The Difference between the Face Value and the Actual Value of Coins
As a general rule of thumb, and especially when it comes to coins, you must never judge a book by its cover; you never know when those small metals in your pocket could prove to be lucrative.
Some coins are larger and have lower values, while others are smaller and have a higher value. Such is the case with a penny and a dime — a classic example of perceived face value versus the actual intrinsic value.
Distinguishing between the face and intrinsic values may seem complicated; here’s a breakdown of the terms to help you understand better. Take a look:
The Face Value of a Coin
The face value is the apparent value on monetary denominations. It is a financial term used to describe the nominal value such as the inscriptions; one cent on pennies, five cents on nickels, ten cents on dimes, and twenty-five cents on quarters, to name a few.
In simpler terms, the face value is the tender value given to the coins by the government.
Tip : An easy way to remember the meaning of the term is by remembering the value printed on the coin’s face
What Is The Intrinsic Value Of A Coin?
The intrinsic value is the actual bullion value of a coin based on the amount of precious metals used within the coin.
The metals typically used in minting coins are gold, silver, copper, zinc, palladium, and platinum.
Tip: The way to remember this term’s meaning is to think of intrinsic value as the value of metals inside the coin.
Not only do coins hold a bullion value, some even hold a numismatic value.
What Is The Numismatic Value Of A Coin?
A numismatic value is an additional value added to coins due to external factors that make them precious.
The external factors which contribute to the premium amount are: the rarity of the coin, its historical significance, and the condition it is kept in.
These numismatic coins are not found easily in the market and are usually collected as a collector’s item.
However, due to their rarity and intrinsic value, the coins can prove extremely profitable and an excellent investment in the long run.
Gold Coins
When it comes to gold coins, some coins like the British Gold Sovereign don’t have a face value stated on them as they are made purely of gold. Hence their value is determined by the gold prices.
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