Making a Case for NOT Purchasing Silver Coins?

[yoshi]

I just purchased my first very small batch of pre-1964 quarters. One of them is from the 1930's and, although in good condition, "looks" very old. And that got me to thinking...

Let's say we actually have a SHTF scenario in which the government infrastructure goes belly up. Your typical "Patriots" or "Lights Out" book scenario. Assuming that there would be more than ONLY preppers still around, what are the chances that a large enough percentage of the "survivors" would know that pre-1964 coins are 90%+ silver and, therefore, accept them for barters/sales?

I may have a very hard time trying to convince Joe Blow who lives a few houses down that my 1930's quarter is, in fact, silver, and that might screw me out of being able to purchase essential items that I and my family might need. With that scenario in mind, would it be wiser for me to purchase silver bars from places like Apmex rather than investing in coins that people may not realize are silver?

[Alan Georges]

You make a good point, but I think that nearly everyone would get it through their heads PDQ that 1964 (and prior) is the magic date to look for.  People tend to figure out what works for money pretty fast.  I'd give it a week, maybe a month tops.

Possibly of more concern would be some of the later '65-'76 40% silver dollars and halves.  Those years and percentages get slightly more complicated, so they might not do as well for everyday transactions.

[fritz_monroe]

That's the reason for not concentrating on any 1 type of silver.  There will be enough people that know that pre-1964 coins are silver to make it worth while to have some on hand.  But certainly buy Silver Eagles, silver rounds, silver bars, etc.

[cmxterra]

For me buying silver or gold is for wealth preservation across generations more than bartering. Assuming the SHTF in the worst possible way we as humans would rebuild. I doubt that it would be mad max for long (assuming the worst). And when things are "back to normal" then you could use your silver to convert to whatever the currency du jour is. The dollar might go away but the metals would hold their value and are portable from this country to another if need be.

I hold gold and silver for the time when things get back to normal not for when things are actually falling apart. 

[woodlandmonk]

For me, the only reason to acquire precious metals, is to try and preserve wealth after an economic collapse for when a new economy is established. In my opinion, silver and gold are not good barter items in a SHTF scenario. Joe Blow down the way is going to want beans bullets or bandaids more than he is going to want silver or gold. Once things settle down, probably months if not years later, precious metals will have their place as a holder of economic value, but for the direct aftermath, they will be fairly useless.

That being said, I think about precious metals the same way I think about my retirement accounts. They get funded only after I have at least 6 months of reserves in my savings account. In the same way, as long as I have at least 6 months to a year of beans, bullets and bandaids stocked up for personal use and barter, then I worry about silver and gold.

[jpbearit]

Whenever anyone asks me about how I feel about a particular prep, my go to answer is always the same:
What does your gut tell you?
Let’s face the fact that we are guessing at what may or may not be useful in any possible future based on what we know and learn.  Add to that what is easiest for us to obtain and what takes more effort to get and you can talk yourself in or out of any particular prep. I promise you, if and when a “collapse” comes we are all going to be wishing we had stocked up more of “that” and not as much “this.”
 The only way I can do this without going into an over thinking panic is to listen to my gut reaction to whatever purchase I make.  If I “feel” a little better about my future after I buy this prep or do this activity or learn a little more about that subject, then I know I’m making the right decision.
If silver doesn’t do that for you, go find what does.

[Shaunypoo]

I am not a firm believer in any one given scenario being the one that SHTF, I just feel that it going to happen at some point.  Depending on the level of SHTF, precious metals may or may not be helpful.  Along that vein I try to have a good general overall coverage when it comes to my preps, and try to have just about anything I think can be helpful in as many scenarios as possible.  I think precious metals fill these criteria, but they are far enough down on my list and can be costly.  Do I think you should have them?  Yes.  But not until other preps are filled to your satisfaction.

[Mister Dark]

For me buying silver or gold is for wealth preservation across generations more than bartering. Assuming the SHTF in the worst possible way we as humans would rebuild. I doubt that it would be mad max for long (assuming the worst). And when things are "back to normal" then you could use your silver to convert to whatever the currency du jour is. The dollar might go away but the metals would hold their value and are portable from this country to another if need be.

