Numisphere Podcast - Coins, Currency, Bullion
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Numisphere Podcast - Coins, Currency, Bullion
90% Constitutional Junk Silver
Ever wondered about the treasure trove that might be hiding in your spare change? Join Tyler and TJ as we discuss 90% silver coins, the kind that could turn your coin jar into a veritable chest of 'junk' silver riches. Together, we dissect how every dollar of these old dimes, quarters, and half-dollars holds approximately 0.723 troy ounces of silver. The conversation gets richer as we recall the times when the entire nation was abuzz hunting for these coins, and we share personal anecdotes from the silver rush. Get the inside scoop on how the premiums on these coins ebb and flow with market demands, and why the refiners were having a hard time during the pandemic, offering a crash course in economics and history all rolled into one.
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Welcome back to the new hemisphere. I'm Tyler O'Connor and I'm TJ O'Connor. One of the benefits of what we do and especially with the fact that we have a brick and mortar shop here in Bellingham, massachusetts is we have the opportunity to really meet a lot of people, to help them strive to meet all kinds of goals, whether that's collecting goals, financial goals, goals of liquidating and redistributing assets and through that we're really able to build genuine relationships and friendships and trust and understanding and appreciation for everything people go through. So today's topic was brought up by one of those customers. He has been coming into the shop for a little while and always kind of struggled with having a good understanding of this, as it can get very convoluted, especially as you look for resources to understand. Everyone seems to kind of have their own way to look at it. He's currently going through a little bit of a rough patch and we wanted him to know that we're thinking of him and we wish him the best and we hope for a speedy recovery. And with that let's kick off today's episode.
Speaker 2:Absolutely. So today's episode is going to be pretty interesting, I'd have to say, and carry some appeal for all types that are involved in the new hemisphere. We're going to be talking about 90% silver, aka junk silver or what we like to use as a term which is a little less dirty, constitutional silver, and I think that.
Speaker 1:But who doesn't like?
Speaker 2:dirty money. Well, I mean, we all know that the money's dirty, but in this case it sounds a little less dirty. And what we're referring to here is US coinage that was produced prior to 1965, particularly the half dollar, the quarter and the dime, and then, of course, inclusive of silver dollars, back to the piece dollar, and before that With 90%. I think it's important that people gain a concept of what does 90% silver mean and what does the value come to for those dimes, those quarters and those half dollars. So why don't we break it down so that everybody has a firm understanding here? Tyler, what is the actual silver weight, or ASW, of constitutional silver.
Speaker 1:So there's a few ways to measure this. The standard tends to be with face value, so it's measured by every $1 in face value usually equates to a price and that price is measured off of taking the total weight, 90% of that weight, giving you on average of new production material.
Speaker 2:Now keep in mind I'm not talking slicks or smoothies or truly blown out silver coins and those of you who aren't familiar, those terms that he just used are meant to describe coins that have been smoothed out or reduced in their overall mass due to wear and exchange in transactions.
Speaker 1:So their ASW is a fraction of what it should have been, but on newly minted coins or less circulated coins, the average is out to 0.723 troy ounces per $1 face value.
Speaker 2:So that's 0.723 troy for $1, which would be four quarters 10 dimes two halves and it all equals that 0.72. Now, that's approximately.
Speaker 1:Right, because we're talking circulated, non-circulated, so on average, that's where it falls.
Speaker 2:So there's some tolerance right where things get worn down. Now that's interesting, right, because when our listeners they go out there to the internet and they're trying to research this stuff on their own, they could get easily confused. When you try to Google the actual silver weight of a silver dollar, what actually comes up is the Morgan Silver Dollar or the Peace Dollar, or even prior to that, and they state 0.77 troy Yep.
Speaker 2:So the dollar's a little bit different. Okay, so definitely a distinction there. We're talking mainly about the 50 cent, the 25 cent and the 10 cent, all equating to 0.723 troy, and that's approximate Now a slight other way to think about this too is that to achieve an ounce, a troy ounce of silver, it's approximately $1.40.
Speaker 1:Interesting In 90% silver. So obviously you can't necessarily achieve that with all the denominations, right? You could do 14 dimes, cool Quarters, get kind of close, hit the mark, right. So obviously that's where it's a little difficult. But if you want to think about it as measuring an ounce, it's about $1.40 in face value.
Speaker 2:Interesting, yes, very nice amino acid, chuck. We have $1.40 would equal a Troy ounce. And then we have also, if we're comparing this, we're comparing it to that single Troy ounce round or bar that we could buy, right, what are we looking at for prices? Is it economical to be buying this junk silver or this constitutional?
