Consider US 40% silver coin as part of your wealth storage

[68Camaro]

(A developing work in progress... I keep finding minor typos)

Other than coin searchers who still pull these coin from circulation at face value there are not a lot of well-documented supporters. But are the detractors missing some key points? Does it make sense to include these in a strategy? Let's dig into this.

While also available in NIFC (non-intended for circulation) Eisenhower dollar coins, we will focus especially on the common circulated 1965-69 JFK half dollar, which is often available in bulk at a discount to many other silver forms. Physically this coin is the same diameter and thickness as the traditional US half dollar design but the alloy was changed in 1965 from the traditional 90% Ag content coin silver alloy to a clad (sandwich) coin with an average content of 40% silver and 60% copper. The clad construction uses outer layers of 80/20 silver/copper alloy (same as was used for Canadian silver coin for many years) over a copper-dominated inner core of nominal 20/80 silver/copper alloy (actually 20.9/79.1 for the core alloy, to be precise). The resulting weight is less than the coin it replaced due to the lower silver content: the clad coin weighs-in at a nominal 11.50 grams compared to 12.50 grams for the traditional 90/10 coin silver alloy. The circulated versions of these coins were minted in large quantities and have essentially no numismatic value. No circulated half of any type was minted in 1970, and in 1971 the circulated coin alloy for the half dollar was changed to the current nickel/copper clad design. The 40% half was minted in 1970 but only released as NIFC for inclusion in mint sets (the mint did not revealed that the end of the circulated coin was 1969 until after the 1970 mint set sales were ended). The other (and last) 40% half is the NIFC 1976S bicentennial coin.

For many years the 40% half had an intrinsic value well below face value so there was little reason for the population to hoard it. These silver-clad halves were increasingly ignored during the 1970s as common circulation of the half dollar went out of favor; eventually their greatest use became as gambling tokens. Even now examples of these coins can sometimes still be found hiding within bank change orders delivered by armored car services, mixed in with the far more numerous nickel/copper clad coin. With accumulated surface dirt and tarnish they are often fairly unattractive in their native state and due to the clad copper-dominated core - which has a copper-ish hue - they are often confused by many people who mistake them for the common nickel/copper clad coins that are far more common.

There are two primary (and valid) negatives of 40% silver coin:

1) The silver content is low and with that they are less desired by many because they are not considered bullion silver. It's hard to argue against this; in truth the lower alloy content is not favored by bullion investors who seek the advantages of 99.9% Ag. And for alloy coin fans the long-standing circulating composition of US 90% Ag (or Canadian 80%) coin silver is more widely respected than the 40% silver coin. The truth is that for the portion of your store of wealth that you want to be pure silver you should simply buy pure silver. However, the fact of lower silver content doesn't have to be a defining criterion that eliminates it completely from consideration as part of your store - more on this below.

2) If you are trying to create a large store of weath then eventually the 60% portion of copper adds undesirable weight and bulk. To store up large amounts of silver content with the 40% coin requires you to store by weight 1.5 times that same weight in copper (and the percentage of volume bulk is even higher). Yep, that's all true as well. If you are strongly challenged by either volume or weight constraints then 40% silver coin isn't the ideal solution for you.

So given the above drawbacks to the coin what are the positives? What part, if any, should it play in your personal archive of wealth preservation? Here are eight reasons to consider 40% silver halves:

1) they are often available at or below spot silver prices, while other forms often have a premium.
2) each contains 4.6 grams of pure silver, just over one-seventh of a troy ounce.
3) these coin possess the lowest ratio of intrinsic value to face value of any common coin (currently 6-6.5:1) - arguably a good thing. If the value of silver was to go to zero these will never be worth less than 50 cents.
4) the JFK design is timeless and widely recognized; in a SHTF scenario this coin would arguably be more easily tradable and less subject to wear issues than bullion.
5) the metals used in it are simple duplex alloys; if they were to be separated back into their constituents there are none of the complicating factors such as seen with the 35% silver "war nickel" of 1942-45.
6) the second alloy element copper, is itself widely valued as a key base metal, at 6.9 grams of pure copper per coin.
7) being little circulated there is generally little to no wear on most examples of this style.
8) while these coins often come out of circulation poor in appearance, they usually clean up well with Tarn-X tarnish remover. With 1965-69 dates being accepted as non-numismatic coins, the only ones with collectable value above face or instrinsic value are special polish die strikes (65-67) or proof strikes (68-69), or oddball strikes that might therefore be worth far more in an uncleaned state. This link is a good starting point: http://en.wikipedia.org/wiki/Kennedy_ha ... Collecting. Except for these off-nominal strikes (which should be extracted and saved separately without cleaning) there doesn't need to be any reluctance to clean them, and after cleaning they usually present as a very attractive coin and at that point are clearly recognizable as silver.

