Why Gold and Silver Numismatic collectible coins increase in value versus Bullion (Metal Content) of the same coin doesn’t…

I was thinking all day the perfect answer for my very own question, so to satisfy myself, I did a lot of researching.

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I found out that as early as age 20, you can already be rich if you know the value and how much fun coin collecting can be! Fantastic isn’t it, and so interesting!

Below are the important terms, that everyone should be aware of:

5FS – abbreviation for Five Full Steps designation

6FS – abbreviation for Six Full Steps designation

Alloy – a mixture of two or more metals

ANA – American Numismatic Association, the national organization for coin collectors

Assay – the testing of an ore sample to determine its precious metal value

Attribution – the designation of a coin’s varie ty according to standard reference books

Authentication – the determination of a coin’s genuineness

Base metal – a non-precious metal, such as copper, nickel or zinc

Blank – an unstruck coin disc, the same as “planchet”

Bourse – a popular term for the sales floor of a coin show

BN – abbreviation for Brown designation

Brass – an alloy of copper and zinc

Bronze – an alloy of copper and tin

Bullion – refined precious metal in non-coin form

CA – abbreviation for Cameo designation

Certification – the process of having a coin authenticated, graded and encapsulated

Clad – a laminated or sandwiched coin metal

Collar – a retaining ring which imparts a coin’s edge, whether plain or reeded

Commemorative – a coin honoring an event, place or individual, usually of limite d mintage

Condition census – a roster of the five or six finest known specimens of a particular coin

Contact marks – small nicks imparted by contact with other coins

Counterfeit – a non-genuine coin, whether made to circulate as money or to deceive collectors

Coronet – a crown or tiara frequently seen on the Liberty portrait of 19th Century U. S. coins

Currency – circulating money, used numismatically to denote a non-proof coin

Denomination – the face value of a coin, such as one cent, ten cents, etc.

Denticles – the toothlike projections seen on the borders of older U. S. coins

Device – a raised design element on a coin, such as a portrait or lettering

Die – a cylindrical shaft of steel that imparts one side of a coin’s design (two are required)

Double eagle – a United States $20 gold coin, issued from 1850 to 1933

DPL – abbreviation for Deep Prooflike designation

Eagle – a U. S. $10 gold coin, issued from 1795 to 1933

Edge – the third side of a coin, it can be plain, reeded, lettered or starred

Encapsulated coin – one which has been sealed inside a plastic holder

Field – the flat surface area of a coin between the various devices

FB – abbreviation for Full Split Bands designation

FBL – abbreviation for Full Bell Lines designation

FH – abbreviation for Full Head designation

Fineness – the percentage or decimal proportion of precious metal in a coin

Flip – a flexible, transparent, plastic envelope having one pocket for a coin and one for its label

Frosted – describes a coin’s surface which is textured rather than smooth or glassy

FT – abbreviation for Full Torch designation

Grade – the numerical value assigned to a coin’s condition on a scale of 1 to 70

Hairlines – fine scratches on a coin’s surface which may affect its grade

Half cent – a U. S. copper coin of that value, issued from 1793 to 1857

Half dime – a U. S. silver five-cent coin, issued from 1794 to 1873

Half eagle – a U. S. $5 gold coin, issued from 1795 to 1929

Hub – a steel cylinder bearing one side of a coin’s design and used to produce dies

Intrinsic value – the value of a coin’s metal, irrespective of its face or collector value

Legal tender – a coin declared by a government to be acceptable in the payment of all debts

Legend – an inscription which appears on a coin, such as LIBERTY

Lettered edge – the edge of a coin on which either raised or sunken letters appear

Luster – the reflected light from a coin as determined by its surface texture and quality

Matte – the purposely dulled surface of a coin, this style was used on certain U. S. proof coins

Minor coin – a base-metal coin of small value, such as a cent or nickel

Mint – the structure where coins are produced, or, the governmental body overseeing its work

Mintmark – a small letter appearing on a coin to denote its city of manufacture

Mint State – describes an unworn coin and means the same as Uncirculated

Mirror – the brilliant surface of a coin, typically the fields of a proof or prooflike coin

MS – the abbreviation for Mint State, it’s used with a numerical figure to grade unworn coins

Numismatics – the studying and collecting of coins

Numismatist – one who engages in numismatic activity for whatever end

Obverse – the front side of a coin (“heads “)

Overdate – a coin variety in which one date is impressed over another

Pattern – an experimental coin made as a test of a new design, material or technology

PF – the abbreviation for Proof, it’s used with a numerical figure to grade proof coins

