Friday, March 18, 2011

A reader sends in a question....

Don P. sends in this question....

Question: Do you think in the silver currency era, an Apmex round will be any less trusted than a silver eagle? I know the eagle is legal currency and guaranteed to be one oz. but I was considering the additional spot paid for them. Worth the little extra for others' confidence?

The Eagle will be the most trusted coin on the planet, however, it’s not likely pure 1 oz silver coins and rounds will be money. They would most likely create a coin with a small amount of silver and gold along with an alloy in different denominations like the dime and quarter, etc. So the Eagle would be obsolete as far as spending but would instead carry a different value for being pure silver and rare as they will most likely cease minting them and people will store them safely away.

But considering a post fiat, metal monetary system the current scoundrels running the hooskow will resist all efforts to introduce metal into circulation but a couple of alternatives should be considered here.

1) IF the current crisis spins out of control and the bankers lose control of the markets you will see a barter system evolve out of the chaos. This is the worst case scenario and you really would not want anyone knowing you had metals in the first place. You would want to trade things you didn’t need for things you did before you brandished your metal. What would likely evolve out of this chaos would be private mints accepting bullion and making a more standard, common and familiar coin according to different Weights & Measures rather than a face value, e.g., 1/10th of an ounce, ¼ of an ounce, a half, etc. Here you would bring your Apmex rounds to have them converted into something more acceptable to the market place. Actually Apmex rounds may be acceptable enough but you may want smaller denominations. The Eagle would be a very valuable 1 oz coin. The one dollar face value would be ignored.

2) If the crisis is managed properly fiat will simply not disappear. They will try and incorporate silver and gold into the digital world. You will deposit your silver and gold and have credits that you can break down digitally into smaller increments. Think Goldmoney. It may even be that you will have the option of having a portion of your check automatically deposited into a silver and gold “saving’s account to be drawn on when needed. The rest of your check would go into checking for daily use. The Chinese actually do something similar now.

There are other alternatives as well but that hopefully answers your question.

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