Speaker 1:silver. Well, that's where some other factors come into play. Is that you have market demand and market supply. Okay, so like all things, there's ebbs and flows. I can remember, not even that long ago, year and a half ago premium on 90% was insane because nobody could get it.
Speaker 2:Right.
Speaker 1:So replacement values were up for everybody and you were paying 26 to one.
Speaker 2:I recall that we were actually getting propositioned by vendors all the way across the country to get-.
Speaker 1:National wholesalers were calling us for 90% because nobody had it Interesting, nobody was giving it up Now.
Speaker 2:so I find that the demand or the supply of constitutional silver is a little bit unique, right, Because it's not as if more is going to be produced. They've already been established right. It's already been minted. There's already a limited number of these out there. So when that demand is present, if the supply isn't there, you start to see a separation in that premium and that premium starts to climb Like we experienced that year and a half ago.
Speaker 1:So I don't know if you recall, but during COVID, getting pure silver for refineries and for producers for blanks and everything else, it was very, very difficult and it was very expensive. And I know certain refiners were actually taking 90% coinage, melting it down, refining it and using that to produce their products. Wow, so not only is there a limited mintage, but how many times have we melted down and repurposed massive quantities of these coins?
Speaker 2:So this is essentially a depleting supply, slowly kind of ticking away as it's being applied to different uses, and that definitely makes constitutional silver a unique animal. But there's other pieces that make constitutional silver a unique animal because it has an extensive history, right Of course. So why don't we tell the listeners here what? Where did this all start? Why the silver dollar? Why the United States utilizing silver? Where did that come from?
Speaker 1:So it was the coinage act of 1791 or 92. 1792. 92, okay, which basically gave the sole power, via the constitution, to Congress to issue and control the money supply for the United States, and within that they determined that there would be certain compositions at certain purities for different denominations, okay, and it all basically stemmed down from gold.
Speaker 2:Okay.
Speaker 1:Right. So they would start at the top, and they measured one pound of gold with an equivalent to 15 pounds of silver.
Speaker 2:That sounds familiar. Is that the standard ratio that we've seen over the existence of gold and silver.
Speaker 1:It's a golden silver average.
Speaker 2:Yes, so a 15 to one ratio.
Speaker 1:Okay, and that's how we started it all. And then they would break it all down within the fractions for each of the denominations and that basically set what we call constitutional coinage. Gotcha Was that it was done in gold and silver, okay.
Speaker 2:Now it didn't just stay like this, right, because things change, right. The economic picture for the United States went through many fluctuations, potentially bankruptcies. I mean there's many things that we can dig into Potentially.
Speaker 1:Yeah, there's many things that we can dig into there. Not alluding to anything there, check it out, think about it.
Speaker 2:Yeah, absolutely, but this changed over time. So the United States started this. They put out that ratio of 15 to one, I think when they initiated this, the mint itself was able to pull in silver from silver miners that were actually executing mining in the United States at the time and they could simply turn that or convert it into coinage at that point in time, if I'm not mistaken.
Speaker 1:Yeah, it was redeemable, for I believe it was a half a percent under the metal value. They could exchange raw silver for actual coinage no-transcript.
Speaker 2:That kind of persisted. But then we had a change, right, and then we had I think it was Coinage Act of 1834, right, and we took that 15 to 1 ratio and we brought it to a 16 to 1, which is a really strange thing Because technically the world was still trading silver at a 15 to 1 ratio, but in the United States it was designated to 16 to 1. So effectively the government was Forcing the price of silver to be suppressed compared to its fair market value.
Speaker 2:That's kind of the beginning, of where this thing gets interesting, right? Sure as we continue to move forward through history. We also had the coinage act of 1873 and that's where they finally removed that ability for People who mine that silver to turn it into coinage right then, effectively Dislodge people from be able being able to create money with that constitutionally correct silver there at that point in time and a kind of Leamed more on the gold standard at that point right. So we have well they were still.
Speaker 1:A big part of that was supply chain issues. Okay, right, so they wanted to make sure that they were getting a quality product, but also politicians were essentially stuffing their pockets. Okay, and a lot of these politicians that that would never happen, by the way I really don't believe that would ever happen. They actually own substantial stock in some of the biggest mines in the country and those the mines that got contracts with the government to Produce and provide the silver.
Speaker 2:That sounds oddly familiar, like. Contracts being awarded by politicians to their buddies and yeah no, no insider trading happening today, nancy, nancy. What's next? So we've had some evolutions here, right, where the value of the silver is being determined differently by the United States, with these different coinage acts, and then we obviously we got into the gold standard here and the gold standard was developed. Then we came into 1934 and you weren't able to own anything unless it was jewelry or collectibles, right, and they had to limit it amount, pull all of that off.
