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What seigniorage is
Seigniorage is the profit a government makes when face value is more than the cost to produce the money. A Gold Eagle does not work that way.
Seigniorage is the difference between the face value of money and what it cost to make and issue it.
If it costs two cents to make a nickel, and the nickel spends as five cents, the government has seigniorage before overhead. That is the clean version.
When it goes the wrong way
If the metal in a coin is worth more than face value, people melt or hoard the coin. That is why the US left 90% silver in 1965, and why pennies and nickels get periodic “it costs more to make than it is worth” news. Inflation. 1965.
Bullion coins are not a seigniorage product
A Gold Eagle’s $50 face is a legal label. The mint sells it as an ounce of gold plus a premium through authorized purchasers. The shop then trades it as metal. Authorized purchasers. US Mint vs shop. Face value.
Kings used to debase coins to squeeze more seigniorage. That is the old version of printing. Where coins began. What money is.
Continue in the coin and money library. Related visitor guides: for shop visitors.
Extra pad history for seigniorage
Seigniorage is the difference between the face value of money and what it cost to make and issue it. If it costs two cents to make a nickel, and the nickel spends as five cents, the government has seigniorage before overhead. That is the clean version. Kings used to debase coins to squeeze more seigniorage. That is the old version of printing. Where coins began. What money is.
If the metal in a coin is worth more than face value, people melt or hoard the coin. That is why the US left 90% silver in 1965, and why pennies and nickels get periodic “it costs more to make than it is worth” news. Inflation. 1965. Kennedy halves 1965–70 kept 40% for a while. War nickels 1942–45 were 35% silver. Canadian circulating silver 1920–66 is 80%. Same pressure, different mints.
What a shop does with that fact
Bullion coins are not a seigniorage product. A Gold Eagle’s $50 face is a legal label. The mint sells it as an ounce of gold plus a premium through authorized purchasers. The shop then trades it as metal. US Mint vs shop. Face value.
We do not pay seigniorage. We pay metal or collector demand. A nickel is five cents. A 1964 dime is silver. Do not melt coins in a backyard because a news story said the mint is losing money. Bring the silver. Bank the clad.
People also ask
Is seigniorage a tax? It is the issuer’s margin on making money. Not a shop fee.
Why keep making pennies if they lose money? That is a Congress argument, not a bid.
Does a Gold Eagle make the mint seigniorage on $50? The product is the ounce plus premium, not the face.
Did debasement cause 1965? Metal passed face. The mint changed the coins.