Gimmicks are meant for collectibles, not investments: Gold and Silver Mine | Gold and Silver Mine

When is a coin not a coin; that is, when is a coin an object not meant to be used for the purpose of buying or spending?

I’m seeing more and more instances of countries, the United States included, that are employing gimmicks in their coinage process to encourage collectors to buy their product. Anything from odd-shaped coins, (for example, our mints’ production of the baseball/glove dollar and half-dollar coin that was concave for the glove side and convex for the ball side), bimetallic coins, colored coins, holographic designed images on coins, coins with the Superman logo, Star Wars and Star Trek characters. I could go on, but their sole purpose is to compete for collectors’ dollars.

Since these coins are issued under the direction and control of the government of the countries that mint them, rather than by private mints, they have value in the monetary system of the country shown on that coin.

The term for this is noncirculating legal tender. In many cases, but not all, the coin is actually struck in a precious metal (gold or silver) whose metal value is higher than the denomination shown on the coin. An example is the United States silver eagle, minted since 1986 and sold as a silver investment. The face value noted on the coin is $1. But since the coin contains 1 ounce of silver, which at this time is worth around $17, that coin will never be spent for $1.

These coins are sold in fancy boxes with an abundance of paperwork at a premium well above the face value, even in cases where they are not struck in a precious metal, again ensuring they will not be spent as a coin in commerce.

However, I remember two instances where countries struck coins in a precious metal when the value was high and with a face value they thought was sufficient, only to have the price of the metal drop to the point that it became better to spend the coin.

This happened to Panama, whose $100 gold coin, when gold dropped in price, contained less than $100 in gold, and as a result people tried to spend them. The government response was to forbid its use because of the adverse impact on the economy.

The British Virgin Islands issued a series of silver coins that also ultimately were worth more as coins than for the silver content. They, too, were removed as legal tender.

The issuance of these coins is meant for one purpose – a revenue stream for the governments – since they are sold to collectors at a substantial profit over the cost of production. Consider the commemorative coins and sets the U.S. Mint has been striking since 1984, now with numerous designs released every year.

However, not all commemorative coins that were sold at a premium price over their face value benefited the government. The first commemorative coin struck by the U.S. Mint was the Columbian half dollar minted in 1892 for the World Columbian Exposition. It was sold for $1, with the extra 50 cents to go toward the construction of the exposition.

Commemorative coins were struck in various years from that point forward until the 1950s in denominations of 25 cents, half dollars, both gold and silver dollars, and $2 ½ gold pieces. They all were meant to be sold at a premium to benefit the construction or support of a monument or event.

Although they were intended for collectors and cost more than their face value, many of these coins will exhibit signs of wear because, due to difficult financial times, they needed to be spent rather than collected.

Back to these oddball coins now being minted. If they fit in your collection either by topic or design, by all means buy them, but keep in mind one thing: You are buying a collectible, not making an investment, which means you probably will not make a profit.

Douglas Keefe is the president of Beachcomber Coins Inc. He and his wife, Linda, operate Beachcomber Coins and Collectibles, formerly in the Shore Mall and now at 6692 Black Horse Pike in the old Wawa building just beyond the former Cardiff Circle. They have satellite offices in Brigantine and Absecon. Between them they have more than 70 years of experience in the coin and precious metals business. They are members of the American Numismatic Association, the Industry Council of Tangible Assets, the Numismatic Guarantee Corp., the Certified Coin Exchange and the Professional Coin Grading Service.

One comment

Leave a Reply

Your email address will not be published.

ten + 20 =