Speaker 2:Silver continued to be minted in United States coinage all the way up until when?
Speaker 1:Well, we stopped 90% silver in 64. That was the last year. Okay then we used kind of the remnants of our supply from 65 to 70 by using 40% in our Kennedy half dollars, gotcha. But keep in mind that although there was a pause in circulating 90%, that we did still create 90% issuances of things like Eisenhower dollar by Centennial coins as well. Okay, then we also bring that back for silver Eagle and a lot of the collector sets today gosh.
Speaker 2:So, like for the, the mints collective Products that they were putting out, they were doing that in silver. And then, of course, we had the implementation of the silver bullion coin, the silver Eagle, in 1986 right.
Speaker 1:So, we were using in not intended for circulation coinage. Okay.
Speaker 2:Wow, that's quite the history. So, basically, people woke up one day in 1965 and they stopped having silver in their coinage. What I mean it was planned.
Speaker 1:It's not like, hey, let's turn the water off, but it was planned.
Speaker 2:In part of that too, with that planning is people were actually Horting yes, a lot of the coins because they knew it was coming to an end that might explain why it is that we see a lot of these collections from Baby boomer generation that's been handed off to the next. They're gonna be incorporating Quite a bit of this constitutional silver if not a lot of times. The majority of these collections are presented in In constitutional silver, so that's a generation that definitely saw the value and saw what would happen while it was being taken away.
Speaker 1:Right and they had the opportunity right, and that's where we get some of the so many roles of BU 63, 64 Right. It's like as soon as they announced that, everybody started to hoard that silver and now we have really nice examples but there's not a collectability to them.
Speaker 2:It's really a less like premium over at silver Right it is just simply because of the fact it's commonplace to find well-conditioned 63 64's, because people were taking these straight out of Circulation and putting them right into their safe where they were never touched. Never transaction transacted after that. That would make sense as to why we see it. Yeah, I was.
Speaker 1:I was on the sixties.
Speaker 2:Imagine so we talked a little bit about the monetary value, or $1 face having a specific one quantity of silver knowing that we can get to $1.40 with a Troy ounce, where does constitutional silver kind of fall in Price-wise compared? Like what is a better choice for me, tyler, if I were a new investor and and I just wanted to get into a few ounces of silver, sure, but I wanted to get the most coins I could for it.
Speaker 1:Where would you direct me? I mean again, that goes back to ebbs and flows and when you're buying. But most generally your 90% is going to be comparable to generic. Lately it's been a little bit over a generic price, okay. But if you play your ratios right, depending on when you're buying in, you can leverage 90% To actually kind of move up the ladder right, so you can go from 90% to pure silver and take that pure silver and go into gold. But in all reality, I think that you would need to ask yourself a few questions. Okay, why are you interested in 90%? What's your overall purpose? Are you playing the ratio game? Are you wanting this just in case? Are you Just like 90% silver?
Speaker 2:I'm so glad you asked that question, tyler, because as a new buyer, I'm scared. I'm thinking that everything's gonna go down. I don't even know if the debit cards are gonna work. I don't know if cash is gonna work. So I want to be able to exchange and transact with people in the case of an emergency.
Speaker 1:Right. So with the intent of barter ability, there's several factors that come into play with 90% that are Substantial benefits.
Speaker 2:Okay.
Speaker 1:You have multiple denominations, right, right? So, just like we use today, you've got your diamond quarters and half dollars Mm-hmm versus. If you're trying to trade someone a solid, pure ounce of silver, you might be overpaying, right? So you want to go get a haircut, but an ounce of silver is at 50 bucks, right?
Speaker 2:I don't want to pay for my piece off, like taking pieces off of you like an eight rail or something?
Speaker 1:I mean, we just don't do that. So, being able to have multiple denominations To fulfill whatever transaction you need, mm-hmm. Substantial, substantial benefit for 90%.
Speaker 2:Yeah, absolutely so. Barter ability is a plus and if you have goals of wanting to be able to transact in an emergency, having flexibility in the sizes of the silver that you hold gives you flexibility in your form of payment. So you won't have to be distributing that one ounce of silver for a bag of groceries when you have that mercury dime that could take care of the, the value that you need to exchange right? That's one of the solid benefits that are there. Now, what about the fact that it was minted by the United States? I mean, don't get me wrong. I'm sure outside of the United States Maybe less people are familiar with the coinage that was produced here, but in the US these coins are very recognizable.
