Gold Sovereigns

Buying and investing in gold sovereigns and half sovereignsGold sovereigns and half sovereigns were / are coins minted in Great Britain by the Royal Mint in London and Wales, and sometimes they are minted in other countries under the close supervision of the Royal Mint.

These days they are struck to be sold for a profit, as opposed to being coins in general circulation, gold coins produced under such circumstances are known as bullion coins since they are largely bought by people and institutions to act as a financial investment, others just like to collect them.

People also like to buy gold sovereigns as an investment, they are small and portable and more liquid than a bullion bar.

History of the Sovereign

Originally the sovereign and half sovereign date back to the former British coinage system of pounds, shillings, and pence.

That system was also dubbed LSD, as in Livre (the old French word for pound), shilling, and Denarii, as in the old Roman pennies.

Under this system there were twelve denarii to the shilling, and twenty shillings to the pound. By the time the LSD system was scrapped in 1971 to help British entry into the Common Market, sovereigns and half sovereigns were already far too valuable to be used as circulation coinage thanks to the increase in the value of gold over the intervening years.

Because the actual gold content value of a sovereign or half sovereign was way above the face value of the coin people only used the corresponding banknotes instead for financial transactions.

The sovereign was an English coin first struck during the Middle Ages, yet discontinued in the early period of James I’s reign in 1604.

The idea behind the coin had always been that it was made up of enough gold to be worth at least a pound of silver. English coins were prone to debasement both official and unofficial, whilst periods of higher inflation sometimes meant the coins were worth less than their nominal face value.

Towards the end of the Tudor era the value of English coins had been weakened by inflation and debasement so in many ways the decision of James I to withdraw all remaining sovereigns made a lot of sense. He and his officials also could then sell any of the silver or gold obtained from all of the melted down coins.

It was to be another review of the coinage, this time in 1816 that brought about the revival of the sovereign. Parliament had ordered this review to find a solution to an international shortage of silver.

The following year, 1817 the sovereign was reintroduced to serve as a pound coin, and the half sovereign had a face value of ten shillings. It was decided that the new coins would feature the now seminal design of St George and the dragon, as designed by the Italian Benedetto Pistrucci.

The design was approved by Parliament, the Prince Regent, and also the Royal Mint. The design has never changed, and the high quality of the coins has not diminished either.

Technical Specifications of a Gold Sovereign

Parliament set the measurements, definitions, as well as the size of the coins the year before they were first issued in their revived format. As per usual the Royal Mint starts the production of all coins dated in any year in the previous year in order to ensure there will be enough currency in circulation.

The edges of the sovereigns were purposely milled to prevent people clipping gold off the edges of coin, a very common problem in the past with other kinds of gold and silver coins.

These days such edges are continued with as much to keep up with tradition than as a security measure, indeed the sovereign is probably the most faked gold coin in the world, with many fakes coming from the Middle East.

While these fakes are often made from gold, the purity of the gold may be lower than in a genuine coin.

A modern sovereign weighs in at 7.98 grams, has a diameter of 22.05 mm, and is some 1.52 mm thick.

The half sovereign is exactly half the size (and thus half the value).

The purity for both coins was fixed at 22 ct gold, and it is unlikely that it will ever change.

Despite the modest size of these coins the high standard of their production means that they are constantly sought after. The measurements and the weight of the coins were reduced marginally when the United Kingdom turned metric, and abandoned the imperial system of weights and measures as a precursor to membership of the European Union.

Such changes are barely detectable to the casual observer, but an avid coin collector would undoubtedly notice them.

Sovereigns and half sovereigns had remained circulation coins whilst the pound sterling and most other major currencies had their values linked to the global price for gold.

Before the First World War the pound had been fully convertible into gold, but the cost of fighting that conflict had informally made it non-convertible. The attempts to re-establish the gold standard were not as effective as the British government would have liked, and had detrimental economic consequences.

The end of the gold standard in practice but not in name after 1931 meant virtually nobody used gold coins as currency and preferred notes instead.

Sovereigns and half sovereigns remain highly popular being ideal for investors since they are portable, liquid, and small (as opposed to the much larger full ounce gold coins). When it comes to buying or selling gold sovereigns you obviously need to shop around and make sure you are dealing with someone you can trust.

There are many reputable dealers out there from where you can buy gold sovereigns, or sell your sovereigns to, usually most online dealers will have the current prices for both full and half sovereigns displayed on their websites making it easy to value them.

Unless yours is a rare coin from a year when not many were struck, or is from an obscure mint, then it will have the same value as any other sovereign, and this is determined solely by the gold price at the point in time when you sell or buy your coin or coins, since every sovereign contains exactly the same amount of gold.

You do of course need to think about storage of valuable coins like these, and of insurance too, since they will not be covered under your normal home contents insurance, or rather a collection or quantity of them would not be covered so make sure that you protect your investment with suitable additional cover.