"Spot price"

[mvpel]

Does this:



... have the same "worth" or "value" as this:



???

[Puke]

No, creating a coin takes effort and labor.
That makes the value increase.

[Little Owl]

Look out everybody. Try not to trip over the DEAD HORSE being continually beaten by those who fail to recognize the difference between insisting that a coin's sale price be representative of its value and the not-often-stated-but-usually-read-anyway claim that a coin should be sold for its spot price.

[penguins4me]

Technically, the spot price is for a large bar of silver of a specific mass and purity.

Granted, your point still applies because the bar is rather plain, quite large, and not as useful for regular bartering.

[J’raxis 270145]

Look out everybody. Try not to trip over the DEAD HORSE being continually beaten by those who fail to recognize the difference between insisting that a coin's sale price be representative of its value and the not-often-stated-but-usually-read-anyway claim that a coin should be sold for its spot price.

We even have an icon for this now:—

[mvpel]

Look out everybody. Try not to trip over the DEAD HORSE being continually beaten by those who fail to recognize the difference between insisting that a coin's sale price be representative of its value and the not-often-stated-but-usually-read-anyway claim that a coin should be sold for its spot price.

Kind of a tautology there, eh?  Isn't the sale price of something, by definition, its "value?" Merriam-Webster: "value" - 2: the monetary worth of something : market price

Is paying $20 for a finely detailed example of the engraver's art in the form of a gleaming one-ounce silver frosted-cameo proof a ripoff when you can buy a banged-out ounce for $15.25?  Or is it a bargain when compared to a finely detailed one-ounce silver frosted-cameo proof offered by the US Mint?

Over the past few days since the raid, I have read countless people harping on the "fact" that since the one ounce Liberty is $20 while the "spot price" is $14 and change, it's a "ripoff" or a "scam."  "Not often stated?"  Not lately.  That's why I posted this thread in the first place.

[J’raxis 270145]

Eventually, if we ever reach the point where we're using exclusively precious metals for currency, I would expect people would value the metals purely by their weight, so yes, they would be the same—an ounce is an ounce no matter how fancy it looks when I hand it to you.

When the government tries to place artificially high face values on their pieces of metal, this is called seigniorage, and is generally considered to be in the same class of behaviors as debasement and inflation.

But for now, I have no problem with the Liberty Dollar doing this, since they're a private company who are trying to make a profit in order to stay in business. And, a lot of people using them consider them to be a transitional currency to get others off of the artificial "dollar" units and to the state referenced above, so putting face values on the coins that line up with the closest dollar unit ($1, $5, $10, $20, ...) makes sense in order to not confuse people too much. The spot price is too un-round a number and fluctuates too much in dollar terms to be useful.

[J’raxis 270145]

Look out everybody. Try not to trip over the DEAD HORSE being continually beaten by those who fail to recognize the difference between insisting that a coin's sale price be representative of its value and the not-often-stated-but-usually-read-anyway claim that a coin should be sold for its spot price.

Kind of a tautology there, eh?  Isn't the sale price of something, by definition, its "value?" Merriam-Webster: "value" - 2: the monetary worth of something : market price

That's the definition as used by economists, but not the common lay definition. Take a look at the first definition: a fair return or equivalent in goods, services, or money for something exchanged.

As an illustrative example, two different grocery stores might sell the exact same item, but one for $1.79 and one for $2.19. Is the one you bought for $1.79 in some way of less value to you? Perhaps using economics definitions, but to most people, no.

[mvpel]

When the government tries to place artificially high face values on their pieces of metal, this is called seigniorage, and is generally considered to be in the same class of behaviors as debasement and inflation.

The site http://www.coinflation.com/ is rather eye-opening.  The "golden" dollar, for example, has about 5 cents worth of metal in it.

[SethCohn]

Something Mike's missing in his comparison is that we're NOT talking about unknown items compared to others, but about a unit of exchange aka currency.

Nothing stops you from going to the 'official' currency exchange, or going to a street vendor, or going to a bank, in a given foreign country, when you need to swap one currency for another.  But the rates will be vastly different.  One place to avoid such an exchange, for example, is the airport, which is usually the worst of all possible deals.

How does this relate to silver rounds?  You can say that a $20 'face value'  is not an unreasonable markup for $14 worth of silver...
but some of us do complain about that exchange rate.  Yes, someone is making a profit, and profit is what is driving them to produce such an item for exchange, but hey, the airport currency exchange is making a profit too..., and serving a need, but that doesn't make it a good deal.

The closer to 'spot' a round is, the better the value.  Don't expect to find proofs at spot prices, but proofs aren't valued for their content, they are valued for their condition, an entirely different thing from content, and something that the average (non-collector) doesn't care about, if you are talking barter or exchange purposes.

[J’raxis 270145]

When the government tries to place artificially high face values on their pieces of metal, this is called seigniorage, and is generally considered to be in the same class of behaviors as debasement and inflation.

The site http://www.coininflation.com/ is rather eye-opening.  The "golden" dollar, for example, has about 5 cents worth of metal in it.

Yep. And the older pennies that are worth more than their face value are now illegal to melt down and illegal to export from the country.

The link dropped me at what looks like an ad farm, but I assume you meant http://www.coinflation.com/.

[mvpel]

As an illustrative example, two different grocery stores might sell the exact same item, but one for $1.79 and one for $2.19. Is the one you bought for $1.79 in some way of less value to you? Perhaps using economics definitions, but to most people, no.

Suppose that each of the following depicts the same weight of silver:






Would you consider them to represent the "exact same item?"  Should someone feel foolish if they paid more for one than for another?

[SethCohn]

Suppose that each of the following depicts the same weight of silver:

This has the 'authority' of Canada behind it.  Their reputation is likely better than "Joe's House of Silver"

Millenium, as a brandname, might be good or bad, since I don't know them right off (as a non-following of the silver market), but some quick research would fix that.

Since it looks like silver, but we don't know the exact content, etc, it's certified by nobody.

And this is junk metal, and doesn't even look like silver.

Would you consider them to represent the "exact same item?"  Should someone feel foolish if they paid more for one than for another?

No, but if the price of the 'best' exceeds the price of the worst by X, then X is solely for the sake of the value of the authority behind.

The question remains: what price is authority and trust worth?

[mvpel]

I submit, Seth, that it's not "solely" for the sake of the backing authority.

The originators of the Liberty Dollar decided to raise awareness of the fundamental problems of fiat currency and its ongoing debasement by the government by using beautifully crafted gold and silver medallions and negotiable warehouse receipt certificates in quotidian barter trade, rather than neatly-dressed and earnest squares going door to door handing out little booklets.

Judging by the fact that their warehoused inventory went from 3,000 silver ounces in 1998 to 158,000 silver ounces this year, not to mention the many thousands more in the hands of the public, not to mention the two TONS of Ron Paul Dollar pieces seized this week by the Feds, it was an effective strategy.

[mackler]

As an illustrative example, two different grocery stores might sell the exact same item, but one for $1.79 and one for $2.19. Is the one you bought for $1.79 in some way of less value to you?

Yes the one that costs $1.79 is of less value to me.  The store is farther from my house, parking is more difficult there, they have "no returns" policy, and the staff is rude.

It is also of less value to the store, since they buy it from a supplier at a lower price than the other store, and they ordered too many of that item and need to make room for other items.