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What is coin debasement?
Is this old practice extinct? Or is it alive and kicking?
Learn it right below!
- What is Coin Debasement (Meaning and Definition)
- What are Some Coin Debasement Methods?
- Coin Clipping
- Coin Sweating
- Coin Plugging
Here’s an awesome quiz about coin debasement. For your best results take t after you’ve read my guide.
Table of Contents
What is Coin Debasement (Meaning and Definition)
Coin debasement is the practice of reducing the intrinsic value of currency by altering the metal content in coins.
This practice dates back to earlier societies where governments mixed precious metals like gold and silver with lower-quality metals.
This maintained the face value of coins while decreasing their real worth this allowing governments to mint more coins than their metal reserves could support.
Today, coin debasement as a concept extends to modern monetary policy, characterizing currency’s decline in value through excessive money supply without a proportional increase in goods and services.
Coin debasement usually works short-term to stabilize the economy but the long-term consequences are loss of trust in the currency and broader economic instability.
What are Some Coin Debasement Methods?
Common coin debasement methods are:
- Alloy mixing;
- Weight reduction;
- Coin clipping;
- Coin plugging;
- Coin sweating.
I detail all of these coin debasing methods right below.
What is Alloy Mixing?
Alloy mixing is when governments mix precious metals with lower-value materials leading to a significant drop in coin’s precious metal content.
For example, during the Great Debasement in England from 1544 to 1551, the silver content in coins decreased from 92.5% to just 25%.
This silver reduction came from pure silver being alloyed with other silver-looking but inexpensive materials and metals.
What is Coin Weight Reduction?
Coin weight reduction is a process where the amount of precious metal (like silver or gold) in a coin is reduced, while the coin’s face value remains the same.
This effectively decreases the intrinsic value of the coin. A telltale sign of debasement is a reduction in the weight of the coin.
For example, Rome’s denarius once contained approximately 4.5 grams of silver; by the 3rd century, it fell to around 2% silver content.
What is Coin Clipping?
Coin clipping is a coin debasement method that involves shaving small amounts of metal from the edges of coins.
The goal is to extract valuable precious metals like gold and silver while leaving the coin’s face value unchanged.
Historically, this allowed individuals to profit by removing material from many coins, leading to significant losses in a currency’s overall metal content.
Governments also recognized the impacts of coin clipping on their economies. Many resorted to stricter regulations and modifications in minting processes to prevent this practice.
For example, some coins featured milled edges or new designs that made clipping more challenging.
Reeded edges were also introduced specifically to make coin clipping nearly impossible.
In modern economies, coin clipping is less prevalent due to the transition from metal coins to paper currency.
What is Coin Sweating?
Coin sweating is a method of coin debasement that involves shaking coins in a container to remove small amounts of precious metals from their edges.
This process results in the gradual falling off of the coins’ metal content, allowing individuals who engage in this practice to collect the chips of valuable material that fall off.
Over time, fallen precious metal accumulates to create new coins or even small precious metal bars. Coin sweating differs from other debasement forms because it doesn’t require official intervention.
Individuals can conduct this process quietly and over time get rich.
What is Coin Plugging?
Coin plugging is a coin debasement method where a hole gets punched into the center of a coin to remove its precious metal content.
This action occurs covertly, allowing those involved to extract valuable materials while keeping the coin’s face value unchanged.
The hammering of the surfaces afterward helps conceal the alterations made, maintaining the appearance of legitimacy.
See what coin plugging looks like in the image below.
Can Gold IRA Coins Be Debased Like Regular Coins?
No, Gold IRA coins can’t be debased like regular coins can.
Debasing isn’t possible with Gold IRA coins as these are designed to have a specific precious metal content quantity and purity.
Gold IRA coins are stored in a gold IRA depository and gold IRA owners don’t physically own them. That’s why these coins can’t be debased in the way they could be if they were in free circulation.
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Coin Debasement- The Why and How Behind This Controversial Tactic! Conclusion
Coin debasement is the practice of reducing the intrinsic value of currency by altering the metal content in coins. This practice dates back to earlier societies where governments mixed precious metals like gold and silver with lower-quality metals.
They maintained the coins’ face value while decreasing real worth, allowing them to mint more coins than their metal reserves could support.
References:
- Are there any documented cases where a state intentionally clipped and/or counterfeited the coinage of another state? Either as a form of economic sabotage or as a way to make profit? https://www.reddit.com/r/AskHistorians/comments/1c1k6e3/are_there_any_documented_cases_where_a_state/
- Coin Debasement- https://en.wikipedia.org/wiki/Debasement
- What Is Currency Debasement, With Examples- https://www.investopedia.com/terms/d/debasement.asp
- debasement of coinage- https://dictionary.cambridge.org/us/dictionary/english/debasement-of-coinage
- What Is Currency Debasement?- https://learn.apmex.com/answers/what-is-currency-debasement/
- The Great Debasement- https://en.wikipedia.org/wiki/The_Great_Debasement
- Denarius- https://en.wikipedia.org/wiki/Denarius
- Reeding- https://en.wikipedia.org/wiki/Reeding
- A 1795 SILVER-PLUGGED HALF DOLLAR- https://www.coinbooks.org/v23/esylum_v23n06a26.html
- “Cleaning & Restoration” vs “Smoothing and Tooling” on a Philip I Sestertius (before/after pics)- https://www.reddit.com/r/AncientCoins/comments/17jhi7z/cleaning_restoration_vs_smoothing_and_tooling_on/
- Reeding- https://en.wikipedia.org/wiki/Reeding
Nikola Roza
Nikola Roza is a blogger behind Nikola Roza- SEO for the Poor and Determined. He writes for bloggers who don't have huge marketing budget but still want to succeed. Nikola is passionate about precious metals IRAs and how to invest in gold and silver for a safer financial future. Learn about Nikola here.
