This article features a collaboration by RENOZEP and AGXIIK, both long time members of the TFMR community. The two authors provide some ideas and alternative thoughts as to why we should own gold and silver, what kind of metals might be the best given what we see coming and even how to rebalance a precious metals portfolio that suits the new age of commodity ownership and asset protection while reducing their target profiles from rapacious governments.
THE CASE FOR US JUNK SILVER – A PRIMER FROM RENOZEP
Junk Silver -aka - US Constitutional Silver is fractional coinage (dimes, quarters, half dollars) made before 1965 containing 90% silver by weight. It is any pre-1965 circulated, common date, modern era US coin that does not have an enhanced numismatic (collectible) value due to it’s rarity. Includes: Mercury dimes, Roosevelt dimes, Washington quarters, Standing Liberty quarters that are so worn you can’t read the date, Walking Liberty half dollars, Franklin half dollars, 1964 Kennedy half dollars and any other US silver coin that is so slick you can’t read the date. Morgan and Peace dollars could be considered as Constitutional silver as they're also 90% silver and 10% copper but are usually considered collector coins unless severely worn. No one calls them junk bullion however.
Junk silver got it’s unfortunate name because for many years the dealers had a hard time selling it. I bought it here in Reno at spot. I heard that people bought it at a discount to spot. Some folks decry the name and insist on calling it “Constitutional” silver. I’m afraid it’s too late, the name has stuck.
There is one main exception. The 1965-1970 Kennedy halves containing 40% silver. Some people like these because the premiums are significantly lower than the 1964 90% Kennedys. But IMHO, these are going to be confusing and difficult for re-sale or barter. I only buy them when they are dirt cheap.
KISS- Keep it simple stupid. The Mercury dime, Walking Liberty half and Franklin half are the only Junk coins that were only made in 90% silver. No non-silver versions - No exceptions, It’s a silver coin. Hey Mr. Black Market man, I’ve got silver, let’s make a deal for your toilet paper.
Buying: Remember that Junk silver is usually sold in $1.00 face value lots. ie- 10 dimes, 4 quarters, 2 halves. You can buy in smaller amounts but you will usually pay significantly more per coin.
The typical junk coin, grading good, very good to fine has lost somewhere between 4% and 10% of it’s weight, and an equivalent value of it’s silver. Currently this usually makes no difference in any transaction; but it may in the future as silver becomes more realistically valued and that loss becomes significant.
You have to expect a few “slicks” (a very worn coin but date still legible) and even a “cull” occasionally (extremely worn, date worn off, bent, holed, damaged) coin in every large lot of junk coins. Like many things “slick” is in the eye of the beholder. My experience says maybe one slick in every 10 to 20 coins is reasonable. I usually refuse to buy the culls. They are ugly and even the guy at the black market food stand won’t want them.
But the dealers have to sell the slicks too. If they let us cherry-pick too much they wind up with a big tray of nothing but slicks. Some e-Bay/internet sellers are bad about the number of slicks. They also play games like selling at weight in Standard ounces instead of Troy ounces (a significant difference). They mix denominations, throwing in 40% Kennedys and even add non-silver coins into their lot offerings. It’s best to visit your LCS so you can decide for yourself on your slick tolerance.
Another consideration- Many junk coins have been melted for the silver. No one really knows how many are left. Some dates that were high mintage years may not be so “common” any more. The only way we will find out is time. Time will show us how easy any one date is to find.
An Anecdote: I went into my LCS (a big shop with 3 branches) here in Reno, NV a week ago to get my silver fix. I asked for my personal favorite, junk Mercury dimes, and was told they were out and would no longer be selling Mercs as “junk.” They were getting “ too hard to get in quantity”.
Is this a sign of things to come for Mercury dimes and Walking Liberty halves in particular, and junk coins generally?
Many dealers have been selling Mercs at a small premium over the Roosevelts for a couple of years at least. Often the same premium spread applies to the Walking Liberty halves over the Franklins. Junk halves have been commanding a premium over quarter and dimes for a while too.
