Friday, February 19, 2010

Making Change in a New Precious Metals Economy

A newspaper illustration depicting a man engaging in barter, paying his yearly newspaper subscription to the "Podunk Weekly Bugle" with chickens. Illustration by F.S. Church, published in Harper's Weekly, January 17, 1874, p. 61.

By Larry W., another reader and James Wesley Rawles via Survival Blog

So, given that the USA Federal Reserve currency, the US dollar, is going down the tubes, something else will replace it. There will undoubtedly be attempts by various governments to reinstate some version of fiat money, but people are going to see through that, and will not accept it, since fiat money is, at it’s core, an undeclared, and essentially unlimited, tax on those who produce.

Ultimately, people will probably return to a means of exchange with more than 4,000 years of history; Gold and silver. Here in the USA, in the aftermath of the coming economic collapse, there will be barter, at least at first, but as economic activity revives, something more convenient will be badly needed. I am sure that there will be all sorts of private minting of gold, silver and even copper ultimately, but in the meantime, before private mints are established to meet the demand for real money, I expect, as many others have postulated, that pre-1965 US silver coinage will be a recognizable means of exchange.

There is a problem, however, with silver coinage. Just as gold coins have too much buying power, even in 1/10 troy ounce sizes, for many transactions, so even a US silver dime may have too much buying power for many day- to-day local transactions. Someone wishing to buy a needle, or a couple of fishhooks is not going to spend a whole 0.0715 ounces of silver (the amount in a pre-1965 silver dime) for a single needle. Smaller change will be needed, and needed badly. What to do?

At present (mid-February, 2010), based on the present commodity prices at Coinflation, a silver dime is worth $1.10 US based on spot prices for silver. A US nickel is worth about 5 cents, for the metal content. Clad dimes are about the same value as pre-1982 pennies (~2 cents), while clad quarters are slightly less valuable than nickels (~4 cents) and clad halves are worth about 8 cents in US currency. While most people have not put aside precious metals as such, (gold or silver coins) there will be a substantial quantity of clad coinage in circulation, and this could be used as smaller change for silver coins.

It is my intention, as economic activity is resumed, to exchange clad quarters and US nickels as 1/20 of a silver dime, essentially ½ of a ‘silver penny’ in exchange, and clad dimes and pre-1982 pennies as half of that value, or ¼ of a ‘silver penny’.

For example, let’s suppose that I have #6 fish-hooks for sale, at the rate of four hooks for a silver dime. Mr. Jones wants to buy just two hooks, but has no silver, all he has are clad coinage. I’d sell him the two hooks for 5 clad halves, 10 nickels or clad quarters, or twenty pre-1982 pennies or clad dimes.

Another example- Mr. Smith wants to buy a pound of 8d cement coated nails. I’m offering to sell ‘old’ factory made nails (not my new handmade ones) at one silver dime per pound (maybe a screaming bargain for him!) Again, he has no silver coins, but has a bunch of nickels; I’d sell the nails for twenty nickels. Local commerce and trade would be facilitated by such an arrangement.

Until private minting fills the money gap, this would appear to be a workable solution for small local transactions, which is where most of the trade would be, at least to start with.

Ounces of silver in pre-1965 coins:
Silver bullion coin = 1 ounce
Pre-1965 silver dollar = .77344 (90% silver, 10% copper)
Pre-1965 silver half dollar = 0.36169 (90% silver, 10% copper)
1965-69 silver half dollar = 0.1479 (40% silver)
Pre-1965 silver quarter = .18084 (90% silver, 10% copper)
Pre-1965 silver dime = 0.0715 (90% silver, 10% copper)

There is no silver in most post-1965 coins, except the aforementioned half dollars, and in some proof sets:
Post-1965 clad dollar = weighs 0.260 troy ounce. (copper 88.5%, zinc 6%, manganese 3.5%, nickel 2%)
Post-1970 clad half dollar = weighs 0.365 troy ounce. (nickel plated copper- 8.33% Ni, 91.67% Cu)
Post-1965 clad quarter = weighs 0.1823 troy ounce. (nickel plated copper- 8.33% Ni, 91.67% Cu)
Post-1965 clad dime = weights 0.0729 troy ounce. (nickel plated copper- 8.33% Ni, 91.67% Cu)

Nickel coins:
Mid-1942 to 1945 (56% copper, 35% silver, 9% manganese)
1866 to present except 1942-45 weighs 0.1615 troy ounces. (75% copper, 25% nickel)

Penny coins:
1793–1857 (100% copper)
1857–1864 (88% copper, 12% nickel)
1864–1942 (95% copper, 5% tin and zinc)
1943 (zinc-coated steel)
1944–1946 (95% copper, 5% zinc)
1946–1962 (95% copper, 5% tin and zinc)
1962–1982 weighs 0.080 troy ounces. (95% copper, 5% zinc)
1982– present weighs 0.080 troy ounces. (copper-plated zinc- 97.5% Zn, 2.5% Cu)

Base Metal Content Values
(The following are as of February 2010. See for updated figures)
Pre-1965 silver dollar = $12.47
1965-69 silver half dollar = $2.38
Pre-1965 silver half dollar = $5.83
Pre-1965 silver quarter = $2.91
Pre-1965 silver dime = $1.16

1971-1978 Eisenhower Dollar = 18 1/2 cents
1979-1981, 1999 Susan B. Anthony Dollar = 6 1/2 cents
2000-2010 Sacagawea Dollar = 5 1/2 cents
2007-2010 Presidential Dollar = 5 1/2 cents

1971 to present half dollar (clad) = 9 cents
Post-1965 quarter (clad) = 4 1/2 cents
Post-1965 dime (clad) = 2 cents

1946-2010 Nickel (except 1942-45)= 5 cents
1942-45 Nickel= 91 cents

1909 to 1981 penny except 1943 = 2 cents (95% copper)
1982 to the present penny = 1/2 cent (97.5% zinc) - [Perfect future use: Sacrificial Anodes]

JWR adds: Also, keep in mind that it is currently illegal to melt or bulk export U.S. pennies and nickels, but that would likely be rescinded, if they are dropped from circulation.

1 comment:

  1. Wow !! I m surely sharing this Pre-1965 US Coins with my friends! Had fun reading it indeed .