The Purity Differences Between Investment Grade Silver Coins, Sterling Silver, and Junk Silver Coinage

Silver has an established track record as being utilized as currency and a necessary commodity to further industry and technology. Physical silver is commonly viewed as a safe-haven investment vehicle and a long-term store of wealth. When market volatility and inflation are present, investors utilize physical silver to diversify and stabilize a portfolio. Physical silver is used to minimize the risk associated with debt. 

Currently, global silver deficits are expected to expand 17% due to industrial use and the decline in silver mining production. 

Let’s review the significant differences between Investment grade silver, sterling silver, and junk silver.

Millesimal fineness system

This system is used to measure the purity of silver in alloys. It’s also used for all other precious metals such as gold, platinum, and palladium alloys. It calculates a value by counting the parts per thousand of pure silver by the metal’s mass in the alloy.

Since an alloy is a mixture of two or more metals, it may have varying quantities of pure silver in it depending on the lightness, hardness, or strength. For instance, an alloy with 92.5% silver is regarded as 925.

Investment grade silver coins

Investment grade silver coins are 99.9 percent pure or referred to as .999 pure. Sovereign mint produced investment grade coins are legal tender designated and are .999 pure. A sovereign mint produced coin will be stamped with a hallmark certifying the purity of the coin. Investment grade coins that are 99.9 percent pure, meet the IRS purity guidelines for accredited retirement account requirements. Currently, U.S. retirement accounts represent $38.4 trillion in investment assets. For this reason, IRA eligible silver coins command a much larger market share in comparison to non-IRA eligible silver products. A larger market share will promote better liquidity and more upside potential. It’s also important to state that certain precious metal investors will only accept sovereign mint produced coins that are globally recognized. Investors prefer sovereign mint produced coins due to their consistency in purity and the added security feature of mint marks.

Sterling silver

Sterling silver is not considered investment grade and cannot be included in an accredited precious metal retirement account. Sterling silver is used in manufacturing silver ware and jewelry pieces. It’s usually a .925 silver with 7.5% copper alloy. This is why you may find .925 often stamped on articles of silver jewelry. 

However, to revive the scintillating appeal of the metal, silver ware is coated with a .999 silver as flashing. Rhodium can also be layered on top to prevent the metal from tarnishing. In comparison to the silver flashing process, the rhodium finish is a more costly application.

Junk silver coinage

Pre 1965 silver coinage is generally referred to as junk silver. The purity ranges from 35% to 90% in U.S. silver coins minted prior to 1965. The purity of junk silver coins is commonly confused with silver. It is important to understand the difference between purity and content. Purity refers to the metal composition of a coin and the silver content refers to the amount of silver in a coin.

Here is a list of pre 1965 U.S. silver coins and their silver content and purity:

1) Silver Dimes consist of .715 troy ounce of silver and are 90% pure.

2) Silver Quarters consist of .715 troy ounce of silver and are 90% pure.

3) Silver Kennedy Half Dollars consist of .295 troy ounce of silver and are 40% pure.

4) Wartime Jefferson Nickels consist of .05625 troy ounce of silver and are 35%.

Junk silver coinage is not allowed in a precious metal retirement account. Junk silver coinage does not meet the IRS accredited retirement account guidelines. Junk silver is stored in burlap bags and for this reason, often worn and damaged. Junk bags of silver are generally filthy, be prepared to wash your hands after handling pre 1965 coins.

The case for silver

Over the past 25 years, silver has gained approximately 450% in value. Currently, silver would need to increase approximately 70% to reach its all-time high. Silver is currently more undervalued than gold. Silver is expected to continue to rise in value moving forward. This trend is expected to continue due to inflation, industrial and technological applications, supply and demand fundamentals, and geopolitical tensions. With silver at only $29 per ounce, and silver expected to reach new all-time highs, investors should seriously consider diversifying in this precious metal before it moves any higher.

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