Here?s an interesting exercise that will illustrate the value of real money versus that of fiat money that is subject to inflation.

Let?s use variables that we are all familiar with; the price of a gallon of self-serve unleaded gasoline. We?ll compare how much a $1.00 FRN will buy against silver.

In our first example we?ll use a simple comparison. Today (09/22/08) I filled up in Queen Creek, AZ and paid $3.389 a gallon. Today silver closed at $13.50 an ounce. A silver American Eagle coin contains one ounce of silver and has a minted value of $1.00USD. So we can see that a silver American Eagle nearly four times more valuable than a $1.00FRN.

Let?s look at how silver holds value over time in comparison to a fiat currency.

Using the chart found here: http://www.eia.doe.gov/emeu/aer/txt/ptb0524.html we find that the first year that regular unleaded fuel prices were kept was in 1976. That year a gallon of gasoline was $1.53.

The last year that coins were minted with 90% silver was 1964. Using this chart: http://www.coinflation.com/silver_coin_values.html we can calculate the silver value of a coin based on today?s spot price. In this case we?ll use a Kennedy half dollar. The silver value of that coin would be $4.8539. Since this coin has a minted value of $.50 we?ll double that value to get approximately $9.70.

So, two (2) 1964 Kennedy half dollar coins would have enough real value to purchase 2.86 gallons of gasoline, whereas, a $1.00 FRN will only purchase one-third of a gallon. Making the two silver coins, with the same minted value, over 8.5 times more valuable.

Here?s another test. Using the inflation calculator found here: (www.westegg.com/inflation/), we find that what cost $1.00 in 1976 would cost $3.60 in 2007. They didn?t have data loaded for the current year, but I wouldn?t be surprised if when they do it?ll be pretty close to our aforementioned exercise.

So, it seems to pretty much settle the question about what type of coins to store for a TEOTWAWKI situation.

419!