A Useful How-To

     Courtesy of David DeGerolamo, we have this:

     And it is so. The awareness of that debasement (which is a synonym for inflation) has driven smart people throughout the world to hedging their wealth by acquiring gold, most often in the form of gold-bullion coins. However, at over $2600 per Troy ounce, gold as a medium of exchange for goods today is a bit pricey. Should there be a complete collapse of the dollar, the most likely medium of exchange for day-to-day commerce would be silver, perhaps with copper coins for small change.

     So those smart people aren’t acquiring gold and only gold. They’re also adding silver to their hoards, usually in the form of “silver rounds.” (The U.S. Mint frowns on calling anything it hasn’t issued a “coin.”) There are a lot of such rounds on sale today… but there’s a hitch: unless the maker of the coin is widely regarded to be trustworthy, a trader might suspect it of not being true silver. (Apologies to the dwarves of Middle Earth for the “cultural appropriation.”)

     Mind you, I don’t know how likely that is. Counterfeiting silver rounds has a relatively low profit margin, especially if we take the labor required into account. Still, some will worry. So courtesy of Craig Schaaf at Gab.com, here’s a chart that sets out the silver content of various U.S. silver coins:

     Schaaf also has some useful ideas about how to go about bartering silver for goods in a collapsed-dollar scenario:

     So I’m skipping ahead to look at what does happen after people lose confidence in a fiat currency and are no longer willing to trust it. There are many historical examples you can study to understand the basic principles that play out. During a time when prices begin to inflate rapidly people will often give up on trying to keep up with it and look for what I call a “mental anchor”. This is a coping mechanism that is very natural as people want to feel like they can gain control again of something that has totally gone out of control. In Germany after the war it was a carton, pack, and individual cigarettes. In Brazil I’m told in many areas it was a gallon of milk. A mental exercise you can do now, is take several important needs and compare them. Let’s say a gallon of raw milk from the local dairy farmer, a face cord of oak firewood and the average wage. Now before anyone gets bent out of shape on the figures I’m going to attach. I realize these things are quite varied depending on where you live. So here is my community. Milk $3.00 Gallon, Face cord of oak firewood $60.00, and average wage $15.00 hour. Now these are anchor points to relate to. So you could also say it another way Oak firewood is the same as 20 Gallons of milk, or four hours of labor. Now none of that can be set in stone. Milk may be so much in demand that people are willing to exchange for it differently. This is a place to start mentally.

     Add to that the price of silver at the point of the collapse: let’s imagine it to be $30 per Troy ounce, just to keep the numbers round. That would suggest bartering levels such as these:

Good / Service Price in Dollars Price in Silver
Milk $3.00 / Gallon 0.1 Troy Oz.
Oak Firewood $60.00 / Face Cord 2.0 Troy Oz.
Unskilled Labor $15.00 / hour 0.5 Troy Oz.

     NB: I’m not postulating that the above are the actual numbers that would apply. Indeed, in all probability silver would be priced considerably higher in fiat dollars just before a dollar collapse. Still, we have here a useful starting point for the post-dollar precious-metals marketplace.

     Thoughts, Gentle Reader?

5 comments

Skip to comment form

  1. I try to buy silver every month. Just a bit at a time. I understand that gold is more valuable, but if I want to buy a tank full of gasoline, I’d rather hand over a couple silver rounds rather than try to haggle with a gold round that’s worth way more than the gas.

    I also invest in brass, copper and lead. Just in case there’s someone out there who wants my silver, but doesn’t think they need to barter for it.

    • Divemedic on September 24, 2024 at 12:16 PM

    I would also argue that unskilled labor is somewhat of a manipulated market, caused by the artificial minimum wage. Unskilled labor is, by definition, something that anyone can do for themselves. The only reason that unskilled labor has any value at all is that skilled workers can make more, and thus they are wasting their time doing things like mowing the lawn when they can be more profitable in paying someone to do that whilst they are off engaged in more profitable endeavors. 
    In the event that we have a collapse of the US currency/economy, people who are skilled may or may not have a lot more free time on their hands. 
    Accountants, tax professionals, stock brokers, etc. will be unable to sell their skills and will become unskilled labor. 
    Farmers, mechanics, and doctors may or may not become more valuable, depending on the particulars of their knowledge. 

    • Miffed Max on September 24, 2024 at 7:52 PM

    As a “quite old” doctor, I don’t think there will be that many of us doctors whose skills will become more valuable. I think I first read this in the Vorkosigan sf universe a few decades ago, but too often “the doctor is just the interface between the patient and the technology”.

    I think knowing the basics such as diagnosis being 80% history, having a reassuring bedside manner with appropriate but not inappropriate empathy, maintaining the old-school expertise to manipulate and set fractures and dislocations, along with the ability to clean, close and dress wounds and provide instructions to the patient’s carers in those regards – all those could be very valuable. Saying that I can’t diagnose your chest pain until I get your circulating serum rhubarb and your ambient woke titres back, not so much.

    • SiG on September 24, 2024 at 7:58 PM

    Some years ago, I started collecting “junk silver” – the 90% silver coins that used to be money in the US. We even stopped issuing that stuff before killing the gold standard.

    Long story shortened, my samples showed that a dollar was 25 grams; 90% silver means 22.5 grams, and converting to Troy ounces gives 0.723 oz. to a dollar’s worth of 90% silver. GoldSilver.com is currently saying silver is $32.16/oz, and doing the multiplication says that a dollar face value in 90% silver coins is $23.26 in today’s grossly inflated money. (Naturally, a spreadsheet was involved. Sorry, Engineer. It’s in my blood.)

    We are in that phase where the description says, “that which can’t go on forever won’t go on” applies. Or Voltaire’s line about paper money returns to the value of the paper. Dollars are printed on some fancy paper (at least they used to be) and at some point the cost of the paper, ink, and paying the people to print them is going to exceed the value of the dollar. Much like how in the 1980s we switched from copper pennies to the copper plated zinc crap we use today. Somewhere in there is total economic collapse.

  2. Thoughts?

    I need to buy more silver.

Comments have been disabled.