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My favorite part about this is why it's worth $10 million. Because it's currency? Nope. Because it's gold? Nope. Because it's collectable? Yes! Really highlig

My favorite part about this is why it's worth $10 million. Because it's currency? Nope. Because it's gold? Nope. Because it's collectable? Yes! Really highlights how price and value can come unstuck.

hackinthebochs 13y ago
I remember seeing a documentary that made the connection between the evolution of money and the human race's tendency to find inherent value in "collectibles". Stones, shells, jewelry, etc, were all the basis for a currency in various times, and its only because of our shared appreciation for collectibles that this worked.
- sjg007 13y ago
  One should read: The Island of Stone Money.
  - yskchu 13y ago
    Wow, very interesting, thanks for that! For others interested, here's some links: NPR Article http://www.npr.org/blogs/money/2011/02/15/131934618/the-island-of-stone-money http://www.npr.org/blogs/money/2011/02/15/131934618/the-isla... Milton Friedman paper on the island. http://hoohila.stanford.edu/workingpapers/getWorkingPaper.php?filename=E-91-3.pdf http://hoohila.stanford.edu/workingpapers/getWorkingPaper.ph...
- brc 13y ago
  Well, currency is defined by divisibility, durability, scarcity and difficulty of forging. Humans desire a medium of exchange to better facilitate trade. The desire to trade creates the requirement for currency. The desire to collect manifests in many different forms - but the use of currency is separate (though probably related) to that.
  - tellarin 13y ago
    Collectibles are also related to durability, scarcity and difficulty of forging. So I guess it's more related to currency than most would realize. I for one had never thought about it this way.
wintersFright 13y ago
Is the mono lisa only worth $2.50 for the price of canvas, paint and wood frame? Old paint at that! The price of a collectable is because someone else (not necessarily you) values it. And the odds are that many other wealthy collectors would value it at the same price, allowing the buyer to hold it and then trade it later for similar value.
- iandanforth 13y ago
  Indeed, but here it's something that has two well understood prices. One, currency, which doesn't change over time, and two, gold, which fluctuates but generally increases over time. And despite being composed of these other things it has a third almost-totally-unconnected price related to artificial scarcity! I think that is super neat. It may also signal that humans are totally insane, but no matter.
  - WalterBright 13y ago
    When the price of gold fluctuates, you have to be careful inferring meaning - is it the value of gold fluctuating, or the value of the currency fluctuating? It's not an easy question to answer.
    - digitalengineer 13y ago
      Of course one could also argue it's not the price of gold that fluctuates, it's the dollar/euro/yen gold is measured in that does.
    - twic 13y ago
      No, it's a very easy question to answer. How many cups of coffee would a gram of gold buy me? Yesterday morning, the London gold fix was 803.117 GBP/oz; if i took my gram of gold to my local baristas and traded it, i would get 6.59 flat whites. Yesterday morning, the gold fix was at 798.532 GBP/oz; my gram would have got me 6.55 flat whites. Whereas if i'd gone in this morning with 4.30 GBP in ready money, i would have got 1.00 flat whites. And if i'd gone in yesterday with 4.30 GBP, i would have got 1.00 flat whites. You can do this analysis against benchmarks other than flat whites: cappucinos, espressos, and even things that aren't coffee. You will always find that the buying power of a unit of currency remains constant from day to day, while the buying power of a unit of gold does not. It's gold that fluctuates.
robbrown451 13y ago
I'm curious what the melt value would be. I didn't see that in the article. I assume when they say $27,000 they mean the currency value, but if you were to melt it and sell it at the current price for the metal (~$1300/ounce), it would probably be a lot more than that....while less than the $10 million it is supposedly worth as collectibles.
- absherwin 13y ago
  Approximately $1.76 million Starting in 1837, gold coins in the US had 0.48375oz of gold per $10. So $27,000 in coins would be worth $1,755,432 given a price for gold of $1344 per oz. This excludes the value of the copper with which the gold was alloyed, which would be worth roughly another $30.
  - robbrown451 13y ago
    Cool, thanks for figuring that out for me. :)
daniel-cussen 13y ago
There's a legal factor you're not considering. USG has confiscated bullion gold in the past, but not coin collections. Therefore, for goldbugs, these coins are worth more than their bullion content of $1.75 million, and obviously much more than the $27,000 face value price.

