One skill that every aspiring coin collector and dealer should develop is the ability to assess a coin and accurately identify its composition. Being able to do so can help the collector or dealer save money and avoid being scammed. One key skill is being able to tell if a coin is silver or clad.<\/p>\n\n\n\n
To tell if a coin is silver or clad, you can look at the mint date and evaluate the edges. Most coins minted after 1964 are clad, with a few exceptions, and clad coins also have a copper ring around the edge which is absent on silver coins. You can also check the coin\u2019s weight or do a ping test.<\/strong><\/p>\n\n\n\n In many cases, identifying whether a coin is silver or clad is easy. In some cases, however, it takes running through the process of testing and doing research to verify if an identification is accurate. Below, we talk more about this process so you can tell whether your coins are silver or clad.<\/p>\n\n\n\n With just about every type of coin, there are usually multiple ways to identify its composition<\/strong>. In most cases, tell-tale signs are obvious and only one or two steps are needed before you can make a successful identification. With some, however, multiple steps of the process must be completed to get to the proper identification.<\/p>\n\n\n\n To get the most out of the process, though, understanding all you can about the coin<\/strong> in question is the best way to successfully identify a coin\u2019s makeup every time. The reason that is so important is because money is involved, and when money is involved, scammers perfect their craft to take advantage of the uneducated!<\/p>\n\n\n\n Almost every coin used to be close to 100%<\/strong> of the metal it was advertised as being. They were all backed by precious metals and their value was assured by the issuing government. Thus, a $25 gold coin was worth $25 and had an equivalent amount of gold bullion in storage to back its worth. That system caused a few problems.<\/p>\n\n\n\n Debasement is when the precious metal value of a coin exceeds its denominational<\/strong> value. This could happen in a variety of ways.<\/p>\n\n\n\n Shaving was one way, involving chipping off a part of a coin made of a precious metal and melting it to combine with other chips to create an ingot. When this happened, the value of the coin was reduced<\/strong>, but the face value of the denomination stayed the same. Done in mass, this could be very profitable to unscrupulous merchants.<\/p>\n\n\n\n To combat this, the government began putting milled edges<\/strong> on coins. The milled edge would be marred when the coin was shaved.<\/p>\n\n\n\n Gresham\u2019s law comes in to play when dealing with debasement. This monetary policy principle maintains that if two coins, one made of precious metal and one of debased value, hold the same face value<\/strong>, two things will happen:<\/p>\n\n\n\n This principle always results in less currency being circulated<\/strong> as the more valuable coins are hoarded.<\/p>\n\n\n\n Debasement did not always happen because of shaving. In many cases, including the United States, debasement was used as part of an overreaching monetary policy<\/strong>, as mentioned above.<\/p>\n\n\n\n The first recorded, major debasement<\/strong> project was created by Cardinal Wolsey, advisor to Henry VIII. Coinage debasement became common as the English waged wars against Scotland and France and ran up debt. Debasement allowed for more coins to be minted to pay off that debt.<\/p>\n\n\n\n Making some coins<\/strong> almost entirely of precious metals was prohibitive. It was not economically sound to mint coins of precious metal mainly because the value of the metal often exceeded the face value of the coin.<\/p>\n\n\n\n This did not really impact the average citizen<\/strong> of a country so much as it was an unnecessary expenditure on the part of the government. If a government was swimming in debt, reducing the amount of precious metal in a coin yielded money that could be far more useful to pay off that debt.<\/p>\n\n\n\n Debasing coins allowed governments to print more money<\/strong> and it removed much of the incentive to shave a coin or melt it entirely for its precious metal value. Mixing gold with common metals to make a coin, for instance, set the face value of a coin because the government backed the denomination and removed the possibility of the precious metal value of the coin rising above the face value.<\/p>\n\n\n\n This approach worked, provided the initial coins made of precious metal were taken out of circulation<\/strong> by the government and replaced with a debased coin. If not, there was a metal value comparison that led people to hoard coins made predominately of precious metal. When that happened, inflation became an issue.<\/p>\n\n\n\n To address the inflation<\/strong>, though, the government that did the debasement had few options. What was worse was that none of them were very good. Each relied on a cooperative public and economic strategies that frequently flew in the face of human nature.