PL – abbreviation for Prooflike designation

Plain edge – the edge of a coin which is smooth and lacking any decoration

Planchet – a blank disc that will be stamped between dies to produce a coin

Press – a compression machine in which dies come together to stamp a coin

Proof – a high-quality coin for collectors made in small numbers from specially prepared dies

Prooflike – having the appearance of a proof coin, that is, mirrorlike fields

Quarter eagle – a U. S. $2.50 gold coin, issued from 1796 to 1929

R1, R2, R3, etc. – a scale of coin rarity rangin g from R1 (very common) to R8 (unique)

RB – abbreviation for Red Brown designation

RD – abbreviation for Red designation

Red Book – the popular name for A Guide Book of United States Coins, by R. S. Yeoman

Reeded edge – the edge of a coin on which raised lines appear

Relief – the portion of a coin’s design which is raised above the smooth surface or field

Restrike – a coin made years after the original edition but from the same dies

Reverse – the back side of a coin (“tails”)

Series – a continuous run of coins of the same type, such as the Buffalo Nickel series of 1913-38

Slab – a slang term for an encapsulated coin

SP – Specimen

Specie – coined money, as opposed to paper money or other store of wealth

Starred edge – the edge of a coin featuring either raised or sunken stars

Strike – the action of producing a coin, or, the quality of a coin’s detail sharpness

Trade dollar – a special type of silver dollar made from 1873 to 1885, primarily for export

Trime – a U. S. silver three-cent piece, issued from 1851 to 1873

Type collecting – assembling a collection of one of each coin denomination and design

UC – abbreviation for Ultra Cameo designation

Uncirculated – describes an unworn coin and means the same as Mint State

Wire rim – a fine, raised line of metal around the rim of very sharply struck coins

Let me share the  history of the dollar in North America pre-dates US independence. Even before the Declaration of Independence, the Continental Congress had authorized the issuance of dollar denominated coins and currency, since the term ‘dollar’ was in common usage referring to Spanish colonial 8 real coins or “Spanish Milled Dollars”. Though several monetary systems were proposed for the early republic, the dollar was approved by Congress in a largely symbolic resolution on 8 August 1786. After passage of the Constitution was secured, the government turned its attention to monetary issues again in the early 1790s under the leadership of Alexander Hamilton, the secretary of the treasury at the time. Congress acted on Hamilton’s recommendations in the Coinage Act of 1792, which established the Dollar as the basic unit of account for the United States.

I guess that’s explain why gold and silver numismatic collectable coins increase in value versus Boolean coins. Moving forward, until 1874 the value of the United States dollar was tied to and backed by silver, gold, or both. From 1792 to 1873, the U.S. dollar was freely backed by both gold and silver at a ratio of 15:1 under a system known as bimetallism. In this system, the dollar could be exchanged for 371.25 grains (24.06 g) of silver or 24.75 grains (1.60 g) of gold.

Because prices of gold and silver in the open marketplace vary independently, the production of coins of full intrinsic worth under any ratio will nearly always result in the melting of either all silver coins or all gold coins. In the early 1800s, gold rose in relation to silver, resulting in the removal from commerce of nearly all gold coins, and their subsequent melting. Therefore, in 1834, the 15:1 ratio was changed to a 16:1 ratio by reducing the weight of the nation’s gold coinage. This created a new U.S. dollar that was backed by 1.50 g (23.2 grains) of gold. However, the previous dollar had been represented by 1.60 g (24.75 grains) of gold. The result of this revaluation, which was the first-ever devaluation of the U.S. dollar, was that the value in gold of the dollar was reduced by 6%. Moreover, for a time, both gold and silver coin were useful in commerce.

In 1853, the w eights of US silver coins (except, interestingly, the dollar itself, which was rarely used) were reduced. This had the effect of placing the nation effectively (although not officially) on the gold standard. The retained weight in the dollar coin was a nod to bimetallism, although it had the effect of further driving the silver dollar coin from commerce.

With the enactment (1863) of the National Banking Act during the American Civil War and its later versions that taxed states’ bonds and currency out of existence, the dollar became the sole currency of the United States and remains so today.

In 1878, the Bland-Allison Act was enacted to provide for freer coinage of silver. This act required the government to purchase between $2 million and $4 million worth of silver bullion each month at market prices and to coin it into silver dollars. This was, in effect, a subsidy for politically influential silver producers.

