TNAG-0765-FCO40-969-Minting-of-coins-for-Hong-Kong-1978 — Page 25

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8.5(2)

Details of the specifications of individual coins have been hard to determine, chiefly because they are frequently changed as a result of the sharp fluctuations in bullion prices. Although all the

agreements examined refer to the proposed specifications there is no

guarantee that they will be implemented, even for the first issue,

without some amendment. Understandably, responses to our request for

specifications have been somewhat mixed, and in several instances it has therefore proved impossible to calculate with any accuracy the relationship between bullion content and face value, particularly where a territory has been issuing coins for some years and has

sanctioned frequent amendments. Formulae for invoking clauses which

permit such amendments vary in the US-style agreement. Occasionally it

is agreed that specifications may be adjusted to take account of any movement of free market bullion prices outside a certain range.

common in recent contracts is a clause stating simply that amendments to specifications may be discussed if there is any (unspecified)

change in bullion prices. As far as the UK companies are concerned

it appears that no provisions for amendments are required since

agreements are for one year only and little time lapses between the agreement and production of the coins.

8.5(3)

More

There appears to be no consistent relationship between

bullion content and face value, even allowing for fluctuations in the

market prices of gold and silver. There is, however, a tendency for

the value of precious metal (as a proportion of face value) to be

greater in gold than in silver coins, although this may be a product

of the formula which rules the ultimate colour, hardness, etc. of the

alloy. None of the territories under consideration has, as yet,

experimented with other precious metals. As bullion prices* have

risen sharply over the last five years (Gold: US$65 end-1972, $195

end-1974, $135 end-1976, $165 end-1977; Silver: $1.68 end-1972,

$4.35 end-1976, $4.79 end-1977) those coins issued under early

agreements have, at current market prices, a higher precious metal

content than recent issues. It follows that those coins of similar

denominations produced at a time when gold prices were exceptionally

high (and thus contained correspondingly less gold) will at present

offer a poorer investment, although the investment value of a numismatic issue may depend as much on its rarity and the attraction of its design as on the bullion content.

*Bullion prices are quoted in terms of US$ per troy ounce of fine gold

or silver. The percentage fineness of bullion coins varies but is rarely greater than 0.925 and may be as low as 0.500 (see also Annex 2).