Jim:
Some thoughts with regards to the following [from JWR]: “If and when you want to buy (via barter) a gallon of kerosene, a box of ammunition, or a can of beans, then gold is inappropriate. How would someone make “change” for a transaction that is priced at 1/100th of the value of a one ounce American Eagle or one ounce Krugerrand gold coin? With a cold chisel?”
While I feel that the advice given, namely to use pre-1965 silver dimes, is sound, I want to comment on the above, since it is grossly misleading. For starters, everyone seems fixated upon the “one-ounce”
coin, and completely lost is the fact that smaller weights are quite possible. Folks, it’s a metal! You can make it any darn size or weight you want! The US Eagle, for example, also comes in 1/2, 1/4, and 1/10
ounce sizes. Other gold coin issues often have similar denominations. Historically, even denominations as small as *25 cents* have existed, though they are not very practical, being tiny things about the size of a fish’s scale both in terms of diameter and thickness (the example I saw was in the Numismatics museum in Colorado Springs). Why people continually focus solely on the 1 ounce coins and ignore utterly the well established fact of the existence of smaller denominations is something I have never really comprehended.
Another way of looking at it is that each “class” of coin has its intended purpose. In the old days before fiat money one used copper pennies for very small transactions, silver coins for small to medium
transactions, and reserved gold for large purchases. I would no more buy a single box of ammo with a gold coin then I would buy a house with a dump truck full of pennies or a few wheel barrels full of silver dimes and quarters. It is therefore more than a little disingenuous to proclaim the inappropriateness of gold by stating that you can’t buy a gallon of kerosene with it… While literally correct, it is hardly the
whole story.
It is also worth mentioning that not every transaction is going to be for a single can of beans. Does no one here buy in bulk? Do you all literally go to the store and buy one (1) can of beans only? I
sincerely doubt it. Most typical grocery runs are in the 50-100+ FRN range, which is within the realm of the 1/10 and 1/4 oz. gold coins (though I imagine smaller silver and even copper coins would be needed to get the exact amount). While the point made is a valid one, it is often (as in this instance) stretched to unreasonableness and becomes nothing more than a straw man argument, and a fairly absurd one at that.
Finally, with regards to the comment about making change with a cold chisel, I ask “Why not?” Historically, that is precisely what has been done to make change. Consider the famous Spanish “piece of eight” which was actually intended to be divided into halves or even 1/8 “bits” to make change. One of the things forgotten in our modern era of “miracle” fiat currency was that back in the day money was valued for the weight of precious (or sorta precious in the case of copper) metal contained within it, not the arbitrary stamp of value (i.e. $1, $5, etc.) placed upon it. Thus, one could take a $1 silver coin, and conceivably cut it in half to make 50 cents (of course, given that we had smaller denominations, this
was unnecessary. But the point is since it was the silver that was valued, one could realistically do that and retain the full value of the weight of the silver). Try doing that with a fiat $1 bill – you
can’t, can you? Of course, that is because you are playing with a paper token that possesses only shared hallucinatory value, rather than real worth. Anyone serious about participating in a post-TEOTWAWKI/post-fiat currency economy had better muy pronto get used to thinking in terms of metal weight, rather than arbitrary fiat currency value stamp. – G.F.L.
JWR Replies: First, I am well aware of 1/10th ounce gold coins. Up until quite recently, I owned several of them, including 1/10th ounce Krugerrand,1/10th ounce Maple Leaf, and 1/10th ounce American Eagle issues. I have heard that the Maple Leaf and the Chinese Panda are even made in a 1/20th ounce size. I wasn’t trying to keep SurvivalBlog readers ignorant of their availability. I might recommend these coins for barter, but these coins carry a hefty purchase premium but typically no corresponding resale premium. I recently saw 1/10th ounce American Eagles selling for $74 each! (The equivalent of $740 per ounce! This was when gold was around $610 per ounce.) Most dealers charge more to sell fractional gold, but they only pay the same price per ounce (or just over) that they do for full ounce coins when they buy it back. In essence, it costs a national mint the same amount to mint, package, and distribute a 1/10th ounce coin as it does for them to do so for a one ounce coin. These minting costs are passed along to the retail buyer.
The other major problem with using gold coins for survival barter, regardless of their weight, is that they will be immediately suspect as counterfeit by the individual on the other side of the table. Most Americans have never even seen a Canadian Maple Leaf or a Krugerrand, much less have any mean to determine its weight, water displacement weight, or otherwise test its authenticity. (Touchstone or acid test.) In contrast, small denomination circulated 90% U.S. silver dimes, quarters, and half dollars are almost immediately recognizable by most Americans, and will not be suspect beyond perhaps a passing glance.
Second, we were discussing a survival barter situation, when at some point in the future ordinary storefront commerce has been disrupted. In these circumstances, you probably won’t have the opportunity to walk into a retail grocery store an buy large quantities of anything. I predict that the commerce that will transpire will be very small scale–perhaps something similar to the Barter Faire that I portrayed in the “For and Ounce of Gold” chapter of my novel “Patriots.” Under these circumstances you won’t be buying case lots. It will be “onesees and twosees” transactions. Here, silver coins will be a practical medium of exchange.
Again, as I mentioned in my original post, I prefer common caliber ammunition for this sort of barter. A 50 cartridge box of .22 Long Rifle cartridges is just about ideal: recognizable, expendable, practical, almost universally used, and easily divisible. I strongly recommend that SurvivalBlog readers stock far more ammunition than precious metals, if their goal is survival bartering.
