Hypothetical Silver Coin Situation

Let's say if circulating silver coins were issued once again, do you think they would be hoarded even though they became the norm in your change? And what would happen to the clads? Would they become valuable or become junk?

David

 

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junk for clad i believe and the silver would be hoarded like crazy

 

In order for the government to produce circulating coinage with any silver content, the intrinsic value of the coin produced would have to be less then the face value, which would be difficult. The silver percentage would have to be reduced greatly or the size of the coin would have to be adjusted appropriately.

In regards to what would happen, if the government were to circulate coins with any amount of silver in them I think that collector response would be to hoard them which may in fact cause a result similar to that which occurred with the biccentennial coinage - a lack of any real increase in value.

 

Clad is already junk...it isn't worth it...BUT the Goverment puts a value on it so every-one else does too!--now don't get me wrong...some clad coins have gone up like the 1996-W dime and the 1974 DD Half.

I think most people would hoard it and then it wouldn't be rare in mint state as most of them would be saved in BU rolls.

Speedy

 

I believe that no matter what the metal content is of US coins, people will collect them.

 

Here is another situation. In the beginning of US coinage, what if clad was used instead of silver? How would the values be different today on those old coins? Also it is my understanding that silver is a soft metal. With that being said, how well would clad have held up compared to silver? Could you imagine a clad walking liberty half or a clad standing liberty quarter?

David

 

Nickel (the metal) holds up in circulation better than silver does. However, I am of the opinion that toning on silver generally looks better. I also like the look and feel of a VF or AU circulated silver coin. They appear more "noble." Although I will concede that's a personal preference.

As for reintroducing silver, there is a saying that "bad money drives out good." In other words, if a clad dime and a silver dime are each worth ten cents, people will hoard the silver ones for their intrinsic value and spend the clad for their monetary value.

 

The sound of a Morgan dollar as you flip it is totally beautiful to the ears. You can't get that sound with clad.



Bottom line is the government back in the early 60's could not keep up with the demand and cost of silver...so a long term and less expensive alternative came about along with no mint marks for 1965, 66 and 67. The government thought less people would hoard coins if mint marks didn't designate our coins anymore.

 

There are any number of examples demonstrating that coin collectors do not consider "intrinsic" value to be a very significant in their collecting choices: old coins, rare coins, varieties, errors, foreign coins, proof coins, mint sets, etc. are prized but are of miniscule metallic value.

Investors/dealers may consider intrinsic value as a price floor for a coin that they own in the hopes that it will appreciate because of collector interest, but this is probably limited to gold coins or "bullion" coins. The metal value of these coins (and even "junk silver") is sometimes seen as an inflation hedge.

What really drives collectable US coin prices is demand (supply being fixed). This, as with other collectables of any type, has its cycles of interest and fashion, and is influenced by education, awareness, promotion/publicity, and its relevence to other events such as political movements, historical anniversaries, and news stories about rare or expensive coins. A recent example is the success of the US state quarters, which has an easily understood collection objective, historical/geographic connections, local interest, and the five-times-a-year promotional opportunity.

 

Easy, Just make a $10 circulating Silver 1 oz coin. Face value would be above silver prices. If silver goes above the ten dollar mark, make it a $20 circulating silver coin.

I think this would be extremely popular!

 

It may seem that easy, but the bullion stock that the US government would have to accumulate would, probably, increase the overall demand of silver. Then if silver becomes more valuable than face value, you have the issue of people having it melted down for the metal value of the content - which then messes with the amount of currency floating in a market at any given time... best case scinerio, in that situation, is that the US government can possibly recapture most of the population, and either melt it down for a higher value coin, or revalue it with a counterstamp. Then what? Issue out only half of the previous population, because you've doubled the face value of the coin?

Then, even after you figure all that stuff out, you're left with the problem of popularity - have you ever carried a few one ounce coins in your pocket? If you have a hundred bucks, you'll end up using it to buy a more reliable belt to keep your britches from being yanked down...

I think the only time you would ever see a chance for bullion content in a coin would be in situations of currency revaluation - and that generally happens after economic and monitary decline, so it most likely wouldn't happen then either.

 

Small change has never been made of silver or gold and never will be unless silver or gold ever become far less valuable.

Virtually all coins ever issued have been junk inasmuch as their face value always exceeds the value of the metal in the coin. Consider that the value of the copper and nickel in a clad quarter are nearing the value of the silver in a silver quarter during the great depresssion. Money has value because people believe it has value. When this belief ends then coins only are worth the value of their metal. Of course there can also be collector value but this does not arise from metallic value or an 1804 dollar would be worth less than $7 and Kennedy half dollars could not sell for more than $10,000.

