How to Buy Silver Below Its Spot Price
by Luke Burgess, Investment U Research
Tuesday, February 21, 2012: Issue #1713
Most investors are skeptical when you tell them that they can actually buy silver below spot prices.
But it’s absolutely true. And there’s no word play, or gimmicks. Anyone can do it right now.
The only caveat is, to buy silver below spot prices you have to make bulk purchases of the right silver vehicle.
Standard silver bullion – like American Eagles and Canadian Maple Leafs – can often carry high premiums above the metal’s spot price. And no matter how many you buy at once, you’d be very hard pressed to find any bullion dealers willing to part with Eagles or Maple Leafs below spot.
However, there is one specific set of silver coins that dealers quite frequently sell below spot prices.
They’re called “junk silver coins”. And despite their less-than-flattering name, they’ve become one of the most popular investments for speculators looking to get the most silver for their money.
Investing in Junk Silver Coins
The term “junk silver coin” is broad, covering many world coins. But at its core, a junk silver coin is any government-issued coin containing any amount of silver that has little to no numismatic or collectible value above the value of the metal it contains.
Although there are many world coins minted in silver, the most popular junk silver on the market today are circulated U.S. coins minted before 1965. Prior to that year, the U.S. government produced many of its coins in alloys consisting of silver purities ranging from 35% to 90%.
Investors buy these coins today for their metal content, paying attention to what they call “melt value” – which doesn’t imply the melting of the coin (that’s illegal) but rather the intrinsic value of the silver contained.
Here are the most common U.S. junk silver coins that are available on the market today and an idea of their melt values:
In the past few years, the market for U.S. junk silver coins has been quite healthy as buyers quickly learn that they can be one of the absolute most affordable ways to buy silver.
A new, uncirculated American Silver Eagle typically carries a 10% – 15% premium over spot prices right now.
Meanwhile, you buy can U.S. junk silver coins for as little as 1% – 3% over spot prices. Sometimes you can even buy junk silver below spot if you buy in bulk.
But you have to buy the right coins. That’s because a growing interest in numismatics has greatly increased the premiums for certain, rarer U.S. silver coins.
A circulated Peace dollar in good condition, for example, will sell for a 15% – 20% premium from a coin shop or online auction – higher that the premium on a 99.9% pure silver American Eagle.
So if you’re interested in junk silver coins as an affordable way to buy silver, not all U.S. silver coins fit the bill.
But there are three specific U.S. silver coins that I believe provide for the best junk silver investment.
The Best Junk Silver Coins for Investment
The best junk silver coins are the purest. Junk silver coins with lower silver purities – like the 40% silver Kennedy half-dollars and 35% silver Jefferson war nickels – force you to mostly own other metals of much lesser value, like copper and manganese.
Popularity-wise, junk coins with lower silver purities play second fiddle to the 90% silver coins and are ultimately less liquid. So I recommend staying away from those.
So considering purity and rising numismatic values for the rarer U.S. silver coins, here are the three best junk silver coins for investment:
Very few of these coins remain in general circulation. However, you will receive a silver dime or quarter as change once every blue moon.
Nevertheless, you certainly won’t be able to put together a sizable investment from the silver coins you find in your pocket change. So you’ll need to buy them somewhere. And the best places to do that are from coin shops and reputable online dealers. There, you’ll find junk silver coins sold in small denominations, or in what are known as “silver bags”.
The Cheapest Junk Silver: Silver Bags
A silver bag is simply a bag of circulated U.S. junk silver coins – assorted in either single or multiple denominations with varying dates.
A typical 90% silver bag will contain U.S. Roosevelt dimes, Washington quarters, and Franklin and Kennedy half dollars with a specific face value. Dealers most frequently sell silver bags with $100, $500 and $1,000 face values.
These silver bags are the absolute cheapest way to buy silver. Sometimes you can even buy just below spot prices, if you buy enough. One online dealer, Ampex, is selling a $1,000 silver bag for about 0.2% below spot right now. Below is a brief approximation of current premiums on silver bags:
To buy silver below spot prices, speculators may need to make a sizable investment. But for serious silver investors, a large silver bag could be very profitable if the metal’s price continues to rise.