An observation: the Junk silver is drying up. When the next crisis arrives, Junk will be the first to become “Unobtainium”. I bought it a few years back at spot, no premium. Now the premium is only exceeded by the premium on American Silve Eagles. Unlike ASE’s, Maples, Krugs, other sovereign bullion coins, generic rounds, and bars- they ain’t making it anymore. The strong-hand stackers/preppers are wising up. This is being reflected in the prices.
A Sad Scenario. Some day in the future-
The dollar has died. It’s early-on post collapse and the general public has had minimal time to educate itself on all the forms of sound money. (think Weimar) You go out to get some groceries. You’ve got your ASE, Maple, Buffalo round, fancy collectible, whatever. You approach the produce guy and offer him a beautiful ASE. He has never seen one, is suspicious, and doesn’t have a clue. Additionally silver is now at a nominal $250/oz. He can’t make change and neither can you. Difficult to make a fair deal.
But if you’ve got a pocket full of Junk silver your chances go way up. You pull out a Mercury dime. He may have never seen one, but he looks it over. It has the look and character of real money.
Then you pull out your coin book, show him that all Mercuries were 90% silver, some prices, and go from there. Maybe he calls in the boss or maybe he does that transaction P2P and both parties benefit. Here is a chance to educate someone on the value of sound money.
In hyperinflationary environments the general public stops taking the paper money but will often accept the coinage even if it has no precious metal content. So perhaps your pocket change, post 1964, may become the way to complete a fair barter deal. I’ve started saving all my pocket change for this reason.
Rafi Farber at the End Game Investor has given this post collapse scenario a lot of thought. If this interests you, check him out.
The Bottom Line: Plan for the worst- Hope for the best
From a long- term, worst case perspective: Stacking some US Junk silver will provide you a tool which is the single most liquid, easiest to barter with and least likely to be confiscated by a desperate predatory government. All prudent stackers/preppers should have at least a little. Ask Bill Holter, a clear-eyed realist, if there ever was one.
I make decisions based on probabilities, not certainties. In my opinion the probability that “The Great Keynesian Experiment” will end in a hyperinflationary inferno grows by the day. TPTB know this too and are desperately trying to get us locked in their CBDC Prison before their control is destroyed.
I hope, pray, they fail but it’s not looking good.
Your stack will keep you free, with the Junk, Constitutional silver, acting as the “point of the spear” in your stack.
This from AGXIIK
A recent article from National Review wrote of four options available to governments during and after times of national crises. Listed in no particular order they include:
- Historical accounts of actions taken included the 90% devaluation of Roman silver coinage from the 1st, through the 3rd Punic wars
- Aristotle's comments of the Ephesians confiscation of rich women's jewelry to retire the national debt,
- Bernie Sanders's policy of private citizens property confiscation via wealth taxes.
- Default on the national debt, by refusal to pay, bond rates taken to NIRP or extending debt repayment to infinity
History is replete with hundreds of examples of governments, armies and wealthy elites demanding action be taken to save their Republic. When events come to a head; when war, crises or exploding debt and the ensuing attempts to fix the problem are set in motion, one or more of the 4 solutions noted above are attempted to fix the problems.
The National Review listed 176 sovereign entities which experienced 248 defaults since 1820. Averaging 1 per year these came in waves that built in height until significant parts of the world suffered the extraordinary pain levied on We the People to fix to the problem. While we did not cause the problem, Weimar was the epochal event of the last century but there have been plenty since then including the Great Depression, the Great Recession, The Great Financial Crisis, multiple examples of Covid 19 damage and extreme FIAT printing.
A brief review of 60 years of US history shows the US Government has resorted to all 4 takings over in the last half a century including stealing from the people through Eminent Domain , gross devaluation of coinage in 1965, repudiation of the gold standard in 1971, ZIRP and frequent Civil Asset forfeitures. To say that the USG has gone rogue in the last couple of decades is the understatement of the last century and this.
This leads me to some ideas that might work well for the TFMR readers as we slouch towards TEOTGKE.
The suggestions that come to mind for those who are capable of doing them, include minimizing cash balances where possible, reallocating banked capital to higher rate accounts, reducing monetary foot prints, acquiring certain assets that are invisible to the Praetorian Guards and even a strategic allocation to sovereign mint coins of your home country is elsewhere.