If precious metal coins were issued today then they would not only have to be junk but they could not be small change. It wouldn't make sense to save the junk because one's money would buy much more silver or gold than the amount of metal in the money itself. Coins are an extremely convenient way to save precious metals so there would be at least some hoarding but this will simply mean more coins have to be produced than would otherwise need to be to facilitate commerce.

There were base metal coins used in the early days of the republic and these are avidly collected today. Not only are there cents and half cents but various states issues and colonial and token issues. Most of these are copper or bronze but there are other metals involved.

 

Silver could very easily be reintroduced into circulation and without requiring a low quality alloy. The American dollar has declined tremendously in value over the past 100 years. Simply do what many countries have done when their currency declines. Do a currency reform, say 50 current dollars equals one new dollar. Silver is now 14 cents an ounce, gold is 9 dollars an ounce. A standard quarter dollar (6.25 grams of 900 fine silver) with a face value of 25 cents would contain 3 cents worth of silver. minimum wage is 10 cents an hour. A McDonalds double cheese burger is 2 cents. A new car is 600 dollars. A house that cost $250,000 in old dollar costs $5,000 in new dollars. A double eagle with a face value of 20 dollars would contain about 8 dollars worth of gold. With the revaluation you include a clause that all old contracts are also affected by the 50 to 1 change as well. With this revaluation silver and gold could return to circulation. It has no net change on peoples incomes, expenses or anything else. Yes your income drops to 2% of what it was but so do your expenses, and the buying power of your money increases 50 fold so it cancels out.

 

But why would anybody go to this much trouble to accomplish nothing? Eventually Silver and Gold will reach a value higher then that of the new face, then your back at square one again.

 

The validity of Gresham's Law (Bad money drives out good) was demonstrated again in 1964 when US coinage abandoned silver for base metals, and an old "good" quarter became intrinsically more valuable than a new "bad" one. If the US, or anyone else, were to revert to coining silver circulation coins again, as long as any of the clad/base metal coins were still around, the silver would go into cupboards and smelters.

 

And of course you simply ignore Article I, §10 of the United States Constition:

and the Fifth Amendment:

 

I think Mexico is examining the potential introduction of silver coins again. The people want it but the central bank does not. Personally, I would hoard the silver coins if they were cheap compared to silver bullion coins, and spend the clad. I'd probably prefer a silver peso to US clad.

 

You haven't impaired the obligation of the contract, nor does it deprive anyone of property. The value of the obligation in the contract has not changed. In effect I have done this:

I have a contract to pay you 50 dollars. The 50 to 1 reform is put in place and the contact is rewritten to read 1 new dollar. I put 50 old dollars in a bag, mark it one new dollar and give it to you to settle the contract. You get the same thing either way. The obligation was not impaired and you are not deprived of property.

It would be the same time as in say 1920 rewriting a contract that said payable with 200 gold dollars to say payable with 10 double eagles.

It doesn't change the VALUE of anything, just the size of the package.

 

I think Article I section 10 of the US constitution only prevents states from printing their own currency. It doesn't prevent the Federal government from printing paper money. During the civil war, the federal government printed the Greenback to pay it's military during the war, the constitution allows for that to happen, but what it doesn't allow is for the federal government to outsource the printing of money to a private entity, which is basically what we have with the not-so federal reserve. This is a very dangerous position the government has taken with the Federal Reserve because it is paying interest to the Federal Reserve on money it is not able to create.

What the government is doing right now is getting a cash advance to pay off a credit card, than getting another credit card to pay off the cash advance and it's repeating that dangerous cycle.

 

The Constitution only refers to lawful money. The way they got out of having to deal with the pesky Constitution was to create the Federal Reserve. Technically it is a private institution and holders of Federal Reserve notes have an obligation with the Federal Reserve, not the US Government or US State. Thus, the Constitutional laws regarding Lawful Money do not apply to holders of Federal Reserve Notes. It's a private contract and thus laws affecting private contracts such as taxation can be applied. This is the somewhat legal argument that allows the Constitutional arguments to be avoided.

The money we use now, i.e. Federal Reserve notes are legislated money, not Constitutional or rather lawful money. Because it is legislated, as long as they don't violate the constitution by taking away a right, basically they can do as they wish and that is where we are today with the Federal Reserve. It only exists, basically, to get politicians elected because it allows them to spend money without having the immediate taxation required in the Constitution. (this is the real reason they quit circulating US issued notes in 1971)

There are a lot of people who will argue that there are a lot of legal ambiguities over this and I tend to agree. However this has been several generations in the making and the memories of what money used to represent are long gone. In other words, most people have no idea now and think it has always been this way.

Basically the dollars we use now have only been around since 1971, and not surprisingly, 97% or 98% of the entire US historical debt has been run up since that time. Of course the unlimited printing of money rerquired them to remove the PMs from one of the holdovers of the previous system, i.e. coins.