Saturday, February 6, 2010

Barter and Survival Coins

Given the mounting dollars in debt and increased spending on entitlements along with large scale discounting of the world reserve currency (US Dollar), many have taken to the purchase of silver coins to support their other preparations for an emergency.
We are not discussing the diversification of your investment portfolio here but instead providing some quick insight into a medium of exchange that would prove useful were the financial system to fail (or be temporarily suspended with restricted access to funds) under the current lack of government leadership or because of war.
Some might recall the desperate situations and currency collapse in Argentina or Paraguay in 2002 or the German Republic after WW1 as examples of what could take place.
Relying on your old foreign coin collection and a few silver dollars to get you through likely won't cut it longer term unless you possess considerable quantities of some other form of barter such as toilet paper, food or ammunition.
What will prevail is metal that is easily recognizable for the content - e.g. silver, gold, platinum, etc..
Most people would not immediately recognize what a foreign coin silver or gold content would be or if in fact they were even authentic. Yes, there are fake gold and silver coins. You need something that will work immediately and without any discussion.
Using a high value gold coin or bullion makes little sense as no one will have "change". You would quickly run out of "money". Gold coins that could serve as a useful exchange medium would be the 1/10th oz American Gold Eagle - small, more affordable, transportable and easily recognized - they could work in situations requiring a higher exchange rate.
As for silver, pre-1965 US Silver coins are the best bet. The most relevant players here would be the Franklin Half Dollars, The Walking Liberty Half Dollars and Mercury Dimes. All of these contain 90% Silver content and can be purchased in various quantities for that silver content. There are no clad versions of these coins unlike Roosevelt Dimes or Kennedy Halves. So put the KISS principle in play - no confusion or dispute when you can least afford it.
There are also "Silver Rounds" which look similar to coins but are not legal tender - instead they are .999 silver bullion. Silver bullion can also be had in bars that range from 1oz, 10oz, 100oz with the larger sizes meant for investments. Silver rounds would be the best bet here as they are stamped with their content but bars can be stored more easily assuming they are not wrapped in plastic. You can decide if people would more likely accept known coins or bullion.
Silver coins can be purchased in bags of what are termed "junk coins" that have no numismatic value and are pegged to the spot silver market price - as always buy when low. Depending on the spot price for silver you can secure hundreds or thousands of dollars worth of "exchangeable" silver coins.
If you are looking to make this preparedness investment over $10,000 you might consider gold as you will soon need an armored truck to move that many silver coins around. If you can swing silver and gold coins - good for you.
Don't buy numismatic collector pieces for this purpose because when TSHTF few will be collecting coins. Instead, people will be using them and exchanging them for their silver content only. The premium you paid for the investor quality mint condition coins will have evaporated.
Having a manageable quantity of silver content pre-1965 coins on hand to be used in emergency situations may be a good idea. Smaller sized dime coins can be added to your prepositioned assets or evac bags and they can be used as a means of exchange if the current system quits such as in an EMP attack (see earlier blog).
If you consider this type of investment as "insurance" at least it is one that will retain (some) value over time and you can cash in because it does not expire.
If you visit a local merchant use common sense.....if they are a pawn shop or someplace in a seedy neighborhood - don't go there. Online sources can provide you with a good source of information and prices you can gauge the integrity of the local silver merchant.
Check the spot market price and if it continues to dip lower - consider going out and buying some of the coins above. Inspect them for really worn out pieces and see if you can exchange for recognizable coins.
Added: We had some comments on whether silver coins would be recognized for their content during a severe downturn in the economy or social upheaval.....historically civilizations have resorted to some alternate form of exchange in those times and had fallen back on valuable metals.
Depending on the nature and duration of such events you might find regionalized "economies" adopting some form of exchange and coins would be the most logical and available means to do so. People would quickly come to realize the value of pre-1965 silver coins.
Those with valuable skills other than keyboarding and texting their friends would be able to exchange their services for food/supplies. While we hope these times never come it would be foolhardy to simply ignore what is taking place all around the world and in our own country. As always the choice is yours we just offer the suggestions.

1 comment:

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