It occurred to us recently – some of our posts and commentary here at Provident Metals discuss gold, silver coins and even copper coins as an alternative means of exchange. Much of this discussion has centered on the use of precious metal coins to “barter” for goods and services rather than using traditional U.S. Dollars.
However, we realized recently that we’ve never really explained what “barter” is in the first place.
As defined in Merriam-Webster, barter means “to trade by exchanging one commodity for another.” This basic definition can be expanded to include “…without using a medium of exchange such as money.”
While barter has been around for centuries and represents one of the most basic forms of commerce, it generally isn’t used on a mass scale unless there’s a monetary crisis of some sorts.
Here’s a basic example of barter:
Joe is a painter whose truck needs a new set of brakes and an oil change. Joe’s friend Frank is a car mechanic, and it just so happens that Frank needs a room painted. The two agree – Joe will paint Frank’s room and Frank will fix Joe’s truck.
In this situation, both Joe and Frank need roughly an equal amount of work done. They’re able to agree on a mutually beneficial arrangement – in exchange for fixing my truck, I’ll paint your room.
While the arrangement works in this example, that’s not always the case. What if Frank needs the outside of his house painted, but Joe only needs the set of brakes and oil change. Joe will not benefit from taking such a large job and getting so little in return. Maybe Frank should sweeten the deal by adding a couple ounces of silver?
This is the basis on which monetary systems were formed – a medium of exchange, be it gold, silver or a currency like the U.S. Dollar – allows Joe to pay Frank for only the work he needs done, and Frank can either find another painter, or pay Joe the appropriate amount to paint his house.
How does barter work in today’s economy, especially with silver coins and other precious metals?
Over the last several years, the barter economy has been on the rise in the U.S. Many reasons can be cited for the shift in how goods and services are traded, but it’s clear that the declining value of the U.S. Dollar and continued economic stagnation across the country are leading this quiet revolution.
It has become more common for individuals and businesses to use silver coins like 90% junk quarters and others to “barter” or “trade” for goods and services. We’ve discussed one such novel approach used by the American Open Currency Standard. Watch this quick video about a store in Texas that will only accept silver and other stores of value for payment…they absolutely will NOT accept U.S. Dollars.
This is just one of many unique and creative examples of how individuals, communities and businesses are moving away from dollar-based transactions. Most of these efforts occur at the local level and are aimed at supporting local commerce. Cumulatively though, these barter networks are quietly shifting things away from a fiat currency like the Dollar and into precious metals.
How can I properly use silver coins and others for barter?
The challenge with bartering using pre-1965 quarters/dimes, or another coin such as those approved by the American Open Currency Standard, is figuring out if you’re giving the right amount for the goods or services you’re purchasing.
Let’s use 90% quarters and dimes as an example, since at present, they’re the most common “barter” coin available. This calculation, which can be used for any silver coin, will help translate the value of the silver/gold in your hand into dollars, which will then help you decide whether a merchant is asking a fair price in silver for their products.
Here’s the basic formula:
Silver content (troy ounces) x Silver Spot Price = $$$ value of metal
If you have two pre-’65 quarters, their dollar value with a silver spot price of $30 would be $10.85 – each quarter contains 0.18084 troy ounces of silver. Multiply that by two and then multiply that number by the silver spot price. This formula can be used anytime to determine how much silver you would need to exchange for a given item.
A 90% silver dime for example contains 0.07234 troy ounces of silver. Multiply 0.07234 times $30 and you get $2.17, which is the intrinsic value of one silver dime. Another helpful hint ….4 – 90% quarters contains as much silver and weighs the same as 2 – 90% halves….and 10 – 90% dimes.
As this quiet barter revolution continues, stay tuned to our blog and knowledge center for more information and analysis on the effects. It’s exciting to see how so many individuals like Rob Greene and others are revolutionizing how we pay for the goods and services we demand.
Even if there isn’t a store in your area accepting silver, gold and copper coins for payment, just sit tight.
