Intrinsic value (numismatics)

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 difficulty 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, also known as melt value, is the value of the metal, typically a precious metal, in a coin. For example, if gold trades in commercial markets at a price of US$ 1200 per fine troy ounce, then a coin minted from one troy ounce of fine gold would have an intrinsic value of US$ 1200.

When a coin is in use as money and the intrinsic value becomes greater than the face value, these coins are in danger of being removed from circulation in large numbers (an expression of Gresham's law). 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, leading the Mint to change the composition of the cent in 1982.[1]

Intrinsic or melt valueThe market value of the constituent metal within a coin.
Legal or face valueThe legally defined value of a coin relative to other units of currency.
Market valueThe price that a coin will fetch in the marketplace. For most coins in circulation this value is coincident with the face value.


This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.