Why is $800 one ounce gold coin a "Fifty Dollar" coin?

This is a newbie question to be sure, but what is the story with the values on gold coins the mint makes? For example, they have some one ounce golden eagles on there selling for $800. Yet, the coin is designated as a "50 Dollar" coin on the reverse.

Does this mean if I was stupid enough to take it out and use it to buy groceries it can be used as legal tender, but only in the amount of $50? Why would the coin be given a face-value at only $50 if the price of gold is so much higher than that? Is it just "because the mint says so" regardless of the actual gold value of the coin? The same way an old silver quarter is worth more than it's face value?

 

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The mint doesn't want them to be medals so they put a value on them. Technically, they are legal tender so you could spend them for $50. Most merchants won't accept them (that's my guess at least, I've never tried) since they'd have no idea what they were.

The reason they're worth $50 and not more is if the mint made them $600 or somthing like that but then gold went way down in value they might start circulating or something like that. Actually, I don't see why that would matter since if they sell a $500 face value coin for $700 and gold goes to $10 an ounce (yeah right) who cares if people use them for $500, the mint would still make a profit. I think that's the logic but it still doesn't make a whole lot of sense. Perhaps someone can further my answer.

 

Technically, yes. You could spend it for $50 worth of groceries. It's legal. Also, as you note, quite stupid.

Back in 1996 when silver was about $4/oz, I "celebrated" my last day in grad school by buying a cup of coffee with a Silver American Eagle. These have an equally arbitrary face value of one dollar. The barista barely batted an eye, and tossed the big coin into the till, and I got my coffee.

As for why a one ounce GAE is $50 -- who can say. It has to be some face value, else it wouldn't be a coin. Not that even that makes much difference -- a one ounce gold medal is worth the same as a one ounce gold coin, bullion-wise. But a lot more people collect coins than medals, so there's some consideration there. The Mint did try gold medals back in 1980-81, and they were a collossal flop. So, they just picked a face value and went with it -- no particular reason, just that it had to be sufficiently below the melt price of gold (otherwise I guess people would spend them!).

 

Oh...I bet the guys running the corner stores would take that gold coin for some gas and munchies

 

i will accept

if someone spend one ounce of gold american eagle as $50.00 to me. i would accept it right away. no question ask. this also applied to american eagle one ounce silver as $1.00.

 

I had a similar question a couple weeks ago. Here is the thread:

http://www.cointalk.org/showthread.php?t=20970

I guess I could argue both sides of the issue. In the end it is probably better for the hobby to keep the denominations small.

Best Regards

Darryl

 

yea and the places by me, they'ed make ""Gold Teef"" or Multi-finger Rings ...

 

http://www.law.cornell.edu/uscode/html/uscode31/usc_sec_31_00005112----000-.html

Here is a link to the US Code that sets the value to be placed on bullion. I believe it is required that all coinage produced by the US Mint (not medals) must display a value. In the case of bullion however it is more a formality that a realistic value. I am not certain how that compares with bullion minted outside the US, ie. Maple Leafs, Krugerands, etc.

 

I think the fact that they monetize bullion coins, even if at rather trivial amounts, makes an important psychological difference for some collectors who do not want to get caught up in collecting medals, but will gladly collect US gold coins because they are "money." The fact that they are official US coins and money gives them more collecting appeal to some.

 

Many have heard my wife's story. Long story short, while working at a gas station, she got a 1 oz platinum ($100 face value) to pay for gas and cigarettes.

 

Bullion is the intrinsic value determined by the weight and purity of the base metal. They're not intended as currency. Bullion trades on markets much like the stock market. You can hold bullion in an IRA for example. You can also invest in mutual funds or exchange traded funds which hold the underlying bullion. The numismatic attraction of bullion is recent and is the reason inidividuals cannot purchase non-proof bullion directly.

 

I contacted Scotiabank in Canada [a big silver dealer] a couple of years ago to ask them whether the $5 silver maple leaf could be redeemed at face value if the price of silver went below $5 per ounce. They answered "no," that the legal tender laws for bullion were different from circulation coins and it could only be redeemed for bullion value. They said that Canada puts a $ value on the coin to be able to export it to other countries duty free because under some trade law provisions it is considered money and escapes taxation if it has a legal tender value stamped on it. I don't know whether any of this influenced the decision to put a nominal face value on US bullion coins.

 

Canada put limitation on theirs because several years ago the value of silver DID drop low enough that the Olympic commems and maple leafs could circulate and did start to do so. Rather than have to redeem the coins the Canadian government put limits on the amount that could be presented for redemption effectively give them very limited legal tender status. I belive you can't require anyone to accept more than one of them at a time.

 

Golden is like how they describe costume jewelry and those just-as-cheap-looking "Sac" dollars. You mean gold eagles.

So you buy a used car with this $50 coin and the seller gives you $300 in change because he's asking $500 for the car and he realizes the coin is worth $800. And the IRS (of course you can count on this :rolling treats the transaction as a $50 purchase.

 

Please tell me she bought that for herself...(I haven't hear that story)

 

Skinnyeddie,those $50 gold Eagles are actually a type of medal-coin.I know of one instance where a bullion coin was offered for sale through the banks (monetisation) & other financial institutions such as a credit union.It was NOT in America,but Canada.It was those Olympic Games commemoratives (1973-76) that were actually sold at face value,even though they are silver,so technically,it wasn't a medal-coin as such.

Aidan.

 

Wish I'd known that, down here in the states the Olympic commems sold for double face.

 

One reason American gold coins are given a dollar amount could be that if the government ever confiscates gold (it's happened before), then all they have to pay to "buy" it is the dollar amount stamped on it.