The difference in both weight and content sometimes makes comparison confusing for those unaccustomed to them, so just keep this little rule of thumb in mind. The 4.6 grams of silver vs. 11.25 grams silver in a nominal weight 90% half happens to yield 40.88% of the silver content of the heavier 90% half. So five 40% coins contains roughly the same amount of silver (just slightly more) as two 90% halves (or any other $1 face of fractional 90% coin).

What to watch out for? Wear - because the bulk of the silver for this coin is in the exterior layers, heavy wear of the 40% clad coin has a more devastating affect on the net silver content, as described in this other post viewtopic.php?f=9&t=23637&p=219936

Two other important views to consider, especially if you are interested in trading or arbitrage, are presented in these posts:
viewtopic.php?f=9&t=26248&p=237915#p237955
viewtopic.php?f=9&t=26248&p=237915#p238027

[knibloe]

The bulk of my silver is in 40%.

the main driver is because it was all available at face value.

I am generally too cheap to buy silver at spot.

[68Camaro]

The bulk of my silver is in 40%.

the main driver is because it was all available at face value.

I am generally too cheap to buy silver at spot.

Good to see a reply post on this!

I credit Neil's persistence in talking about 40% as the main thing that kept 40% on my radar and eventually caused me to examine it more seriously. I realized that I was snubbing a solid option without good (enough) reason. We need to make informed decisions, not relying on emotion or depending on the direction of some herd led by people with other motives or needs that might not be aligned with our own. So I've turned my opinion around 180 degrees and have included 40% as a part of my overall strategy.

[reddirtcoins]

I would not include 1970 as common circulated. 1970 half dollars were only made in Denver and released solely in mint sets and there are some lower collected numis see the "collected" area in the below wiki.

http://en.wikipedia.org/wiki/Kennedy_half_dollar

..and yes, I have lots of 40's...

[beauanderos]

good post... but I don't have room to store 40% rolls.

Another point is that on silver pullbacks, 40% offsets volatility... it falls less than 90% does. On wide enough swings there is arbitrage there to take advantage of... buying 40 on price rises (if discounted) and selling on dips... and swapping into 90% at the same time will build your ounces. I've done this a few times, although it is more practical when dealing in $1000 face bag amounts.

[smackvay]

I've not read this thread. I'm glad its posted and well written!!!!
Thanks again guys

[68Camaro]

I would not include 1970 as common circulated. 1970 half dollars were only made in Denver and released solely in mint sets and there are some lower collected numis see the "collected" area in the below wiki.

http://en.wikipedia.org/wiki/Kennedy_half_dollar

..and yes, I have lots of 40's...

Good point, I wrote the above from memory and wasn't sure about the 70 being NICF. I'll edit it at next update. Thanks!

[68Camaro]

good post... but I don't have room to store 40% rolls.

Another point is that on silver pullbacks, 40% offsets volatility... it falls less than 90% does. On wide enough swings there is arbitrage there to take advantage of... buying 40 on price rises (if discounted) and selling on dips... and swapping into 90% at the same time will build your ounces. I've done this a few times, although it is more practical when dealing in $1000 face bag amounts.

Also a good point. Hadn't considered this path but I'll refer to your post as something to consider.

[CardsNCoins]

I am a big fan of 40%.........at face.

[galenrog]

Silver is silver. I will stack in whatever form is available. War nicks, 40%, 80%, 90%, Sterling, or .999. Does not matter. When the safe (30 cubit feet) is full, then decisions in future stacking will be made.

[68Camaro]

I am a big fan of 40%.........at face.

yeah, yeah, yeah... I'd be smiling too if I had your supply! But sort on, sort 'em while you got 'em.

[highroller4321]

I believe you are missing one very important factor......You can normally buy them below spot, but when you go to sell them you also normally get quite a bit below spot.

[reddirtcoins]

example

online retailer buy price $6121
current melt $6439

still, just be aware and you can make some good profit.

