Assigning Dollar Amounts To Bullion Coins

Was hashing this question out with another member on a different thread
so i thought i would dedicate one to the question on assigning value to
Bullion coins.

First examples: would be the AGE,S

1. 1 OZ Gold (stated value as $50)

Then you have the APE,S

2. 1 OZ Platinum (stated value $100)

Last time i checked Gold was about $300 higher then Platinum so placing
A monetary value on a bullion coin is rather ridiculous from this point of view
The only way that it makes even a little sense is for counterfeiting protection
But still.....

I think its a flawed system

There has to be a better way !

 

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Since you are no longer on a gold or silver standard the government can place a value on any item it mints or prints . It matters not the material used to produce it,what matters is that piece of currency is backed by the government that has issued it.

 

There have been $100 1oz gold coins from the US Mint as well. The face values are arbitrary and serve a symbolic purpose only. Don't overthink it.

 

Interesting little facts on this:
The Krugerrand never has a value because it's supposed to always be tied to the world price of gold.
The Canadian mint "royally" screwed up by offering $20 minted collectible silver coins for $20, but now that the price of silver has fallen from highs a few years ago, they had to cease the program due to losses.

 

The coins cost less to make than they did before, so now they're having losses?

 

Remember all the talk during the last financial crisis about minting a $1 trillion platinum coin?

They can put whatever face value they please on platinum, and presumably on gold or silver. The ATB 5-ounce pucks still proclaim a face value of 25 cents. I haven't yet heard of someone trying to spend one at face value.

My personal pet peeve was having 1-ounce gold eagles with a $50 FV, 1/2 ounce $25, 1/10 ounce $5 -- and 1/4 ounce at $10. Makes me want to go to the Mint and demand that they make change for a $50 eagle with five $10 eagles, repeatedly. Or let me cash in two $5 eagles for one $10.

 

Personally, I think its just to say that "the coin has legal tender" plus, even though there is a lower price platinum is a lot more rare than gold.

I think it would be so cool if the Mint did something like a $20 for $20 series and gave the coins Circulating Legal tender status, to get everyone collecting coins and to re-introduce precious metals into the monetary system.

 

Look into that more. Banks and merchants aren't required to accept those as payment. They weren't losing money on them, people were just upset that they believed they were assured of getting face value when they were not

 

People started dumping the coins at banks and post offices when the price of silver in the coins was lower than the face value of the coin. The RCM was forced to pay the face value (to banks or via post offices back to the consumer). People also stopped buying new ones from the mint when the price of silver dropped. The RCM lost money due to lack of new sales in the last few years and by having to pay back the face value on unwanted coins.

Article and more info here:
http://www.coinweek.com/world-coins/armageddonroyal-canadian-mints-20-for-20-silver-coin-program/
Unfortunately for the Mint, the value of silver bullion has dropped around two-thirds since its 2011 price. The quarter-ounce of silver contained in these $20 coins now is worth less than $6 Canadian, therefore inspiring owners to cash them in.

Non-circulating legal tender items (such as the Face Value series) are designated as collectibles, and businesses and banks are allowed to take the $20-for-$20 coins at face value if they so choose but they are also free to reject them.

The Royal Canadian Mint has an agreement with Post Canada. Those customers (whose banks refuse to take them) who wish to return the coins to the Mint are sent a shipping label that includes insurance.

 

If you had a $20 bill and a $20 silver coin, which would you spend?

We tried having silver and base-metal coinage circulating together in the 1960s. It didn't work. The silver was universally hoarded.

 

so lets say for instance I go to the store and I don't have any money other
the a 1 OZ AGE face value at $50 and a APE 1 OZ valued at $100 and my bill
comes to $75 so at face value I could not afford to pay the bill with my AGE even
though it is worth more by about $300 then then the APE ? I find this system
to be flawed assigning a useless dollar amount to a bullion coin is mind boggling

 

Well let's hope you are never stuck in a store with only platinum and gold coins.

I do believe that when US platinum coins first came out platinum was worth more than gold if that helps any.

 

Symbolic how ? there is no point to it when the value far out ways the amount
assigned why not make it worth 25 Cents if it,s symbolic then it really doesn't
matter just saying...

 

Just using that as an example of course but trying to drive the point home
even if it is a less likely scenario and yes there was a time when Platinum did
set atop the PM throne but the dollar amount assigned be it $50, a $100 or
what ever is really irrelevant and should no even be on the coin since there
main purpose is there bullion content.

 

The era of attempting to circulate precious metal coin should be thrown out of the window.

There is a good reason why the Chinese used to chopmark silver coins to death in the early 20th century - to determine whether they are genuine silver. Even so, some merchants would only accept them at a discounted rate for certain coins.

Now fast forward to 21st century where super counterfeits have become a major issue. I would be highly paranoid to accept some bullion in commerce when it could easily be gold plated lead.

 

Well the methods for testing are easy enough maybe not as simple as a
Pen but there available, by the same token taking a monetized bullion
Coin and using that for the non bullion value would be crazy as the amount
assigned would not even come close to the bullion value.

 

If I owned the store, I'd give you a "break" and say I'm knocking $25 off your total, so you can decide for yourself whether you want a $50 bill as change (when you hand me your platinum oz) or just want to give me the double eagle to cover your purchase.

 

That would have to be one hell of a break...LOL

 

Don't store your wealth in US Gold, Platinum or Silver coins if you expect at any time to spend it as coinage.

Store you "money" in Cash. Use spare/excess money into PMs.

PMs always have to be converted to cash (either through trade, barter, etc to a monetary value) before actually being "spent".

I store "wealth" in PMs simple as a pretty method of wealth holdings, which, hopefully in the long term future will be worth more than it currently is.

This is the difference between "money" and Precious Metals. One has wealth in PMs based on spot price, and the "market" to buy/sell is different than your "grocery Market" which identifies all coinage by it's stamped worth irrelevant of material.

If you put a 1915 dime into the Self Serve Payment Machine to buy a loaf of bread it shows that you paid 10 Cents. The same as a 2017 dime. You still owe the machine a Dollar to buy that loaf of bread.

 

It was your example. I merely answered your question and solved your problem in a manner that eliminated the disparity that you described.