A selection of modern coins.In terms of its value as a collector's item, a coin is generally made more or less valuable by itscondition, specific historical significance, rarity, quality/beauty of the design and general popularity with collectors. If a coin is greatly lacking in any of these, it is unlikely to beworth much. Bullion coins are also valued based on these factors, but are largely valued based on the value of the gold or silver in them. Sometimes non-monetized bullion coinssuchas theCanadian Maple Leaf and the American Gold Eagle are minted with nominal face
values less than the value of the metal in them, but as such coins are never intended for circulation, these value numbers are not market nor fiat values, and are never more thansymbolic numbers.Most coins presently are made of a base metal, and their value comes from their status as fiat
money. This means that the value of the coin is decreed by government fiat (law), and thus isdetermined by thefree marketonly as national currencies are subjected toarbitragein
international trade. This causes such coins to be monetary tokensin the same sense that paper
currency is, when the paper currency is not backed directly by metal, but rather by agovernment guarantee of international exchange of goods or services. Some have suggestedthat such coins not be considered to be "true coins" (see below). However, because fiatmoneyis backed by government guarantee of a certain amount of goods and services, wherethe value of this is in turn determined by free marketcurrency exchange rates, similar to the
case for the international market exchange values which determines the value of metalswhich back commodity money,in practice there is very little economic difference between
the two types of money (types of currencies).Coins may be minted that have fiat values lower than the value of their component metals, but this is never done intentionally and initially for circulation coins, and happens only in duecourse later in the history of coin production due toinflation, as market values for the metalovertake the fiat declared face value of the coin. Examples of this phenomenon include the pre-1965 US dime, quarter, half dollar, and dollar ,US nickel,and pre-1982 US penny. As a
result of the increase in the value of copper, the United States greatly reduced the amount of copper in each penny. Since mid-1982, United States pennies are made of 97.5% zinc coatedwith 2.5% copper. Extreme differences between fiat values and metal values of coins causescoins to be removed from circulation by illicit smelters interested in the value of their metalcontent. In fact, theUnited States Mint, in anticipation of this practice, implemented newinterim rules on December 14, 2006, subject to public comment for 30 days, whichcriminalize the melting and export of pennies and nickels.
Violators can be punished with afine of up to $10,000 and/or imprisoned for a maximum of five years.To distinguish between these two types of coins, as well as from other forms of tokens whichhave been used as money, some monetary scholars have attempted to define three criteria thatan object must meet to be a "true coin".
These criteria are:1.It must be made of a valuable material, and trade for close to the market value of thatmaterial.