James,
So I found a reputable dealer here in town, went to the store, He asked what can I do for you? I said how many pre-’65 silver coins do you have? A big smile on the owners face and he gets up from his desk walks behind a partition, and comes back with three boxes of loose coins. Half dollars, quarters and dimes. I ask what is the going rate and he told me 23.25 times face value. I asked how much $2,000 would buy me. He calculated $86.80 in silver coin. He asked me why I was buying, and I told him I didn’t trust the economy to make it to Christmas, so its always handy to have some coin. Silver is something that anyone will accept [if Federal Reserve Notes become hyperinflated to the point of worthlessness].
I have to ask, was the price I paid worth the silver’s value? If I needed to pay $2,000 to someone would they accept $86 and change? Thanks for all you do, Peace, – Michael T.
JWR Replies: I can assure you that 23 times face is a very fair retail rate, at present. Here is why: When I last checked, spot silver was at $32.09 per ounce. (Close of market on 26 October, 2012.) The key number to remember is 715. It is generally agreed that there are 715 Troy ounces of silver in a $1,000 face value bag of circulated pre-1965 half dollars, quarters and dimes. (Given typical wear.) So we would calculate $32.09 x 715 = $22944.35. That is the “melt” value of a $1,000 valve value bag. Hence, by shifting the decimal three places from the “Thousands” place to the “Ones” place, we’d get 22.94435 times face. So your dealer was not cheating you. He generously gave you the same premium that most dealers charge for a full bag. (Smaller increments generally sell at a higher premium.)
And don’t feel bad that $2,000 in FRNs only buys you $86.80 face value of coins. This isn’t the coin dealer’s fault. The robbery was committed the U.S. Congress and Lyndon Baines Johnson, back in 1965–when they started passing off silver-plated copper slugs as genuine coinage. It is no wonder that the American people quickly scooped up all of the silver coins they could find in 1965 and 1966. As I’ve mentioned before, an analogous situation now exists for nickels (U.S. five cent pieces), which will soon be similarly debased. Stock up!