I hold gold and silver for the time when things get back to normal not for when things are actually falling apart.

Well said.  Hard assets like precious metals can very easily be converted back into the currency of the moment.  That, and the fact that you are almost always going to get a return at least equal to inflation, makes them a solid investment.   That, and the fact that it will take 1 pre-64 dime to get into Bartertown...

[yoshi]

I hadn't really considered that, but it makes a ton of sense. I'm glad I still have so much to learn!

[El Rhino]

I'm a big fan of precious metals, but I think you're better off focusing trying to acquire the goods you think you'll need going forward now (tools, skills, food, skills, land, seeds, guns, skills, gear, whatever, etc.) while they're easily available and then worry about silver coins for barter on the things you're forgetting.

If you were to show a silver dollar to the average person today and have them guess its' worth, you'll probably get some varied answers.    Having what you need pre-SHTF will help insulate you from that awkward period when everyone knows that silver is worth something, but no one is quite sure what.   

[lochaber]

The thing I always wonder about is the value of 90% silver when worn. Most of these coins are 5-8% under weight from simple wear. When we pay spot for the official weight of the coin we actually pay over spot, but then we do that for everything so it doesn't bother me.

The question is if we ever had to barter with worn silver quarters, will we care about the wear, or would we treat them as money on the face value despite the loss of mass.

[Harold J. Forbes]

The wear issue is a valid point with 90% silver, although 5-8% under seems a bit on the high side. If you are storing large quantities of 90% silver I would lean more towards half dollars (generally circulate less than dimes or quarters so would likely have less wear). Of course you would still want some dimes and quarters if you anticipate using them for barter. You may also consider 40% halves (silver content is pretty close to that of a 90% quarter) if you are concerned about loss from wear, but the issue with those is that their silver content isn't as well known.

I do think that if we ever got into a barter situation that there wouldn't be a lot of concern about loss from wear. Perhaps if the coin was really worn, but as long as it is in reasonably decent shape I think it would be accepted without a second thought.

[hobbs67]

The question I always wonder is does silver actually have any inherent value or is it just despised fiat like dollars?

I have no bone to pick, just go back and forth in my mind about pm's.

When you see the markets swing back and forth every day and see the history with silver and gold, $3 to $50 then back again why would there be any hope for stability or storing wealth?  Aren't we just as likely to buy high then buy low?   

What is the inherent value of silver that people would accept it if times get bad? That its shiny?

[lochaber]

Unlike gold, silver is a serious industrial metal, and we are only using more and more of it in electronics and solar panels. It is currently mined as a byproduct if zinc and nickel mining, as we have long ago exhausted the "good stuff". Sure, it could go back to $3, its a hedge, and I'm not selling everything to buy silver.

[hobbs67]

Unlike gold, silver is a serious industrial metal, and we are only using more and more of it in electronics and solar panels. It is currently mined as a byproduct if zinc and nickel mining, as we have long ago exhausted the "good stuff". Sure, it could go back to $3, its a hedge, and I'm not selling everything to buy silver.

Not saying that anyone was selling everything, just wondering about the thinking behind oft set forth potential of silver coin barter markets in Idaho post disaster along with the OP as it doesn't ring true to me. 

Why would anyone accept a silver coin in such circumstances over a regular old coin or even a dollar for that matter? 

[Taylor3006]

Not saying that anyone was selling everything, just wondering about the thinking behind oft set forth potential of silver coin barter markets in Idaho post disaster along with the OP as it doesn't ring true to me. 

Why would anyone accept a silver coin in such circumstances over a regular old coin or even a dollar for that matter?

Because thousands of years of human history says silver (and gold) have value. I had written a long post but erased it all. Do a google search on history of money, fiat currency, and why precious metals are valuable.

[lochaber]

Why would anyone accept a silver coin in such circumstances over a regular old coin or even a dollar for that matter?

Because a regular coin has very little intrinsic material value and a dollar bill has none. If you are concerned about the currency being worthless, then a coin made of a metal that is considered precious is valuable.  Most of the money in circulation only has value because the government  will accept it as a tax payment. You might as well ask why would someone prefer a silver coin over monopoly money or money you printed yourself, and the answer is the same: You don't have to go exchange at an official location for something of value, it represents value in itself.

