won’t experience when investing in traditional bullion:
One of the biggest problems you’ll encounter when investing in circulated silver coinage is storage. A 10-ounce silver bullion bar takes up a small amount of space — about 2″ x 3.5″. To get 10 ounces of Washington Quarters, you would need 55 coins. This takes up substantially more room.
When you get into the more affordable junk silver coins, this issue becomes even worse. It would take about 180 silver Jefferson Nickels to accrue an ounce of the precious metal. This takes up far more space than that 10-ounce bar we mentioned.
No matter what, precious metal storage is always a major concern.
Even with coins that contain 90% of the precious metal, you’re still not getting anywhere close to pure silver. They might sell great on eBay and other online marketplaces, but when it comes down to securing true value, nothing outshines bullion.
Did you know you can save many silver bullion coins in individual retirement accounts (IRAs)? This provides a safe haven from taxes that builds value towards retirement. Unfortunately, IRAs do not accept junk silver coinage. Coins must be at least .999 fine silver to qualify.
When you’re purchasing old circulated coins, it’s different from buying silver bullion coins. If you get an American Silver Eagle from a reputable dealer, it’s essentially guaranteed that you got what you paid for. And while the U.S. government guarantees all its coins, you can still run into problems.
That’s because junk silver typically comes from non-dealers. This means you’ll have to go coin-by-coin to verify authenticity. This often means checking the date on every single item you buy. This can prove time-consuming and tedious.
Contrary to popular belief, it is not illegal to melt down silver American coins. If a time ever arises when you need access to pure precious metals, though, it’s going to be a difficult endeavor. Melting junk silver results in a mixture of the precious metal and whatever else is in the coin.
Separating these metals can become expensive. And if you fail to do so, you’re still stuck with an item containing the same impure composition.
While many people lump all pre-1965 silver coinage into the same “junk” group, this isn’t exactly a true designation. That’s because many of these coins carry a numismatic value in addition to their face and intrinsic values.
The following definitions will help you better understand these terms:
If you decide to invest in junk silver, it’s important to know what you have. Selling a coin based on spot price — even if you charge a premium — can cost you big if the coin has high numismatic value. If you’re going to buy rare silver coins — or sell them — it’s best to go directly through a reputable dealer.
Investing in junk silver is certainly a legitimate means of storing value for the future. Unfortunately, the disadvantages of this type of investment are many. Storage needs alone prevent many serious investors from going this route. That’s why you should consider all your options.
Buying silver should be a way to earn money and secure your future. It should not create a burden. Unfortunately, this is exactly what buying old 90% circulated coins often does. There are too many coins out there that offer higher value to justify dealing with “junk.”
At Silver Gold Bull, we want to make sure you get the most for your investment. Visit our Silver Bullion Products page to see everything we offer. When you’re ready to get serious about buying precious metals, bullion coins and bars are typically your best option.
And if you’re still interested in junk silver, check out our Mercury dimes. These carry intrinsic value along with a measure of collectability.
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