Silver Coin Commerce

There are several ways to use silver coins when making transactions. It is not as complicated as some might think, since there is no need to herd your livestock(money used in the ancient times) to the marketplace and do trades with cows, sheep, goats, horses, and use chickens for small change as they did in days gone by. Actually, in terms of history, it was less than a blink of the eye ago when Americans were still using silver in daily transactions.

Why we stopped using silver

The only reason that Americans stopped using silver in our daily commerce is that the American Dollar had became so devalued that the silver in the coins was worth more than their face value. So in the mid-1960′s the government needed to stop making most of the coins out of silver and use just base metals like copper and nickel in order to get the cost down. Due to this, your parents and grandparents hoarded these more valuable coins and removed them from circulation. These very same 90% silver coins are currently worth more than 12 times their face value. So every dollar in face value of these coins is worth more than twelve paper dollars according to today’s spot price of $17.07/oz. From the given trend in value, what do you think will be worth more in the years to come? The 1 dollar face value of 90% silver or 12 paper dollars? Since the trend is your friend, it points to the 1 dollar face value of silver.

History repeats itself

Now, less than 50 years later, the government is in the same boat again. The US dollar has continued to devalue so much during this brief time period that some of these base metal coins are worth more than the face value. Up until 1982 the penny was 95% copper and 5% zinc, this was changed to 97.5% zinc and 2.5% copper at that time to keep cost down. The nickel, which is currently made of 75% copper and 25% nickel, will most likely being targeted for a composition change in the near future since its current metal value is worth about five and a half cents, or 110% of face value. So it costs the government more in raw materials for the coin than it’s face value is worth. Once you include the fully loaded manufacturing expenses, the cost of producing each nickel is approximately 9 cents. Not a good business practice if you want to stay in business. Now don’t go out and melt down all your nickels and take them to the scrap yard to make your 10% profits just yet. The government is way ahead of you, in 2006 laws were created that made it illegal to melt pennies and nickels. It is also illegal to export these coins for melting. Travelers may legally carry up to $5 in pennies and nickels out of the USA, or ship $100 of these coins out of the country “for legitimate coinage and numismatic purposes.” Violators could pay up to $10,000 in fines and spend up to five years in prison. Plus, you get the added bonus that the government will confiscate any coins or metal used in melting schemes.

Face Value vs. Weight

There are 2 easy ways to potentially use silver in today’s marketplaces and as usual there are advantages and disadvantages of each.

Face Value: Faster, but lose a little accuracy. Today’s silver spot price of $17.07/oz. calculates out that 90% junk silver coins are currently worth 12.348 times their face value. While the spot price and the conversion calculations are accurate, you lose some resolution in the fact that you don’t know the exact weight of each coin. Most of these coins have been used in circulation and therefore some of the silver has been removed from normal wear and tear. Therefore each coin of the same denomination could have a slightly different weight.

Weight: Slower and a scale will be needed, but more accurate. With the weight method, you don’t even need to count the face value, just make sure it is 90% silver and start stacking it on the scale. Start out with the bigger coins and fine tune it with dimes until you get the weight in ounces needed.  Just make sure that you are using Troy ounces. I have pasted the definition of a Troy Ounce below, if you come across a word on this site and are not familiar with its meaning, there is a good chance that it is on our definitions link that can be found at the top of the home page.

TROY OUNCE: A measure of weight. A Troy ounce is different from the ounce most Americans are accustomed to (the Avoirdupois ounce). There are 12 Troy ounces in a Troy pound, and one Troy ounce is equivalent to 1.333 Avoirdupois ounces. So, if you buy one Troy pound or twelve Troy ounces of silver, don’t expect it to weigh in at one pound on your bathroom scale, because it won’t. One troy ounce equals 31.1035 grams or 480 grains. One troy ounce equals 1.09711 avoirdupois ounce.

Either the Face Value or Weight method will work, it is just a matter of personal preference or the availability of a scale.