One of the most famous gold coin series around the world is the British Sovereign. With a long and rich history, old British sovereigns are highly popular amongst numismatic collectors, while newer bullion sovereigns are popular among investors. The first coins in this series were minted in 1489 by King Henry VII of England. They had a nominal value of one pound sterling (20 shillings). But their primary use was as official bullion, so there is no marked face value on the coins.
The first gold sovereigns were 23 carat gold (96% percent pure) and contained 15.6 grams, or one half troy ounce, of gold. King Henry VIII, reduced their purity to 22 carats (92% pure), which defined the standard that is now referred to as "crown gold", a common standard for gold coins in both the UK and the US. The gold content was reduced several more times and fixed at 7.322 grams, or 0.2354 troy ounces, where it remains today.
The British Royal Mint has released various additional denominations of gold sovereigns, including half sovereigns with a nominal value of 10 shillings (a half pound sterling), double sovereigns with a nominal value of two pounds sterling, and quintuple sovereign coins with a nominal value of 5 pounds sterling. And in 2009 the Royal Mint for the first time has issued quarter sovereigns with a nominal value of 5 shillings. Obviously the nominal value has nothing to do with their real value in modern times.
Gold Sovereigns were produced in large numbers until World War I, when the British pound was removed from the gold standard. Until 1932, sovereigns were produced only at branch mints around the British Commonwealth, specifically in Melbourne, Sydney, Perth, Bombay, Ottawa, and Pretoria. Production was then halted until 1957, when gold sovereigns began to be minted once again, to prevent the debasing of the coins' value through counterfeiting.
Until 1982, sovereigns were minted as regular bullion, but from 1982 to 1999 were produced only as proof coins for collectors. Since 2000, Sovereigns have once again been minted as bullion coins, whose value depends mainly on their weight in gold, and not on numismatic prestige.
As mentioned earlier, British Gold Sovereign coins have a nominal value. But their real value is determined both by the current market price of their gold content plus variable numismatic value, which varies massively depending on the specific coin and buyer demand. Newly minted bullion coins should theoretically cost approximately the market value of their weight in gold plus a minimal premium, but older sovereigns can sell for much more. Historically, British Gold Sovereigns were regularly removed circulation by the Royal Mint and their gold content reminted into new coins. There were also buybacks of coins that had lost some of their weight in circulation, which were exchanged for full weight sovereigns. Because of this history of reminting, old British gold coins often have extraordinary numismatic value because of their rarity.
Collectors love sovereigns and they can have tremendous numismatic value because of their history and rarity. But these same strengths make old British sovereigns inappropriate for simple investors. Such investors would be better off staying away from numismatic coins and buying only bullion coins, whose value depends on their gold content rather than rarity or aesthetics. Bullion sovereigns minted in recent years would be appropriate. But even if buying bullion sovereigns as an investor, one potential pitfall of sovereigns is the unusual gold content of 7.322 grams, or 0.2354 ounces, which is written nowhere on the coin. This makes British sovereigns less liquid than a standard weighted one ounce gold coin, at least outside of the UK. They can probably be sold to most bullion dealers, because they will be familiar with them. But if there is ever an economic meltdown and you need immediate liquidity for daily transactions, sovereigns may not be widely recognized. They still make a solid investment, but as an emergency supply of real physical money, other one ounce coins are probably a better choice.
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