The illusion of currencies vs. money.

By now we all know there’s going to be a new pound coin coming into circulation in 2017. But, why is it that the new Pound Coin won’t be purple, red or any other random colour for that matter? Surely, the design team’s first question was, “What colour shall we make it?”

It has long been known that we associate wealth with the colours Gold and Silver. But if we stop and think about it, why do our coins have to be Gold and Silver in colour?

But, if they weren’t, it would make it all the more obvious that we’re carrying around pieces of stuff that are not worth anything of real value. We probably wouldn’t want to make the new £1 coin out of plastic. But inherently, there’s no difference.

This shattering of our currency illusion would cause many more people to buy and invest in the real Physical Gold and Silver bullion, because they would suddenly realise how very little REAL MONEY they actually owned. This would increase the price of physical Gold and Silver, which would in turn cause fear in the paper markets.

It’s a case of a mass illusion, all jingling around in our pockets.

 

Old one pound coin standing on a bed of other one pound coins

 

Currency

Currency is something that promises – as long as everyone agrees – that we’ll use this ticket as a promise of exchange for usually a lot more than it’s actually worth. 

 

Money

Money on the other hand, has historically been a piece of real Gold or Silver that is actually worth what we all say it is. It is worth this because we can’t print it or digitally create it. We have to dig it out the ground as a finite resource.

This is why currencies collapse – the illusionary value becomes so over-inflated that it eventually comes crashing down to earth.

 

Coins and notes used for the Great British Pound

 

How Much is a £1 Coin Actually Worth?

The pound coin is actually 70% copper, 24.5% zinc and 5.5% nickel and weighs a tiny 9.5 grams. At today’s prices for copper, zinc and nickel that works out at just £0.039p per £1 coin in real value. And that’s assuming the quality of the copper, zinc and nickel is pure.

That means that 96.1p worth of each £1 is actually not really in your pocket. That’s an incredible amount of illusion everyone is carrying around every single day.

So, how many £1 coins would you actually need to be holding £1 worth of the metals of copper, zinc and nickel?

 

You would need 2,564 pound coins to actually be carrying around just £1 in real metal terms. 

 

How Much Gold Would 2,564 Pound Coins Buy?

Use your 2,564 of the pound currency coins – the amount you’d need to really be carrying around a true £1 in copper, nickel and zinc in real metal terms – to instead buy:

To be able to trade a piece of currency that is only actually worth £1 in copper, zinc and nickel content for the above amounts of real physical Gold and Silver pure bullion is a trade of a lifetime. This perfectly illustrates how over-inflated our current currency actually is.

 

50g gold Umicore bullion bar lying on a bed of gold

 

What If I Save My Old Style £1 Coins to Sell Later?

For many of us, this is not the first time the £1 British currency unit has changed. A large majority of our readers will remember the £1 note, which was removed from currency in 1988. A pound coin was a new entity back then, with much the same commentary on its pros and cons that we see discussed now regarding the upcoming 2017 £1 coin.

And back in 1988, people also wrote exactly what they are writing now; that if we kept our £1 pound notes they would be worth a small treasure in 20 years time.

Today on EBay, £1 notes are going for anything between 1 to 6 times their face value, with a few much higher but less-likely-to-be-genuine prices.

But, taking into account inflation, a £1 note in 1988 would have to now sell for at least £2.59 today to break even. So, at a push you’d be able to double your money. So, it’s doubtful hoarding those £1 notes back then would have really been the best investment.

A selection of different designs of the old one pound coin.

 

What If I’d Bought Gold in 1988 instead?

An ounce of Gold in 1988 would have cost you just £244.66. Today that ounce of Gold had a monthly high of £1,017.12. So, that’s an increase of 316%. A much better investment.

To buy Gold and Silver please call Bleyer on 01769 618618 or visit the website today.

A selection of old one pound coins stacked on top of each other

 

History of Gold and Silver in our Coinage

Many of our readers are already familiar with the following but here is a brief history of why Gold and Silver were used in coins, for a little further reading if desired:

“The earliest examples of coins did not have any value stamped on them. Their value was purely down to what they were made from. The coin might have the head of an emperor or ruler on one side and some other picture on the other, but that was all. 

Even as currency continued to develop through the years, precious metals remained at the centre of the whole system. Augustus of Rome brought in coins made from gold and silver during his reign in the early Anno Domini years; indeed the Romans in general stand alongside the Greeks as being the two groups that did the most to retain the high level of precious metals present in all their coins.

As time went by it became less common for coins to contain so much gold, silver and bronze [mainly due to needing money to raise to fight more empirical wars]. These metals began to be mixed with other metals and therefore their face value wasn’t as high as it had been. 

This was essentially the start of the long road of change towards the fiat money we exchange with each other today. Fiat money basically means a system in which the actual currency itself is worth nothing; it is simply a means of agreement between parties that a particular coin or banknote will be worth what it states it is.

But even though the precious metal content in coins became less and less pronounced, they were still backed by the two most valuable metals, gold and silver. People understood that even while the coins they held in their hands were not worth as much as they used to be, they could still be exchanged for an amount of gold if they wished. This leads to the Gold Standard of backing a currency to ensure it had a value, which came into being in the 1700s and finally met its end in the 1970s.

So, “money” as we know it today is an entirely different animal to the one it used to be. It seems hard to imagine nowadays what it must have been like to walk around with coins made from pure gold and silver in your pockets – or probably more likely in a pouch, back then.  Suddenly the money we deal with now doesn’t seem so valuable after all, does it?” (Currency Converter)

Gold Roman bullion coins as currency