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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 is the case with issues sponsored by US promotional companies) the value of the bullion content is substantially below the face value, and 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.
9.3(7)
An additonal hazard attaches to the new numismatic market
which does not to most other commodity markets. Since the coins have
self-evidently no antique value (and cannot have for a number of years ahead), much of their value (other than any rarity value) depends on
the perfection of their finish. The slightest mark can thus reduce
or destroy numismatic value, so that the collector's or investor's
guarantee against total loss is then based only on its metal value
and/or its legal tender status and redeemability. See Annex 6(2) for advertising emphasis of "floor price"] Devices such as heat-sealed
cases to prevent marks and discoloration can hardly be completely
reliable.
9.3(8) It is obvious, however, that problems would be likely to
arise only when the market value of coins falls near their face value
and this would probably occur sooner for specimen coins as these are
usually issued at near face value, than for proof coins which are normally sold at well above face value.
9.3(9)
Nevertheless, there is nothing to suggest that this market is
in principle unlike other markets. The chances are, therefore, that
at some future date, for whatever reason or combination of reasons, it
will enter a period of decline, even collapse, before (possibly)
recovering again. When prices sink the only floor price for holders
seeking to recover some value will be the face value of a coin, and the
test is then likely to be made of the extent to which the face value
constitutes a valid claim on the issuing authority.
9.3 (10) To sum up, it is a reasonable judgment that a decline in this
somewhat fragile market is to be expected at some future date, particularly if the present expansionary trends continue. We cannot,
however, on the evidence available, estimate either when the decline
will appear, whether it will lead quickly to a widespread demand for