Silver Coins as Circulating Money
Also: Current coins, Silver current coin, Circulating silver, Circulation coins
Silver coins as circulating money were state-minted means of payment made from silver alloys that dominated everyday monetary transactions for centuries, until rising silver prices forced their withdrawal and replacement by 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 British shilling and the American Morgan Dollar, silver literally shaped the money 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 the coins, governments worldwide withdrew their circulating silver - a textbook example of Gresham's Law: bad money drives out good.
Historical fineness levels at a glance
Circulating coins were rarely minted from fine gold or fine silver; alloy additions (copper, nickel) increased abrasion resistance. The table shows selected fineness levels:
| Country / coin | Period | Fineness | Note |
|---|---|---|---|
| Great Britain (Shilling) | until 1919 | 925‰ | Sterling silver (British tradition) |
| Great Britain (Shilling) | 1920-1946 | 500‰ | 1920 reduction of fineness |
| USA (Dime, Quarter, Half Dollar) | until 1964 | 900‰ | "Pre-65" coins |
| USA (Half Dollar Kennedy) | 1965-1970 | 400‰ | Transitional alloy |
| Switzerland (franc/half franc) | until 1967 | 835‰ | corresponds to 835 silver |
| German Empire (1 Mark) | 1873-1918 | 900‰ | Silver currency until WWI |
| Austria (2 Schilling) | 1928-1937 | 640‰ | Main circulating coin |
The end of circulating silver: Gresham's Law in action
As 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 based on 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. In the United Kingdom, silver had already been eliminated from circulating coinage after 1946, when the fineness of "silver" coins was reduced to zero (cupronickel).
"Pre-65" coins as collectible and investment objects
Today, former circulating silver coins are traded in two different contexts:
- Numismatically / as a collector's item - rare vintages and high grades (VF, XF, MS) achieve premiums well above the silver value.
- As "junk silver" - worn coins without numismatic added value are traded by weight, often in bags of USD 1,000 face value (USA). Trading is oriented to the current silver price.
Especially well known are US "Pre-65" dimes, quarters and half dollars, British pre-1920 sterling coins and Swiss franc coins up to 1967. The scrap silver segment includes these pieces once their melt value dominates the numismatic value.
Tax considerations (not tax law, not investment advice)
In the United Kingdom, the sale of silver coins - unlike investment gold - is generally subject to VAT (currently 20%) at purchase. Dealers may apply the VAT margin scheme, which limits the tax base to the trading margin. Gains from a private sale may be subject to Capital Gains Tax above the annual exempt amount; however, UK legal-tender coins from The Royal Mint are CGT-exempt. There is no German one-year 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 circulating money are a closed chapter of monetary history, but 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.