Junk Silver Vs. Silver Bullion – What’s the Better Investment?
At a Glance:
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- Junk silver and silver bullion are both valid types of silver to invest in.
- Bullion silver is generally purer, but many stackers prefer junk silver.
- On this page, learn more about whether junk silver or silver bullion is a better investment.
Junk Silver Vs. Silver Bullion – What’s the Better Investment?
Choosing the right type of silver to stack can feel like an impossible task, especially if you’re a new investor. The good news is that, at the end of the day, silver is silver. No matter what type of silver you choose to invest in, you’re still getting an intrinsically valuable asset that you can cherish for decades to come. In other words, there’s really no objectively wrong way to invest in silver.
That being said, dedicated stackers do pay attention to the types of silver products they add to their silver portfolios. Certain silver products are harder to sell than others, and some types of silver may sell at prohibitively high premiums over spot price compared to other products. There are many ways you can invest in silver, but all silver products tend to fall (roughly) into two main categories:
- Junk Silver. U.S. circulation coins minted before 1965 that contain real silver (typically 90%).
- Silver Bullion. Coins, bars, and rounds that are highly pure (often 99.9%+) and are minted for investors.
Junk silver and silver bullion each come with advantages and disadvantages. There are also quite a few subcategories in both of these general categories. Junk silver can come in the form of dimes, quarters, half-dollars, and dollar coins, for example, and silver bullion is usually either sold as a round, bar, or coin. Needless to say, it’s tough to definitively conclude which type of silver is better.
On this page, we’ll walk you through everything you need to know in order to decide between junk silver and silver bullion.
Here’s the Difference Between Junk and Bullion Silver
Terms like “junk” and “bullion” silver may seem confusing, especially if you’re new to investing in precious metals. These are actually just two terms we use to describe different types of silver that investors are able to purchase. The two main differences between junk and bullion silver are their purities and their intentions. Junk silver is typically 90%, 40%, or 35% pure, while silver bullion is usually 99.9% or 99.99% pure. Junk silver was initially minted for circulation and for use as currency, while silver bullion is manufactured specially for investors.
What is Junk Silver?
Junk silver isn’t really junk – it can actually be quite valuable. So what is junk silver? Junk silver, also known as 90% junk silver or constitutional silver, refers to circulated U.S. coins that contain actual silver. Until the end of 1964, United States dimes, quarters, half-dollars, and dollar coins were minted using 90% pure silver. Today, these coins are called “junk silver,” typically because they have little to no numismatic (collectible) value.
Premiums can vary wildly for junk silver. The cost of investing in junk silver tends to depend primarily on the types of coins you’re buying, as well as the condition, mint mark, and dates of each coin. To buy junk silver for cheap, most investors buy large lots of common 90% silver coins in poor condition.
Pre-1965 Silver Coins Explained
Junk silver coins are often called pre-1965 silver because some U.S. coin denominations were minted with 90% silver until the end of 1964. American circulation coins stopped being silver with the passage of the Coinage Act of 1965, which eliminated 90% silver content from all existing currency coins.
The following coins were minted using 90% pure silver until the end of 1964:
Today, these “junk silver” coins are always worth at least their melt value, which is the current market value of the silver they contain. Certain junk silver coins may also have numismatic value, which means that they sell at an additional premium over melt value to collectors.
Types of Silver Bullion
As opposed to junk silver, silver bullion products generally have never been used as a currency intended for circulation. Instead, private and public mints produce silver bullion as investments or collectibles. While silver bullion can come in many forms, the three most popular types of silver bullion are:
Below, we’ll take a closer look at the three main types of silver bullion that investors can purchase.
Silver Coins
Silver coins are circular pieces of silver bullion that are produced by a sovereign government and given face values. Popular silver coins include the American Silver Eagle, Canadian Silver Maple Leaf, and British Silver Britannia, among others. Silver bullion coins are usually sold at moderate premiums over melt value, although in-demand coins like Silver Eagles tend to command higher premiums.
Silver Rounds
To the untrained eye, a silver round might look nearly identical to a silver coin. The difference between silver coins and silver rounds is that rounds can be produced by private mints. Additionally, a silver round will never have a face value, since only sovereign government mints have the power to make a coin legal tender. Silver rounds are produced by private mints and tend to be just as pure as silver coins, although rounds don’t have the security of being backed by a government.
Most silver rounds are sold at reasonably low premiums over spot price, but some hard-to-find rounds may retail at a larger markup. Many investors enjoy silver rounds for their variety, as well as their affordability compared to high-premium silver coins like the American Silver Eagle.