Even though these coins are called “junk”, they contain one of the most important monetary metals known to man: silver. Today’s coins are minted with base metals of much lesser value, like copper and nickel. It seems to me that they are the real “junk.”
But no matter what you call them, 90% silver U.S. coins can be one of the most affordable and fun ways to invest in silver.
Good Investing,
Luke Burgess
P.S. I was able to secure an exclusive “junk silver coin” deal for Investment U readers with Asset Strategies International, Inc.
To find out how to get your complimentary Morgan Silver Dollar, click here.
Any investment contains risk. Please see our disclaimer.
14 Responses to “How to Buy Silver Below Its Spot Price”
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Interesting and informative article. It would have been helpful if an example of pricing were included. According to my rough calculations, a $1000 face value bag of 90% silver would sell for about $22,000. Is that correct?
Thanks!
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If I were to buy more silver maple leafs locally
I’d be paying approx. $36.50 per oz. .999% pure.
According to your quote above I can buy 715 oz. of
silver coin, 90% pure (795 oz.of coin)
That’s approx. $1.40 per oz. pure silver.
Please explain! If I’m reading it right, how do I go about a truck-load purchase for del’y to my Canadian address?
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The above quote is referncing $1000 face value of 90% silver US coins NOT purchase price. The cost for $1000 face 90% US silver coins that contain the equivalent of 715 troy ounces of silver is the prevailing spot price at the time of purchase plus the approximate premium percentage. The moreface value that is pirchased, the lower the premium perentage. In the case of $1000 face I believe that you should realistically expect to pay near to the stated 1.5% or more likely 2% – think of the seller with an investment at say $34.25 per ounce of $24500 to profit just 2% at $500! Hefty investment for such a small return. BTW I’d want to back up the trucks at $1.40 per ounce too!
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Mr. Burgess — Here’s a much better name for those silver coins:
Constitutional silver coins.
(Remember that, anybody?)
Best regards, The Founders
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I live in Hong Kong.Do you know any dealer who will send junk coins to Hong Kong?
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Colin,
I believe APMEX.com will ship to Hong Kong.
Also try LibertyCPM.com
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Thanks Zachary
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Does it mean that if we were to purchase $1000 face value of the coins, we pay $ 1000 only? What about the delivery cost? Also the mode of payment? Thanks!
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Lots of good info here, thanks.
There’s a convenient junk silver calculator here:
http://www.teslamap.com/public/silver/index.php
to make those calculations a bit easier. Also a nice list of junk silver coins.
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When in terms of junk silver coins someone says FACE VALUUE. They mean what the denomination is of the coins and not the value of the silver. For example $1 face value of us currency prior to 1965 could be 10 dimes or 4 quarters or 5 dimes and 2 quarters. Now the approximant amount of silver in the 90% silver coins is .714 ounce per $1 face value. The reason that we say about .714 is that some of the coin has worn off due to circulation. So for example $10 face value has about 7.14 ounces of silver. If the spot price of silver is $35 then $10 face value is worth $249.90. Now as you know the pre 1965 Dimes and Quarters coins are 90% silver. So if you buy by the pound use this formula. (LBS*16*.9)*(Spot price). Hope this helps.
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Bought my bucket full between 9.00 – 18.00 at local coin shops over a period of a couple of years. Glad I did.
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One warning I didn’t see in your article: Junk silver coins, since they have been circulated, may be so worn as to be considerably short on weight, substantially reducing their weight and value (I learned this the hard way).
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So “there’s no word play or gimmicks” in the headline “How to Buy Silver Below Its Spot Price”? Au contraire. When one reads through this spiel, he finds that all this claim amounts to is that “One online dealer, Ampex, is selling a $1,000 silver bag for about 0.2% below spot right now.” That’s 0.2% — two-tenths of one percent! This headline is quite exaggerated and misleading.
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> 0.2% below spot price
> below spot price
> below
Your comment appears to be quite exaggerated and misleading, Mr. Zan.
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