Franklin half-dollars carry the images of Benjamin Franklin on the obverse and the Liberty Bell on the reverse. Between 1948-1963, the U.S. Mint produced approximately 309.4 million Franklin half-dollars, which are composed of an alloy of 90% silver and 10% copper. Each coin, when minted, contained 0.36169 ounce of silver. A bag ($1,000 face) weighs right at 55 pounds on a bathroom scale and will yield 718-720 ounces of silver if smelted.
In the 1970s, bags of circulated half-dollars contained a mix of Kennedys, Franklins, and Walking Libs, with Kennedys and Franklins comprising most of the bags. While solid bags of Kennedys were common, rarely did bags of only Franklins show up. Generally, bags of halves carried no premiums over dimes and quarters, as all the coins were abundant.
By the 1980s, the smelting of circulated 90% coins became commonplace, but the smelting reduced only slightly the availability of 90% bags. Yet, half-dollars sometimes picked up premiums over dimes and quarters. During the 1990s, after a decade on heavy smelting of 90% coins, halves often sold at premiums to dimes and quarters. When halves didn't sell at premiums to dimes and quarters in '90s, it was during periods of little interest in the silver, such as in 1992 and early 1993 before silver enjoyed a run-up.
The Y2K buying in 1999 put premiums on all 90% bags (relative to their silver content), and halves sold at solid premiums over dimes and quarters. However, during the Y2K washout in 2000 and early 2001, when people who had bought in 1999 began dumping, halves did not carry premiums.
People who bought because of Y2K did so because they feared a collapse of the world's economy, not because of silver's supply/demand fundamentals or because they knew the dangers of paper money and wanted an alternative, the two primary reasons for buying silver. So, when Y2K became a nonevent, they sold. That selling, however, was short lived.
By 2001, halves began picking up premiums over dimes and quarters, and by the summer 2002, the demand for halves was so strong that dealers began separating halves into bags of Walking Libs, Franklins, and Kennedys as buyers asked for solid bags of halves. Walking Libs picked up the largest premiums, followed by the Franklins, and then the '64 Kennedys.
Investors who buy bags of Franklins are basically making a silver bullion investment, although in coin form. Franklins, because they are pre-'65 U.S. 90% silver coins and not because they are Franklins, could achieve high premiums in a strong precious metals bull market, as all 90% coins tend to pick up premiums in rising markets.
Yet, CMI believes Franklin half-dollars do not warrant high premiums over mixed bags of half-dollars or Kennedy half-dollars. We think that when silver reaches $5.50 to $6.00, Franklins will become more available and should sell at about the same price as bags of Kennedy half-dollars.