Silver bags are probably the best silver investment next to silver rounds.
It was the mid-16th century British Economist, Sir Thomas Gresham, who formulated the principle known as Gresham's Law: "When coins of equal face value but different intrinsic value are put into circulation side by side, the coin with the higher intrinsic value will be hoarded and only the coin of lower intrinsic value will remain in circulation."
This is demonstrated very well with Silver Bags. Silver Bags are collections of U.S. 90% silver coins minted prior to 1965.
In the 1960's the Public Law 88-36 was passed to eliminate silver as the underlying exchange for one and two dollar bills. The U.S. government discontinued minting U.S. dimes, quarters and half dollars with a 90% silver content switching instead to the cheaper cupro-nickel coins with less intrinsic value.
Naturally Gresham's Law held good and the pre 1965 silver coins have fast became collectors items resulting in the sale of the 90% silver bag.
Benefits of a Silver Bag
One of the prime benefits of a 90% silver coin bag investment is that the bag has a built-in guarantee, unavailable with many other silver investments. Regardless of what happens to the price of silver, the value of your 90% silver bag will never be worth less than its $1,000 face value since that is the face value of the coins contained therein. If the price of silver dropped (most unlikely given its steady trend over the years and the world wide shortage of silver) you would still have 1000 dollars worth of coins.
Something that is also worth knowing is that when the premium on a 90% Silver Bag moves up, this is a good indicator of the future price of silver. By the same token, if the premium drops, then the price of silver is likely to drop. But you still have your face value remember!
Contents of a Silver Bag?
All silver coins struck in 1964 or earlier were with a purity of 90% silver. The balance being copper and other metals to increase durability. Each Silver Bag usually contains either all dimes, quarters, or half dollars. Generally there are no mixed bags, that is to say they will not contain dollar coins. If you want dollar coins they are sold as Dollar Bags and due to the weight may be shipped as two separate bags.
The Face Value of $1.00 is divided by the coin denomination, i.e. $1 face = two halves, or four quarters, or ten dimes with a total $1.00 face value. Every $1.00 face value is considered 1 oz. of Silver Bullion, but after accounting for wear and tear of general circulation, the average amount of Silver per $1000 bag averages a little over 710 ounces.
These are not proof or even mint coins. They are coins that have likely been used and the condition is going to be good at best and poor at worse. They are collected not for being pretty coins but purely for the silver content.
Future of Silver Bags
Although they are easily obtainable at the present time, there is a limited supply of Silver Bags. No more silver coins are being minted that would be suitable for silver bags. Current silver coins are usually one ounce and mint or proof coins and the premium is high.
Currently, Silver Bags are easily obtained from dealers such as the Northwest Territorial Mint, Goldfinger Coin and many dealers. Some people like to collect them on the premise that if there is an issue with the currency of the day, one can still offer a or some silver coins for purchasing goods and services and the coins will likely be accepted.
But as well as a nice little investment for the future, collecting bags of silver coins can also be a rewarding and fun activity and, who knows, you could even find that elusive silver coin worth thousands when you buy 90% Silver Bags