According to historians, the use of silver as a transactional currency goes back thousands of years when in the third century BC, the Romans traded in silver or even further to back to 400 BC when the ancient Greeks traded silver ingots for goods and services. There is also evidence that the people of Asia Minor (modern day Turkey) used rudimentary silver coins adorned with bulls and other images as far back as 600 BC.
Today, silver is no longer used as currency in every day commerce. The United States stopped minting 90% silver dimes and quarters in 1965 and ceased mintage of 40% half dollars in 1970. Canada, Australia, and most western European nations also stopped producing silver coinage in the mid to late 1960’s. The small change that was once minted of silver was converted to cheaper metals, mostly copper nickel and zinc.
While maintaining its monetary history, silver is acquired today less for its use as a transactional currency and more as a collectible or investment. For example, silver collectors may wish to acquire as many or all of the U.S. Mint’s American The Beautiful Silver Bullion Coins or the British Royal Mint’s Queen Beast Silver Bullion Coins. Silver investors may wish to stack generic silver bullion products like 10 ounce silver bars to preserve wealth. Silver collectors and investors, generally hold their items for the long term, perhaps intending to pass them along as part of their estate.
But what if you had to use some of your silver to transact in the event of an extended power outage, bank failure or financial crisis? Would it be practicable to use a 10 ounce silver bar to buy a cup of coffee, would you want to bust up your painstakingly acquired America The Beautiful collection?
One can continue to collect and/or invest in silver in a way that also allows you to spend some of it, if necessary without having to break up a collection or sell entire 10 ounce silver bars. There are two options – junk/constitutional silver or fractional silver rounds.
What is Junk Silver?
Junk silver refers to silver coins that once circulated as legal tender and contain 40-90% silver. These silver coins are also often called “constitutional silver” due to the provision in Article 1 Section 10 of the U.S. constitution that reads, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts”. The most popular and plentiful junk silver coins are United States minted dimes, quarters, half dollars and dollars dated 1964 and earlier. These coins contain 90% silver and 10% copper. U.S. coins minted for general circulation after 1964 (other than Kennedy half dollars that were minted with 40% silver from 1965-1970) have no silver content and are referred to as “clad”.
The last mintages of 90% silver Roosevelt dimes (1946-1964), Washington quarters (1932-1964) and Kennedy half dollars (1964) are widely recognized as U.S. coins. Because of their familiarity and one’s ability to easily discern the difference between a 90% coin and a coin that contains no silver, simply by checking the date, junk silver coins can serve as a barter currency that could be widely accepted by merchants and valued for their silver content.
Junk silver is generally priced by the face value of the coins sold. The junk dime, quarter and half dollar contain .07234, .18084, and .3619 ounces of pure silver, respectively. To simplify pricing, junk silver is sold by face value and would probably be valued in commerce on the same basis.
Older U.S. junk silver can also serve as a barter currency but is priced slightly higher to reflect the relative rarity of the coins, including Mercury dimes (1916-1945) Standing Liberty quarters (1916-1930), Liberty Walking (1916-1947) and Franklin half dollars (1948-1963). These coins can satisfy a collector’s appetite for less commonplace barter coins while remaining affordable.
Junk silver can be purchased in increments as small as $1 face value or by the roll (dimes: $5 face value, quarters $10 face value and half dollars $10 face value). Junk silver can also be purchased by the bag. These bags are sold in increments of $100 and $500 face value and can be purchased in dime or quarter only bags or in mixed dime and quarter bags.
Fractional Silver Rounds
Some view junk silver coins as the ideal barter silver. There is however, one limitation of junk silver – the amount of silver in each coin is not in amounts that make calculations of their silver value easy. While the stamped values on junk silver make them easy to use dimes quarters and half dollars, calculating their silver value is not as easy as determining their face value.
Fractional silver rounds solve the problem of having to calculate how much each 90% silver dime, quarter or half dollar might be worth. Fractional silver rounds are produced by private mints and contain 99.9% silver. They can be purchased in 1/10, 1/4 and 1/2 ounce sizes. Calculating their value can be done merely by multiplying the size of the coin by the price of silver. For example, to determine the value of a 1/10 ounce 99.9% silver coin, one would multiply .1 X the current price of silver. For a quarter ounce 99.9% silver round .25 x the current price of silver and for a half ounce 99.9 silver round, .50 X the current price of silver.
Fractional silver rounds range from generic designs to some more collectible designs.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.