The situation with the British St. George and the Dragon coin is reminiscent of the Canadian Maple Leaf 1oz. silver bullion coin.
The Maple Leaf has a $5 (Cdn.naturellement) face value while throughout 2001 the spot price was under that figure, trading as low as $4.07 in November of that year.
Even allowing for the fact the coin is in high demand and trades at a premium this was the flip side of the capped gold price that Alphaville's Izabella Kaminska pointed out* in December 2012. In that case gold wasn't going higher which left only two directions for price moves, flat or down.
In the case of the Maple Leaf, no matter what happened to bullion prices it had that five buck face value limiting the downside.
Why these things happen in markets I've yet to figure out but here's another one.
From the Financial Times' Long Short blog:
How much would you pay for £20?
How much is a £20 coin worth? The Royal Mint seems to have created a risk-free arbitrage, thanks to its decision to sell the first silver £20 coin for £20, with free postage (hat tip to Elroy Dimson). It is legal tender, so there’s no risk of it being worth less than £20 (and it could always be paid into a bank account or swapped at the Bank of England if you feared it might be).
Yet, on ebay demand is such that the coins are selling for £30 or more – and some chancers are listing the coins for as much as £65, plus postage. Presumably these prices are being paid by collectors attracted by scarcity value. It certainly has nothing to do with the intrinsic value, as the silver content of the coins is worth only about £6.33....MORE
My question, and the reason for the title is why not go £10 face amount? Or £50? Or is £20 the optimum for extracting seignorage while limiting the expansion of M0/M1?
*She posted Capping the Gold Price 5 days before gold hit a major (and not seen since) intermediate top-tick of $1715.
Pretty good timing.
One more oddity, I believe, i.e. I'm guessing,
Update: I guessed wrong. The Canadian 1 1/2 ounce silver Polar Bear, minted since 2012, has an $8 face value.
I should know better than to guess about easily verifiable facts. Sorry.