Why Put "Bogus" $ Amounts On Bullion Coins Anyway?

This is why I like Libertads so much.

Yes a "coin" has a currency value where a medal does not. If you really wanted to, you could turn in your ASEs for face value at a local bank, as that is their monetary worth. Their *intrinsic* worth is of course much higher.

Also face vs intrinsic can be rather disjoint. Take copper pennies, nickels and modern $1 coins. The first has intrinsic value over face, the middle has intrinsic value nearly equal face, where the latter's intrinsic value is a fraction of face.

Another way to think about it is that face value is a legal definition that pegs its worth as accepted by a government where intrinsic value is determined by the market.

With bullion coins it is an advantage to have face values under their intrinsic worth as such a coin's major value is derived from its intrinsic value. If it were close enough that if the market took a dip, people could potentially "rules lawyer"-fenagle significant profits unjustly. The same thing happens with circulating coins that are too close to their face values. If the market rises, the coins disappear from circulation as money and are destroyed for their metal value, effectively putting the dole on taxpayers to replace them.

I would love to do a hidden camera thing following someone trying to spend a $50 gold eagle at a local bank or maybe a grocery store. Though it maybe legal tender I believe you would have a hard trading/selling it to most business owners or their employees. I think people as a whole have no idea that a 1 oz gold piece has $50 monetary value, heck most of my employees would think it was fake or someone trying to pull some other shenanigans.

My brother got 2 SAE's about 6 months ago from a lady that came in and used them for the extra cash she needed to buy her cigs.

I am waiting for the day somebody wants to trade me a $50 GAE, heck even a $20 gold piece for a tank of gas. That would be a "red letter" day.

Actually, where the face value of a coin is far below the cost of production, the seigniorage is negative. At current silver prices, it costs the mint $30 or so to make an ASE, but they go on the Treasury books as only $1 - that's negative $29 seigniorage. ASEs are only profitable for the government because none of them are actually released for face value; Treasury onsells the entire lot to bullion dealers for more than it cost them to make.


As others have stated earlier: the reason governments do not put "realistic" face values on their bullion coins (i.e. face values just below the metal content value at the time of issue) is because sometimes, precious metal prices go down, rather than up. And that would spell bad news for the government that issued those coins.

Suppose at the peak of the silver spike in 2011, the government had issued a 1 ounce silver coin with a face value of $40. Bullion prices have fallen since then; if you took that $40 coin into a bullion dealer right now, they'd give you bullion price for it, $27. But if it were legal tender for $40, you could take it to the bank and get $40 for it. Even if your local bank had a policy refusing to accept such coins, they're still legal tender - so you could pay your tax bill with them, or something.

Suppose the bank has no problem accepting it. In such cases, the banks send "weird" coins back to the Treasury. In effect, your "redeeming" the $40 coin forces the government to buy back its own coin, at a loss.

Governments certainly don't want to be accepting such losses - issuing coins is supposed to be guaranteed money-maker, not a money-waster. Many countries (including Australia and Canada) have learned the hard way that issuing lots of high-face-value coins might earn lots of revenue short-term from seigniorage, but it can come back to bite you in later years if the market for the coins collapses and people choose to cash them in instead. In extreme cases, such as what has happened in the Marshall Islands and Cook Islands, governments faced with having to buy back hundreds of thousands of dollars worth of high-face-value coins have unilaterally declared those coins to no longer be legal tender.

Of course, it's an option of last resort - a government declaring that it no longer recognises its own coinage becomes the laughingstock of the world. And, thanks to the super-low face values, it's an option the American government is not likely to have to exercise. If the price of silver falls below $1 an ounce, the government will have a lot more to worry about than a bunch of silver hoarders trying to cash in.

the denomination is put on a nclt coin simply to give it legal tender status.
Everyone is talking about the intrinsic value of the coin being way above that of the legal tender value.
Here's an interesting one
36 g 92% Copper,2% Nickle and 6% Aluminium
face value $5 AUD Intrinsic value a few cents



I doubt if any of these have been cashed in.
Regardless of the metal composition of NCLT coins they are rarly cashed in simply because they were released as collector coins and a premium was charged when sold at the mint.

The Marshall Islands still recognized all their coins as reedeemable, but the restrictions put in place for redeeming them are so stringent that its virtually impossible to do so. For example I believe they require the original franklin mint purchase invoice in order to redeem the coins, and on top of that there are daily limits to how many coins you can redeem.

Personally, I would be very happy to see new gold and silver coins that have no dollar denomination on them at all. All they really need is the weight, purity, and type of metal on them. If that requires rewriting a law, then so be it. Merchants are smart enough to price things in grains, grams, or whatever the new standard would be.