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Is Your Dollar About to Be Cut in Half?

Is Your Dollar About to Be Cut in Half?
(Dollar Photo Club)

By Thursday, 21 April 2016 08:59 PM Current | Bio | Archive

In July 2015, the U.S. Mint issued a new High Relief Liberty gold coin based on input from the Citizens Coinage Advisory Committee.

This isn’t unusual; the Mint issues gold coins with a face value in U.S. dollars every year, as well as collector’s coins like these that offer a significant degree of detailed craftsmanship and which are only available in limited numbers.

But for some reason, one conspicuously not explained in the narrative documenting the coin's development, the Mint decided to raise the face value of these coins, which are unchanged in size or weight, a whopping hundred percent, from $50 to $100. This isn’t just a design issue; these coins have a monetary value ascribed by the Mint that makes them legal tender, though even at one hundred dollars that value is far below the actual worth of the gold in the coin.

In theory this value is engraved on coins to ensure you can transport them from country to country without paying the heavy tariffs imposed by some nations on gold bullion. But with the disparity between this engraved value, and the price you could get for it based on its gold content and numismatic attributes, no one imagines you’ll be spending the Liberty coin on a night out or to gas up your SUV.  Nevertheless, the decision by the Mint and the Treasury to raise the face value without any explanation is raising eyebrows and leading to speculation about why they felt such a move was necessary at this time. 

Interestingly, in a July 8 press release announcing its issue, line drawings depict the coin with a face value of $75.00, still a big jump from the original $50.00.  But within that same release is a link to the coin’s page in the Mint site’s shopping section, which now shows the face value at $100.00.  Clearly throughout the process of conceiving, designing and minting this coin there was an evolving discussion of what its new face value should be.

But it seems it’s a conversation the Mint chose to share with the American public.

The practice of assigning a face value to gold coins stretches back over one hundred years to the days when the Mint issued actual circulating gold coins like the famous ten dollar gold piece that was circulated in various forms between 1795 and 1933. This ten dollar gold piece, one of the most famous coins in history, may not have won the west but it certainly financed our expansion. Back then the coin contained roughly one-half troy ounce of pure gold mixed with alloy metals for increased durability.

Though the Mint continues to produce gold and silver coins today, these Liberty and Eagle gold coins aren’t expected to function as legal tender. In fact, at 24k, the highest purity of gold available, the coins would be far too soft to be in circulation.  Their function today is to preserve wealth in a form other than paper currency or the virtual money represented by numbers on your computer screen.  Many believe, as do I, that it’s crucial to have a significant portion of your wealth in a form that’s not as vulnerable to outside forces that can devalue your paper dollars, or hack into your bank or brokerage. No one yet has devised a way to hack into your gold. 

But none of this explains what prompted the Treasury or the advisory council’s decision to so quietly and abruptly upgrade the face value of this coin at this time.  The only plausible explanations are that the Treasury expects the price of gold to move higher or the value of the dollar to move much lower—say, in half. Devaluations of paper currency and spikes in the price of gold tend to go hand in hand. Perhaps the Treasury expected no one would notice until after the fact.

But if the agency that issues our currency is expecting a fifty percent plunge in the value of those dollars, and/or a doubling of the price of gold, which others experts have suggested is likely, it’d be wise to act quickly.  Right now, even with recent surges, gold is at a comparatively bargain-basement price, one of several reasons I’ve seen a similar surge in clients seeking the protection of a gold IRA

If the experts are right, this is the moment to shield the buying power of your wealth, particularly your retirement nest egg from any impending adjustment.

Trevor Gerszt is America's Gold IRA Expert, CEO of Goldco Precious Metals, and holds a position on the Los Angeles board of the Better Business Bureau.

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In July of 2015 the U.S. Mint issued a new High Relief Liberty gold coin based on input from the Citizens Coinage Advisory Committee.
Dollar, economy, value, gold coin
Thursday, 21 April 2016 08:59 PM
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