Silver Bars
Silver bars are instantly recognizable by most collectors. Silver bars are produced both privately and publicly and typically have no face value. Most silver bars are either 99.9% or 99.99% pure. Although silver bars usually don’t offer the beautiful designs or artwork you’ll find on silver coins, bars make up for this with their affordability.
Many investors love silver bars because they tend to sell at lower premiums than rounds or coins. This makes silver bars a popular choice among stackers, silver investors whose goal is to procure as much silver as they can for their cash.
Comparing Junk Silver and Silver Bullion
So what’s the better investment – junk silver or silver bullion? The short answer is that it depends. Your investment objectives, personal preferences, and even your budget can play a role in determining which types of silver are best for your portfolio. Generally, though, most investors consider four main factors when deciding what to add to their silver stacks:
- Premiums
- Liquidity
- Security
- Numismatic/Collectible Value
Below, we’ll take a closer look at how silver bullion and junk silver compare using these four metrics.
Premiums
A precious metal premium is a small (or large) fee added to the melt value of a coin, bar, or round. Premiums can vary depending on the type of silver product you’re dealing with, the quantity that you buy, and market conditions at the time of purchase. It’s tough to directly compare premiums between silver bullion and junk silver, since the premium fees associated with these products fluctuate so much depending on which specific coin, bar, or round we’re talking about.
As a general rule, you should expect to get the most bang out of your buck when you buy silver bullion in bulk, especially if you’re buying bars or rounds that are in less than perfect condition. While it is possible to save money stacking junk silver, junk silver premiums tend to depend heavily on which coins you’re buying. The Walking Liberty Half Dollar, for example, sells at a higher premium over melt value than a 90% silver Franklin Half Dollar, since “Walkers” are more popular and rarer.
On the flip side, stacking 90% junk silver can be an affordable way to start building your silver portfolio. Since junk silver coins are typically not worth as much individually as silver bullion coins or rounds, you can get away with building a sizable silver stack over time by putting $20 into junk silver each week.
Liquidity
When it comes to liquidity in the current market, silver bullion is typically a better investment than junk silver. Silver bullion is popular globally and carries appeal because of the intricate designs on coins, bars, and rounds. Additionally, it is legal to melt down silver bullion to make jewelry, silver bars, or even other silver rounds. The same cannot be said for junk silver; the U.S. government prohibits citizens from melting down circulating currency (which junk silver coins are). As a result, dealers tend to offer less for junk silver coins than they do for popular silver bars, coins, or rounds.
Some survivalists prefer junk silver for another type of liquidity, though. In the case of currency devaluation, junk silver may hold more weight as a bartering tool than silver rounds, bars, or coins. Junk silver coins are still legal tender, instantly recognizable, and less commonly counterfeited compared to even the most popular silver coins, bars, and rounds. As a result, adding some junk silver to your stack can be a great liquidity play if you’re someone concerned about the future of fiat (paper) currencies.
Security
Counterfeiting is a multi-billion dollar industry globally, so it should come as no surprise that many silver investors are concerned about the security of their purchases. Generally, both silver bullion and junk silver are secure, so long as you know how to spot fake silver coins and purchase only from reputable dealers that you trust. Additionally, investing in a silver testing tool can be a great choice if you plan on buying from new private dealers.
Most junk silver coins aren’t profitable to counterfeit, since they’re so small and have a melt value of only a few dollars each. When you start buying numismatically valuable pre-1965 coins, that’s when counterfeiting becomes a more realistic issue. As for more recognizable coins like the American Silver Eagle, counterfeits are certainly common.
Numismatic (Collectible) Value
Almost all silver products sell at a premium over spot price, but this premium can vary greatly depending on the specific asset you plan to buy. You’ll pay the highest premiums for coins that are numismatically valuable, which means that they have value to collectors. A coin, bar, or round gets its numismatic value from its rarity, popularity, or condition. This is especially true for certain low-mintage junk silver coins.
As a general rule of thumb, silver bullion tends to come with a lower numismatic premium compared to junk silver.
Final Verdict: Junk Silver or Silver Bullion?
Ultimately, it’s up to you to decide which type of silver best matches investment objectives, preferences, and budget. Remember – there’s nothing wrong with investing in a mix of silver bullion and junk silver. To some investors, diversifying with both types of silver provides them with the best of both worlds.
About The Author
Michael Roets
Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.