The discover y of large silver deposits in the Western United States in the late 19th century created a political controversy. Due to the large influx of silver, the value of silver in the nation’s coinage dropped precipitously. On one side were agrarian interests such as the United States Greenback Party that wanted to retain the bimetallic standard in order to inflate the dollar, which would allow farmers to more easily repay their debts. You can also pay your debts fast by the help of nationaldebtreliefprograms.com debt relief programs. On the other side were Eastern banking and commercial interests, who advocated sound money and a switch to the gold standard. This issue split the Democratic Party in 1896. It led to the famous “cross of gold” speech given by William Jennings Bryan, and may have inspired many of the themes in The Wizard of Oz, since speeches are really important in the world, because they’re necessary for many things as politics and motivation, so All Speeches Great and Small should come from a resourceful source. Despite the controversy, the status of silver was slowly diminished through a series of legislative changes from 1873 to 1900, when a gold standard was formally adopted. The gold standard survived, with several modifications, until 1971.

Thus the United States moved to a gold standard, made gold the sole legal-tender coinage of the United States, and set the value of the dollar at $20.67 per ounce (66.46 ¢/g) of gold. This made the dollar convertible to 1.5 g (23.2 grains)—the same convertibility into gold that was possible on the bimetallic standard.

On April 5, 1933, President Roosevelt outlawed the ownership of gold by individual persons and corporations in amounts in excess of $100 in value by passing Executive Order 6102 which stated: “All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency … all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933.” (Presidential Executive Order 6102, Section 2). Supported by this confiscation of gold, during the Great Depression, President Franklin D. Roosevelt revalued the dollar to 35 per troy ounce (112. 53 cents per gram) of gold. This represented a drop in the value of the U.S. dollar. It fell to only 890 mg (13.7 grains) of gold. The U.S. dollar had thus been devalued almost 41% by government decree.

A gold-standard 1928 one-dollar bill. It is identified as a “United States Note” rather than a Federal Reserve note and by the words “Will Pay to the Bearer on Demand,” which do not appear on today’s currency.

A gold-standard 1928 one-dollar bill. It is identified as a “United States Note” rather than a Federal Reserve note and by the words “Will Pay to the Bearer on Demand,” which do not appear on today’s currency.

Under the post-World War II Bretton Woods system, all other currencies were valued in terms of U.S. dollars and were thus indirectly linked to the gold standard. The need for the U.S. government to maintain both a $35 per troy ounce (112.53 ¢/g) market price of gold and also the conversion to foreign currencie s caused economic and trade pressures. By the early 1960s, compensation for these pressures started to become too complicated to manage.

In March 1968, the effort to control the private market price of gold was abandoned. A two-tier system began. In this system all central-bank transactions in gold were insulated from the free market price. Central banks would trade gold among themselves at $35 per troy ounce (112.53 ¢/g) but would not trade with the private market. The private market could trade at the equilibrium market price and there would be no official intervention. The price immediately jumped to $43 per troy ounce (138.25 ¢/g). The price of gold touched briefly back at $35 (112.53 ¢/g) near the end of 1969 before beginning a steady price increase. This gold price increase turned steep through 1972 and hit a high that year of over $70 (2.25 $/g). By that time floating exchange rates had also begun to emerge, which indicated the de facto dissolution of the Bretton Woods system. The two-tier system was abandoned in November 1973. By then the price of gold had reached $100 per troy ounce (3.22 $/g).

In the early 1970s, inflation caused by rising prices for imported commodities, especially oil, and spending on the Vietnam War, which was not counteracted by cuts in other government expenditures, combined with a trade deficit to create a situation in which the dollar was worth less than the gold used to back it.

In 1972, the United States reset the value to 38 dollars per troy ounce (122.17 ¢/g) of gold. Because other currencies were valued in terms of the U.S. dollar, this failed to resolve the disequilibrium between the U.S. dollar and other currencies. In 1975 the United States began to float the dollar with respect to both gold and other currencies. With this the United States was, for the first time, on a fully fiat currency.

The sudden jump in the price of gold after central banks gave up on controlling it was a strong sign of a loss of confidence in the U.S. dollar. In the absence of a gold-market-valued U.S. dollar, investors were choosing to continue putting their faith in actual gold. Consequently, the price of gold rose from $35 per troy ounce (1.125 $/g) in 1969 to almost $900 (29 $/g) in 1980.

This graph shows the final closing value of the U.S. dollar for each calendar year. Value is measured in milligrams of gold. By this measure the U.S. dollar lost a very significant amount of value during the 1970s.

This graph shows the final closing value of the U.S. dollar for each calendar year. Value is measured in milligrams of gold. By this measure the U.S. dollar lost a very significant amount of value during the 1970s.

