(Benefits and Drawbacks)
Silver Stock Report
by Jason Hommel, May 31st, 2008
Since 1 ounce rounds, 10 ounce bars, and 100 ounce bars are getting very hard to find, and a 6-8 week delay is unrealistically unacceptable, some of you may be considering buying 90% Silver, which are more available in places these days, especially, I hear, from www.fidelitrade.com. So, I figured that some of my readers would like my experienced opinion on acquiring this kind of silver product.
Definition: 90% US Silver Coins come in “bags” of $1000 face value, which consist of 10,000 dimes, or 4000 quarters, or 2000 half dollars. The coins were regularly minted, circulating U.S. silver coinage dating 1964 or earlier. Usually, a “bag” is split up into two or four actual canvas sacks to make it easier to carry. The coins exclude silver dollars, which are another product. The silver is 90% silver, the rest, the other 10% is copper, to help harden and toughen the coinage. There is 0.72 of an ounce of silver in each $1 face value, or 10 dimes, 4 quarters, or 2 half dollars, but the industry counts it as if it’s .715 ounces, due to coin wear. A full $1000 bag weighs about 54.5 pounds. The most common form is quarters, about 70% of the time. 20% of the time, you get dimes, and 10%, half dollars. Seems that the dealers hold back the dimes and half dollars because they might be more interesting.
Known as:
“Bag” U.S. 90% Silver Coins
90% Silver Coin Bags
90% Junk Silver Bag $1,000 Face Value-715 Ozs. Of Pure Silver
90% Silver Bag – 715 Troy Oz., $1,000 Face
$1000 bags of 90%
Silver Bag 90% $1,000.00 Face Value
Silver US 90 Percent Coinage
US 90% Silver Coins $1,000 Face (pre1965) (715.00 oz.)
90% Bags, $1,000
90% Silver Coins
Benefits:
1. Easily divisible into small amounts, since they are already broken up into small amounts.
2. As former U.S. circulating coinage, the risk of confiscation might be the lowest of all forms of silver.
3. They just don’t make this kind of silver anymore!
4. This silver is very difficult to counterfeit — once you get some, you will see how our modern coinage is so different, as today’s coins are lighter, the metal looks different, and toda’s coinage has the copper strip in the middle. Silver coinage also has that distinctive “ring” to it.
5. This silver has historical value and significance; as our forefathers worked a day’s wage for these exact same silver dimes and quarters! It’s amazing that you can get a silver dime for about $1.20 each, in bulk!
6. Price varies. Sometimes 90% coinage had a 30-50% premium, or extra value over the spot price, such as 6 months to a year prior to Y2K, as people wanted spendable, usable or more practical forms of silver.
7. Rarely, you might be able to pour through a bag of dimes, or half dollars, and find some coins that might have some numismatic value. I have separated out my mercury dimes from the rest, but nobody is paying any signifianct premium for these, maybe $50/bag which is not yet worth it. My mercury dimes might even end up having less value, being more worn down.
8. 90% silver is among the cheapest kind of silver you can get today, and it tends to be more available and easier to find. When this silver is the cheapest, you end up getting the most silver for your dollar, which is a significant advantage. One strategy among silver investors is to buy the kind of silver that is the cheapest at the time, and then sell the product that happens to be most highly valued in the marketplace at the time.
9. 90% silver might not be a reportable transaction. However laws change, and this is not legal advice. Check with your attorney (Yeah, as if attorneys know anything!)
Drawbacks:
1. In 1980, when silver was being melted at the refiners, 90% silver coins were bought for about $35/oz. when silver was $50/oz, due to the fact that the refineries were backed up with too much 90% silver to melt down, and smelting them down is an added cost if there is a need to turn them into 1000 oz. Comex bars. (Personally, I don’t think that’s much of a worry or concern, since I’m not investing in silver hoping for a Comex-driven short covering spike and crash; instead, I’m expecting more of a permanant revaluation upwards as society must return to real silver and gold in commerce when paper money fails.)
2. Counting requires a coin counter, which can cost $1000; but most coin shops have these counters. (Or you can use a scale to see if the bag weighs 54.5 pounds.)
3. Regular, coinage, dated 1965 or later, can slip into the mix. This usually happens when 40% silver halves get slipped into the 90% silver half dollars, since they are more difficult to tell apart, since the 40% coins have no copper strip in the middle, and so you have to check the individual dates. One time my dealer found about 5-10 coins of 40% silver in one bag that I had bought years earlier.
4. Most people I tell about silver are not as interested in buying 90% silver, due to the fact that the conversion factor is “too much math” for most people to figure out by multiplying $1 face value times .715 ounces of silver. Most people want to easily know how much silver they have, and what it’s worth. Most people prefer 1 ounce rounds, in my experience, because it’s easier to know how much silver you have, and what it’s worth.
5. There is a scam going around where 90% junk “walking half dollar liberties” are being sold for up to 72% over the spot price, and on leverage, (with no delivery of product) with interest on the loan of up to 15%, which is a horrible deal. These coins are not numismatic, and have no numismatic demand, and no numismatic value.