December 4, 2008 – Investing in “Junk Silver” Dimes

Investing in “Junk Silver” Dimes

Dimes minted between 1916 and 1964 can be collected for their silver content, but be careful that you’re not being taken advantage of by figuring out just how much silver in each bag of dimes, first.

In North America, dimes, quarters, half-dollars and dollar coins were made of 90% silver before 1964. While some of these old, silver coins are in very collectible condition, a very large number could be classified as being in poor or fair condition. Such coins are referred to as “junk silver” in the US and Canada.

It is worth noting that the term “junk” only refers to the value of the coin from a numismatic point of view – that is, how coin collectors rate the condition of the coins and their relative rarity. This has little bearing on their value as commodity silver. In fact, silver dimes and quarters remain a very popular investment among those who believe the fiat currency system is doomed to failure, since it is likely that useful commodities will always retain some value, no matter what happens to public confidence in a money supply backed by little more than inertia.

During the mid-1980s, when the price of silver temporarily sky-rocketed to over $50 per ounce due to the famous market-cornering actions of the Hunt brothers, it is estimated that as much as 90% of the silver dimes that were still in circulation at the time were melted down. The side-effect of this imposed selection on the remaining supply of dimes was to make previously rare dimes suddenly common while previously common dimes became rare after the majority of them were melted.

In the intervening decades since $50 silver, the relative rarity and overall condition of the remaining silver dimes has been slowly determined. Unlike the 1980s, when many of the coins that were sent to the smelters were in poor condition, many of the remaining dimes are actually in fairly good condition since they too were selected out during “the great melt.”

There are two types of dimes that are almost exclusively represented when people speak of “junk silver” dimes.

Mercury (aka “winged liberty”) Dimes, 1916-1946 Roosevelt Dimes, 1946-1964

The preceding series of “Barber” dimes, made between 1892 and 1916, are now rare and old enough to have a higher value among collectors than as melt silver when in “good” or “very good” condition, so are rarely purchased for their “spot value.” However, those made since 1916 that are in anything less than “very good” condition are suitable for purchase as a silver investment.

One would do well to spend some time doing a bit of math when figuring how much is reasonable to pay for pre-1964 dimes. They are 90% silver and 10% copper, so both metals may be considered for their melt value. This means that you should consult both the silver and copper price for a given day and multiply and divide accordingly, leaving as much as 5% wiggle room for wear on fair and poor quality coins.

For instance, with the price of silver and copper being $9.58 and $1.55 respectively, the value of a pre-1964 Roosevelt or Mercury dime is about $0.693. That means you could melt down a sack of 100 dimes and receive $69.30 for your trouble at those rates. Therefore, much more than $35.00 for a roll ($5.00 face value) of silver dimes is not a very good deal as long as those spot-prices remain steady. You can easily find the current price and conversion factors from any number of web sites.

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