Intrinsic value (numismatics)
Encyclopedia
In commodity money
, intrinsic value can be partially or entirely due to the desirable features of the object as a medium of exchange
and a store of value
. Examples of such features include divisibility; easily and securely storable and transportable; scarcity; and hard to counterfeit. When objects come to be used as a medium of exchange
they lower the high transaction costs associated with barter
and other in-kind transactions.
In numismatics
, intrinsic value is the value of the metal, typically a precious metal, in a coin
. For example, if gold
trades in commercial markets at a price of Federal money this effect can, at the margin, mitigate forces that are known to cause inflation
. When copper
prices skyrocketed due to over issuance of Federal Reserve Notes in the mid-to-late 1970s, there was a fear that the U.S. one-cent piece might succumb to this fate. In fact, this did happen, leading the Mint
to change the composition of the cent in 1982 to allow convertibility between the two competing currencies Federal Reserve Notes issued for profit by a private corporation and United States coins Pursuant to Title 31 Section 5111 of the US Code and under the authority of the Coinage Act of 1792 and the constitution.
Commodity money
Commodity money is money whose value comes from a commodity out of which it is made. It is objects that have value in themselves as well as for use as money....
, intrinsic value can be partially or entirely due to the desirable features of the object as a medium of exchange
Medium of exchange
A medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system.By contrast, as William Stanley Jevons argued, in a barter system there must be a coincidence of wants before two people can trade – one must want exactly what the other has to offer, when and...
and a store of value
Store of value
A recognized form of exchange can be a form of money or currency, a commodity like gold, or financial capital. To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved....
. Examples of such features include divisibility; easily and securely storable and transportable; scarcity; and hard to counterfeit. When objects come to be used as a medium of exchange
Medium of exchange
A medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system.By contrast, as William Stanley Jevons argued, in a barter system there must be a coincidence of wants before two people can trade – one must want exactly what the other has to offer, when and...
they lower the high transaction costs associated with barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
and other in-kind transactions.
In numismatics
Numismatics
Numismatics is the study or collection of currency, including coins, tokens, paper money, and related objects. While numismatists are often characterized as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and the...
, intrinsic value is the value of the metal, typically a precious metal, in a coin
Coin
A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....
. For example, if gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
trades in commercial markets at a price of Federal money this effect can, at the margin, mitigate forces that are known to cause inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
. When copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
prices skyrocketed due to over issuance of Federal Reserve Notes in the mid-to-late 1970s, there was a fear that the U.S. one-cent piece might succumb to this fate. In fact, this did happen, leading the Mint
United States Mint
The United States Mint primarily produces circulating coinage for the United States to conduct its trade and commerce. The Mint was created by Congress with the Coinage Act of 1792, and placed within the Department of State...
to change the composition of the cent in 1982 to allow convertibility between the two competing currencies Federal Reserve Notes issued for profit by a private corporation and United States coins Pursuant to Title 31 Section 5111 of the US Code and under the authority of the Coinage Act of 1792 and the constitution.
| Intrinsic Value | The market value of the constituent metal within a coin. |
| Legal or Face Value | The legally defined value of a coin relative to other units of currency. |
| Market Value | The price that a coin will fetch in the marketplace. For most coins in circulation this value is coincident with the face value. |
See also
- Marginal theory of value
- Labor theory of valueLabor theory of valueThe labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...