Coin trick by an entire nation: Austria's investment silver dollar

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http://www.spiegel.de/international/...633772,00.html

The object of desire is 37 millimetres in diameter and made of .999 fine silver. On one side, the coin shows an organ, its country of origin ("The Republic of Austria") and its face value: €1.50 ($2.12). On the flipside: "Vienna Philharmonic Silver" and a few musical instruments from the world famous orchestra.


The coin, known to numismatics as the "Silver Philharmonic," could well drive Germany's already harassed Finance Minister Peer Steinbrück over the edge. Because the ounce of silver is a hot tip among German investors -- and a means of discretely transferring untaxed funds back home.

Austria issued the new coin in early 2008, wisely anticipating the consequences of the bank collapse, the stock crash and the rising value of precious metals. The coin was explicitly intended for purposes of investment, not collection. Bernhard Urban, marketing spokesman of the Austrian Mint, modestly calls it "unique" in Europe. The story of its success has to do with a funny little contradiction: As a means of payment with a value of €1.50, the coin can be used to buy a beer.

But nobody in his right mind will take it to the pub in the first place because the exclusive silver piece is worth -- depending on the price of silver --somewhere between €11 ($16) and €14 ($20), and costs that much at the teller's window.

[Rotwang]

Re: Coin trick by an entire nation: Austria's investment silver dollar

It is in similar in nature to all bullion coins issued by national mints with a duality of standing, legal tender value and bullion value. One has to assume that the coin cannot be in two places at once, it is either treated as bullion or it is circulated. The national banks/mints do not enter the coins into circulation, but rather sell them as bullion investment to all comers.
Once owned/purchased it is up to the new owner/holder to choose how it is treated. It is unlikely that he would choose buying a beer at the local tavern, unless of course he had privately negotiated a deflation special with the proprietor. Provided the proprietor is within his rights to extend a special price offer, all kinds of things happen. The coin holder buys beer on the cheap (at least nominally), the proprietor sells beer at a loss, and his overall revenue picture changes as well as taxation on profits/gross turnover. Buying beer on the cheap might be attractive to a German drinker, in the event he fetched his coin horde abroad and brought it home at face value. It might also be advantageous for the proprietor to pay his own wages in this coin, while the serving help is settled from another corner of the till.
Beer is of course only one of many products. One could well imagine that a Boeing 787 or portions thereof would be traded for U.S. money, delivering severe reverse leverage on nominal transaction amounts.
In international transactions it would appear that the laundry might work exceptionally well, where one party would be able to book the cost of obtaining 'foreign' currency, and the other party would receive currency at face value in settlement/payment of contract terms.
For conspiracy minded interpretations of real world transactions, it is entirely conceivable that some parties choose to pay for product, rather than discharge the obligation by circulating legal tender debt, which of course is the current world-wide medium of exchange.
The U.S. coins are of course 'extra' special since they can't even maintain a single weight/face value standard within the series. So let's not accuse CONgress of even attempting to regulate the value of 'money' through uniform measurements in the issue of Eagles. Probably just an accidental oversight when the law was written.