Question About Use of Alternative Currencies

[powerofreason]

Say I open a convenience store. One of the benefits of my store is that it accepts alternative currencies.

Do I label everything with 3 price tags? One for FRN's, one for gold ounces, one for silver ounces?

Do I just have the FRN tag and then convert over the dollar amount at checkout to the ounce amount using the current spot price of the metal?

Does the spot price necessarily reflect the real value of the metal coins?

Say somebody walks in with some of these silver coins
http://www.goldeneaglecoin.com/categoryimages/1213912902.jpg
http://www.goldeneaglecoin.com/Silver/Silver_Rounds

and tries to pay for something worth say, $17.94? How the hell does that work? My main question I guess is, how do you figure out the value of the alternative currency compared to the FRN value?

And of course theres the problem of fakes. How can I determine the purity of the metal coin? Do I just go by trust?

Can someone walk me through how this might work? I'm also looking to buy some silver (poor as I am) to preserve what little wealth I'll have when the inflation starts up. What would be the most easily tradeable silver coin (in case the currency collapses altogether)? Where should I buy from? Whats a reasonable premium to pay for a minted coin over the spot price of the metal?

Lots of questions I know :D

[Csturmer]

I'm not sure how your store would work, but I can help you buy some precious metal.

I buy from two places, http://www.apmex.com and http://www.bulliondirect.com.

They both have advantages and disadvantages.

Apmex has a superior selection, and better shipping and handling charges if you order stuff one at a time. They have brand new rounds (I'll get to what this in a minute), as well as freshly minted government issued coins. The prices are competitive, and they have a lot of unique metal items, not just bullion/coin.

Bullion Direct is superior when it comes to trading and investing in bullion. They have a portfolio option which lets you buy bullion an accumulate it until you're ready to ship. Over the course of three months I made 4 or 5 different purchases and let it all sit in my portfolio. Because of this, I saved hundreds of dollars on handling charges, and when all was said and done I probably paid 25 dollars for shipping several pounds of metal. If it were apmex, you'd be paying much much more. They also have something called the nucleo exchange, which allows you to buy from other sellers (not bulliondirect's warehouse) and bullion direct acts as the middle man. All you see is the items and their asking price, if the seller decides to sell for your bid, bullion direct takes care of shipping it to you, collecting and evaluating the metal, and collecting the money to pay for it. There are some real deals to be had in the Nucleo exchange, and sometimes you can make a fair bit over market value depending on what you're selling.

Biggest disadvantage to Bulliondirect.com is that their catalog selection (what they sell) is minuscule compared to Apmex, and right now because of the high activity a lot of their items are delayed.

Hope this helps!

[powerofreason]

Maybe I would just have digital signs of the price of an ounce of gold and silver that update constantly with the spot price. During hyperinflation you could just sit and watch the numbers shoot up as the FRN becomes worth less and less. And of course I'd have to run around updating the price tags every hour so I don't let people get crazy deals lol.

[Conza88]

Maybe I would just have digital signs of the price of an ounce of gold and silver that update constantly with the spot price. During hyperinflation you could just sit and watch the numbers shoot up as the FRN becomes worth less and less. And of course I'd have to run around updating the price tags every hour so I don't let people get crazy deals lol.

Yeah maybe like those barcoded readers in toy stores... Big store, you can check the price on the tag/shelf is right.

You take it to a reader, scan it yourself and the info comes up on the screen.

Possible idea... :)

[tremendoustie]

Say I open a convenience store. One of the benefits of my store is that it accepts alternative currencies.

Do I label everything with 3 price tags? One for FRN's, one for gold ounces, one for silver ounces?


I'd just make labels in either FRNs or silver, and convert when necessary. You don't want to have to keep relabeling. Gold's probably too valuable to be practical, unless you're selling Rolex watches or something.



Do I just have the FRN tag and then convert over the dollar amount at checkout to the ounce amount using the current spot price of the metal?


Yep, that'd work. If it were me, I probably wouldn't bother checking at the time of checkout, I'd just have a general idea of what silver's running for. It's probably not worth worrying about a few pennies -- but, you could check.



Does the spot price necessarily reflect the real value of the metal coins?


No, an American Eagle right now, for example, probably costs at least $3 over spot. That's why I'd probably just agree on something with the customer: Hey, so, how about $14 for that AE, sound fair? Yep! Okay then ...



Say somebody walks in with some of these silver coins
http://www.goldeneaglecoin.com/categoryimages/1213912902.jpg
http://www.goldeneaglecoin.com/Silver/Silver_Rounds

and tries to pay for something worth say, $17.94? How the hell does that work? My main question I guess is, how do you figure out the value of the alternative currency compared to the FRN value?


Silver rounds are worth probably a buck or so over spot, so, I'd say, "I'll give you $12 for that round, sound fair?", and away we go :).



And of course theres the problem of fakes. How can I determine the purity of the metal coin? Do I just go by trust?


