“77-year-old Government Program Makes it Possible to Buy Real Silver for $1.41”

By Travis Johnson, Stock Gumshoe, December 11, 2009

I usually reserve my new articles for the Irregulars on Fridays and publish them in the Friday File — and I’ll be doing that, too, when I do my more detailed writeup today.

But I’ve had a bunch of folks ask me about this silver-buying program from Eric Roseman at The Sovereign Society, so I thought I could at least explain it for you quickly … and as a small bonus, you’ll have less of my blather to sit through!

“’Unpublished,’ 77-year-old Government Program Makes it Possible to Buy Real
Silver for $1.41″

That’s how they tease the idea. They go on to say …

“Thanks to a little-known government program – that was launched during the Great Depression – there is now an opportunity to acquire silver for $1.41.

“Not ETF shares… Not a pooled account… Real, hold-in-your hand silver.

“For decades, the Federal Government has tried to “pretend” this program doesn’t exist.

“An active President of the United States even “pooh-poohed” it…

“And… I say it’s “unpublished,” because it’s not mentioned anywhere on the U.S. Treasury website…

“But the truth is… it’s been quietly making average investors richer, with each passing month.

“And now, thanks to this program, backed by the U.S. Treasury, you can double… triple… perhaps even quadruple your money on silver over the next 12-24 months.”

Sounds exciting, no?

Well, it also may sound familiar — this is essentially the same kind of teaser language that Dr. David Eifrig used back in July when he was telling us that we could buy US government-backed silver for $1.25 (the price of silver has gone up a bit, naturally).

So you can read my thoughts on this “US government program” by clicking here for that July article if you want more details and examples, but I can tell you quickly that this is just “junk silver” — the coins (dimes, quarters, half dollars and dollars — not nickels) that were minted by the United States before 1965 that were 90% silver. They’re still legal tender as currency, but they’re almost all now being hoarded and traded for their silver content because the silver is worth far more than the face value.

Oh, and just to be clear — yes, you can probably buy this “government-guaranteed” silver for $1.41, but of course it won’t be an ounce of silver, it would take roughly 14 pre-1965 dimes (that’s the lowest denomination, the one you might be able to buy for around $1.40) to get an ounce of pure silver.

You can buy big bags of “junk” silver coins, beaten up old 90% silver coins that have no collectible value, but you’ll still almost always (in this market, at least) have to pay a decent premium of at least several percent over the melt value of the coins. And of course, it’s not exactly legal to melt down US currency.

The $1.41 refers, I assume, to the price you’d expect to pay for a pre-1965 “junk silver” dime — those dimes, at the current price of silver of $17 and change, have about $1.24 worth of silver in them … but since lots of folks are looking to buy silver, even “junk” silver, you’re unlikely to find one for that price, but you can probably find them from dealers (in rolls or “junk” bags), or on ebay, for roughly $1.40 or so. At times in the past “junk” silver has traded at a discount to the silver price, sometimes a huge discount, since it’s not refined and it would cost money (and maybe the bending of some laws) to turn it into pure silver, but those days are gone for now — wait until silver falls precipitously if you want to buy this stuff at a discount. If you want to see precise numbers for the silver content of each coin and the value thereof, the Coinflation website is a great place to start. And of course, if you happen to want to sell those coins for their silver content in the future, there’s no guarantee that the coins won’t trade at a steep discount at that time.

Junk silver coins are, however, probably the easiest way to get widely-accepted silver that has a floor value (a dime is still currency and will never be worth less than a dime, though it may certainly be worth less than $1.40) and that is available in very small amounts of less than an ounce, in case you’re worried that the world is going to hell in a handbasket and you want small denominations of barter-able silver available.

I hold some junk silver that I’ve bought when I could get it for near or less than the melt value, but I don’t subscribe to the handbasket the