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In commodity money, intrinsic value can be partially or entirely due to the desirable features of the object as a medium of exchange and a store of value. Examples of such features include divisibility; easily and securely storable and transportable; scarcity; and difficulty to counterfeit. When objects come to be used as a medium of exchange they lower the high transaction costs associated with barter and other in-kind transactions.
In numismatics, intrinsic value is the value of the metal, typically a precious metal, in a coin. For example, if gold trades in commercial markets at a price of Federal money this effect can, at the margin, mitigate forces that are known to cause inflation. When copper prices skyrocketed due to over issuance of Federal Reserve Notes in the mid-to-late 1970s, there was a fear that the U.S. one-cent piece might succumb to this fate. In fact, this did happen, leading the Mint to change the composition of the cent in 1982 to allow convertibility between the two competing currencies: Federal Reserve Notes (issued for profit by a private corporation) and United States coins (pursuant to Title 31 Section 5111 of the US Code and under the authority of the Coinage Act of 1792 and the constitution).
|Intrinsic Value||The market value of the constituent metal within a coin.|
|Legal or Face Value||The legally defined value of a coin relative to other units of currency.|
|Market Value||The price that a coin will fetch in the marketplace. For most coins in circulation this value is coincident with the face value.|
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