[68Camaro]

example

online retailer buy price $6121
current melt $6439

still, just be aware and you can make some good profit.

What's the online retailer spread, then normalize that to percent, and then what is the same spread in percent for 90%? Let's do a real comparison. There is always a buy/sell spread if you're trading.

[silverflake]

If the madness of a big run up into a frothy bull market occurs, some profit can be made as Mom and Pop USA start to buy anything silver. I would also imagine they would sell closer to melt in a true run up. Good potential, low risk, thanks 68camaro.

keep stacking.

[highroller4321]

example

online retailer buy price $6121
current melt $6439

still, just be aware and you can make some good profit.

What's the online retailer spread, then normalize that to percent, and then what is the same spread in percent for 90%? Let's do a real comparison. There is always a buy/sell spread if you're trading.

http://mjpm.com/silver.cfm

$1,000 face value bag
BUY $15,926.95 SELL$17,280.45 7.9% Spread

$500-$1000 or more face value per $1 40%
Buy $5.94 Sell $6.64 10.6% spread

http://www.apmex.com/category/528/silver-coins-90-40-35

APMEX 90% $1000 Bag Buy Price: $16,087.50 Sell $17,045.60 5.6% Spread

APMEX 40% $1000 Bag Buy Price: $6,121.25 Sell $$6,708.30 8.7% Spread

http://www.providentmetals.com/1000-fac ... coins.html

Sell To Us Price: 90% $1000 Bag Buy Price $16,159.00 Sell $17,188.60 6% spread
Sell To Us Price: 40% $1000 Bag Buy Price $5,855.90 Sell $6,472.45 9.6% spread

[Hawkeye]

I've always liked 40% halves. They're usually not worn or ugly (at the least most of the ones I've come across), they have a higher "floor" than other US coins, and I just like the design.

[68Camaro]

So there is a ~3% spread when comparing $16k to $6k. Would it be different if the 40% order was 2-1/2 times larger?

[everything]

40% is more bang for your buck, if your stacking long term, that's more silver, but I totally understand why others would shun it. I have about 40 oz. of it, was going to move it, but am going to keep it instead.

[68Camaro]

I believe you are missing one very important factor......You can normally buy them below spot, but when you go to sell them you also normally get quite a bit below spot.

Thanks for the above data, links. Sped things up a bit. Based on what I saw at APMEX I'm going to guess there's not a significant further improvement in price for volume between $1000 face and $2500. So you've got a point that needs to be factored in and monitored if you care about trading and arbitrage.

Of course if you buy and sell at RC you eliminate most of the spread here. But if you buy here and sell at the dealer, with 40% you would currently lose 2-4% more than you would with 90%.

So keep that in mind if you trade, flip, or need to be concerned about selling early. If you're a long-term wealth protector I suspect that buy/sell spread between 90% and 40% would be of far less concern.

[CLINT-THE-GREAT]

I really enjoyed this post. I like 40%... and really it was our LAST silver circulated coin.... I have been PMd by some individuals on here as well as BS... that me asking anywhere close to spot is an insult..... and that "they" have never and would never buy 40% as it is just a waste of time.....I just can't imagine having that kind of sentiment towards 40%....plus I don't konw why they bothered to PM me... just ignore my ad!!!

-The Great

[johnbrickner]

Silver is silver. I will stack in whatever form is available. War nicks, 40%, 80%, 90%, Sterling, or .999. Does not matter. When the safe (30 cubit feet) is full, then decisions in future stacking will be made.

I include foreign silver coinage to the above. Variety is the spice I like and my current spectrum of taste is for silver. Also include Ni, Cu, Au, but not with the variety as with Ag. Recently added a number of 40%ers for the reasons listed here with appreciations to Neil and others.

[68Camaro]

Thanks for the comments! Incorporated several of the comments into a further edit above.

[AGCoinHunter]

Nice work 68Comaro. I love my 40%.

[alpacafarmer]

I'm not a big fan of 40% but that has made them very profitable for me. On one large buy several years back I was buying everything the guy had, silver, wheats, old numi's and when he got to the 40% I told him I wasn't interested. He started them off just below melt @ $2.50 and he kept lowering the price until I just couldn't say no any longer and I left with over 40 rolls and paid $1.25 a piece for them. When silver hit $45 an ounce I took them to a coin show and unloaded them for a nice profit.