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FACE VALUE

The nominal value of a government issued coin. A meaningless throwback to the days when national currency units were actually defined as a certain mass of gold or silver. The face value is almost always a tiny fraction of the market value of the coin due to inflation of fiat currency. This does have interest implications on tax reporting, however.

FEDERAL OPEN MARKET COMMITTEE (FOMC)

The committee that sets interest rate and credit policies for the Federal Reserve System, the United States Central Bank. The FOMC has 12 members. Seven are members of the Federal Reserve Board, appointed by the president of the United States. The other five are presidents of the 12 regional Federal Reserve banks. Of the five, four are picked on a rotating basis; the other is the president of the Federal Reserve Bank of New York, who is a permanent member. The Committee decides whether to increase or decrease interest rates through open market operations of buying or selling government securities. The committee’s decisions are closely watched and interpreted by economists and stock and bond market analysts, who try to predict whether the Fed is seeking to tighten credit to reduce inflation or to loosen credit to stimulate the economy.

FEDERAL RESERVE SYSTEM

System established by the Federal Reserve Act of 1913 to regulate the US monetary and banking system. The Federal Reserve System (the Fed) is comprised of 12 regional Federal Reserve Banks, their 24 branches, and all national and state banks that are part of the system. National banks are stockholders of the Federal Reserve Bank in their region.

The Federal Reserve System’s main functions are to regulate the national money supply, set reserve requirements for member banks, supervise the printing of money at the mint, act as a clearinghouse for the transfer of funds throughout the banking system, and examine member banks to make sure they meet various Federal Reserve Regulations. Although the members of the system’s governing board are appointed by the president of the United States and confirmed by the Senate, the Federal Reserve System is considered an independent entity which is supposed to make decisions free of political influence. Governors are appointed for terms of 14 years, which further assures their independence.

FINENESS

A measure of the purity of a particular specimen of precious metal measured in parts per thousand. Fineness is calculated as the fraction of (fine weight)/(gross weight) measured to four decimal places and multiplied by 1000. Absolute purity is 1000 fine, but is impossible to achieve with current refining technology. Purity of 99.5% is written as 995. fineness. The highest fineness seen in the bullion industry is 999.9 or “four nines”. A one kilogram gold bar of 999.9 fineness contains 999.9 grams of fine gold and one tenth of a gram of dross.

FINE WEIGHT

The measured pure gold content of a bar or coin arrived at by multiplying the gross weight by the fineness. The actual weight of pure precious metal in a particular specimen.

FOOL’S GOLD

Iron pyrites, which look like native gold.

FOUR NINES GOLD

The purest form of gold containing 999.9 parts per 1,000. Occasionally gold containing 999.99 is fabricated for use in the electronics industry.

FUTURES CONTRACT

A standard contract offered by the major Exchanges that allow for the purchase of sale of metal at a pre-agreed price for future delivery at a pre-agreed date.