Individuals who have been in and around the silver coin industry for years are probably familiar with the term “junk silver coins.” Junk silver coins typically refer to 90% silver dimes, quarters and half dollars minted in 1964 or earlier, but technically they can refer to any government issued silver coins for general circulation that are primarily bought and sold for their silver content. Other examples of junk silver coins are 80% Canadian silver coins minted in 1967 and earlier, 40% silver Kennedy half dollars minted from 1965 – 1970 and British silver coins minted prior to 1947. However, with the recent surge in demand for 90% silver U.S. coins, rarely do you hear individuals refer to these coins as “junk.”
While the demand for 90% silver coins, and subsequently the premium for these coins vary over time, we haven’t seen the type of premiums that we’re currently experiencing in the marketplace since 2008. There appears to be a new found respect for “junk silver coins,” and considering that demand continues to outstrip supply, we don’t see interest in these coins waning anytime in the near future.
Dimes, quarters and half dollars are all in high demand, but interest in 90% half dollars continues to remain higher than the other denominations. This has historically been the case for a few reasons. For one, it’s easier to store rolls of half dollars than smaller denominations. Secondly, substantial investors in silver coins tend to prefer larger denomination coins. Thirdly, some older half dollars, such as Walking Liberty halves, may have some collectible value – especially in high end condition.
It’s difficult to know for certain the reason why we’re currently seeing high demand for 90% silver coins, but we know that in 2008 many individuals were purchasing silver as a hedge against financial and economic crises. They were also seeking a flight to quality. At that time, the stock market plummeted, many smaller banks were failing, and the consensus among many folks was that the largest banks had an enormous amount of toxic loans on their books, which effectively made them insolvent.
While some of the most recent economic indicators have shown an improvement in GDP and job growth, many individuals still aren’t convinced that we’re in the midst of a sustained recovery, as long term interest rates have remained artificially low due to the Federal Reserve’s purchasing program of $85 billion a month. This is equal to $1 trillion annually. If the economy were truly on stable ground, the belief is that the buying efforts of the Federal Reserve would no longer be needed. In fact, most central banks around the world are pursuing similar accommodative monetary policies.
90% silver coins are not only a hedge against inflation and financial crises, but many individuals are of the opinion that if the dollar is destroyed due to high rates of debt, deficits and monetary printing that silver coins may also be used as money or for bartering in the future. With this being the mindset of some folks, they believe that a combination of dimes, quarters and half dollars is a prudent choice, as using these coins for transactions will be similar to using different denominations of paper currency.
While in time we’ll likely see a reversion to the mean for 90% silver coins, it’s difficult to know when that may be. However, since a number of 90% silver coins are being melted every year by refineries and jewelers, even though this practice is illegal, fewer of these coins will exist in the future, so it’s possible that we’ll continue to see some type of higher sustained premium than we’ve seen in years past.
In summary, due to the current high demand and increased cost for 90% silver coins, very few people these days are referring to these coins as junk silver. As to if the premiums will sustain over the long run, it’s anyone’s guess, but considering that many silver coin dealers are having a difficult time keeping these coins in stock, we suspect that the current interest level in these coins will likely persist for some time.