Junk Silver Premiums.
Premiums on Junk Silver are at elevated levels.
Pre 1965 dimes, quarters and half dollars sought after for their silver and barter value in times of economic uncertainty.
During the Great Silver Shortage of 2015, premiums on junk silver and American Silver Eagles have surged to highs last seen during the financial crisis of 2008-09 (see charts below).
Premiums on other silver products, like privately minted silver bars and rounds have not risen to the same extent as premiums on American Silver Eagles and junk silver.
What is Junk Silver?
Junk silver refers to United States minted dimes, quarters and half dollars with dates before 1965 consisting of 90% silver and 10% copper. Junk silver coins were (and still are) legal tender and minted for general circulation. Today’s American Silver Eagle coins (1986-present) produced by the United States Mint are legal tender but consist of .9993 pure silver and .0007 copper.
United States silver dollar coins, like Morgan Dollars (1878-1921) and Peace Dollars (1921-35) also contain 90% silver but generally are not considered “junk” silver.
To learn more about junk silver click here.
Why Do Premiums on Junk Silver Rise?
Until recently, junk silver was an economical way of obtaining silver in bulk. Premiums were low because junk silver had been relatively plentiful and many silver stackers preferred to purchase their silver bullion with higher percentages of silver purity. Silver products with at least .999% silver content like silver rounds, bars and government issued coins like American Silver Eagles and Canadian Silver Maple Leaf coins have captured a large percentage of silver demand.
In 1964-65, the United States Mint produced nearly four billion dimes, quarters and half dollars using about 550 million ounces of silver in the process. During the period of silver coinage in the United States ending in early 1965, billions of ounces of silver were used in the production of silver coins.
The United States Mint produced a prodigous amount of silver coins dated 1964.
The 44 million one ounce American Silver Eagle annual sales record is dwarfed by the amount of silver used to produce 1964 dated dimes, quarters and half dollars.
No New Supply of Junk Silver
Despite the massive amounts of junk silver produced during their history, none have been produced for over fifty years. Many of these coins have been melted down for their silver content, although no records are kept as to the amounts. In addition, collectors pull key dated coins and other coins from the supply of junk silver. Thus, the supply of junk silver available to purchase in bulk diminishes each year.
During Periods Anticipating Crisis, Demand for Junk Silver Coins Increases
Higher junk silver premiums may act as a barometer of economic uncertainty among a certain segment of the population. During times of economic uncertainty, demand for junk silver increases. While investors in silver bullion may prefer 99+% silver products in larger sizes, those concerned about having instantly recognizable small silver coins for barter, covet the pre 1965 dated 90% silver dimes, quarters and half dollars.
Thus, junk silver premiums rise not only when overall silver demand rises, but when that demand is driven in part by economic or geopolitical uncertainty.
Since supply of junk silver is never increasing, any increase in demand will push the premiums on it higher.
The chart below shows the premiums for junk silver from 2009 – September 2015. You can see that premiums are increasing and have surpassed the recent highs of 2013 when there was concern over a U.S. government shut down. Premiums have not yet reached the levels of the 2008-2009 financial crisis.
Junk Silver premiums are on the rise indicating an increase in silver demand and heightened economic uncertainty.
Click here to see updated junk silver premium charts as well as premiums on American Silver Eagle, Austrian Silver Philharmonic and Canadian Maple Leaf coins.
Earlier this month we reported on rising American Silver Eagles premiums. At the time premiums were at 30% and have since risen to nearly 50%. American Silver Eagle sales are headed for a third annual sales record in as many years despite this year’s silver eagle mintage having been marked by production halts and allocations to the U.S. Mint’s Authorized Purchasers.
Demand for American Silver Eagle coins is at an all time high while supply has been limited at the U.S. Mint causing premiums to surge.
Click here to see updated junk silver premium charts as well as premiums on American Silver Eagle, Austrian Silver Philharmonic and Canadian Maple Leaf coins.
Click here to see updated silver and gold eagle premium charts.
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