Where did the word “numismatics” come from? First documented as an English word in the early part of the 1800s, this word derived from a French adjective, numismatiques, which means "of coins." In turn, that word came from the Latin word for “coin.” The meaning of the word gets even more interesting when the Latin word gets traced back to the original Greek that it was borrowed from. After some iterations, the word came from the Greek nemō, or "I dispense or divide."


Two-tier gold value system starts in 1968: Precious metals basics

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In the five months preceding March 1968, speculation absorbed nearly $3 billion in gold, almost all of which was lost by the International Monetary Fund gold pool countries, primarily the United States. Unwilling to suffer such losses in the future, the gold pool members instituted the two-tier system.

The system, outlined in a Washington meeting of the gold pool nations on March 16 and 17, 1968, set up new guidelines governing the future of gold. On one level, the price of gold was maintained at $35 an ounce. At this price, transnational governmental authorities agreed to the unlimited exchange of gold among themselves. On the second level, a free market in gold was established that could fluctuate to reflect whatever the value of gold really was. Three conditions effectively achieved this segregation:

1.?An agreement among monetary authorities to trade gold among themselves at an official price of $35 an ounce.

2.?Agreement to supply no more gold to private markets from official stocks.

3.?Agreement to buy little or no gold from private sellers.

The concept of Special Drawing Rights (SDRs) was introduced at the March meeting and adopted later in 1969 and 1970. SDRs are a form of “paper gold” to be used in the same manner as gold, dollars or other currencies to settle debts between nations. The SDRs were distributed to members of the IMF in proportion to their economic importance in the world economy. De­signed to protect gold reserves, SDRs could be used to settle international payment deficits that would have otherwise drawn on these reserves. SDRs were given the value in gold of one U.S. dollar, which, at the official price of $35 an ounce, would buy 0.888671 gram of fine gold.

MORE: CoinWorld.com's precious metals basics

U.S. domestic policy changed to conform to the new system. The Treasury announced it would no longer purchase gold in the private market, nor would it sell gold for industrial, professional or artistic uses. Domestic producers were permitted to sell and export freely to foreign buyers as well as to authorized domestic users. Domestic consumers regularly engaged in an industry, profession or art in which gold is required were permitted to continue to import gold or to purchase gold from domestic producers.

The U.S. government also removed the remaining 25 percent gold backing from paper money in circulation, freeing another $750 million to stabilize the gold market.

The price of gold on the free-market tier began to rise. On May 17, 1968, it touched $40 an ounce on the London market. In July, however, the price fell again when the French government tried to bolster the franc and rumors spread that South Africa would be selling some of its newly mined gold on the free market. In October, the United States and other major nations in the IMF agreed to provide a mechanism for sales of newly mined gold to monetary authorities, but only when the free market price reached or fell below the official price of $35 an ounce.

The above is an excerpt from the eighth edition of the Coin World Almanac, published by Amos Media Company in 2011.

Community Comments

Numismatics is about more than just coins.

While many people use numismatics as a general term to refer only to the study of coins, this word actually refers to the study of all kinds of money. As such, it includes the study of coins and also paper bills, tokens, and other related objects that have been used as currency by various people throughout history, as well as noncurrency items like medals. Some kinds of money used at different points in history might surprise novice numismatists; for example, a culture might have used shells as a currency. 

Barter, or the trade of objects and services for other objects and services, has long been used in the marketplace and continues today. In some cases, the line between barter and currency still provides a topic of debate, but in most cases, articles about numismatics cover subjects like coins and paper money. Numismatics might become easier to comprehend by understanding the numismatic values of coins and paper money, and this refers to the value of a coin or note that is higher than the intrinsic or face value. In other words, this could also be called the collectible value. For example, a historical gold coin has an inherent value that is based upon its bullion value. It may also have a face value, or the actual value of the money assigned by the country that produced it. However, that same coin might be worth much more than the gold or the face value because it is rare, historically significant, beautiful, and/or designed by a famous artist.

Ultimately, understanding numismatics really depends upon understanding the nature of money. In the past, money might have been shells, gems, or precious metals. Today, most societies rely upon coins and paper money, but in this digital age, even that has begun to change as billions of dollars get exchanged every day electronically without the need for physical currency. Even more revolutionary, there are new digital currencies that have never been based upon any nation's physical currency. As it has in the past, it is likely that the study of numismatics will continue to evolve as currency evolves.