Author Topic: Soviet / Russian Chervonetz 1979  (Read 4621 times)

0 Members and 1 Guest are viewing this topic.

Offline Ukrainii Pyat

  • Collector of everything numismatic
  • Meritorious Member
  • ****
  • Posts: 624
Soviet / Russian Chervonetz 1979
« on: November 27, 2010, 08:31:47 PM »
Purchased from Aleks Basok at the MSNS show, he priced it, I tried to talk him down, we haggled over price then he goes back and has his wife price out the AGW of the piece and it is actually more than he priced it so he wins the argument and I get a nice RSFSR gold chervonetz at under spot - a cool find because Russian coins are getting ridiculous these days:

These are restrikes of coins that were originally minted in 1923-5 by the RSFSR before the formation of the USSR.  In theory at least, Russia was on a gold standard until 1947 - the reason that the the paper money issued from 1925-1938 dates is referred to as the "gold ruble".  In reality the State Bank of the USSR did have some chervonetz as backing for the currency, but the paper money issue grossly exceeded the gold reserves alleged to have backed it.  In reality you could not go in with a chervonetz note worth 10 Rubles and get a gold chervonetz.  Silver coins did circulate until 1931 when they were replaced by base metal coins and the previous coinages quietly disappeared from circulation on official orders.  Thus the Stalin government effectively placed Russia on a fiat currency system, becoming the precursor to all the other currencies around the world that in the next 35 years would go completely off of silver and gold as monetary instruments.
Донецк Украина Donets'k Ukraine

Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 32 323
Re: Soviet / Russian Chervonetz 1979
« Reply #1 on: November 27, 2010, 11:49:55 PM »
All of which doesn't explain a Russian gold coin dated 1979. Here is the story.

In the early seventies, the South African authorities discovered a market niche. In 1969, the EU had introduced a common method to levy sales tax, the Value Added Tax (VAT). In most countries, it consists of three tariffs: high. low and zero. Where coins and banknotes were classified, they were listed with zero-tariff goods, which makes sense - in principle. In practice, coins and banknotes were not defined strictly and the South Africans discovered that EU member-states (led by Germany) would not levy sales tax on their gold coins as long as they bore a current denomination, but they would levy sales tax on gold bars.

This was the time of stagflation and, just like now, nervous US small time speculators drove up the price of gold in bubble territory. Small German speculators were not immune to the gold hype and to them, the difference in tax was more than enough to start buying gold Kruger rands. These pieces contained exactly 1 ounce of pure gold. Of course, they did not circulate. The price of the rand was always very close to bullion value plus 4%, the low VAT tariff.

Like South Africa, Russia was an important gold producer. They wanted part of the gold retail market and so they started offering the chervonetz as an alternative in 1975. Taking the 1923 issue as an example, the chervonetz had an important advantage over the rand: it contained only 1/4 ounce of gold, so they could be used for even smaller speculations. The South Africans reacted in the early eighties by offering half and quarter rands. In addition, by that time the EU had got wise on the retail gold traders. Non-circulating coins were moved to the low VAT tariff. making them more expensive than gold bars, which did not carry the 4% margin. The two moves finished off the chervonetz, but through clever marketing, the South Africans could still sell their pieces to the stupid fringe of the retail gold market. I am sure they are doing good business again today. ::)

Anyway, the modern chervonetz was never a trade coin (or even a coin), as KM claims, but only a coin-like alternative for the smallest of gold bars, owing its success to a tax quirk.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Zantetsuken

  • Moderator
  • Senior Member
  • *****
  • Posts: 235
Re: Soviet / Russian Chervonetz 1979
« Reply #2 on: December 28, 2010, 12:04:38 AM »
Cool specimen 'scottishmoney'. These are very difficult to find especially the later years. Here's one that I bought from a friend last year. This is dated 1976, which is slightly more common (slightly). I read that these were issued up till 1982. I don't know if this was before or after Leonid Brezhnev's death.



RUSSIAN S.F.S.R.~1 Chervonetz 1976
« Last Edit: January 07, 2012, 08:01:08 AM by Zantetsuken »

translateltd

  • Guest
Re: Soviet / Russian Chervonetz 1979
« Reply #3 on: December 28, 2010, 12:23:27 AM »
Is the resemblance between the peasant on the reverse and Czar Nicholas II deliberate?


Offline Figleaf

  • Administrator
  • Honorary Member
  • *****
  • Posts: 32 323
Re: Soviet / Russian Chervonetz 1979
« Reply #4 on: December 28, 2010, 01:31:10 AM »
Fun to note, but I doubt that it would have been politically correct at any time in the Soviet era.

Peter
An unidentified coin is a piece of metal. An identified coin is a piece of history.

Offline Ukrainii Pyat

  • Collector of everything numismatic
  • Meritorious Member
  • ****
  • Posts: 624
Re: Soviet / Russian Chervonetz 1979
« Reply #5 on: December 28, 2010, 03:35:33 AM »
Is the resemblance between the peasant on the reverse and Czar Nicholas II deliberate?



I am sure they modelled the sower on a Russian peasant, much more PC for the time.
Донецк Украина Donets'k Ukraine

translateltd

  • Guest
Re: Soviet / Russian Chervonetz 1979
« Reply #6 on: December 28, 2010, 04:39:56 AM »
I am sure they modelled the sower on a Russian peasant, much more PC for the time.

Of course - but look at the facial detail.  It almost seems like someone got away with a very dangerous joke at the mint.