Junk Silver refers to silver coinage, which has a value based predominantly on the silver content, as opposed to numismatic or collectible value. These coins represent an increasingly popular method for investing in silver due to the low premiums, legal tender value, and divisibility. At the wholesale level, junk silver coins are generally bought and sold in bags containing $1,000 in face value, however at the retail levels the coins are available in smaller quantities.
The Coinage Act of 1792 established a composition for standard silver coins comprising 1485 parts pure silver to 179 parts copper alloy. This resulted in a net composition of 89.24% silver and 10.76% copper. The somewhat unwieldy composition was modified in 1836 to become 90% silver and 10% copper, which remained the standard until the Coinage act of 1965 removed the silver content from circulating dimes and quarters, and diminished the silver content of half dollars.
The most commonly traded U.S. junk silver coins have a composition of 90% silver. These coins may include dimes, quarters, and half dollars dated 1964 or earlier. Silver dollars minted from 1878 to 1935 also contain 90% silver, however, these coins typically trade at a premium due to their popularity.
Less commonly traded U.S. junk silver coins include the half dollars struck from 1965 to 1970, which have a composition of 40% silver, and the nickel struck from 1942 to 1945, which contain 45% silver. More recently, some 90% silver proof quarters minted from 1992 to present have traded at junk silver prices. These coins were not issued for circulation, but only distributed within collector proof sets.
Since late 2008, interest in silver investment has increased substantially, leading to increased interest in junk silver. Compared to other investment vehicles, junk silver coins can be purchased for a low premium or sometimes negative premium over the spot price of silver. This allows an investor to obtain the greatest amount of silver for the available investment dollars. Junk silver coins provide the benefit of being legal tender, meaning they will always at least maintain their face value. Finally, the investment is readily divisible. A full $1,000 face value bag and be broken up into smaller lots for sale, or even be traded as individual coins.