It's not terribly hard to tell what's real, if it's from a well known mint, or especially a well known coin like an AE, or maple leaf or something. You can tell by weight, color, etc. But if you really want to be sure, you could use something like this: http://www.centercoin.com/jewelry_supplies/gold_silver_testing_kits.htm, or even a like this: http://www.geocities.com/usernut2000/test.html



Can someone walk me through how this might work? I'm also looking to buy some silver (poor as I am) to preserve what little wealth I'll have when the inflation starts up. What would be the most easily tradeable silver coin (in case the currency collapses altogether)? Where should I buy from? Whats a reasonable premium to pay for a minted coin over the spot price of the metal?

Lots of questions I know :D

Well, the most well known and easily traded silver coin is a one oz american eagle. But, any well known, clearly marked round is easily convertible to cash. I'd go to a local coin shop to buy. Just feel free to take your time, look around, ask about stuff, and make sure you're comfortable, and you're sure of what you want, before you buy. Good coin shop owners will be happy to help, and answer your questions.

[powerofreason]

Thanks for the responses so far. I'll check this thread again tomorrow when I'm released from prison/school for the day.

[fr33domfightr]

It would seem easiest to mark everything with REAL MONEY. As such, they should be rock solid, no adjustment necessary.

I believe our currencies were designed properly (by weight) such that gold and silver could be interchanged without worrying about "gold" or "silver." Since the value of Silver is less than gold, it automatically made sense to have it be the smaller denominations, to make change. But the denominations were fixed, since they were the reference, not FRNs.

I think what you're seeing today are artificially controlled FRN prices.

See the wikipedia link:

http://en.wikipedia.org/wiki/Coinage_Act_of_1792


Using gold and silver means your prices will be marked VERY LOW, to equate to the proper FRN, but your prices shouldn't change much, only the exchange rate will, so it might cost someone more or less FRNs at checkout. Exchange rate can be made at the register, but needs to be tied in automatically so there's no calculating.

Once someone were to start buying at your store, they'd see the same prices day in and day out, because the real money is so strong. With FRNs, they'd be all over the place.

In your store, I should be able to get a coffee for a few pennies, of real money (copper?).


FF

[SLSteven]

Don't forget about the sales tax...which will need to be in FRNs

[Elwar]

I think the best way for a store initially would be for the store to have a small console for online currency or even paypal. They would have at the register the name of the account for you to transfer to. They have a console open with their own accounts open, you walk up to your own console and choose your online currency, put in your ID and PIN and transfer to that store's account. Once the transaction goes through...that's it.

Or you could have it all ready on your cell phone by the time you get to the register if you're equipped with a good phone.

[TonySutton]

I have been to several tourist areas overseas where they take the US dollar alongside the countries currency. (before the euro they would also take other European currencies) They had no problem converting with a slight adjustment in their favor for changing the currency.

I do not see handling competing currencies as being a problem.

[acptulsa]

Maybe I would just have digital signs of the price of an ounce of gold and silver that update constantly with the spot price. During hyperinflation you could just sit and watch the numbers shoot up as the FRN becomes worth less and less. And of course I'd have to run around updating the price tags every hour so I don't let people get crazy deals lol.

You'd have to run around jacking up the FRN price tags. If anything, the others would be going down or you wouldn't get any pms. But most likely, you wouldn't have to change them much at all, especially as compared to the FRN price tags. Which would enable people to see how it works.

And the most easily traded silver coin is the 1964 and prior U.S. silver dime. It is recognized, it is plentiful, it has enough nickel in it to wear fairly well in your pocket (silver is soft) and you never have to make change for more than a tenth of an ounce or so.

[wizardwatson]

It's great to see people are actually thinking about how all this would work. Seems a lot of people are transitioning from, "the current system sucks" to "what would a different system look like".

me like

:)

[powerofreason]

You'd have to run around jacking up the FRN price tags. If anything, the others would be going down or you wouldn't get any pms. But most likely, you wouldn't have to change them much at all, especially as compared to the FRN price tags. Which would enable people to see how it works.

And the most easily traded silver coin is the 1964 and prior U.S. silver dime. It is recognized, it is plentiful, it has enough nickel in it to wear fairly well in your pocket (silver is soft) and you never have to make change for more than a tenth of an ounce or so.

A 1964 or earlier dime is 1/10 an ounce of silver then right? Thats what your saying? And then a nickel would be 1/20 of an ounce, and a quarter would be 1/4 an ounce, so long as its pre 1964.

[powerofreason]

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[tonyr1988]

I have been to several tourist areas overseas where they take the US dollar alongside the countries currency. (before the euro they would also take other European currencies) They had no problem converting with a slight adjustment in their favor for changing the currency.

I do not see handling competing currencies as being a problem.

I had a similar experience in Hungary. Their local currency is the Forint, but they are trying to transition to the Euro. Some things are priced in Forint, some in Euro, but most places accepted both - they would just round up. :) It actually wasn't a big deal at all - some places also took USD.

Just pick one currency to price things in (probably FRN), and say you accept silver and gold as alternative methods of payment. Keep track of what the conversion rate approx is, and do that at the counter. Round up to take care of tax.