Letter Re: The Role of Nickels in a Barter Economy

James Wesley:
I understand saving gold and silver for preservation of wealth but I’m not sure of copper pennies or nickel five cent pieces. Gold and silver have been used for thousands of years as stored wealth but I’m not sure I could convince anyone to take pennies and nickels that are made with industrial metals. The copper value of the coin may be greater than the value marked on the coin but who is going to have a desire to gather up copper and nickel over silver or gold? Thanks for the great blog and the help. – Mark in Minnesota

JWR Replies: In a post-Dollar Collapse economy, when $1 in silver coinage again becomes the equivalent of a day’s wage for man (just as it was before WWI), people will still need to make change for small purchases. I believe that real “Nickel” nickels (still being minted, as of this writing) will fill that role, nicely.  (However, if silver zooms up in value in the midst of a Depression wherein most heavy industries are shuttered, then it may take 100 or 200 nickels to equal the value of $1 in pre-1965 90% silver coins.)

Free markets always find equilibrium, regardless of trying circumstances, and with surprising speed. We call this The Invisible Hand.