Does anyone know the reasoning behind the U.S. using a $1.00 denomination and Canada using a $5.00 denomination for their 1 ounce bullion coins. I really don't. "Just the facts 'mam". For you young whippersnappers that's Dragnet.
The difference is ... pretty much arbitrary, I think. The Britannia and the Philharmonics bullion pieces (1 oz gold) are £100 and €100 for example. You cannot get such coins at face value anyway. Christian
I tried to research it...but found nothing...all I found out is that Canadians love their bank notes over their coinage. Just my honest opinion. MJH
It's probably just marketing, making people think they are getting "more" for their money. I have one of their $20 for $20 bullion coins which only contains about 1/4 oz. of silver. Just think, it doesn't cost their government anything for the high face value, so they make a huge profit on segniorage by selling silver for over 4X spot price. Plus if they sell them for face value there is little downside risk to consumers.
My guess, the true reason is legislative meddling in the coinage authorization acts. By the way, do Canadians pay that whopping provincial sales tax on bullion coins?? If so, there's another reason for inflated denominations -- more sales tax for the provinces. Follow the money.
Most precious metal are tax exempt as long as they meet a minimum purity level (at least 99.50% in the case of gold and platinum, and 99.9% in the case of silver).
Almost true. One guy in Nevada was cheating on taxes by paying employees in bullion and claimed it was payment at face value. Didn't quite get away with it. http://www.reviewjournal.com/news/employers-gold-silver-payroll-standard-may-bring-hard-time
I guess the only reason I can think of is that Congress doesn't pass Canadian laws, and the Canadian Parliament doesn't pass US laws. Other than that, my impression of assignment of face value to bullion is that they're arbitrary values that are far below melt. With silver having been below $5/oz in parts of the '90s, a face value of $5 would have become problematic. Of course, Canada was producing their $5 face 1 oz. silver coins at the time, but I'll fall back on my first explanation here.
Don't know about Canada, but I remember reading years ago the US went with the $1 denomination on the 1oz bullion coin out of tradition. We're used to a $1 silver coin here, not say a $5 silver coin. As a psychological marketing viewpoint, it was probably a genius idea, as I doubt a 1oz $5 coin would have sold as well in the US.
I'm always amazed at what they buy, Ken. But even they've had a difficult time buying, for instance, the silver pucks with a 25 cent denomination. Even modern bullion stackers seem to have a hard time buying them. The only reason I can see is psychological.
That line of thinking never really entered my mind Guy........you may be on to something. 'Pucks' never appealed to me, but it was more the price, than the denomination, that dissuaded me.
Is it maybe due to seniorage? I know they are sold at spot plus premium but if anyone ever tried to actually use them it's legally only worth a dollar versus the five in Canada. So that's an extra $4 dollars to the government? Just a wild guess on my part!!
I think it was the Spinal Tap mentality.... " Oh. Your Marshall stack only goes up to only 10? Well ours goes up to 11"
