Menu
Cart 0

Finding buried junk silver

Posted by John Reed on

What is junk silver?

In the process of working on my brother-in-law’s estate, we found 1,200 quarters and 500 half dollar coins minted before 1965 buried in the yard. They are now in our CA safe deposit box.

Those denominations minted then contained 90% silver. At the time we found them, those coins were worth $7,095.

Overpriced?

I have rejected such “junk silver” on a number of grounds including that it is overpriced.

http://www.johntreed.com/…/60940227-disadvantages-of-gold-a…

However, I just redid the calculations on that. The historical average price of silver in 2016 dollars, since 1965, adjusted for inflation is $15.81 per ounce. Today’s market value is $16.43. Close enough. I will recommend to my wife that we keep, rather than sell them.

Nickels can go up, but not down

But they still have a disadvantage that my favorite investment coin—the current circulating U.S. nickel—does NOT have. Nickels cannot fall in value below the value that is engraved on them: five cents, which is also what you pay for them. So you are guaranteed not to lose if you buy nickels. Junk silver coins also cannot fall in value below their face value, but that is a huge fall before you get to that face value. That is a big difference from nickels where your purchase price is the face value.

To put it another way, if we get deflation, a.k.a. depression, a nickel will still be worth five cents because of the engraving on it. But a silver quarter that you paid $3.23 for can fall in value to to 25¢. Nickels can go up in melt value, but not down below what you paid for them. Junk silver can go up in melt value, but they can fall 92% below what you paid for them or what they were worth the day you decided to keep them.

32 pounds versus 1,600

The virtue of junk silver over current nickels is it is cheaper to store because of its higher value density. $7,100 in junk silver weighs about 32 pounds. The same dollar value of nickels weighs 1,600 pounds—almost a ton.

Great barter item

My hyperinflation book below has a chapter on barter.


The Unelected President novelA Facebook friend asked how we knew where to dig. Here is my answer.Junk silver is an excellent barter item because it comes in convenient denominations—similar to the denominations of the paper money in your pocket. They generally do not give change in barter markets so you don’t want to be using pianos or art works or gold rings as barter items.

Junk silver is also verifiable without an assay. I would not give you $1,260 for a gold coin out of fear that it was not really gold. But I would pay $3 for a junk silver quarter because I can tell by looking at it what it is and because that is too little money to justify counterfeiting. Because of value-to-weight ratio junk silver is nicely portable. Nickels are heavy.

How did we know where to dig?

My brother-in-law told us before he died that he bought and buried the junk silver. He further told his best friend where and the two of them tried to dig it up and failed. They even rented a metal detector to no avail.

The best friend pointed out th
e unsuccessful hole to me. My sons and I dug some more there without success. Then we bought a metal detector. It liked a particular spot. We dug there and found the silver about six inches below where my brother-in-law and his friend stopped digging.

A million dollars worth of gold has the same value as a million dollars worth of lead. Lead takes up a hell of a lot of space. Gold gets counterfeited and stolen a lot. Pick your poison.

Copper may become partially obsoleted by PVC or fiber optics. Lead is a poison the demand for which may be shrunk by environmentalists as it already has in gasoline and paint. Gold has the “virtue” of being near useless therefore, it cannot be used less.
 

Gold value= fear of inflation, period

The value of gold comes from one and only one source: fear of inflation. But paradoxically, an occurrence of inflation causes greatly heightened effort to end inflation and when that effort succeeds, as it always eventually does, the fear of inflation disappears and, along with it, the value of gold.
 
The day after inflation ends, gold plummets to maybe half its average long-term adjusted for inflation value—about $300 an ounce today. Roughly speaking, in order for the inflation adjusted value of gold to be $642, it must spend about half its time BELOW $642 over the long term.
 
Diversification is better than emphasizing a single commodity, no matter which commodity you choose.

Share this post



← Older Post Newer Post →