As we stumble on into increasingly challenging economic and financial conditions, individuals everywhere have good cause to question the viability of their financial assets. Unprecedented money printing by the Federal Reserve is already impacting the value of the dollar, while inflating the value of real (tangible) assets like homes, farmland, and basic commodities.
Silver fits in the third category. With huge above-ground silver stockpiles that existed fifty years ago having been depleted due to an amazing number of new uses (refrigeration, circuit boards, batteries, pumps, solar panels, sunglasses, mylar tape, to name a few), physical silver is now in VERY short supply.
Silver’s been used as money for thousands of years, including for over 500 years in China. No surprise then that 200+ years ago America’s founders constitutionally-defined one dollar as 371.4 grams of silver or 1/15th of that number in gold. [Note: to convert one troy ounce to grams, multiply by 28.3495231.]
U.S. silver dimes, quarters, half-dollars, and dollars were produced until 1965, when production was discontinued by the Johnson administration after the value of the silver in these coins became greater than the face value of the coin itself. Each of these coins contained 90% silver and 10% zinc (for hardness); hence the term “90 percent.” (They’re also referred to as “junk silver.”)
Pristine coins contained 0.7234 troy ounces of silver, per dollar of face value. Today an average worn pre1965 dime contains about 0.0715 ounces of silver and is worth close to $2. No surprise, then, that these coins have been hoarded! Whereas in 1965 you could purchase an ounce of silver for $1.30, today you’d need over $27.
It’s my contention that if/when our monetary system sputters and fails, savvy merchants will welcome 90% silver for purchases, equipping their stores with a small scale where the purchaser can weigh his coins and receive goods or services worth the silver’s value.
Silver also is poised to outperform gold as an investment. The ratio of the prices of gold-to-silver has fallen from 120:1 (last year) to 65:1 currently, with further adjustment ahead—to the historical range of 25–50:1, or even to the founders’ original 15:1 ratio.
In my opinion, there’s only one principal disadvantage: silver is bulky and takes up a LOT of space!
Summarizing attractive features of 90% silver coins:
- Scarcity (hence, premium value); no more of these coins will ever be produced.
- Not subject to confiscation, since they remain official U.S. currency.
- Inflation protection, due to silver content.
- Utility for retail purchases, at agreed-upon value based on metal content.
- Higher growth potential than gold, as ratios return to historical norms (or beyond).
You can purchase 90% from reputable bullion shops—but shouldn’t be surprised if you have to wait for delivery, as these coins are now in short supply… Silver rounds (“Eagles”) are another option, but they’re NOT money, and also sell for a higher premium than 90%.
If the only money you have to make a purchase is in a 401k or retirement plan, you’ll have to settle for paper silver, unless you can convince the plan sponsor to allow you to move your money into an IRA.
But money in an IRA can be coverted into physical coins in your hand. There are at least two retirement plan administrators who allow you to accomplish this legally. You’ll need a document drafted by an attorney who knows what he/she’s doing (cost ~$1000 or more) and some time and patience. You can learn more about this option on our website (link below).
A tip for retail store owners: learn to recognize the “ring” of a 90% coin (compared to the “thud” of a clad coin) and retrieve the 90% coin after the customer leaves.
There’s more on this subject and a lot more on gold in my book “But What If I’m Right,” which you can purchase at our website (below).
For those of you holding paper silver (at a brokerage) we wish you well, but regretfully advise…
“If you can’t physically HOLD your silver, you don’t really own it.”
Legal Disclaimer: Material in this blog is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination that any investment strategy is suitable for a specific investor. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. This blog does not constitute an offer to sell any securities in the United States. We will not be liable for any financial losses which might occur as a result of your use of this material.