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James,

My experience with [US Mint] Silver Eagles is similar to your description [of their lack of widespread recognizability]. I traded 1 silver eagle for some merchandise at $20 USD per Eagle.
The person was happy. I explained to them that this was 1 oz. of silver and at the time of the trade it was equal to the amount that I told them. A few days later I went back seeking to trade again and they told me that since the face value [marked] on the coin was $1 USD that it was all the value they would exchange it for. So then I refused to trade. They were insistent that it was only worth $1 USD . I said sorry you think that way and went down the road. Your point that most Americans wouldn’t know about Silver eagles is correct. I have found that trading Eagles for value is best
done with professional, more educated people. I partially paid for the delivery of our three children with 1-oz Gold Eagles [for each delivery]. The doctor was very eager to settle our bill with that in his hand. Of course the balance due was close to the value of the coin. My chiropractor also will accept Silver Eagles for payment.

Yes it is possible but discuss with the person you wish to trade with before hand, if they are not sure don’t push. You could also get in trouble with the local law if you try to push the issue as the trade nay have second thoughts and make a call on you. Also you might want to look into 10 oz bars of silver with the same rules of purchase as 100 oz bars. Hard times come quickly be prepared! – Jeff B.

Dimitri Orlov on The New Money (A hat tip to Ruby and Vlad’s Mom)

The truth escapes the lips of BHO: Obama Says U.S. Long-Term Debt Load ‘Unsustainable’ I’m praying that he does the right thing, but given the composition of Big Government/Big Taxes/Big Deficits policy wonks that were picked for his Cabinet, I have my doubts.

Thanks to B.H. for this video link: “The Worst Is Yet to Come”: If You’re Not Petrified, You’re Not Paying Attention

GG sent us this: China’s yuan ‘set to usurp US dollar’ as world’s reserve currency

Items from The Economatrix:

Even BoE Has No Idea What Will Happen

UK: BT Doubles Job Cuts to 30,000 “BT has slumped to an annual loss for the first time in almost a decade and doubled jobs cuts to 30,000, as the former state-owned telecoms company struggles with a disastrous performance of a key division.”

Sony Reports Record Loss Amid Consumer Slump “Sony today confirmed the worst about its performance through the global economic slump by announcing its biggest group operating loss of Y228 billion, (£1.6 billion). The Japanese company also predicted another year of losses for the period ending March 2010.”

OPEC: Oil Demand Still Declining

Dubai: No “Green Shoots” in the Desert

Beware of a Premature Return to “Normal” “Forgiveness is wonderful. But if it is granted too soon, miscreants tend to go back to their wicked ways. Markets risk giving some parts of the financial system just such a premature pardon.”

Roubini: Prepare for the Demise of the Dollar’s Status as a Reserve Currency. “This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.”

Stock Markets Battle Poor US Retail Sales Numbers

Geithner: Bailout Repayments Will Be Used For Smaller Banks (That is, if it is legal. As the law is presently worded, “…whatever is returned to the Treasury goes into the general fund.”)

College Graduates Struggle to Repay Student Loans

Toledo’s White Collar Workers Recalibrating Their Lives After Layoff

Economist: Michigan Jobless Rate May Rise to 20%

Japan “Would Avoid Dollar Bonds” “Japan’s opposition party says it would refuse to buy American government bonds denominated in US dollars, if elected.”

“It’s Going To Get Worse Before It Gets Worse”

Inflation Unavoidable (The Mogambo Guru)

Dear Sir,
Regarding comments made in the letter on which form of precious metals to buy, readers should be aware that numerous Chinese fake silver dollar coins exist in today’s market. I recently became aware of these by an honest seller who identified the fakes as such, and sold me a couple for comparison purposes.

They are available as common Morgan and Peace dollars as well as more numismatically valuable styles such as draped bust and trade dollars. They look surprisingly realistic and appear to have normal aging and wear consistent with what you would expect. Believe me when I tell you that only a practiced eye would distinguish them by sight only! Clues to their identity exist, but more thorough examination is required. Weight is slightly low but might not be noticed by many buyers unless a scale is used. They are also a little thin, but again might not be noticed without a known good coin next to it or a micrometer measurement. Another method which can be used to identify real silver coins is by balancing the coin on a finger tip and tapping it with another coin. A real silver dollar gives off a low clear ring like a bell. The fakes give off a higher pitched ring which is not as clear and does not last as long. (Try this with a few real coins to hear the correct note.) The biggest tip off is that the coins are magnetic, being made in part from steel, and can be readily identified by their attraction to a magnet. No legitimates silver [or gold] coins will be attracted to a magnet

You’s better believe that I am now a much more intelligent buyer, and will be carrying a magnet with me (at least) for all future silver dollar purchases. I would have never thought that it would be worthwhile for someone to counterfeit a relatively inexpensive coin like a Morgan silver dollar. – William L.

Sir,
recently you responded to a young gent about silver purchases. i forwarded your discourse to my sister who brought up a valid point — you never mentioned in your response where you see the use for Silver American Eagles. I responded to her that maybe your advice was to use/purchase silver in this order: 1) junk silver; 2) Silver American Eagles; and lastly 3) silver bars.Ii chose that order due to the purity of the metal and its recognizability. Is this your opinion?

As far as the silver bars are concerned, I think that you have a point. Will Grigg once wrote of how his father had received payment once in silver bars, and when the 1980s [bull market in silver] hit, he was able to use them to keep the family going. Thanks in advance, – Rick B.

JWR Replies: Unless you have the opportunity to buy some Silver Eagles on the secondary market at a price that is close to the spot price of silver, then I do not recommend buying them. In most circumstances, they are over-priced. Why pay as much as 35% over their physical (silver ) value? This just plain bad investing. Some would argue that Silver Eagles are “readily recognizable? My question is, recognizable to whom? I’d guesstimate that 90% of the American population has never seen an American Eagle, and that 95% of the American population has never held one in their hand. In contrast, at least half of the population is familiar with pre-1965 mint date US silver coinage. (Although I wonder how many people know with accuracy that 1964 wa the last year of their minting.) I stand by my advice: Get pre-1965 “junk” silver coins for barter, and a 100-ounce serialized bars for investing.

Just as I envisioned three years ago, derivatives are now in thes spotlight: Treasury Seeks More Financial Regulations in Shadowy Markets. (Thanks to Danny S. and KAF, for the link.)

From the Appenzell Daily Bell: Beginning of the end? Fed cannot account for $9 trillion

KAF sent us this: David Frum: Quick fix today, crisis tomorrow in Obama’s White House

Redaer GG flagged this: Strong appetite for silver boosts coin production “Mints around the world almost doubled their silver coin production in the first quarter in response to a surge of investor interest in the metal.”

Items from The Economatrix:

Chrysler Moves to Eliminate 789 of 3,200 Dealership

Celente: The Bailout Bubble: The Bubble to End All Bubbles

Stock Optmists Need to Read a History of the Great Depression

EU Plans Bank Stress Tests in Europe

Asian Stock Markets Edge Up as Spring Ralley Loses Fizz

Hardship Bites in Toyota City

Luxembourg: Angry Steelworkers Storm ArcelorMittal (World Biggest Steelmaker)

Obama: Credit Card Bill Critical to Fix Ailing Economy

US “Sham” Bank Bailouts Enrich Speculators

GM Plans to Export [Chinese-Built] Cars to the US “General Motors is planning to build cars in China and import them into the United States, a strategy that could trigger further job losses and union anger in the US.”

“Green Shoots” Wither on Poor US Retail Sales Figures