Speaker 1:So I think we're at an interesting time in history where, yes, it's recognizable, but to so many it's not okay. So they may say, yes, this is a Washington quarter, right, because they they know the head of Washington, but that's about it, right? They don't understand that 1964 and earlier was 90% silver. Okay, so I Think there's half the population Hopefully a little more than half the population right now that would have absolutely no issue understanding what that coinage is, that it's silver, it's US minted, it is a good quality product. They can trust it and do business without concern. But if you're dealing with, let's say, young millennials, gen Z and everybody else after, that right.
Speaker 1:They use debit cards, right? That's all they know.
Speaker 2:Let me just swipe this or I'll Venmo you, right, they, they just don't know well, I think that you know, just in the perspective of being able to transact, having the recognizability even if it is just amongst the community of previous generations or those that are included in investing in silver or stacking silver, that goes quite a ways, right, they don't have to doubt what it is that you have and and it's easy to To move that across and exchange that value with trust, and I think that that definitely appeals to people. It's also appealing you know Wherever you go for a coin shop etc. They're gonna know what that product is. You should be able to know what that product is. Everybody understands its value between those two parties and you guys are able to settle On a good deal or a good value for for the silver that you're exchanging. Absolutely.
Speaker 2:Now, what may be some of the downfalls that are attached to silver. Actually, you know what. I have one last thing to talk about for the attributes before we get to the potential negatives. So this is appealing to people who are collectors as well, because if you are actually on the search and sifting through constitutional silver on a regular basis, you can find some pretty amazing things in here. You're talking about 16D, mercury, dime, the 2121D. You're talking about conditions in walking liberty. Half dollars that can get you thousands of dollars in value. That never happens.
Speaker 1:What are you talking about. But it does FYI 1933 S and MS-65 walking lip half dollar was acquired here within a junk bag, so please, look, it'll be on the site.
Speaker 2:You guys can check that out. It's a beautiful coin.
Speaker 1:But those things Agecoincocom.
Speaker 2:Yeah, those things come up quite frequently as you're sifting through that silver and a lot of times if you find those key dates, those varieties, those exquisite condition coins while you're sifting, they can be far more valuable than just the silver content that's there, of course. So handling this stuff, dealing in this stuff, it creates additional opportunities to find more value than just that silver. That's definitely a benefit in handling the 90% or the constitutional on a regular basis. What about the downfalls?
Speaker 1:Are there any? No, the biggest one in my opinion would be that you're very much pegged to the commodity value. So you might get in at 20 to 1 and suddenly silver's rapidly declining and you're tied very closely with that value because it is a lower premium product generally.
Speaker 2:Gotcha. So you're going to see a lot more volatility in that pricing as compared to that standard collectible or numismatic coin that may be in the rotator next year.
Speaker 1:Right, which would tend to hold its value more consistently, not pegged to the commodity Gotcha.
Speaker 2:So what happens with collectible markets? If collectible markets are contracting, do we see the value of constitutional or the premiums on constitutional silver contracting?
Speaker 1:In the market right now we see that has definitely been reducing with the premium Because, again, as supply increases and yet that demand goes down because people may not be having the expendable income or purchasing right now for whatever reason, right, so then you balance it back out, your premiums are going to come down. Makes it a much better time to purchase Gotcha.
Speaker 2:So there's definitely you know, not necessarily as much of a correlation tied to that collectible market, but it's all about that supply and then that demand. Hard to tell how it's going to move, but it seems to be that usually when the collectibles market is shrinking, you see the market for bullion or the market for silver and gold increasing. So it's almost like an inverse reaction, at least from time to time.
Speaker 1:Right. So it's the majority of the time when people have less expendable income they tend to spend it less on the kind of frivolous hobbies and they start to question what they should be doing with their actual value or their wealth and money. And oftentimes you kind of look back at God's money and you say it's gold and silver and that's the best hedge historically against inflation, not just against the dollar but against many other currencies as well, and that's a great opportunity for anybody in the industry and for collectors to kind of protect that wealth and acquire it. And the 90% is a great opportunity to get in at a low entry point.
Speaker 2:I like it. So how do our listeners get a hold of constitutional silver? Where can they find it? Where do they source it?
Speaker 1:I mean easiest route. You find a shop like us and you just build a relationship, go in, acquire some Online retailers. Everybody's got them, but I think the hardest but yet most affordable way for people to look for 90% is actually to do role hunting from the banks.
Speaker 2:Oh, okay, Now talk to me about that. What is role?
