Over the past couple of days, we’ve come across two instances where gold and silver coins are being used to transact business, which we believe could be the start of a trend, so we thought we would share these two situations with our readers. The first, which is already a story you may have read about, is a small diner in Wisconsin that has been accepting pre-1965 silver dimes, quarters and half dollars as a form of payment for various items on their menu. Examples include a hamburger for 12 cents, fries for 10 cents and a perch sandwich for 20 cents. What first began primarily as a publicity stunt has caught fire, with some customers taking full advantage of the offer. In fact, the following sign is proudly displayed in their diner:
Another example of accepting bullion coins as payment came up over the weekend wherein a prospective customer was looking for $20 Liberty Head gold coins. When I asked how many, he responded with 120! He is purchasing a tract of land from an individual and the seller of the property wants to be paid in the form of gold coins. His rationale is that he will just use the money from the transaction to purchase gold coins anyway, so he might as well save some time and transact for what he ultimately wants. While the buyer of the property who is in search of the gold coins wasn’t particularly thrilled with the prospect of locating the gold coins, he realized that with the price of gold being down that he could save upwards of $15,000 on the land purchase. I imagine that the cost savings will be well worth the time he’ll spend to try and accommodate the seller.
While the idea of accepting gold and silver coins as legal tender may sound like a foreign concept to most, it’s in fact more prevalent than you might think. Not only are individuals and companies willing to accept gold and silver coins as a form of payment, but just last year the State of Utah passed a law allowing individuals to use American gold and silver eagles as legal tender. While the current federal law allows individuals to use American gold and silver eagles as legal tender for the face value of the coins, Utah’s new law bases the value of the coins on their fair market value according to the precious metals content of the coins. Many other states have similar proposals; however, as of this writing, no other state has passed a similar law.
While the use of gold and silver coins as money appears to be more and more prevalent, it should be noted that both metals can be quite volatile, so if you’re attempting to save for a short term goal, investing in gold and silver coins may not be your best option. However, if you have a long investment horizon and are concerned about debasement of the dollar and/or potential future inflation, investing in precious metals appears to be a wise decision.
They bottom line is that companies, individuals, and even states are realizing that all of the money printing by the Federal Reserve is likely to devalue the dollar and result in inflation. Individuals and companies alike are looking for a hedge against such scenarios, and since gold and silver coins have been accepted as money for thousands of years, it’s not surprising that we’re beginning to see the use of gold and silver coins becoming more prevalent as an alternative currency.
