Time to buy: These silver coins are trading at their lowest premium in 20 years

From Nick Rokke, Editor, The Palm Beach Daily:

The electric grid would crash. Planes would fall out of the sky. Banks would fail. Civil wars would start. Some even believed Armageddon would ensue.

During the late 1990s, fear gripped the planet. At midnight on January 1, 2000, clocks in most computers across the world would roll over to 01/01/00.

But there was a serious problem…

Some computer programmers thought a software glitch would make the “00” in 2000 indistinguishable from the “00” in 1900.

If you’re old enough, you may recall this problem as the “Millennium” or “Y2K” bug.

Back then, to save money and memory space, computer clocks were formatted MM/DD/YY instead of MM/DD/YYYY.

Computers were invented in the mid-20th century. Some programmers worried they’d misinterpret “00” in 2000 and reset the clock to 1900… causing a worldwide network crash.

Fearing the End Times, people stocked up on precious metals.

One that did especially well during the Y2K scare was junk silver.

At the Palm Beach Research Group, we generally treat precious metals like silver as chaos hedges. They act as a form of insurance against things that could go wrong.

We’re usually willing to give up some upside on chaos hedges to protect against future market crashes.

Today, I’ll show how you can make a 14% return or more on junk silver… all while using it to hedge your portfolio.

More Than Junk

Junk silver isn’t a bag full of broken jewelry or electronic scraps.

It’s a technical term for U.S. coins minted before 1965 and composed of 90% silver. These coins include half-dollars, quarters, and dimes. And they’re legal tender.

A pre-1965 silver dime is one-tenth an ounce of silver. At today’s silver price of $15.74, that’s about $1.57 per coin. Two would buy you a loaf of bread during the apocalypse.

That’s why Y2K preppers hoarded bags of junk silver—they’d come in handy in a crisis. Their demand for coins drove the premium to 50% over the spot price of the silver.

We saw the same thing happen during the Great Recession of 2008.

And again in 2015, when Greece nearly declared bankruptcy… the Chinese stock market crashed… and the U.S. Treasury had to “allocate” silver coins to dealers.

And it will happen again.

North Korea, Iran, or a constitutional crisis in the U.S… . any of these crises could send junk silver prices higher.

But here’s the thing…

Today, you can buy junk silver for its lowest premium over spot prices in two decades.

A Rare Opportunity

Rich Checkan is president and chief operating officer of Asset Strategies International. They’re the experts we go to for coins.

Rich says junk silver is at the lowest premiums he’s seen in over 20 years. But it probably won’t stay that way for long.

The markets are calm right now… So, investors don’t feel any rush to buy junk silver. And with demand low, dealers have dropped premiums to move inventory.

But as soon as investors feel trouble is on the horizon, they’ll flock to junk silver like they did in 1999, 2008, and 2015.

When they do, expect premiums to return to their old highs.

A Chaos Hedge That Pays

You might get lucky and find a dealer who’ll sell you just a few junk silver coins. But most serious hard asset brokers sell junk silver by the bag.

Bags typically hold $100 or $1,000 worth of face value coins.

A $100 bag consists of 71.5 ounces of silver. Asset Strategies sells it for $1,169 at current spot price. That’s only a 4.5% premium to the spot price for silver — quite the deal.

There are two ways to make money off junk silver:

  • The obvious one is that demand drives silver prices up. I believe there’s a strong possibility of this happening. There are plenty of brewing crises in the world.
  • But even if silver demand doesn’t go up, you can still make money if the junk silver premium just reverts to normal. The usual premium is around 20%. If it returns there, you’d book about 14%.

If you’re thinking about adding some silver to protect your portfolio, do it now. A 4% premium is almost unheard of and probably won’t last long.

Just remember, silver is a chaos hedge. So, treat it as a long-term commitment.


Nick Rokke, CFA

P.S. When it comes to precious metals investing, no one knows more than our friends over at Casey Research. In February 2001, founder and legendary gold speculator Doug Casey told his subscribers that silver would enter another bull market. At the time, it was trading for $5 to $6 per ounce. By April 2011, it hit $51 an ounce—a nearly tenfold increase.

Now, the Casey team says a new catalyst is about to push gold stocks higher. It has something to do with a new legal ruling they expect to go into effect by March 31. If it does, it will send gold higher than bitcoin. Learn more right here

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