Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Look up keyword
Like this
2Activity
0 of .
Results for:
No results containing your search query
P. 1
Using Junk Silver (Pre 1965 Us Coins) or Silver Rounds in Trade

Using Junk Silver (Pre 1965 Us Coins) or Silver Rounds in Trade

Ratings: (0)|Views: 246|Likes:
Published by Eric Vought
A guide for using US silver coins (junk silver) in local trade, including what coins to use, how to transact, info on taxes, and links to further info.
A guide for using US silver coins (junk silver) in local trade, including what coins to use, how to transact, info on taxes, and links to further info.

More info:

Published by: Eric Vought on Oct 04, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

01/13/2014

pdf

text

original

 
Using Junk SIlver (pre-1965 US Coins) or Silver Rounds In Trade
Written by Eric VoughtThursday, 03 September 2009 19:46 - Last Updated Sunday, 13 December 2009 05:16
Introduction
 Recently, a group of us had a meeting on using alternative currencies (e.g. local trade dollars orsilver coins) to stimulate the local economy and hedge against the possibility of hyper inflation.In writing up his report of the meeting, Lincoln Justice asked me to send him a link describinghow trading with junk silver (pre-1965 US Silver coins) or US-minted silver rounds (post-1985Silver American Eagles or "SAE") works. I quickly discovered that no such single page exists (orI cannot find it). This article is an attempt to gather some of the relevant information in oneplace. This article will not get in-depth about how junk-silver trading fits into a wider system. I expectLincoln Justice's article to cover those issues. Here we are just talking about howtrading/bartering in silver coin works. Please note that I am not a lawyer or a tax attorney. When I make statements about legality, Iam working on my good-faith, best-knowledge of the law and the processes I describerepresent my good-faith efforts at complying with a complicated and confusing system. Butgiven that caveat, trading in junk silver can solve one facet of the currency needs we identifiedin our recent meeting and is a practice I currently recommend; always do your own investigationand make your own decisions. [Release Version 1.3 - Complete release with updates.] 
Which Coins Are Silver?
 So, the first question is "Which coins have silver content?" Pre-1965 dollars, half-dollars, quarters, dimes, and early half-dimes (not "nickles") have 90%silver content (the rest is mainly copper). Ninety-percent silver was used in an attempt to makethe coins last longer in circulation. The size and weight of the coins was chosen to ensure that$1.00 in face value of any combination of silver coins added up to 0.7234 troy ounces of puresilver. Most people use the figure 0.715 to account for wear of the coin over time. My scaleshows each dollar of face value to be very close to 16 dram (fractional ounces) which comes to
1 / 15
 
Using Junk SIlver (pre-1965 US Coins) or Silver Rounds In Trade
Written by Eric VoughtThursday, 03 September 2009 19:46 - Last Updated Sunday, 13 December 2009 05:16
14.4 dram of silver content. These coins are measured and minted by the US mint, so peopletend to trust their silver content more than say, your grandma's silver spoon, or silver roundsminted by less known organizations. Their mixable denominations make them convenient forsmall barter. Post-1985 silver American Eagles are $1 coins produced by the US Mint. They break from theearlier formula for silver content by producing a 1 ounce dollar coin which is 0.999 pure silver.The pure silver content is nice, but it also means they wear faster in actual circulation. Theywere intended as investment-grade silver rounds. Coins are specifically referred to as "junk-silver" when their value to a coin collector is less thantheir value for their raw metal content, In other words, the coins are worn badly enough that theircollector value is negligible and they are simply bagged and sold in bulk by dealers such asLynn Coins. They are generally sold as a multiple of their face value, so, for instance, if the multiple is "11",then a $1 coin is sold at $11 dollars. A bag of 1000 dimes would go at $1100 dollars. This multiple of face-value will be more than thespot-price times the amount of silver in thecoin. The fact that it is a milled coin of knownweight and purity is a convenience which has more value than an unmeasured, un-milled lumpof silver. In addition, the coin-dealer has to eat, so expect to pay as much as 30% over spot formilled coins. 
How Are The Coins Used?
 The coins are fairly simple to use. Given a multiple over face value, $1 face value is exchangedfor $1 x [current junk silver multiple]. So, at 11 x face, a silver dime might be used to pay for$1.10 worth of goods. A Silver American Eagle, given its greater weight and higher silvercontent, generally trades for a higher multiple than junk silver, say 11x versus 18x. This isequivalent to giving someone a discount for using a particular payment system, say cash ormoney order versus a check or credit card. You are giving the buyer a [substantial] discount forusing currency that has a significant base value: no matter how low the value of a dollar falls,the coins will still have intrinsic worth. Conversely, if the value of silver crashes, the coins canstill be exchanged for their face value. 
2 / 15
 
Using Junk SIlver (pre-1965 US Coins) or Silver Rounds In Trade
Written by Eric VoughtThursday, 03 September 2009 19:46 - Last Updated Sunday, 13 December 2009 05:16
Silver rounds minted by others which contain one ounce of .999 fine silver can be traded asequivalent to Silver American Eagles--- with a significant exception in how taxes must be dealtwith. It is probably a good idea for merchants to offer a slight premium for the silver coins above their"trade value". This will encourage people to actively use the coins rather than just trading themin or hoarding them. 
Small Purchases and Odd Amounts
 The different denominations of pre-1965 coins make small purchases easier, but a silver dime isstill worth $1.40 FRN. This can be a serious problem if the value of the silver increasesmarkedly as expected; What do we do if a silver dime is worth $9.80? How do you make smallpurchases (or avoid rounding off large purchases)? There are two useful approaches: 1. Add enough modern currency to make the difference. If I make a nominal $2 purchasewith silver coinage having a market or agreed value of $1.40, then I add $0.60 in moderncoinage to the deal. (Don't forget sales tax!)2. Keep a running tab. This works best with repeat customers. When they pay using silvercoins valued at $10.00 for a $7.40 purchase, record a store credit of $2.60 (or perhaps $0.21 insilver currency). The customer can use that balance on their next purchase. This was done allthe time in the days when silver and gold coins were regularly used. A customer canintentionally "open a tab" by paying an amount of silver coins which they can then use a bit at atime whenever they purchase.My understanding is that amounts "on tab" are not realized as "income" until actually spent bythe customer. Until that point, they are a
liability 
: a debt owed to the customer. 
How Do You Keep From Mixing Them Up?
 Because many of these coins look and feel roughly like modern coins, it can be easy to mixthem up accidentally, in a pocket or change drawer. It is embarrassing to give someone a silverquarter in place of a modern $0.25 piece or use one in a machine. One way to do it is to put your silver coinage in small plastic coin sleeves/envelopes. These areinexpensive and make it harder to confuse. Of course you will still need to look at coins you
3 / 15

Activity (2)

You've already reviewed this. Edit your review.
1 thousand reads
1 hundred reads

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->