Shortly after the gold price started its ascent in the early 1970s, the price of other commodities such as oil also began to rise. While commodity prices became mor e volatile, the average exchange rate between oil and gold remained much the same in the 1990s as it had been in the 1960s, 1970s and 1980s.

Fearing the emergence of a specie gold-based economy separate from central banking, and with the corresponding threat of the collapse of the U.S. dollar, the U.S. government approved several changes to the trading on the COMEX. These changes resulted in a steep decline in the traded value of Durham Precious Metals from the early 1980s onward.

In September 1987 under the Reagan administration the U.S. Secretary of the Treasury James Baker made a proposal through the IMF to use a commodity basket (which included gold) as a reference point to manage national currencies. However, the stock market Crash of October 1987 followed by the Iran-Contra scandal distracted the administration from such plans, and political momentum was lost.

As of May 2004, the U.S. reserve assets include $11,045,000,000 of gold stock, valued at $42.2222 per fine troy ounce (1.36 $/g).

Fiat standard

Today, like the currency of most nations, the dollar is fiat money, unbacked by any physical asset. A holder of a federal reserve note has no right to demand an asset such as gold or silver from the government in exchange for a note. Instead, the currency is backed by future claims to wealth of American taxpayers and other income sources of the Treasury. [1] Consequently, proponents of the intrinsic theory of value believe that the dollar has little intrinsic value (i.e., none except for the value of the paper) and is only valuable as a medium of exchange.

In 1963 the words “WILL PAY TO THE BEARER ON DEMAND” were removed from all newly issued Federal Reserve notes. Then, in 1968, redemption of pre-1963 Federal Reserve notes for gold or silver officially ended. The Coinage Act of 1965 removed all silver from quarters and dimes, which were 90% silver prior to the act. However, there was a provision in the act allowing some coins to contain a 40% silver consistency, such as the Kennedy Half Dollar. Later, even this provision was removed, and all coins minted for general circulation are now 100% clad.

All circulating notes, issued from 1861 to present, will be honored by the government at face value as legal tender. But this means only that the government will give the holder of the notes new federal reserve notes in exchange for the note (or will accept the old notes as payments for debts owed to the federal government). The government is not obligated to redeem the notes for gold or silver, even if the note itself states that it is so redeemable. Some bills may have a premium to collectors.

The only exception to this rule is the $10,000 gold certificate of Series 1900, a number of which were inadvertently released to the public because of a fire in 1935. A box of them was literally thro wn out of a window. This set is not considered to be “in circulation” and in fact is stolen property. However, the government canceled these banknotes and removed them from official records. Their value, relevant only to collectors, is approximately one thousand dollars.

According to the Bureau of Engraving and Printing, as of July 31, 2000, there was $539,890,223,079 in total currency in worldwide circulation, of which $364,724,397,100 was in the $100 denomination.

In September 2004, it was estimated that if all the gold held by the U.S. government (261.7 million ounces = 8 140 Mg) were again required to back the circulating U.S. currency ($733,170,953,704), gold would need to be valued at $2,800/ounce (90 $/g).


The federal government began issuing currency that was backed by Spanish dollars during the American Civil War. As photographic technology of the day could not reproduce color, it was decided the back of the bills would be printed in a color other than black. Because the color green was seen as a symbol of stability, it was selected. These bills were known as “greenbacks” for their color and started a tradition of the United States’ printing the back of its money in green. In contrast to the currency notes of many other countries, Federal Reserve notes of varying dominations are the same colors: predominantly black ink with green highlights on the front, and predominantly green ink on the back. Federal Reserve notes were printed in the same colors for most of the 20th century, although older bills called “silver certificates” had blue highlights on the front, and “United States notes” had red highlights on the front.

In 1929, sizing of the bills was standardized (involving a 25% reduction in the then current sizes). Modern U.S. currency, regardless of denomination, is 2.61 inches (66.3 mm) wide, 6.14 inches (156 mm) long, and 0.0043 inches ( 0.109 mm) thick. A single bill weighs about one gram and costs approximately 4.2 cents for the Bureau of Engraving and Printing to produce.

I must say, I made a successful research to share with my readers, thanks to this research I was able to find the Perfect Bound Booklet Printing service from printstarnow.com.  I also suggest my readers to check on the website of the NATIONAL NUMISMATIC COLLECTION, to learn more about the facts about collecting coins.

Additionally, visit my retail store and these beautiful coin collectibles. http://www.KaratbarsIsGold.com

Cesar Ramirez

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