AOCS barter medallions are valued within a nationwide barter network at fifty units per troy ounce. While the type of unit is not defined, participating businesses accept one ounce of AOCS silver in exchange for fifty dollars worth of goods and services. Given that the face value does not seem to relate to the daily spot price of silver, two frequently asked questions are how does AOCS determine the face value and why is there an AOCS face value in the first place?
The American Open Currency Standard uses a valuation formula to determine the AOCS face value that’s based on the 30 day moving average on the spot price of silver. When the 30 day moving average of silver reaches 41.50 and remains there for sixty days, one ounce AOCS barter rounds will upgrade to an AOCS face value of 100.
So why is an AOCS face value so important? Why, as some have asked, can’t we just let the free market determine the worth of AOCS barter medallions, or any kind of silver rounds for that matter? Here are six reasons why the AOCS face value is absolutely essential to the functionality of an economy based on AOCS currency.
1. The AOCS face value allows for seamless financial record copper bottle keeping for a business who continues to accept dollars, also known as Federal Reserve Notes (FRNs) and AOCS barter medallions as payment for goods and services. No one has to obsess over the daily spot price. A merchant simply accepts AOCS barter rounds at fifty dollars per ounce, records it as such, and doesn’t have to think about it any more.
2. The AOCS face value makes the transaction itself convenient for the buyer and seller. Again, no obsessing over the spot price, no complicated calculations of how many groceries can be purchased with today’s spot price vs. yesterday’s spot price. The customer can pay for the goods and be out the door.
3. The AOCS face value brings stability to the silver currency allowing people to accurately predict their expenditures. You can imagine the consternation a homemaker might feel upon shopping at the grocery store the day after the spot price of silver dropped by a few dollars and was faced with having to pay more silver for the same amount of food she could have gotten the day before. Imagine the even worse hypothetical scenario of an employee getting paid in silver at the spot price, then having the spot price drop between payday and the day the rent is due. He suddenly has to pay more silver than he can afford based on what he was paid. With a face value, he can know exactly how much silver he’ll get paid and how much he’ll have to pay in expenses.
4. The AOCS face value provides incentive to actually spend the silver. Usually when people buy silver rounds, they pay a premium over the spot price and this is true with silver rounds for sale at AOCS Mint. If I had to pay a premium to obtain the silver but I must spend it at the spot price, I have just lost money on the transaction, so why would I do it? With the AOCS face value I can buy silver rounds at the spot price plus a premium, then spend them at the face value and gain purchasing power in the process because the face value is so much higher than the bulk value.
5. The AOCS face value brings stability to the overall network of participating businesses and customers. Under the elusive free market, three merchants selling the same product in the same town could value the silver at three different values relative to FRNs. Customer then are forced to spend time evaluating each purchase made with AOCS approved silver to determine where they will gain the greatest value. The merchants who assign the silver rounds a higher value will be pushed out by those who assign it a lower value. Eventually, the trade value of the silver will revert back to the spot price. At this point it ceases to be a currency and people will stop spending it.