Legal Tender Values
Onastone
Posts: 4,027 ✭✭✭✭✭
Bullion is legal tender, but the legal tender value for silver or gold is ridiculously low....seems like the face value of an ASE should be set higher than a dollar. Why wouldn't the redesigned Eagle have been changed to keep up with inflation? At least the new Liberty gold coins are valued at $100, but that's still ridiculously low. Just seems to me that putting ONE DOLLAR on our pure silver Eagles needs to be updated.
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They aren't intended to circulate in commerce. The government gives them a token face value to make them money so they are covered by the anticounterfeiting laws.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Exactly.
They want the face value to be ridiculously low so they aren't spent. If the face value of an ASE was $25, whenever silver was less than that number they would get spent.
A good example of why they don't have high face values is the problem that arose some years back with the Canadian one ounce silver bullion coins that were valued at $5. At one point the value of silver declined below $5 and holders tried to cash them in at face value. The Canadian government quickly reacted by putting rules into effect that made cashing them in in any quantity very difficult.
It doesn't need to be updated as it's done intentionally. There's a desire for these coins to never circulate as our commercial systems, including banks, vending machines, and merchants are not set up for it. Imagine trying to spend gold coins at a store or, even better, the bi-metallic Library of Congress $10 coin?
The underlying issue is that most countries are on a fiat system with no desire to go back to a gold standard. Introducing this could muddy the picture here with 2 classes of money.
The example of the Canadian coin posted by @291fifth is an example. Of course, one can debate whether they should be allowed to circulate, but today, they are not intended to.
The most extreme example that I can think of is the 5 oz silver ATB Commemorative pucks which have face value of a quarter dollar.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
As I recall, the US gov't adds the face value to the cost of the bullion when it's sold to the authorized dealers. So, higher denominations would mean higher premiums.
Government controlled and certified tokens of precious metal, intended for government profit. Cheers, RickO
Our monetary authorities do NOT want anyone noticing how far gold has risen.
But it's fun in a coin shop to see folks going nuts over the price when the face value is fifty bucks.
Thanks for the replies....fascinating how that all works...token values for anti counterfeiting laws and to keep them out of circulation! And I did think of the 5 oz puck with the value of a quarter!!!!!
In 1929, you could exchange one of these...
for one of these at the bank.
Today, you'd need around 100 of the notes to get one of the coins.