You could argue that post a serious collapse the industrial value of silver would also be minimal as building solar panels and integrated circuitry will be unlikely anyway, but people used silver for coinage before that as well.

[jpbearit]

The question I always wonder is does silver actually have any inherent value or is it just despised fiat like dollars?

What is the inherent value of silver that people would accept it if times get bad? That its shiny?

Hobbs,

This is a really cool question.  Cool to me anyway.  I've recently started studying Austrian Economics in search of this very answer. So far, the best answer I’ve been able to find is: anything judged to have value by more than one person can/will be used as a medium as long as it contains certain properties judged convenient to all parties.

In other words, any form of money we use has to be judged by anyone we want to barter with as having enough value to make the exchange worthwhile.  Gold and silver have a long history of this, the beginnings of which have been lost to history. But feel free to speculate and imagine on your own.  The current reality probably has more to do with the relative scarcity and durability of these mental. With that in mind almost all cultures and societies place some high value on them that translate across all boarders. So we can fulfill the convenience factor of being able to carry a relatively small amount of gold and silver from one place to another and gain a relatively large amount of needed and wanted goods in exchange for these metals.

It’s a pretty cool tradition of our world culture now.

How is that for an answer? It gets even more complicated beyond this basic answer but most folks don't want to get into that.

[Chemsoldier]

Ultimately I am not trying to make money with silver or have the ability to conduct commerce with it exclusively after an economic collapse.  A percentage of my income I save goes into silver (and other metals).  The savings also goes into IRAs, cash and the military's version of a 401k.  All those things can be wiped out by inflation and other economic issues.  While silver prices have only gone up in the time I have been purchasing it, I do not rely on it, its just a level of diversification.  In general when "normal" financial vehicles take a hit, precious metals go up in value.  When they go up, precious metals tend to take a dive.  I just want to diversify to the point that I should not be wiped out completely in a crisis, it makes it more likely I will have some asset to live on after a crisis till the economy starts to put itself back together.

Monetary preps (which is what I will call any savings program for commonly valued items like cash and precious metals) are just part of the system of food and fool and other preps...things designed to help you make it further to the right of the crisis (picture a timeline with the past on the left and the future on the right).  The further you can make it to the right without external support the more likely it is that civil society will be able to support you when you need it.  While not a be all end all, precious metals is just another part of the prepping system.

[jpbearit]

bumped: to answer silver question

[fred.greek]

I remember silver coins in normal circulation.  I would “trust” them much more readily then bullion bars, or any other “coin” that might purportedly be silver.  I associate a silver quarter with almost buying a gallon of gasoline…  it just sticks in my mind… 

[vardaman]

Take a step back and think about it for a second. The government did not take these coins out of circulation, people did. You have to go "buy" a bag of junk silver to get your hands on it. That money isn't decreed off the market by government, people hoarded it.

So you've already answered your own question.

People already placed a value on the silver over and above non-silver coinage by simply taking it out of circulation.

There are bags of pre 1964 quarters and dimes in homes all over the union. But bear this in mind, most of this coinage came out of circulation in the seventies. I remember getting lots of silver coins as a kid and plenty of silver dollars as well. By the time I was in high school (early eighties) it was not seen. As a matter of fact I still have some silver dollars that I collected as a young kid.

So what does that tell us?

The generations that have been raised never touching or exchanging real silver day to day have no connection to it whatsoever. Since they have only been privy to zinc and the like silver has no validity for them.

Now, and this should be an experiment, take some kids and have them buy something and get change back and let part of that change be actual silver coinage. I'll bet that the average kid who's never touched an actual silver coin will instinctively know that that coin is more valuable than the zinc coins. He won't know exactly why, but he'll spot the difference.

Why do humans place value on gold and silver over zinc and lead?

It's hard to know exactly, why do we appreciate the fragrance of a flower or enjoy the taste of fruit?

Because we are of the Earth, we instinctively appreciate the intrinsic properties of things that come from Earth. Man valued precious metals long before they were conceived as money, hence the reason they became money.

