Wednesday, June 01, 2016

Survival Value of Coins

We’re all so busy, rushing around from place to place in our modern world that we forget things have not always been like this, and – if history is any clue – things will not always be like this either.

Money makes our day-to-day life go forward, and most of us handle most of our transactions these days electronically, or with plastic.  (Does anyone write checks anymore?)

With even a simple blackout, most businesses are unable to function.  They couldn’t take your money if they wanted to, because their registers are all requiring electricity.
With a severe blackout, credit cards would be useless, though some merchant (and fellow traders) might accept paper currency.  At least for awhile, regular coinage would be accepted, because somehow tangible coinage in the hand will be regarded as more “real” than a check or paper money. 

If we were to fall into some long term breakdown (caused by natural forces, or man-made causes, or some combination), life would still go on and people will need some medium of exchange.  And they will find some medium.  In the short term, coinage will work, even the “junk metal” modern coinage, so it’s a good idea to have rolls of halfs, quarters, even dollars on hand.

In longer term situations, people might demand silver, meaning, pre-64 coinage from the U.S.  Copper and silver bullion pieces might work too, if you had the foresight to purchase these when they were readily available.

Gold is always touted as the survival metal, and yes it has stood the test of time because of its true rarity, and its incorruptibility, and its intrinsic actual value.  Nevertheless, look at the current price of gold.  Even if gold is “only” a thousand dollar an ounce when you read this, how many of your daily purchases approach a thousand dollars?  Not many. Even if you had 1/10 ounce coins, how many of your daily purchases are around a hundred dollars?  Granted, some will be.  But the 1/10 ounce gold coin is very small, and easy to lose.  It is probably a good idea to have some, because you can pack a lot of value into a little piece, but it’s not likely to be a coin of daily exchange in a survival scenario.  Gold does better in “normal” times when you can readily sell it on the open market for cash. 

But because so many of use these days more and more use plastic and electronics for paying bills, there is less and less hard currency in circulation. That means that if we were to experience some sort of currency collapse, coinage would disappear somewhat quickly. What then would people use for trade?

Again, we look to the past for clues.  Anyone who lived through WWII, or any of the other “small wars” all over the world, knows that basic commodities that everyone uses go into short supply.  Food, coffee, medicine, toilet paper, fuel, etc.  The items of everyday use become the items that everyone wants and needs, and these become tradable when the dollar dies.  Tradable items might also include sewing kits, first aid supplies, beer and alcohol, seeds, and maybe ammo.  Ammo makes a good trade item because it has different sizes that you barter about, but in the real world, most people want to keep their ammo, so other consumables will be highly sought as trade.
Use your imagination, and experience.

I have always enjoyed coins.  Not necessarily collecting, but learning about them, admiring them, learning their history, taking time with them, getting to know them, cleaning them, putting them into their right place in your collector’s book. 

Coins have rich intrinsic stories, and learning each coin’s history clue excites real collectors. Yes, perhaps some people make money with coins, and that was part of my early interest in coin collecting as a hobby.  You aren’t collecting buttons or bottle caps, but something that has a universally-acknowledged value. At the very least, coins are never worth nothing, and do not fall below their face value.

Like most collectors, I started with pennies, because pennies were cheap and you could buy rolls for 50 cents, and search through them for ones to fill the spaces in your book.  You learned real quick which ones were hard to get and rare: 1909SVDB, 1914D, 1931S, and perhaps a few others. Zinc pennies from the war were always interesting, and it reminded you that wars affect the availability of metals.  Indian head pennies were somewhat uncommon, and not necessarily valuable, but I always saved each one I ever found.

Coins are great conversation pieces, domestic or foreign. Everyone deals with coins all the time, so everyone is interested in at least a few coins.  Buffalo nickels are universally admired, and have long been used to adorn hat bands and belts.

Everyone likes the real silver dollars that were so long a part of American coinage, and visitors to Las Vegas back in the day would bring home silver dollars to give away or to collect.  Though only 90% silver, those beefy dollars reminded us that there was intrinsic metallic value in the coins.  They are still highly prized and only go up in value as silver rises.

Some years ago, I operated a farmers market and would get change for the farmers each week at the bank.  One farmer would consistently ask me to purchase rolls of half-dollar coins for him. More often than not, the bank didn’t have them, even though they are still produced.  Because they are not commonly used, most banks simply don’t stock them.

I asked the farmer why he wanted an “odd” size coin. He told me that the main reason is that people remember him from spending 50 cent pieces because they are not common.  He told me that people would often smile seeing them, and somehow that exchange of a half-dollar cemented friendships. He also said that occasionally he still finds silver coins.

I found that amazing, so I began to try it.  When receiving a half-dollar coin, people will feel it, hold it, look at it, and often smile, even laugh. “I haven’t seen one of those for awhile,” they’d laugh. 

I have had an occasion where someone thought they had received a dollar coin, and tried to give me change as if I’d paid double. In another case, as a joke, I told asked the person behind the counter if they would accept “Hawaiian money” as I placed the Kennedy half-dollars on the counter. “Oh, no, we can’t accept that,” said the worried clerk.   I didn’t think I’d have to explain that Hawaii was part of the U.S., and that I’d just made a joke, but the clerk was a new immigrant to the U.S. who had never seen a half-dollar, and didn’t know that Hawaii was part of the U.S.  To my amazement, I had to take back the half-dollars and pay with other money.

There was a coffee shop that I used to frequent, and I had begun paying with half-dollars.
After a few days, I came again to the shop and the proprietor asked me, “You were here two nights ago, right?”  ”Yes,” I said, “how did you know?”  “Because I found half-dollars in the cash register,” the proprietor told me. 

But another aspect that I found even more interesting is that because half-dollars are not commonly circulated, you occasionally may find silver coins in the rolls you get from the bank.  One Christmas, I actually got several Franklin halfs and 1964 Kennedy halfs, which are 90% silver. I assumed that some boy stole his father’s coin collection and spent the money, and the merchant who received it just took it to the bank with all the other change.

Though 1964 was the last year that there was a 90% silver Kennedy half, there was 40% silver in the halfs from 1965 through 1969.   This meant they were worth more than face value.  If  you know the spot price of silver, you can simply do the math to see how much just the silver is worth in, say, a 1966 Kennedy half.  Certainly more than 50 cents.  But I’d collected so many of these 40% silver coins that when I needed money to pay for a trip to Mexico a few years ago, I sold them all for over 10 times what I paid for them, and paid for the trip.  That wasn’t a bad investment.

Coins (and paper currency too) tell the history of a country, its politics, its ebb and flow of culture. I once had a Nazi silver coin that I’d purchased at a coin show, but I found its “atmosphere” unpleasant and quickly got rid of it.  I am still a bit amazed that Chinese currency retains the face of Mao, who was responsible for the deaths of perhaps 100 million Chinese. But he retains a bit of a mixed reputation among Chinese.

Sure, you can say it’s only pieces of metal, but they are so much more. They are living pieces of history, bringing the past alive, and giving you great conversation pieces.  And, equally important, if you’re ever broke, you can just sell your coins, or barter with them when the valueless Federal Reserve Notes are no longer accepted.

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