Coins, Coin
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All modern systems comprise of coins and banknotes. Coins typically have a low monetary value, while banknotes have a higher value. The face value of coins in circulation is generally higher than the gross value of the substance/metal used to make them.
The History of Coins
The history of trade began with the barter system, a system in which goods were exchanged for other goods. The inconvenience associated with this system resulted in commodity money (precious metals, such as gold or silver) being used as the medium ofexchange. The first coins appeared around the seventh century BC in Lydia (ancient Greece), which is located in modern-dayTurkey. These coins were made from scraps of metal. In the fourth century BC, Alexander the Great played a key role in spreadingthe concept of coinage throughout the kingdoms he conquered.
In the US, the Coinage Act of 1792, under the leadership of President Washington, led to the establishment of a mint in the country.
Types of Coins
There are various types of coins for different purposes. These include:
- Circulated Coins: These refer to coins in circulation that can be used to buy things.
- Bullion Coins: These coins are made of precious metals, like gold and silver, and are not used for everyday transactions.Bullion coins are purchased as investments. Krugerrands and the American Eagle Series are examples of bullion coins.
- Commemorative coins: These are thematic coins issued to honor a specific issue, event or personality. Historically, these coins have been used to depict a king’s coronation or victory. Such coins are minted in limited quantities and their cost is typically significantly higher than their face value. It is often possible to preorder these coins, which quickly become out of stock.
- Rare Coins: The classification of a coin as being “rate†depends upon its mintage or availability and the demand for it. Thereare no exchanges for rare coins, as these are usually very expensive and prone to fraud (the making of fake coins). These coinsare usually bought on a sight-seen basis.
As an investment, the most common coins used are gold coins. Gold coin investing is used as a way to hedge against inflationand recession.
