Re: Face value on gold coins

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

http://www.usmint.gov/mint_programs/...can_eagle_gold

Augustine wrote:

> I'm left wondering if one is the value as fiat
> money and the other as purchase price.

Yes.

--
.Bill.

>From reading both sites, first these coins may only be purchased
through certain dealers. These dealers operate as a gold exchange,
hence the customer pays at least the market rate for gold. Second the
coins may be used as currency when say, shopping, but cashiers and
such are obligated only to treat the coins' value at the value
embossed on them.

The coins are a way to invest in gold. The government values them at
the price of gold and sells them accordingly, as long as the price of
gold means the coins' are valued over their embossed value.

"Bill" <> writes:
> Augustine wrote:
>
>> I'm left wondering if one is the value as fiat
>> money and the other as purchase price.
>
> Yes.

The fiat price and the value of the medium almost always diverge.
In most cases, the fiat price is vastly higher than the medium
price. Think of a dollar bill. The paper is worthless, so it
trades at the fiat price. Currency generally trades at whichever
price is higher.

Pre-'64 silver coins illustrate this nicely - a pre-64 dime
has a fiat price of ten cents, just a it always had. But you'd
be nuts to give one away for ten cents because the silver from
which it's stamped is worth more. You could melt it down and
sell the raw silver and make more. So folks pay (closer to)
the value of the underlying materials. (As late as the early
'90s, I used to periodically find pre-64 silver amongst change
I'd get and I always used to keep an eye out for it. I'm
pretty sure nobody's given me any pre-64 silver in at least
15 or 16 years and I've long since stopped looking. But when
it happened, I always felt like I'd won a prize or something.)
Note, though, that when they were actually being pressed, the
fiat value was higher than the materials value. Silver went
above a buck/oz around '65 and has never fallen below $4/oz
since the very early 70s. Quarters and dimes (and half
dollars) haven't been the same since.

At one point or another, the value of materials going into a
penny was worth more than the fiat stamped value on them (or
close enough that it was starting to look ugly). In '82,
they switched to copper plated zinc for this reason.

As far as I know, the American Eagle Gold, Silver and Platinum
bullion coins are the only money being pressed by the US Mint
which has a fiat value well below the value of the materials,
which makes the fiat value on them basically just a matter of
nostalgia. Unless, as someone else pointed out, gold goes
below $20/oz, silver goes below $1/oz, or platinum goes below
$100/oz.

Some nice pictures of the current coins here:
<http://www.usmint.gov/mint_programs/american_eagles/index.cfm?action=american_eagle_bullion>



--
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<> wrote in message
news:...

> (As late as the early
> '90s, I used to periodically find pre-64 silver amongst change
> I'd get and I always used to keep an eye out for it. I'm
> pretty sure nobody's given me any pre-64 silver in at least
> 15 or 16 years and I've long since stopped looking.

A few months ago, I received a few silver quarters from a change machine. I
thought about running all my bills through to see if there were any more,
but didn't.



Brian
--
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