[LibertyBelle]

Remember those old blue Whitman tri-fold us coin collection folders?  Before I was born and shortly afterward, my parents filled literally dozens of them, from pennies to the morgan silver dollars.  Hubby's grandfather did the same.  And now those filled folders have been passed on to both he and I...so no, we are not purchasing silver coins.  And one of our sons works retail and mentioned to the boss that he "collects coins" and as such has been given permission to switch out coins for face value.  He occasionally brings home pre-1964 silver quarters and has even ended up with a couple pre-1964 half dollars.  We even have a few silver coins from other countries, complements of my military and traveling family members who would bring back a few coins as a souvenir for me.

[bigbear]

Not saying that anyone was selling everything, just wondering about the thinking behind oft set forth potential of silver coin barter markets in Idaho post disaster along with the OP as it doesn't ring true to me. 

Why would anyone accept a silver coin in such circumstances over a regular old coin or even a dollar for that matter?

I've been back and forth on this myself for at least 4 years (when I'm not 'distracted' elsewhere).  My current flavoring is that gold/silver still has a place because of the historic psycho/emotional warm and fuzzy it gives people.  Dollars and cents has the same warm and fuzzy.  'Cash is king' applies unless an absolute total collapse of trust in the gov't happens.  Which I don't see happening.  The biggest difference is the predictability (or unpredictability) to produce/print/multiply the currency base (debasement).  In other words, QE-Infinity and other currency manipulation as means to 'support' jobs and debt burdens.

I'm pretty much in agreement with cmxterra's stance of across generational savings rather than bartering or investing.  I don't even think of it as 'saving' but more like 'insurance' (diversification/hedge).  What's interesting is the number of financial advisors recommending to hold a % in PMs is increasing...  My wife heard a national Christian financial radio host recommend holding 10-15% in PMs.

I've been telling myself that I'm not where I need to be financially so I can't afford silver purchases.  Which is true for the most part because given my logic above, I'd place it in a similar category as a 529 or 'Life savings account' meant for my children or with a cash valued whole life product.  And I haven't really started funding those yet either.  So that's part of my 'argument' to not purchase PMs (it depends on where you are financially otherwise).

However, I've told my wife that I'd like to start buying the kids silver coins or rounds as one of their Christmas gifts each year.  She surprised me and was on board with the idea!   

[livinitup0]

If you're worried about people not believing your US coins are silver, how are you going to convince them your metal bar is indeed silver and not filled with lead?

I think the fact that they are US currency with a date on it is the best way to prove that its genuine....
Also...just tell them to look at the edge of the coin if they dont believe you.

IMO if im bartering with someone and they dont know that US coins were made out of mostly silver at one point Im busting out my beans and rice to trade with them and keeping the silver for the traders that know what its worth.

 

[Bonnieblue2A]

With all due repsect, I think the OP is over thinking and trying to create problems where none exist. Like everything else used for preps, PMs are just one form of insurance. Some bridges need to wait to be crossed if/when they become an issue. No sense in borrowing more trouble while prepping, IMO. YMMV

[cep89]

The place I bought came with a shop with a huge amount of sorted nails, screws, nuts & bolts and other hardware.  So much that I could never use it all.  In a SHTF situation I will sell it for barter items.  I would take silver & gold coins, but not silver & gold bars because I could not be sure they were real. 

[osubuckeye4]

Ultimately I am not trying to make money with silver or have the ability to conduct commerce with it exclusively after an economic collapse.  A percentage of my income I save goes into silver (and other metals).  The savings also goes into IRAs, cash and the military's version of a 401k.  All those things can be wiped out by inflation and other economic issues.  While silver prices have only gone up in the time I have been purchasing it, I do not rely on it, its just a level of diversification.  In general when "normal" financial vehicles take a hit, precious metals go up in value.  When they go up, precious metals tend to take a dive.  I just want to diversify to the point that I should not be wiped out completely in a crisis, it makes it more likely I will have some asset to live on after a crisis till the economy starts to put itself back together.

Bingo.

It's all about diversification/hedging.