Suppose you have a $1 silver eagle United States coin. This coin is made up of 1 ounce of 99.99% pure silver. (The other .01% is zinc to strengthen the coin)
3. Is this fiat currency?
No, this is not fiat currency. Fiat currency is a type of currency that is not backed by a physical commodity like gold or silver, but rather by the government's declaration and acceptance as a medium of exchange. In this case, the $1 silver eagle coin has intrinsic value because it contains 1 ounce of pure silver.
To determine if the $1 silver eagle United States coin is fiat currency, we need to understand the definition of fiat currency.
Fiat currency is a type of currency that is declared legal tender by a government but is not backed by a physical commodity, such as gold or silver. Instead, its value is derived from the trust and confidence people have in the government issuing it.
In the case of the $1 silver eagle coin, it is not considered fiat currency. This is because the coin has intrinsic value, as it is made up of 1 ounce of 99.99% pure silver. It is a bullion coin, which means its value primarily comes from the silver content it contains. While it does have a face value of $1, the actual market value of the coin is determined by the current price of silver.
Therefore, the $1 silver eagle coin is not fiat currency but rather a form of precious metal bullion.