COINS

June 12, 2007 – 9:01 pm

COINS
The Origin Of Coins
A study in coins belongs to the stream of knowledge known as numismatics. It is usually made of metal and is in the shape of a disc. Governments use it as money in various types of transactions. These transactions may be from ordinary purchase of grocery to the stocking of vast amounts of bullion in banks. Previously coins were the only type of exchange in use but since it proved to be cumbersome to carry around discs with such weight, bank notes came to be circulated. Coins used in circulation are of lesser value than banknotes. There is also another point – the face value of coins is generally higher than the value of the metal, which has been used to make them.
In the world of coins the bullion coins or non-monetized coins made of silver and or gold are intended for collectors or for those who invest in precious metals. For instance the USA mints a gold coin known as the American Gold Eagle, Canada the Canadian Gold Maple and South Africa the Kruggerand.
History says that many types of metals and alloys have been used to make different types of coins. Bullion coin is exclusively for storage as against circulation of bank notes. A coin is valuable to the collector depending on its condition, historical value as well as its rarity and beauty. If any of these qualities are lacking then the coin is not worth much.
Today most coins are of base metal and their value depends upon its usage as fiat money. Fiat money means that the government declares by a fiat or law what is the value of the coin in the open market. Thus it is the free market in the international trade that determines the value. Thus coins become tokens just like bank notes.
Sometimes coins have fiat value, which is less than the value of its component metals. It is never done on purpose but only when the market value of metals overtakes the law declared by the government. For instance when smelters found that the metal is of greater value than its fiat value they began to melt it down. Today laws have been enacted to make it a criminal act to melt down coins. The fine imposed is extremely steep hoping that it will be a deterrent for further use of the practice.
Thus we see that coins may be of two types – the token and which is legal tender.
For a coin to be a true one, it must be made of valuable metal and close to the value in the market of that metal. Secondly the weight must of a given standard and purity. Last but not least it must be marked or stamped by the seal of the authority that has guaranteed its content.
History says that one of the first coins of the world was made in Lydia but except for one on which it is embossed “I am the badge of Phales” there is no form of writing on the others – only animal figures. The coins were found under a temple and a controversy is raging over the dating of these coins. Some say private individuals made them while others say King Croseus issued them. Arabic numbers were used on the first European coins and were made in Switzerland in 1424.
It is a well-known fact throughout time that governments issued more coins than they should – keeping in view the bullion factor. By diluting even a small fraction of its original metal the value began to be continually depreciated. Usually copper or nickel was used for this purpose. Price inflation invariable follows debasement of coins. The disease can be remedied only government controls.
In this matter USA stands out as a unique example. Only one-cent coin has been allowed to change since 1864. Despite a fall in its reducing power it is still very much in circulation. The largest coin is 25 cents. Recent appreciation in copper, nickel and zinc prices are beginning to tell upon the American scene also – slowly but surely.
The edges of old gold and silver coins had milled or reeded. It was originally designed in this manner to show that none of the valuable metal had been scraped off. Prior to this system the coins used to suffer from this shaving effect. The situation came to be so grave that the monarch often had to recall all the coins in circulation and send them to the mint again.
The obverse or the ‘head’ of the coin contains the bust or emblem of the monarch or authority. The other side is known as the reverse or colloquially ‘tails’. Of course this rule does not always hold good for all countries during all times. Some coins are not round but have an odd number of sides with smooth rounded off edges. The diameter of the coin however is constant and therefore can be recognized by any vending machine. An example is a 50-cent coin of Australia with twelve sides. The best example of symmetrical coin is the Belgian one-euro coin.
Coin flipping is a favorite in all sports circles or private bets. The custom is as old as the hills. There are some coins that can be struck only on one side because these are very thin. These are known as bracteates.  Somalia and Poland once issued guitar and fan shaped coins respectively. The government mint in Canada can now bring out holographic-effect gold and silver coins.
With the coming of age of the plastic money or credit and debit card, perhaps the age of coins is fast coming to a close and only of value to the collector.

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