<\/p>\n\n\n\n For the average person, the choice was between turning in coins made of precious metal to the government as requested or hoarding coins<\/strong> and letting them build value.<\/p>\n\n\n\n How that progressed is no mystery. Citizens, coin collectors and dealers<\/strong> hoarded silver coins. The hope was that over time the value of the coin would increase either because of the scarcity of the coin or if the price of silver increased.<\/p>\n\n\n\n The options a government had<\/strong> were:<\/p>\n\n\n\n The sum of each of those approaches, combined with the large number of citizens hoarding silver coins, created a scarcity<\/strong> that helped drive coin value up. The coins that were being collected or hoarded took on a value of their own, separate from regular currency and became collectibles.<\/p>\n\n\n\n Paper currency was easier to carry<\/strong>, particularly in large volume, and coins of precious metals became less and less in demand. This applied to everyday use as well as use by organizations that transported large sums of money. It was always easier to cart around a pocket full of paper bills<\/strong> than a pocket full of coins and, because of that, coins among regular users of currency became less popular.<\/p>\n\n\n\n Some precious metals are truly rare<\/strong> and getting rarer. Using them to create coins that are mostly made of the precious metal uses up that resource. A good example of this is the verbiage in the 1965 Coinage Act<\/strong>. US President Lyndon B. Johnson (LBJ) signed the Act, which altered the makeup of US coins predominately made of silver.<\/p>\n\n\n\n The reason for the switch was that silver supplies were diminishing<\/strong> as the price of silver was rapidly escalating. For three years, the presidential administration and congress debated what they should do. At the same time, the perceived scarcity of silver prompted a market jump of 10% and then by 30% by 1962.<\/p>\n\n\n\n Increased price and demand combined with dwindling supplies led to congress and LBJ\u2019s administration negotiating a migration from predominately silver coins to clad coins. When LBJ signed the 1965 Coinage Act<\/strong>, the official statement on the issue, legislation and action included the following:<\/p>\n\n\n\n \u201cThe new dimes and the new quarters will contain no silver<\/strong>. They will be composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper. They will show a copper edge\u2026<\/p>\n\n\n\n Now, all of you know these changes are necessary for a very simple reason \u2014 silver is a scarce material. Our uses of silver are growing as our population and our economy grows. The fact is that silver consumption is now more than double new silver production<\/strong> each year.<\/p>\n\n\n\n So, in the face of this worldwide shortage of silver<\/strong>, and our rapidly growing need for coins, the only really prudent course was to reduce our dependence upon silver for making our coins.\u201d<\/p>\n\n\n\n Upon signing the Act, the USA began minting clad coins<\/strong> comprised of common metals with zero silver in them.<\/p>\n\n\n\n With coins that are predominately silver and coins that are clad, the key factor that distinguishes one from the other is the metal composition<\/strong> of both. Technically, any coin that has silver in it is a silver coin. The line of demarcation is how much silver makes up the overall composition of the coin.<\/p>\n\n\n\n The role of silver in coins<\/strong> in terms of United States monetary policy, both in coins that were predominately silver and in silver-clad coins, illustrates clearly how this works.<\/p>\n\n\n\n Throughout the history of the USA, silver has played a major roles in both mostly silver coins and silver clad coins. Initially, after the American revolution, the Articles of Confederation that governed the new country permitted each state to mint their own coins<\/strong>. Additionally, foreign coins were legal tender.<\/p>\n\n\n\n That created confusion<\/strong> because the same coin could be worth different amounts in each state. Add to that the foreign coin influence, which could be yet another coinage value, and the entire currency situation was best described as confusion bordering on chaos.<\/p>\n\n\n\nWords On The Process And What You Need To Know<\/strong><\/h2>\n\n\n\n
Some Background<\/h3>\n\n\n\n
Debasement Of The Coin<\/h3>\n\n\n\n
Gresham\u2019s Law<\/h3>\n\n\n\n
Examples Of Governmental Debasement<\/h3>\n\n\n\n
Production Costs Were High<\/h3>\n\n\n\n
Debasement Saved Money For The Government<\/h3>\n\n\n\n
Inflation<\/h3>\n\n\n\n
Paper Was More User Friendly<\/h3>\n\n\n\n
Scarcity Of Resources<\/h3>\n\n\n\n
The 1965 Coinage Act<\/h3>\n\n\n\n
The Difference Between Silver And Clad Coins<\/strong><\/h2>\n\n\n\n
Silver Coins In The USA<\/h3>\n\n\n\n
Copper Cents<\/h3>\n\n\n\n