Is ten cents for two bucks’ worth of silver a bargain?

A friend has been bit by the coin collecting bug.  Like another couple of people I know, he’s withdrawn substantial amounts of coins from the bank and searches them for treasures, like older coins, errors, and coins with precious metals.  To date he’s already found a number of silver dimes and half dollars (around ten I think).  That’s more than I’ve run across with my searching, so good on him.

Why is finding special coins a treasure hunt?

Throughout the past century in the United states, the purchasing power of a dollar has decreased by 95%.  As a result, the price of commodities, like metals, has increased in terms of dollars.  A coin, which is comprised of metals, has a fixed face value.  At first the value of the metal in a coin is small compared with the face value of the coin.  But, as inflation drives up the price of the metals, the value of the metal content approaches, and then exceeds, the face value of the coin.

Three things typically happen as this occurs.  First, a significant portion of the citizens begin holding on to these coins rather than spending them.  Second, the composition of the coin is changed to cheaper metals (debasement) so that the coins can be minted again for less than face value.  Third, anti-melt legislation is put into place to prevent wholesale destruction of the coins for profit.  Then, as Gresham’s Law runs its course, the “bad money” drives the “good money” out of circulation either into private holdings or back to the government.  The melting ban is typically lifted once the good coins are all but gone.

Silver coins have already been driven out of circulation in the US.  They haven’t been minted in quantity for almost 50 years.  The law that forbade melting silver coins was repealed in 1969.  High copper content coins are still in the process of being driven out.  The composition of the cent was changed in 1982 from 95% copper to 97.5% zinc (a cheaper metal).  Right now there is a market on eBay for junk copper cents above their face value.  It is illegal to melt the coins, as well as export the coins in any appreciable quantity.  Both copper cents and nickels contain metal that now costs more than their face value.

Hunt for the coins, or just buy them?

Since I’ve only found a very small number of silver coins just in my pocket change, and I haven’t really gotten a lot of winners from the times I have withdrawn coins in bulk from my bank account, the payoff to hunt through a bunch of coins for what winners might be there isn’t worth the time to me.  Sure, I can get $2.40 worth of silver for 10 cents if I find a silver dime in my loose change or in a box of rolled dines that I got from the bank.  But spend 2-3 hours, potentially, to find it?  Then my time is worth only a buck an hour for that transaction.  Why not pay $120 for a roll of them, and save myself 100 hours of work?

That’s not the only factor though.  My friends like the thrill of the treasure hunt.  One of them “needs to be doing something” even while watching TV, so this fills that need.  And even if the treasures are only a few, and far between, sometimes the treasures are whoppers.  Another friend found that the stash of half-dollars he was looking at was almost completely silver!  Dozens and dozens of half dollars, each worth at least $5 each.  Happy days are here again.

It all boils down to the tradeoff between time and money, and whether or not the hunt is enjoyable or not.  If plowing through rolls of coins isn’t enjoyable, then just buy the coins you want and spend time doing things that are enjoyable.  But if the thrill of the hunt is fun, go for it!

John Wedding

Husband. Father. Web publisher. Musician. John has blogged at Mighty Bargain Hunter since 2005, helping people to recognize life's good deals.

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  1. says

    If this is a hobby, go for it. Many people have hobbies for enjoyment and don’t make any money from them. However, as a way to make money, this reminds me of people who are on the hunt for the lowest gas price around, but then waste their money in a variety of other ways.

  2. says

    Another great post about coins. I particularly agree with the aspect of tradeoffs between time an d money. I’d definitely add the market for copper coins has grown well beyond Ebay since I am a copper penny bullion dealer.

    Though I do entertain a very minority of sales through Ebay, the extreme majority is off of Ebay, showing there is a market beyond that one particular medium.

    I think most people are still quite surprised by the cost of the one cent coin. I pieced together a decade of annual reports by the mint into a chart to show the cost over time which shows, based on 2011 pricing, it now costs 2.41 cents to make 1 cent. Seeing a chart really helps narrow things down to perspective to see the changing cost structure.

    Hearing a story of someone finding dozens upon dozens of half dollar silver coins is great! I love success stories. Odds of such a find is so slim these days though. Still, when it happens (with a lot of good luck), that’s great news!

  3. says

    That does sound like an interesting hobby for those so inclined. My brother used to be really into coin collecting — I bet he’d love to do the treasure hunt thing with his boys now.

  4. says

    I am one of those people that needs to be doing something even while doing something. I may have to take this up. Are there any UK coins that are sometimes silver?

  5. says

    I think the biggest factor is whether or not you’d enjoy collecting. For it to be worthwhile it’d have to be a hobby… otherwise you’d be spending a lot of wasted time “investing” in coins.

  6. says

    It is better to have a hobby than no hobby. Spending the time writing about coins in a blog is probably more profitable. But the therapeutic value of pinching though a mountain of coins is of course invaluable. Enjoy it as long as it lasts. At a certain moment in the next 10 years, all coins will be taken out of circulation.

  7. says

    Wow! Is there really $2.40 worth of silver in every dime minted in 1964 or before? What about the silver value other pre-1965 coins?

    If so, I’ve been collecting silver coins for many many years and as a result I have a small fortune sitting in my safe right now.

    I feel like I just won the lottery! LOL

  8. OC Steve says

    Another technique that I have used in getting silver coins (1964 and before) is to get friendly with a favorite bank teller who keeps her eyes open for rolls of older coins that some collector’s kids turn in to get quick cash. Also she holds onto other odd items like $2 bills and older dollar coins. I always am offered first right of refusal in buying these items. A box of candy at Christmas doesn’t hurt in keeping the relationship happy for all.

  9. says

    Back in the summer of 72, I spent some time going to the bank, buying rolls of pennies and searching for wheat cents (pre-1959). On one visit, my favorite teller waived me over and said that an old person just dropped off $10 worth of rolled pennies, and the teller set them aside for me. Every last one was a wheat cent, and even a few steal pennies from 1943. 40 years later and I still remember that teller’s name.

  10. Robt says

    Such a well written blog. It’s true that most people treasure hunt for the sake of thrill and your friend seems to be one amongst them. I agree with this, “And even if the treasures are very few, and far between, sometimes the treasures are whoppers.”

  11. Robt says

    Size is based on the value of the metals. There was a law that all coins minted in the U.S. had to be struck from gold, silver, or copper. The original 5 cent coin was “half disme” – No! That is not a misspelling, “disme” is pronounced like “dime.” It was a silver coin that was smaller than the 10 cent coin.

  12. says

    I started buying silver back in 2011, when is was around $20 an ounce, after reading a book on investing in gold and silver. I started slow at first and now I own enough to to replace my income for 6 months in case of any unexpected emergency. I love the way that silver sounds when they clink together, but what I like most about silver is it’s history of being a great store of value, especially during times of economic turmoil.

    I also collect the copper pennies minted before 1982, but I don’t buy those. I go to the bank every couple of weeks and get the $0.50 rolls in bulk. Like you said John, it takes a while to go through all of those rolls, but you’d be surprised at how many copper pennies are still in circulation.

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