If the price of gold/silver/copper etc goes up and down, why doesn't the value of our coinage change?

Answer 1

It does change, actually, but the coin must be pure. I'm not sure if copper goes up and down like gold and silver, but if you had an ounce of pure gold, and the value went up or down, the value of that coin would also go up and down. Same with silver.

Only the older silver coins increase and decrease in value, because they are pure silver (they are collectors items, and worth more than the amount stated on the coin). I'm not sure which year it began, but if you ever saw one, you would know, because it's quite a bit heavier than other coins.

If you look at the side of a quarter, or half dollar coin, you will notice that it's not completely silver. The value does increase and decrease, but not much because the coin isn't pure.

Hope that helps.

Answer 2

In 1918 in the UK the government abolished the "Gold Standard" until then money was worth a measured amount of gold. The Queen still says on our banknotes "I promise to pay the bearer on demand the sum of (£5, £10 or whatever)" which is actually a lie.

What gives money it's value is a complex question. Simply "Your faith in the government" as one of the respondents said, is not a true picture of the situation.

As members of the European Exchange Rate Mechanism we were required to maintain the value of our currency against that of our European Partner States. Unfortunately for us the Chancellor of the Exchequer of the time (a certain John Major, who actually failed the maths test to be a London BUS CONDUCTOR....honestly, he did) took us in a too high a rate. In the 48hours before we quit the ERM our Government spent almost £2 billion propping up our currency. That's enough to build TWO city hospitals!!

In simple terms. The pound (or dollar) in your pocket is worth what market forces say it is worth in your own country. Abroad it is worth what the international community say it is worth.

In Turkey in the late 1980s they had to withdraw all coinage from circulation because, with inflation running at 15% per WEEK the people were melting coins down and selling the metal for scrap.

Answer 3

Well in the UK it doesn't really make a difference because all coins are made from Copper, Nickel and some coins have Zinc in them as well but that's it.

Gold and Silver are more valuable than Copper. Copper isn't that rare in comparison so the cost of making a penny is at the moment less than the value of a penny. [In the UK at least]

Answer 4

I can only talk for the UK. On every English pound, it is written that the bearer can exchange that note for gold at the Bank Of England. Of course, this is only in theory. But, other currencies, such as the dollar, there is no such standard, so basically, the US and other countries are simply producing bills without any value, which is why some rich guys in America have more money in their wallet than the total value of Argentina.

Answer 5

It is difficult.If the price of gold goes up people will melt and sell.If the price go down as face valur remains unchanged there is no loss for holder,he will retain.
Linking of currency with value of Gold discontinued after World War II.It was called Gold Standard.

Answer 6

Because when we exchange money, we're not really exchanging the value of the coin. Rather, we exchange money for a good or service because the person giving the good or service believes he/she will be able to exchange that piece of money for something else - the whole thing is based on confidence. So what's in the coin is irrelevant - it could all be done on paper (as it is) or on computer (as it is). It's called Fiat money from the latin Fiat, meaning a declaration. It's worth what it's worth not because of the metal, but because the bank decrees it so.

Answer 7

Because commodity prices are global , any changes effect all currencies that are based on them.Hence the change relative to each other is not apparent.
However higher prices are good for the balance of trade of net exporter of those commodities making them relatively stronger and viceversa for counties that import or use those commodities.
In short a giant money-go-round

Answer 8

we are not on the gold standard, your moneies value is based on your trust in the federal government

Answer 9

maybe because there is less gold/silver/copper that there is money?i do not know but that is my idea

Answer 10

the value does change - last year 86 pence bought you a litre of petrol - this year it takes 99 of them.