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dependencies' coins minted in precious metals is in the range of 24% to
850% of face values. If we consider the gold price alone, we know
that there is an underlying world demand for gold for industrial and
cosmetic as well as monetary purposes. But since in 1972 the US
Government removed gold's floor price in terms of US dollars, gold has
been no more than another commodity. Its price could thus fluctuate
violently, and far more than it has in recent years. Much of the
demand for precious metal coins is likely to be speculative
investment in gold or silver as a hedge against inflation.
If gold
and silver become less attractive for this purpose, so also will gold
and silver coins. Where, as in the case with issues sponsored by the
US promotional companies, the value of the bullion content is
substantially below the face value, and where a coin's other qualities
are regarded as worth little, then clearly either its use as actual
legal tender or its redemption at face value would become an
attractive option.
A decline in this somewhat fragile market is to be expected
at some future date, particularly if the present expansionary trends
continue, and problems could arise when the market value of coins falls
near their face value. It is not possible on the evidence available
to estimate when the decline will appear, whether it will lead quickly
to a widespread demand for redemptions, or whether one territory will
be more severely affected than another. Three particular factors for
consideration seem likely to be relevant:
(1) It is reasonable to expect that coins forming part of a
relatively small issue will retain a certain rarity value which would
not be true of the generally large, subscription basis, issues.
(2) The value for collectors would also be dependent upon
whether the coins had a genuine commemorative purpose and were well
designed, and were thus attractive in themselves as numismatic items,
or whether the initial sales had resulted primarily from intensive
marketing techniques.