Most people are familiar with coins. It continues to be used in many countries as a form of small currency. They are now produced by government mints in large numbers using standard weights and designs. They are widely accepted as payment for every day goods and services.
Coins are typically disc-shamed and made of a metal alloy, but in some cases, it can be made of other materials such as porcelain. Coins made of a precious metal such as gold or silver are called bullion coins, and are usually worth more than its face value. For example, a gold sovereign coin has a face value of £1, but it is actually worth £230, (depending on current gold prices) because of its gold content. It may be worth even more if it has numismatic value. These types of coins are generally not for circulation as regular coins, but intended for collectors and investors.
Aside from British sovereigns, examples of coins minted primarily for its collectible or intrinsic value are the American Gold Eagle, the Canadian Gold Maple Leaf, and the South African Krugerrand. With the exception of the Krugerrand, most bullion coins have a symbolic face value. The American Gold Eagle has a $5 to $50 face value, while the Canadian Gold Maple Leaf has a $0.50 to $50 face value. The actual market value of a $5 Canadian Maple Leaf and the $5 American Gold Eagle (both containing 1/10 of a troy ounce of cold) is about US$130. For regular coins, however, the metal content in coins is usually worth less than its face value.
History of Coins
Back in the earliest days of trade and commerce, people used the barter system, but it was a difficult ay to do business. The first metals coins were produced in the 7th Century BCE on parallel developments in China, Greece, and India, and their use spread quickly. Coins were not always disc-shaped, however. Some were in the shape of ox hides, or cowrie shells.
The earliest coins were made from electrum and had no standard weights. Electrum was a natural mix of silver and gold, and further processed with silver and copper. It is believed that the first Anatolia coins of the Iron Ages were used more for religious rituals and as badges than commerce. Most of these early coins had no writing in it, but mostly representations of animals, and sometimes Greek inscriptions meaning various things such as “I am the sign of light.” The first coin to have Arabic writing on it was the St. Gall silver Plappart, minted in 1424.
Value of Coins
Back then, the metal itself actually had value, so there was no need for fiat. Of course, metal values were not always stable, so the first paper money was invented in medieval China. Around the same time, gold and silver coins were still being used throughout the Roman Empire. The first paper money were circulated in Europe later on, although coins continued to be used as well. Until the 17th century, the penny was made of silver.
Copper pennies started being minted in the US in the 1790s, and silver was gradually phased out until in the middle of the 19th Century, most circulated coins were made of nickel, zinc, copper, aluminum, and bronze. Most coins in regular circulation today are made from alloys of these base metals. This is to discourage people from selling the coins for its metal content. In fact, it is illegal to melt US nickel and penny coins, and any kind of Canadian coin. If you are caught in the US melting nickels and pennies, you could serve as much as 5 years in prison and/or pay $10,000 in fines.
If inflation or other circumstances cause the face value to fall a lot below the intrinsic value of the material of which it is made, the government may pull it out of circulation and reissue new ones. For example, US pennies (face value one cent) used to be made of copper, but the price of copper went up sharply during World War II because it was needed for the production of weapons, so they used zinc-coated steel instead for a short while. It went back to copper after the war ended, but in the 1970s, the price went up again. Eventually, the US mint settled on copper-plated zinc in 1982.
In some cases, the coins actually have no intrinsic value. The only reason it would have value is that the government guarantees it. These are called fiat money, or legal tender. Coins today usually have lower face value than paper money. A coin with the highest possible value is still less than a currency note with the lowest possible value.
Some coins have numismatic value; that is, it has value to a collector or investors. This could be due to its condition, rarity, historical significance, design, or popularity. Bullion coins, which are made of precious metals, are already worth more than its face value because of its intrinsic value. However, if it happens to be a rare coin as well, it will have numismatic value on top of its melt value. Some coins will also have numismatic value even if they have no other value, such as the 1943 Copper Wheat Penny, which if in mint condition is worth about $85,000. If you happen to have inherited a coin collection (or unearthed a jar of coins you unearth from the basement of your turn of the century house), you may just have some bit of metal lurking in there that is worth more than your car!
Coins have a long and fascinating history, and for that, they are useful. In most cases, however they may not have much commercial value for you. Then again, they might. Aside from bullion coins that you may have received or bought, some coins may be worth more than you think. Give your old coins a good look and a quick search online to find out more about them before tossing them aside.