For US example I use American Silver and Gold Eagles, smaller denominations of mint coins, legacy silver and gold coinage such as that which was minted prior to 1965, junk bullion and even non-numismatic quality Morgan and Peace dollars.
Noting that whenever you now file a 1040 return the government requires you show ownership of crypto currencies and foreign bank accounts over $10,000. Penalties for failure to disclose are severe. Should the government demand an accounting of your precious metal ownership on a tax form I can suggest a couple of options. Any financial disclosures of a personal nature are a permanent record on your 1040 and could swing back and bite you. Always be cautious in these disclosures.
To completely comply with such a requirement, you might only include denominations based on the face value of the coin such as a $20 gold piece or a $1 ASE. Junk bullion could be considered no more valuable than a modern non-silver 25 cent piece. This would comply with an ugly draconian edict yet reducing the value of your holding by 95% or more is prudent. A shovel and patch of dirt works well too.
To suggest that you cheat and withhold disclosure might subject you to the fate of Romans who failed in their duties to proffer up coinage. Lions were well fed at the games.
Hiding in plain sight has proven its mettle over the centuries. Developing a more strategic plan may involve trading ordinary generic .999 bullion for ASE or AGE as some have done. Buying precious metal jewelry can remove your gold and silver from prying eyes. If gold attracts these types then shift to silver.
With premiums quite low between ordinary and mint coins, this trade can be done without much friction. Some who prefer physical gold trades now find that the gold to silver ratio of 80 to 1 works to their advantage. Whether done at a local coin store or internet bullion dealer like JM Bullion, SD Bullion, or other reputable dealer the result is the same and can be done quickly and quietly.
Others prefer the relatively seamless and near friction-free transactions done through Kinesis or Cyber Metals, a system that's been recommended on TFMR. How you're able to move one form of metal to another is, in my opinion, prudent and forward looking.
One caveat that's not mentioned but deserves its own paragraph is to exchange foreign mint coins for their domestic equivalent The premiums for US gold and silver mint coinage are generally higher than foreign mint coins but that imputes a higher value should you decide to sell or trade in the future.
If the USG decides to hoover up gold and silver during a crisis including some sort of FDR-like confiscatory Executive Order, paid agents shouting some specious screed that gold and silver from other countries uses slave labor, contributes to climate change or creates gross environmental damage could expose precious metals to a disinformation stink that compels the USG to demand we ship our gold and silver equivalents of 'blood diamonds' to the government coffers. Don't ever mention this to Greta Thunberg. She'd go bat crap crazy at this suggestion
If you think your sovereign coins could make you a target then, by all means, trade your Pandas, Roos, Canadian gold maples, Mexican pesos or Krugerrands to the sovereign coins of your home country.
Does this sound a bit extreme?
To some this idea might sound over the top but those who have heavy investments in Self Directed Precious Metal IRAs or storage at a bullion bank where the metals would be subject to government edicts may see the logic in this thinking. On a personal basis I've spent the last 3 months reallocating generic silver and non-US mint coins to exclusively US mint coins.
This is not to be construed as trading advice. Your decisions to trade, buy or sell physical metals is very personal. Market conditions can change without notice so trade carefully.
This video is of an local coin store talking about junk bullion:
Goodman's brilliant rant about being up $2,500,000, giving you the position of F You forever.
I use SD Bullion and SD Depository exclusively. They have the best 5 star trading and depository practices in the industry.
Ackerman's treatise on barter situations:
Jim Quinn at his best:
Tom Luongo's global overview of what's coming. We're pawns in this game but we won't allow ourselves to be destroyed if we take appropriate measures:
This from ZeroHedge:
Rafi Farber's comments on how defaults and monetary supply are weak points
Martens team tees up the systemic liquidity of US banks. $516 billion in lost deposits is not warm and fuzzy.
The best of our host, on a tear in his September 5 podcast. USD will hit $50 trillion in well under a decade
Last but not least, for Surstromming fans this last video befits the state of all markets today. It's very funny. Step up and take a big smelly bite. Hold your nose, touch your toes and I'll show you where the Wild Goose goes.
Thank you for taking time to read this article.
We think it'll timely and hopefully adds to your storehouse of knowledge as we approach the TEOTGKE point of no return.
RENOZEP AND AGXIIK