Silver Dollars The Case for Quality Confirmed

7^th National Silver Dollar Convention

St. Louis, Missouri

November 13 – 17, 1986

Silver Dollars

The Case for Quality Confirmed

By David Hall and Mark Smith

There’s a big difference between silver dollars and all other U.S. coins.  That difference is availability.  Silver dollars are the most readily available U.S. rare coin.  The history of the politics behind the minting of the unnecessarily large quantities of silver dollars has been documented in several silver dollar books.  I won’t re-tell the story in detail, but the basic principle is the most important factor to comprehend if you want to truly understand the silver dollar market.  In a nutshell, silver dollars never should have been made!  They are large, bulky coins that were as cumbersome 100 years ago as Ike Dollars today.  You don’t want Ike clanging around in your pockets, and people didn’t want silver dollars clanging around in theirs.  Consequently, with the exception of a few very sparsely populated Western States (Wyoming, Nevada, Montana, etc.), silver dollars were not widely circulated.  Why did the government mint so many coins that were clearly not needed for commercial reasons?  It was simply a political favor to the several different Congressional Acts, the government agreed to purchase between two and five million ounces of silver per month.  This unneeded silver was minted into unneeded silver dollars.  And these Uncirculated silver dollars sat around in Treasury vaults gathering dust for more than half a century!

Because silver dollars were saved (by the Treasury) and not spent, they are now the most available U.S. rare coin.  You can go to any coin show and there will be several dozen dealers who have between one and one hundred rolls of Uncirculated silver dollars sitting in their showcases.  Have you ever seen a roll of Barber Halves?  Or Liberty Seated Dimes?  Of course not!  Coins that were contemporary with silver dollars were not saved in significant quantities.  And it’s not just that dollars were saved in large quantities.  You can go out and buy Uncirculated bags (1,000 coins) of silver dollars.  They are literally available by the millions!

Say’s Law of Market states that supply creates demand.  The silver dollar market offers dramatic proof of that.  There are hundreds of coin dealers who specialize in silver dollars exclusively.  There are newsletters devoted to silver dollars.  There have been more books written on silver dollars than any other U.S. coin.  In short, silver dollars are the most popular U.S. coin.  The overwhelming popularity of silver dollars has led to a demand for high quality examples by collectors and investors.  In the past, this demand has been translated into spectacular price gains.  But their great availability, demand, and price performance has also been a source of considerable controversy within the industry.

Large investment-oriented, mass marketing firms have been promoting and selling significant quantities of MS-60, MS-63 and Average Uncirculated dollar rolls.  Their advertising has made some highly optimistic claims about the expected performance of lower quality silver dollars.  Are these really the investment coins of the future?  Let’s stay away from opinion and let’s look at the cold, hard facts:

The Past Performance of Silver Dollars

You probably already know that MS-64 and MS-65 silver dollars have out performed the lesser grades, but did you now by how much?  There are 39 dollar rolls and 120 dollar singles (not including varieties) listed in the Coin Dealer Newsletter.  Using the same percentage increase methods that appear in the David Hall Rare Coin Study, let’s examine the performance of Average Uncirc. dollar rolls, MS-60, MS-63, MS-64* and MS-65 dollars:

Now the MS-60 and MS-63 promoters would argue that because MS-60 and MS-63 dollars haven’t gone up as much in price, they’re underpriced.  Well, the promoters are wrong for several reasons.

1. Desirability:  If you own any silver dollar rolls, take out a few MS-60s (they’re the ones with all the marks and gouges) and look at them very carefully.  Now ask yourself if any collector would even want a coin that ugly – at any price.  Is that BU (which in the case MS-60s stand for “Beat Up” not Brilliant Uncirculated) dollar really good for anything other than melting?  Coin aesthetics are more than personal opinion.  The majority of “coin people” agree that Walking Liberty Half Dollars, $20 Saint-Gaudens, and MS-65 dollars are beautiful and that Ikes, Jefferson Nickels, and MS-60 dollars are not.  This is not just my opinion.  Look at the past performance records above.  The marketplace has clearly said that MS-60 dollars are ugly and MS-63 dollars aren’t pretty enough.

2. Liquidity:  Most of the so-called coin investment firms will tell you differently, but if you buy MS-60 and MS-63 silver dollars, when it’s time to sell you will be trying to sell coins to dealers who already have large inventories of the same material.  The alternative is to ignore the hype and buy investment quality MS-64 or better silver dollars.  Then when it’s time to sell, you will be offering the dealers coins that they’ll have multiple customer want lists for, coins that they probably don’t already have in inventory, in short, coins, that they’d love to buy!

3. Demand:  Collector demand for MS-65 silver dollars is by far greater than collector demand for MS-60 and MS-63 silver dollars.  In fact, collector demand for less than MS-64 dollars is virtually non-existent.  I’ve been in the rare coin mail order business for over ten years.  I have a big following among serious collectors, and many of them regularly send me “want lists,” i.e. lists of the particular coins they’re interested in buying.  I very rarely get want lists for MS-60 and MS-63 silver dollars.  I always have want lists for MS-64 or better silver dollars.  Currently I have several hundred want lists on file of serious collectors willing to buy specific dates of MS-65 silver dollars, but I don’t have a single want list MS-60 or MS-63 silver dollars.

The thrust of the collector demand will always be toward the finest quality dollars, especially Mint State 64 or better silver dollars.  But even if there was a possibility that MS-60 and MS-63 dollars were “underpriced,” why take a chance on a mere possibility.  Stick with a proven winner.  As the old horseplayer’s saying goes, “The race isn’t always won by the best horse, but that’s the way to bet your money.”  And as the past performance records show, it’s not that MS-60 and MS-63 dollars don’t belong in the same race as MS-65 dollars, they don’t even belong in the same race track.

*MS-64 Dollar prices published in CDN starting Jan. 1986.