Letter Re: American vs. Canadian Currency

JWR,

With hyper inflation about to hit us soon, do you think I would be better off having my dollars changed into Canadian currency or have minted silver dollars? Thank you for all that you do for us. – G.T.

JWR Responds: There is nothing magical about Canadian paper (or Tyvek) currency versus U.S. paper currency. Both are inevitably doomed to mass inflation, because neither are both convertible to precious metals on demand.

I presently recommend acquiring pre-1965 U.S. silver quarters, rather than U.S. silver dollars. Quarters minted in or before 1964 have 90% silver content, while U.S. silver dollars do contain more silver than four silver quarters. (See coinflation.com for details.) However, since all U.S. silver dollars have some numismatic value (above and beyond their melt silver value), there is essentially no such thing as a “junk” silver dollar; there will always be a numismatic premium, when you buy. Hence, silver quarters are the better buy, if your goal is to buy trustworthy and readily recognizable silver for bartering purposes. Also, beware that there are now a large number of fake U.S. Silver Morgan Dollars being made in China and circulating globally. These have even fooled some coin shop owners.

Most coin dealers assume that a $1,000 face value bag of circulated pre-1965 dimes, quarters, or half dollars coins has just 715 ounces of silver, due to circulation wear. That is assuming typical wear for a bag that is composed of nearly one-half of the coins with a 1964 mint date (the largest–and last–minting year of 90% silver coins), and a mix of earlier dates. A lot of the really early quarters (such as Walking Liberty quarters) in a typical bag are so badly worn that you can hardly read the dates. A bag of just those would probably have less than 700 ounces of silver.

So, assuming 715 ounces of silver at the current spot price of $19.75 per ounce, that makes a $1,000 face value bag worth $14,121, wholesale. (Or just think of it as roughly 14.1 times face value.)

OBTW, if you have the storage space, I strongly recommend silver over gold. I believe that silver is far more likely to suddenly double or triple in price than gold. (It isn’t very far from $20 to $40, but psychologically it is a lot farther from $1,300 to $2,600!)

And, as I’ve stated many times, gold is too compact a form of wealth for practical day-to-day barter. (I illustrated that point in the chapter of my novel, Patriots, that was titled “For an Ounce of Gold.”)

Hugh Adds: We live in strange times. Never before in the known history of the world has every major currency in the entire world been fiat currency. I understand how and why we got to where we are, and I also understand that there is only one clear outcome. By necessity, there must be a reset back to standards-based currency. What is not clear is when or how this will take effect. Currently, the U.S. dollar is the world standard, but that’s only because people believe it is the least risky of all the fiat currencies. This is obviously an unstable condition, and any currency can take the place of the U.S. dollar if that country can get people to believe it is the most stable.

I completely agree with JWR here. If you can own a hard asset that is barterable and portable (but not too portable), you are in a superior position for any transition that takes place. That asset can be bullion, silver coins, bullets, beans, and even your labor. Obviously, the more recognizable and desirable the asset after the transition, the better your position.