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“Confusion exists regarding United States currency, and precious metals coins. From the Wikipedia encyclopedia we summarize key points for trading currencies and precious metals with emphasis on silver and gold coins.”-Traderrog
The United States Mint first issued one dollar coins of the identical size and composition of the Spanish dollar. Even after the Revolutionary War they circulated in the USA. The English colonies minted and circulated variations of that Lion Dollar during the 17th and 18th centuries. They were in circulation so long they were quite worn and consequently got the nickname “Dog Dollars.” Most do not realize our federal government did not issue currency and silver dollars until the American Civil War. Prior to that time private banks did the work and produced both Spanish and U.S. Silver dollars.
During the gold and silver mining rushes prior to the Civil War, there were several private mints and banks manufacturing American precious metal coins, primarily in California.
When our USA dollar was specified by the Coinage Act of 1792 it was measured by a unit of weight and not a denomination of money. Our currency from the beginning was tied precisely to gold and silver and then converted to equal values for buying and selling goods.
Valuations Protected for 278 Years
The beauty of this settlement was our currency maintained an almost constant value from 1635 to 1913, being roughly 25 times the buying power of USA dollars in 2006. Then the Federal Reserve came into power in 1913 and the steady devaluation of our dollar began. Substantial devaluing of American money has occurred only since the creation of the Federal Reserve and its credit controls system.
Units of Measure for the Silver and Gold Standards
We often wondered where the 15 to 1 ratio came from for value comparisons between gold and silver. It was mandated in the 1792 Mint Act and the dollar was set at 371.25 grains of silver and 24.75 grains of gold; originating the 15 to 1 ratio.
The first step in the wrong direction occurred in 1862 due to the American Civil War. With no precious metals backing, paper money was issued by the U.S. Treasury. Silver and gold coins were also manufactured in parallel. Later, after things calmed down post war in 1878, the value between silver and gold coins was reconnected to American paper currency. It is important to note in the 1870’s the United States had a depression. Was this linked to the 1862 fiat paper money?
Previously, in 1775 the colonies (states) all issued their own paper money which was called “Continentals.” Valuations were all over the yard from 5 shillings per dollar in Georgia to 32.5 shillings in South Carolina. Printing press inflation destroyed these currencies and they were collectively replaced by silver dollars at $1 silver dollar equaling 1,000 Continentals. Nothing is new here is it? Since 1913, the Federal Reserve has embarked upon a printing-dilution travesty destroying our current dollar to almost nothingness. At the beginning of our nation, the states had originated a Weimar-like 1922 event nearly 150 years earlier. Roman coin clipping centuries earlier was similar but induced value dilution through physical means.
In 1900 the silver and gold standard was abandoned and our dollar was equated to 23.22 grains of gold. Silver coins were circulated until 1964 when dimes and quarters were then manufactured with no silver while the $.50 piece contained 40% silver. The halves with 40% silver lasted through 1969 and then they lost all of their silver content as well.
Roosevelt withdrew gold coins in 1933 and the gold standard was changed to 13.71 grains setting the price at that time to $35 per troy ounce. This lasted until 1968. From that date forward a laundry list of various prices were used for gold. Then in 1975 the dollar was allowed to float against all international currencies and the days of Wild WestAmerican money origination and printing began in earnest.
In the past few years we have seen all kinds of currency experiments many of which were not embraced by the public for various reasons. Dollar coins were confused with quarters but the newer “named states” series of quarters got the attention of coin collectors. Other variations have come and gone with little success. The newest quarters are so light and “tinny” in metal content they frequently jam coin operated equipment.
Today’s Real Values are the Gold and Silver U.S.Minted Coins Called American Eagles
The largest denominations of American currency currently offered are the $100 bill (paper) and the $100 troy ounce Platinum Eagle. Other currently minted Eagles are gold and silver. These precious metals coins are real American currency known as legal tender. They do not circulate in the daily transactional system for the most part as true values are so far higher than face values on these coins. For example that $100 Platinum Eagle is now worth more then $1200 for one coin.
The American Silver Eagle is provided only in $1 dollar (One troy ounce) denomination. The American Gold Eagles come in $5 (1/10th troy ounce); $10 (1/4th troy ounce); $25 (1/2 troy ounce); and $50 ( One troy ounce). Platinum Eagles are $10 (1/10th troy ounce); $25 (1/4th troy ounce); $50 (1/2 troy ounce); and $100 (1 troy ounce).
Precious metals contents are as follows: The silver coin is 99.9% silver, and the gold coins are 91.67% gold, 22 karat; and the platinum coins are 99.95% platinum. To purchase the coins you must use the services of coin dealers as the mint does not sell them. However, last year the mint began selling new un-circulated coins with a special finish bearing the mint mark “W.”
They also sell high quality select proof coins for collectors in the same denominations and precious metals content.
Canada has a wider selection of coins available which can be purchased directly from the Canadian Mint. The mint is operated as a profit-making enterprise which we applaud. There are many other choices of gold and silver coins available throughout the world but we prefer the United States and Canadian coins for several reasons. The gold content in Canada’s gold coins is higher than the U.S. coins. Some prefer them for this reason.
The paper dollars or similar fiat paper equivalents of all nations have shifting non-stop values. The currency trading markets never close and literally go around the world each and every day including nights, holidays and weekends. This is the largest trading market in the world by far. Presently, the USA currency has fallen dramatically and is dangerously approaching major support levels. We expect the U.S. Dollar to be supported by central banks. The euro is in favor now and certain oil producers and Asian and Middle Eastern traders are supporting it. The euro is fast approaching its all time high valuation. We expect the authorities to sell euros and buy dollars very soon in quantity to protect the dollars’ fall and avoid a run-away higher valuation in the euro.
We strongly encourage our readers, traders and investors to install an on-going savings plan to buy precious metals coins. They have proven their true value and long-lived stability from 1635 to the sad date of 1913 when the Federal Reserve took over. These coins proved themselves for 278 years. How long has it taken the Federal Reserve to diminish the dollar’s value into near nothingness?
The present commodities and precious metals markets have a long way to go in our view. We see little risk in purchasing these silver and gold coins and a great deal of profitable upside ahead. –Traderrog
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Roger Wiegand is Editor of the Trader Tracks Weekly Newsletter
recommending trades in gold, silver and energy markets.
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