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 Replies: 14 / Views: 1,382 |
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Pillar Of The Community
Turkey
1205 Posts |
I wonder why some coins have a face value that has nothing to do with the real value?
I'm not talking about old mints but the brand new ones. For instance, here a new commemorative coin can be bought at the price that is stated on the coin. It's value increases as it is less available or as the metal price itself increases.
On the other hand I see that some other mints (AU for istance) put a face value while the coin is labeled a lot different.
Anyone who can explain that?
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Pillar Of The Community
3147 Posts |
In many instances it is not the metal but the mintage of the coin. When you add supply and demand it gets interesting. As long as there is a limited supply of any coin on the market and a large number of collectors wanting that particular coin for their collection prices can and will escalate! A mint may make 500,000 coins but if 10 million collectors want it prices spike very quickly! This could last a few days, a few months or years! It is all supply and demand! If you look at each coin in your collection ask yourself at what point would I sell this coin. 100% profit, 500% percent profit? When limited issue coins finally reach the hands of private collectors dealers will start offering much more money to get them back on the market as the most serious collectors don't ever intend to sell and the coin could be off the market for 40 years or more!
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Rest in Peace
United States
2884 Posts |
I think what is at work here is a monitized coin vs what would be considered a strictly commemorative coin or a bullion type of coin. For example an American Silver eagle has a "face value" of one dollar, but an intrinsic value currently about 8 times face value. All eagles since 1986 have been worth more for melt than face value. The gold eagles are another example ie... $50.00 face and more than 10 times that intrinsicly at current gold prices. Of course supply and demand can help to dictate the wide price differentials as already mentioned. Mike
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Pillar Of The Community
 Turkey
1205 Posts |
So you say that face value is just for having a value? Then how is it determined if the melt value is more?
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Pillar of the Community
Australia
853 Posts |
If you want to put things in symplistic terms there are 3 values on a coin and you will pay the higher of these 3 values when you buy a coin.
The first is face value...that is the value you will get if you cash it in at a bank.
The second is collector value...that is the value a collector places on a coin.
The third is metal value...the value f the raw metal the coin is made from.
In Australia...like the rest of the world I suppose...the face value of a NCLT coin is generally a nominal value with the metal value far exceeding the face value.
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Pillar Of The Community
3147 Posts |
I don't know about other countries but in the United States law requires the coin have a face value to be U.S. coinage. All of our bullion coins have relatively low values on the coin itself but the bullion content makes the coin much more valuable. Next, as Bigfella has described, comes the collector value and the rarity of the coin on the coin market. In a sense the collector sets the value of those coins as supply and demand are created. Coins struck for circulation, or spending coins, have their worth on the coin for transactions in normal everyday commerce.
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Pillar of the Community
Australia
1091 Posts |
The mint has to support itself. So they can make a dollar coin and sell it for say $50 and on their books have made $49 to cover costs. The $1 coin is legal tender and they send that to you. Tha Australian mint first started the silver Kookaburra coins at $5 face value. The following year it was changed to $1. No sense giving away four extra dollars profit. |
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Pillar Of The Community
Turkey
1205 Posts |
Thanks for the explanations.
Then it is only our mint that puts the face value as coin's "real" value. For instance the latest ones have a face value of app. 15 USD (the melt value app. 7,5 USD + 7,5 design & labor). I always thought that value is like a label. Since now:)
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Pillar of the Community
Australia
853 Posts |
quote:
Originally posted by toast
Tha Australian mint first started the silver Kookaburra coins at $5 face value. The following year it was changed to $1. No sense giving away four extra dollars profit.
Toast the reason for this had nothing to do withgiving away $4 profit. The Perth Mint is a private mint fully owned by the WA government. It is not federally owned unlike the RAM. It does however have the right to mint legal tender coins backed by the Commonwealth. You will have noticed the first year of the kookas also was the first year of gold and platnium legal tender coins. They too had a high face value. After the first year of production the government could see a big problem. If metal prices dropped then the government could potentially have to payout large sums of cash on the face value of these coins that were always meant as bullion (ie metal price greater than face value). To solve this they made the face values a "more" nominal amount to minimise the chance of this ever happening. |
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Valued Member
United States
108 Posts |
Take a look at the new 2006 gold 1oz panda.
Face value is 500 yuan now, new this year. A good deal if gold drops.
The value at the will be higher than the gold itself.
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Pillar of the Community
Australia
1529 Posts |
quote:
Originally posted by Vic
Take a look at the new 2006 gold 1oz panda.
Face value is 500 yuan now, new this year. A good deal if gold drops.
The value at the will be higher than the gold itself.
Are you sure  Have you checked the exchange rates According to Xe.com, a currency converter that I use all the time, 1 yuan is US 0.124035....500 Yuan works out to USD$62.0174. I cannot see how I can benefit from what you say in your post. |
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Pillar of the Community
Australia
1091 Posts |
Bigfella,
I thought that when any mint makes legal currency the (face) value of that currency goes into a treasury report to account for it for inflation and a balanced budget etc.
It's like when the government prints paper money, The face value counts in the overall budget. Otherwise they could just print as many millions as they need whenever they need more. This I believe is why we hear stories of wheelbarrow loads of worthless bills.
When the mint send a five dollar coin out to a customer, it has cost the mint an extra $5 face value, as an expense. If the mint sells the same coin but with a face value of one dollar then they have saved 4 dollars.
Yes, I suppose that they could be worried that an ounce of silver could fall below $5 an ounce, but then the coin would just gets treated like any other $5 coin that's made of metal that is worth less than it's face value. It's legal tender.
I suspect the price of the metal was the excuse and not the reason. I'm not sure but thats just my opinion.
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Pillar of the Community
United States
1203 Posts |
I would agree that all that has been said on this topic is fundamentally true, but there is a couple of very basic things that have been left out of the equasion. No.1 How much are you willing to pay for the coin? And No.2 How much do you believe it's worth to you? These fundamental items dictate the price of silver and gold in the long run and must be included in the pricing of anything along these lines. IMO  |
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Valued Member
United States
108 Posts |
Posted - Today : 10:58:10 AM -------------------------------------------------------------------------------- I would agree that all that has been said on this topic is fundamentally true, but there is a couple of very basic things that have been left out of the equasion. No.1 How much are you willing to pay for the coin? And No.2 How much do you believe it's worth to you? These fundamental items dictate the price of silver and gold in the long run and must be included in the pricing of anything along these lines. IMO A little help please to find the fair value of said coin? Is a Grey sheet the only way to deter min the fair market price? Pcgs prices are inflated and , therefore if you use this price you may pay to much correct? |
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Pillar of the Community
United States
7123 Posts |
Closed auctions are another way to find out what the market is bearing on most coins that are actively collected !!
But if you pay close attention to what dan said :No.1 How much are you willing to pay for the coin? And No.2 How much do you believe it's worth to you?
These 2 prices are both personally oriented .
every collector knows that the right coin will and often does sell for multiples of market value,dependant upon these two market rules.
Rick
Edited by Metalman
01/30/2006 1:52 pm
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Replies: 14 / Views: 1,382 |
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Posted 01/29/2006 8:32 pm
