Everything about Intrinsic Value Numismatics totally explained
Intrinsic value, in general, is the argument that the value of a product is intrinsic within the product rather than dependent on the buyer's perception.
In
commodity money,
intrinsic value can be partially or entirely due to the desirable features of the object as a
medium of exchange and a
store of value. Examples of such features include divisibility; easily and securely storable and transportable; scarcity; and hard to counterfeit. When objects come to be used as a
medium of exchange they lower the high
transaction costs associated with
barter and other in-kind transactions.
In
numismatics,
intrinsic value is the value of the metal, typically a precious metal, in a
coin. For example, if
gold trades at a price of
USD 450 per fine
troy ounce ($14/g), a coin minted from one troy ounce of fine gold would have an intrinsic value of USD 450. When the intrinsic value becomes greater than the
face value, the coins are in danger of being removed from circulation in large numbers (an expression of
Gresham's law). When the coin is in use as
money this effect can, at the margin, mitigate forces that might otherwise cause
inflation. When
copper prices skyrocketed in the mid-to-late 1970s, there was a fear that the
U.S. one-cent piece might succumb to this fate. In fact, this did happen, leading the
Mint to change the composition of the cent in
1982.
| Intrinsic Value |
The market value of the constituent metal within a coin. |
| Legal or Face Value |
The legally defined value of the coin relative to other units of currency. eg a dime has a face value of 0.10 dollars. |
| Market Value |
The price that the coin will fetch in the market place. For most coins in circulation this value is coincident with the face value. |
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