TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 133

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though our coverage is incomplete.

Subject to this, the number of

redemptions revealed by the survey represents less than half of 1% of the coins issued by each territory. In the absence of a fund set

aside for the purpose, or where the issuing authorities concerned

choose not to draw on such a fund, these redemptions must represent a

direct cost for those authorities. However, if redemptions were to

occur at the current modest rate, they could doubtless continue to be

dealt with without much difficulty. That is one respect in which the

market has been successful.

9.3(4)

Nevertheless, it is still a new market which has expanded

rapidly in recent years, stimulated not only by "one off" factors such

as the freeing of gold to US residents in 1974, and the establishment

of new currencies, but also by the elaborate marketing techniques of

the promotional companies, seeking always new features to attract and

sustain interest. The example of stamps is, of course, comparable

(though the redemption problem does not apply): and it is relevant that

the over-issue of some countries' stamps (eg Ghana, Tonga, Cook Islands)

destroyed collectors' interest.

9.3(5) The circulation of the numismatic coins of the dependencies

surveyed grew by 720% from an estimated US$7.63 mn. in 1972 to about

US$55 mn. at the end of 1977. Our estimate is that, other things

being equal, it will grow to about US$75 mn. by the end of 1978.

Over-supply is clearly one factor which could in future become

important. Furthermore, the practice of promotional companies in

meeting demand virtually to the full, because of the subscription

method of sales, could over time provoke a glut which would spread

from new issues to "secondary" trading in old issues. The argument

of any individual territory that it is not "over doing" its own

issues, and that these are anyhow limited in one way or another, carries

little weight when one considers how many other countries are also

issuing and promoting the sale of their coins. There is no-one to

monitor this process or indeed the market as a whole.

9.3(6)

Another factor relevant to many coin issues is the future

course of gold and silver prices. The bullion content of 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