Speaker 1:hunting. So the banks hate this because it's inconvenient to them. Okay, right, so they order you a box of half dollars. Okay, right, so they order you in a box. You're cracking every single roll. You're checking that edge, looking for that nice bright white, 90% silver piece. Okay, you might find one. Unfortunately, this has been happening for a while. There's not a lot out there. But when you can get that $10.50, right, it depends how much time and effort you're willing to put in, but that's going to be the cheapest way that you can do it.
Speaker 2:From my understanding role hunting has been pretty popular for like 20 years now.
Speaker 1:Very much so.
Speaker 2:So a lot of that circulating supply is definitely getting weeded out by those that are consistently going through and doing this either on a weekly basis or a monthly basis, where they purchase that box of half dollars quarters, whatever it might be, cycled them, bring them back or, as far as being able to pull this, currently something interesting is happening, right. So we have baby boomer generations that are now liquidating their collections, right, these are going off to the next generation. Some may not know what to do with said coins that have been inherited, and sometimes these coins end up going back into the bank. So occasionally you can be graced with a surprise, right?
Speaker 1:Well, I mean, I'm also thinking, you know, when grandpa walks in the house and he's empty in his pockets and throws his change in the five gallon water jug, right, most people are going to sit there and go through that. So they're going to take that to the bank, they're going to dump it in the machine, yeah, and nothing twice about it. Right, how much silver was in there, right? So if you can hit that at the right time, you can get that batch that came in.
Speaker 2:Yeah, that's where you hit the money Absolutely and of course you know every time you get changed. You want to make sure you're looking through it, of course, right, every time. That's standard. So for best strategies, right? If I am gun hoe on silver, let's say I got a thousand ounces in bullion and I come to you and I talk about I want some smaller stuff. I need a little bit of fractional here. I just want a small portion of my barter ability. What strategy would you suggest for me? Am I going the root of constitutional silver? Am I going the root of fractional Britannia's?
Speaker 1:Well, with all things, you need diversity. So if you are someone who's had larger bars, a lot of weight, you want to make sure you have your one ounce pieces. Those are really the foundation, in my opinion. But then if you are looking for fractional, honestly your best bang for your buck is going to be 90% constitutional. Okay, there's no question.
Speaker 2:Okay, so it sounds like constitutional silver has got quite a bit of value for us, just a bit Well. Is there any questions that you had come in from listeners that you wanted us to approach or answer?
Speaker 1:I think the common question really is how do they understand what they're paying for? So like, for instance, depending on the product, you could be paying anywhere from 17 to 21 dollars per face value. Okay, and then breaking down the math and understanding that right. So again, taking that one dollar face value, multiplying it by.723. Understanding that?
Speaker 1:that's your excuse me, that's your actual weight that you're receiving, right, and then measuring that against spot, breaking down the math. That's always the headache, right? Yeah? So I just always want to remind people that one dollar in face is not equal to one ounce. That seems to be a big hiccup, right? So please keep in mind you're getting less than a quarter of an ounce. So if you're paying $25 to one for circulated coinage, you're paying too much, yeah, right. So keep that in mind and don't be afraid to ask, because, as you're getting into it, it's a very confusing math for a lot of people. Just talk it through and if you're not getting the answers they're looking for, ask more questions.
Speaker 2:The squeaky wheel gets the oil Right Absolutely. When it comes to this thing and don't be deterred, no matter how grumpy your local LCS owner may be. Don't be deterred from asking questions because, truthfully, knowledge is what's going to make it right for both you and the LCS owner, and that transparency between you on what deal is being brokered is extremely important. So make sure that that clarity is there for you before you engage in any transactions.
Speaker 1:And they shouldn't mind the questions, and if they do and they're bothered, just call us, we'll help you out.
Speaker 2:Absolutely. We'd be happy to help you. Speaking of engagement with us, what types of things are coming up for us in the future where our listeners can engage?
Speaker 1:So we have a kickoff to a big show season for us. We're going to be out in Colorado at the A&A show shortly. Okay, we're going to be down in Baltimore, we're going to be in Manchester and then we have some others coming up shortly after that. So if you see us, please come by. Absolutely, we'd love to meet you in person.
Speaker 2:It would be great to get to hear from some of those listeners face to face out there while we're traveling around.
Speaker 1:And if we can't see you face to face, then please, in the comments below, let us know any topics or questions or anything that we can do to help bring more information to you, and it will definitely help us to continue making content that you guys actually would like, absolutely.
Speaker 2:We really enjoy being able to deliver this information to you in a raw and realistic form and hopefully it's easily digestible and you're walking away with a firm understanding of what you're dealing with before you enter into any financial engagements, before you fork over your cash Absolutely Well. With that being said, my friend, I think it's time we sign off. All right Until next time. Until next time.