My favorite part about this is why it's worth $10 million. Because it's currency? Nope. Because it's gold? Nope. Because it's collectable? Yes! Really highlights how price and value can come unstuck.

hackinthebochs 13y ago

I remember seeing a documentary that made the connection between the evolution of money and the human race's tendency to find inherent value in "collectibles". Stones, shells, jewelry, etc, were all the basis for a currency in various times, and its only because of our shared appreciation for collectibles that this worked.

sjg007 13y ago
One should read: The Island of Stone Money.
- yskchu 13y ago
  Wow, very interesting, thanks for that! For others interested, here's some links: NPR Article http://www.npr.org/blogs/money/2011/02/15/131934618/the-island-of-stone-money http://www.npr.org/blogs/money/2011/02/15/131934618/the-isla... Milton Friedman paper on the island. http://hoohila.stanford.edu/workingpapers/getWorkingPaper.php?filename=E-91-3.pdf http://hoohila.stanford.edu/workingpapers/getWorkingPaper.ph...
brc 13y ago
Well, currency is defined by divisibility, durability, scarcity and difficulty of forging. Humans desire a medium of exchange to better facilitate trade. The desire to trade creates the requirement for currency. The desire to collect manifests in many different forms - but the use of currency is separate (though probably related) to that.
- tellarin 13y ago
  Collectibles are also related to durability, scarcity and difficulty of forging. So I guess it's more related to currency than most would realize. I for one had never thought about it this way.

wintersFright 13y ago

Is the mono lisa only worth $2.50 for the price of canvas, paint and wood frame? Old paint at that! The price of a collectable is because someone else (not necessarily you) values it. And the odds are that many other wealthy collectors would value it at the same price, allowing the buyer to hold it and then trade it later for similar value.

iandanforth 13y ago
Indeed, but here it's something that has two well understood prices. One, currency, which doesn't change over time, and two, gold, which fluctuates but generally increases over time. And despite being composed of these other things it has a third almost-totally-unconnected price related to artificial scarcity! I think that is super neat. It may also signal that humans are totally insane, but no matter.
- WalterBright 13y ago
  When the price of gold fluctuates, you have to be careful inferring meaning - is it the value of gold fluctuating, or the value of the currency fluctuating? It's not an easy question to answer.
  - digitalengineer 13y ago
    Of course one could also argue it's not the price of gold that fluctuates, it's the dollar/euro/yen gold is measured in that does.
  - twic 13y ago
    No, it's a very easy question to answer. How many cups of coffee would a gram of gold buy me? Yesterday morning, the London gold fix was 803.117 GBP/oz; if i took my gram of gold to my local baristas and traded it, i would get 6.59 flat whites. Yesterday morning, the gold fix was at 798.532 GBP/oz; my gram would have got me 6.55 flat whites. Whereas if i'd gone in this morning with 4.30 GBP in ready money, i would have got 1.00 flat whites. And if i'd gone in yesterday with 4.30 GBP, i would have got 1.00 flat whites. You can do this analysis against benchmarks other than flat whites: cappucinos, espressos, and even things that aren't coffee. You will always find that the buying power of a unit of currency remains constant from day to day, while the buying power of a unit of gold does not. It's gold that fluctuates.

robbrown451 13y ago

I'm curious what the melt value would be. I didn't see that in the article. I assume when they say $27,000 they mean the currency value, but if you were to melt it and sell it at the current price for the metal (~$1300/ounce), it would probably be a lot more than that....while less than the $10 million it is supposedly worth as collectibles.

absherwin 13y ago
Approximately $1.76 million Starting in 1837, gold coins in the US had 0.48375oz of gold per $10. So $27,000 in coins would be worth $1,755,432 given a price for gold of $1344 per oz. This excludes the value of the copper with which the gold was alloyed, which would be worth roughly another $30.
- robbrown451 13y ago
  Cool, thanks for figuring that out for me. :)

daniel-cussen 13y ago

There's a legal factor you're not considering. USG has confiscated bullion gold in the past, but not coin collections. Therefore, for goldbugs, these coins are worth more than their bullion content of $1.75 million, and obviously much more than the $27,000 face value price.