All that Sparkles…
by Richard
After yesterday’s look at gold speculation, let’s take one final look at the coin of the realm.
Inflation continues to take its toll. It now costs the U.S. mint more than a penny to mint a penny. And it costs them more than 5 cents to manufacture a nickel.
Not to worry. It’s the government, after all, and losing money is a core skill they have mastered from time immemorial.
Not just our government. Go back two thousand years, and you’ll learn that the Roman emperors would shave coins to steadily devalue the currency. The public wasn’t fooled then, nor are they now.
Junk Silver
Which brings us to the coinage known as junk silver:
(Image and description from Wikipedia)
Junk silver is an informal term used in the United States and Canada for any silver coin which is in only fair condition and has no collectible value above the bullion value of the silver it contains. Such coins are popular amongst those seeking to invest in silver, particularly in small amounts. The word “junk” refers only to the value of the coins as a numismatic collectible and not to the actual condition of the coins; junk silver is not necessarily scrap silver.
The most commonly collected U.S. junk silver pieces are Mercury and Roosevelt dimes, Washington quarters, and Franklin and Kennedy half dollars, minted in or before 1964. These coins have a 90% silver composition (”coin silver”), and when minted contained 0.7234 troy ounces of silver per dollar of face value. In practice, the content is usually assumed to be 0.715 ounces because of wear. Less common as junk silver are Kennedy half dollars from 1965 to 1970, which contained 40% silver. Peace Dollars may also be collected for their silver value, but are also less common.
Think about that. All the pocket change your parents and grandparents had before 1965 was made from a precious metal.
They were rich and didn’t even know it.
These coins vanished almost overnight from circulation when base metals were substituted for the silver coinage.
But you can still buy them today.
The Silver Lining
You can look up the daily price in the Wall Street Journal under the heading “Cash Prices”.
The last entry under silver is listed as “Coins, wholesale $1000 face value” and in late August the price for $1,000 in face coins was just over $9,000. Wholesale. You’ll have to add a premium spread to the dealer to lug home your bag of pre-1965 dimes, quarters or halves.
That sounds impressive, but the ninefold increase over the past 44 years works out to about 5.12% compounded annually. You still would have done better investing in equities.
If we do get totally spooked out of our belief in paper currency, expect the price to ratchet upwards dramatically.
Might As Well Hold on To Copper…
And a government that could substitute zinc and copper for silver, should have no compunction about swapping our metallic coins for plastic or cardboard.
Take a look at your paper currency. It no longer says “Silver Certificate” as it did back in the day.
The history of the world is the history of the steady and stealthy debasement of currencies, in all times and under virtually all regimes.
Maybe the gold bugs are right after all?
September 3rd, 2008 at 10:18 pm
One must remember that this country started with the one-half penny and the cent (both nearly as large as a half dollar today) as the first authorized coinage, beginning in 1793. They both lasted as the most popular coin in commerce until 1857 when mint director Snowden declared “they barely paid expenses.” Legislation abandoned these coins and the small cent we know today was introduced. The fact this small cent has survived 151 years is testament to the strength of the US currency. It too is time to look at ‘replacing’ the cent, but let’s do that after next year, and honor Lincoln’s 200th birthday in 1909, and 100th year as the “Lincoln cent”, which will see four new designs commemorating major events of his life. Plastic Reagan cents anyone?
December 30th, 2008 at 8:34 am
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