Silver Coins as Circulating Money
Also: Circulating silver coins, Silver currency coins, Circulation silver, Junk silver
Silver coins as circulating money were government-minted means of payment made from silver alloys that dominated everyday monetary transactions for centuries, until rising silver prices forced their withdrawal and replacement with coins made from base metals.
For millennia, silver was the backbone of everyday payment transactions. From the Athenian tetradrachm through the medieval penny to the German Reichstaler and the American Morgan Dollar, silver literally shaped the monetary system of the world. When silver became permanently in demand as an industrial metal in the 20th century and the market price threatened to rise above the face value of coins, governments worldwide withdrew their circulating silver – a textbook example of Gresham's Law: bad money drives out good.
Historical fineness values at a glance
Circulating coins were rarely struck from fine gold or fine silver; alloying additions (copper, nickel) increased wear resistance. The table shows selected fineness values:
| Country / Coin | Period | Fineness | Note |
|---|---|---|---|
| German Empire (1 Mark) | 1873–1918 | 900 ‰ | Silver currency until WWI |
| Weimar Republic (3 RM) | 1924–1933 | 500 ‰ | Alloy coin, lower content |
| Weimar Republic / Third Reich (5 RM) | 1927–1939 | 900 ‰ | Silver currency large denomination |
| West Germany (5 DM "Heiermann") | 1951–1974 | 625 ‰ | Last German circulation silver |
| Austria (1 Schilling) | 1924–1925 | 800 ‰ | Post-war issue |
| Austria (2 Schilling) | 1928–1937 | 640 ‰ | Main circulation coin |
| Switzerland (Franc/Half Franc) | until 1967 | 835 ‰ | corresponds to 835 silver |
| USA (Dime, Quarter, Half Dollar) | until 1964 | 900 ‰ | "Pre-65" coins |
| USA (Kennedy Half Dollar) | 1965–1970 | 400 ‰ | Transitional alloy |
| Great Britain (Shilling) | until 1919 | 925 ‰ | Sterling silver (British tradition) |
| Great Britain (Shilling) | 1920–1946 | 500 ‰ | 1920 reduction in fineness |
The end of circulation silver: Gresham's Law in action
As the silver price rose after World War II and particularly during the 1960s, the melt value of many coins approached or exceeded their face value. Individuals began hoarding and melting silver coins – an economically rational but circulation-destructive process. The melt value of a coin can be calculated at any time using the current silver price and fineness:
Melt value = Gross weight (g) × Fineness × Silver price (€/g)
The US Coinage Act of 1965 removed 90% silver from daily circulation. The Federal Republic of Germany struck its last silver 5-DM coin in 1974; withdrawal from circulation followed.
"Pre-65" coins as collectibles and investments
Today, former silver circulation coins are traded in two different contexts:
- Numismatically / as collectibles – rare dates, high grades (VF, XF, MS) command premiums well above silver melt value.
- As "Junk Silver" – worn coins with no numismatic premium are traded by weight, often in bags of USD 1,000 face value (USA). Trading is guided by the current silver price.
Particularly well known are US "Pre-65" dimes, quarters and half dollars, as well as German silver 5-DM coins and Swiss franc coins until 1967. The scrap silver segment encompasses these pieces once their melt value dominates their numismatic value.
Tax considerations (not tax or investment advice)
In Germany, the sale of silver coins – unlike investment gold – is generally subject to VAT (currently 19%). For dealers, the margin scheme (§ 25a UStG) may apply, limiting the tax base to the trading margin. Gains from private sales may fall under the speculative holding period (§ 23 EStG). Always consult a specialist for individual tax and investment decisions – this is not tax or investment advice.
In brief
Silver coins as circulating money are a closed chapter in monetary history, but they leave behind a vibrant market: whether as historical collectibles or as an affordable entry point into physical silver – their value can be transparently calculated at any time using the melt value calculator and the silver calculator.