Silver Coins as Circulation Money
Also: Current coins, Silver current money, Circulating silver, Circulation coins
Silver coins as circulation money were state-minted means of payment made from silver alloys that dominated everyday money circulation 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 payments. From the Athenian tetradrachm through the medieval penny to the German Reichstaler and the American Morgan dollar, silver literally shaped the world's monetary system. When silver became permanently sought after as an industrial metal in the 20th century and the market price threatened to rise above the coins' face value, governments worldwide withdrew their circulating silver – a textbook example of Gresham's law: bad money drives out good.
Historical finenesses at a glance
Circulation coins were rarely struck from fine gold or fine silver; alloying additives (copper, nickel) increased abrasion resistance. The table shows selected finenesses:
| 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 coin |
| Germany (5 DM "Heiermann") | 1951–1974 | 625 ‰ | last German circulating silver |
| Austria (1 Schilling) | 1924–1925 | 800 ‰ | Post-war minting |
| 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 |
| United Kingdom (Shilling) | until 1919 | 925 ‰ | Sterling silver (British tradition) |
| United Kingdom (Shilling) | 1920–1946 | 500 ‰ | 1920 reduction of the fineness |
The end of circulating silver: Gresham's law in action
When the silver price rose after the Second World War, and especially in the 1960s, the melt value of many coins approached or exceeded their face value. Private individuals began to hoard and melt silver coins – an economically rational, but for circulation destructive, process. You can calculate the melt value of a coin at any time using the current silver price and the fineness:
Melt value = gross weight (g) × fineness × silver price (€/g)
The American Coinage Act of 1965 removed 90 % silver from daily circulation. Germany struck its last silver 5-DM coin in 1974; withdrawal from circulation followed.
"Pre-65" coins as collectors' and investment objects
Today, former circulation coins made of silver are traded in two different contexts:
- Numismatically / as a collector's item – rare vintages and high grades of preservation (VF, XF, MS) achieve premiums far above the silver value.
- As "junk silver" – worn coins with no numismatic added value are traded by weight, often in bags of 1,000 USD face value (USA). Trading is oriented to 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 up to 1967. The scrap silver segment includes these pieces as soon as their melt value dominates their numismatic value.
Tax particularities (not tax law, not investment advice)
In Malta, the sale of silver coins – unlike investment gold – is generally subject to VAT (currently 18 %; Directive 2006/112/EC as implemented by the Maltese VAT Act, Chapter 406). For dealers, the margin scheme (special scheme for second-hand goods) can apply, limiting the taxable base to the trading margin. Gains from a private sale are not subject to capital gains tax in Malta, since Maltese CGT applies only to specific assets (immovable property, securities, business interests) and not to movable assets such as coins; there is no German-style speculation period. A specialist adviser should always be consulted for individual tax and investment decisions – this is not tax or investment advice.
In brief
Silver coins as circulation money are a closed chapter of monetary history, yet they leave behind a lively market: whether as a historical collector's item or as an inexpensive entry into physical silver – their value can be calculated transparently at any time with the Melt Value Calculator and the Silver Calculator.