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Before Cashing Out My Coins

January 12, 2013 in Coins, Gold, Gold Coins, Platinum Coins, Politics, Precious Metals, Proof Coins, Silver, Silver Coins, USA Coins

by Tom Maguire on January 11, 2013 (http://justoneminute.typepad.com)

Matt Yglesias is a one-man wrecking crew in an epic battle against reality. His launch point was the Trillion Dollar coin concept, and he delivers not one but twomissiles of misinformation today.

His first launch:

The Platinum Coin Was Intended To Generate Seigniorage

No, not really at all. What is “seigniorage”? It is the added value that attaches to a bit of metal (or paper) when the government deems it to be legal tender. For example, a few cents worth of copper and bronze are stamped and boom – we have a quarter worth $0.25.

But platinum is part of the US bullion coin program, along with silver, gold and palladium. Using gold as an example, the Mint takes an ounce of gold worth maybe $1,600, stamps it with a face amount of $50 and boom – sells it for $50, thereby losing $1,550. NO!

They sell it for $1,600 plus a mark-up for production, marketing and administration. But that magic stamp of $50 isn’t why they can sell the coin for more than $1,600 – it’s the gold!

With the bullion coin program the Mint makes money by banging out their precious metal coins more cheaply than the Canadians can deliver their Maple Leafs, the Australians their Koalas, the Chinese their Pandas, and so on. How does General Motors make money? Seigniorage or great products? Yeah, this is America!

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