Face Value

An object’s face value is the legally recognised value printed or engraved, and permanently displayed on it. The face value however is not necessarily the market value - it is not the same as its true worth or even the price when buying it.

Colloquially to take something ‘at face value’ means to accept the obvious, without further thought or questioning, and is derived from the idea of trusting the government-backed face value of coins and notes.

Face value is a term often used in finance in reference to stocks, bonds, and currency coins and notes.

The face value of stocks and bonds, also referred to as the nominal value, is the original sale price. This is the price shown on the share certificate. After being issued, the actual value of stocks and shares is governed by trading on listed stock markets. Regardless of the face value, stocks and shares are bought and sold at the market price.

Are coins worth more than face value?

The value shown on coins and banknotes is its face value. Generally, the value of legal tender currency coins and banknotes is equal to their face value. This is derived mostly from the time of the gold standard, in which coins values were based on the metal used within them. As such, these gold and silver coins had face values based on the gold and silver price at the time which was fixed.

With the adoption of the fiat currency system, face value is now solely a government-backed promise of what a coin is worth. Today, national banks issuing common currency, such as the Bank of England, ensure that the face value is greater than the metal used in manufacturing. This common currency is rarely worth anything more than the face value, though rare issues and mint errors can still see them exceed their original face values.

The 2009 Kew Gardens 50p is very rare. Only 210,000 were released into circulation.

The face value of a coin never changes. Its real value can however vary greatly, especially in the case of bullion coins where face value is no longer determined by the metal content in the coin. A bullion coin’s actual value depends upon its metal content and collectability.

Metal value is determined by the amount and purity of the metal contained in the coin, along with the changing spot price for that metal. Collectability meanwhile is determined by condition, and rarity.

Bullion coins

Apart from common currency coins, national banks also issue bullion, collectible and commemorative coins. These legal tender coins are not intended for use as common currency but are still attributed a face value in the case of official government bodies like the Royal Mint or US Mint.

A one ounce Gold Britannia has a face value of £100. Despite this, at current market prices, it is worth well over £1,000 in gold value.

In the UK, legal tender coins – those with a UK face value – are all exempt from Capital Gains Tax. This means that UK coins, including gold and silver coins, enjoy this tax benefit. This is one of the reasons these coins are so popular with UK investors.

For example, the gold Britannia has a face value of £100, with the smaller sized denominations reducing accordingly. The gold Sovereign has always traditionally been considered a £1 coin. Although this is not actually stamped anywhere on the coin, and never has been, it is still officially classed as having a face value of £1.

So, while face value is a useful thing to look out for, it should not be considered to necessarily reflect a coin’s true value.