TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 57

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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

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.

(vi) An additional hazard in the numismatic market

is that since the coins have self-evidently no

antique value much of their value (other than 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. Problems would arise 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 gold at well above

face value.

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