What is the logic behind face value of bullion coins?
bronco2078
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Coins made from precious metals were first valued according to precious metal content which led to fluctuation in the size of certain coins and also to hoarding or melting of coins in which the precious metal value diverged from face value too much.
In the 1800's we started to reduce the content of coins to make the face value exceed the value of the metal to keep the coins in circulation. Then in the 1900's coins were debased as metal prices climbed above face value.
In another thread we were discussing premiums for ASE's which have a face value of 1$. What are the risks of owning 1$ silver ounces or $50 gold ounces over undenominated bullion?
The governments claim that it was done to make these coins legal tender but I don't see any advantage to that other than perhaps being able to cross international borders carrying them without paying a customs tax.
I can see situations where that $50 face value on a gold eagle would harm me , I can't see any where it would help me.
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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
<< <i>By giving them a token face value and by making them legal tender they fall under the anti-counterfeiting laws that apply to our money. Counterfeit them and the Secret Service can come after you. >>
Quite true.
Also, people prefer coins over non-coins. The perfect example is the American Arts Medallion series. U.S. made, well known, yet we could not sell them because they were not "coins." Often ended up melting them.
<< <i>
<< <i>By giving them a token face value and by making them legal tender they fall under the anti-counterfeiting laws that apply to our money. Counterfeit them and the Secret Service can come after you. >>
Quite true.
Also, people prefer coins over non-coins. The perfect example is the American Arts Medallion series. U.S. made, well known, yet we could not sell them because they were not "coins." Often ended up melting them. >>
True but I think the convoluted buying process involving the Post Office contributed to their lack of popularity.
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
<< <i>
<< <i>
<< <i>By giving them a token face value and by making them legal tender they fall under the anti-counterfeiting laws that apply to our money. Counterfeit them and the Secret Service can come after you. >>
Quite true.
Also, people prefer coins over non-coins. The perfect example is the American Arts Medallion series. U.S. made, well known, yet we could not sell them because they were not "coins." Often ended up melting them. >>
True but I think the convoluted buying process involving the Post Office contributed to their lack of popularity. >>
I'm talking about the aftermarket in the present. Given a choise of an American Eagle at spot plus $85 or an American Arts medallion at spot, most people would take the coin.
I'm more curious about the very low , almost nominal values assigned to them. What would be wrong with the idea of putting a $50 face value on an ASE? By 1986 no one was thinking much about silver coinage anymore maybe the fed didn't want them to compete with fiat dollars in daily commerce? If ASE's had a $50 face value and I had a choice of 1 of those or a $50 bill I would take the metal every time.
There have been bullion coins with high face values has anyone ever purchased anything with one? The canadian 5 and 10 dollar olympic coins for instance.
Recently canada has made some silver with high face value and there have been people who found the banks up there were refusing to take them.
A mint could pick a very high or very low value it seems to me and neither helps the buyer much.
canada put out 5 and 10 and 20 dollar coins that at times had a face value higher than the silver content . You would think since they were legal tender then you could bring them to a bank but they flat out refuse to take them at face value. The $20 coins were worth less than face value as recently as 2010 , people tried to cash some in and were turned away. Since then they have made fractional ounce $20 coins that they also refuse to accept at banks.
Our US bullion coins have very low face value . I think that face value would only be used against the holder of the coin not to his benefit.
if they confiscate precious metals maybe they will generously compensate you $50 an ounce for gold or 1$ an ounce for silver.
it remains to be seen what would happen if a US Bank were asked to take a $50 FV ASE. It is still a hypothetical, and I do not know Canadian Law on their coinage.
here is a news article
it comes down to no one is forced to accept anything by law. It is legal tender, but no one is required to take all forms nor any one form of legal tender.