Gresham's law and fairground dimes

[Dug]

The following was recently posted on my blog for the interest and instruction of my friends, family, and children. You all know about U.S. silver dimes (coins)already, but maybe you'll find the illustration useful or interesting anyway.

In economics there is a law called Gresham's Law which states that when government compulsorily overvalues one money and undervalues another, the undervalued money will leave the country or disappear into hoards, while the overvalued money will flood into circulation. This law is popularized as "bad money drives good money out of circulation." In this photo are 4 dimes found with a metal detector last weekend, all in the same area at a county fairgrounds. Prior to 1965, U.S. dimes, quarters, half-dollars were composed of 90% silver. Modern dimes contain no silver. The three silver dimes in this photo were about 5 inches deep in the ground, and were there for many years. The discolored dime (1985) was less than one inch deep and there for a shorter period of time than the others. All the dimes were rinsed with water only. In accord with Gresham's Law, the ugly discolored dime (bad or overvalued money) will be spent (go into circulation) and the others (good or undervalued money) will be put into my collection (hoarded).

 

[Erik]

It's an interesting concept. There is another denomination currently that is over and under valued -- the copper vs. zinc one cent coins currently in circulation. The copper ones are worth more than the zinc ones in terms of their metal content. Do you think we'll start to see the copper cents disappearing? Seems only the wheat cents are gone and there're still a lot of copper cents in circulation.

 

[alfano]

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[James N.D.]

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[Eddie in Poulsbo]

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[jb]

Sort of neat to find all Silver Roosevelt's and a Clad Roosevelt also. Makes you wonder at times the amount of detectorists who have been close but missed them in the past. Nice finds and probably more out there.

 

[Dug]

He Erik,

Thanks for the comment. Yes, I think you are correct that pennies which are pre-1982 will be collected or hoarded. In fact, they are already, . Something similar happened after 1964. At first there were a few hoarders of the silver dimes, quarters, halves. And this increased as time and understanding increased. Even now one can still occasionally receive a silver dime or quarter in change. It happened to me not that long ago. The value of silver is greater than copper, so it happened quicker and more thoroughly with the silver coins than it will with copper.

Metal detectorists are learning that the pennies after 1982 are really junk, as most of them are half corroded away when they've been in the ground only a short time.

As far as I know no one is buying pennies yet for their melt copper value, but it may happen one day.

Oh, and WTG on that Barber dime. It's a beauty even with the scar.

 

[Erik]

Hi Doug,

Thanks for your post and comments on the Barber dime.

You wrote : "Yes, I think you are correct that pennies which are pre-1982 will be collected or hoarded. In fact, they are already"

Interesting, are people already hoarding the pre-1982 cents? I suppose that it'll also be slower than the silver as it's not that easy to see the difference between a copper and a zinc cent. I know you can read the date, but the date seems to be getting smaller and smaller to me as each year passes. They don't have the tell-tale edge that the clad coins have. Have you noticed that there are still a number of older nickels in circulation? I think this is because of the same reason. Also, I know it costs Uncle Same more than a cent to make a cent coin, but I wonder if the copper content is now worth more than one cent. Interesting stuff.

 

[Dug]

Hey, thanks JB. I found those at a County Fairgrounds 1200 miles from where I live. We were on vacation visiting the grandchildren. I only hunted there for about two hours and found these within only a few feet of each other. So, yes, indeed, there are more.

 

[Dug]

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