Investing in Gold Sovereigns


wealthymatters.comThe  British sovereigns are gold coins with a nominal face value of one pound sterling or twenty shillings.They were first issued in 1489 and still continue to be issued till date. All post-1837 sovereigns are still legal tender in the UK.

The name “sovereign” comes from the large size and portraiture of the coin, the earliest of which showed the king facing, seated on a throne, while the reverse shows the Royal coat of arms on a shield surrounded by a Tudor double rose.

At the height of the British Empire, gold sovereigns were well regarded and accepted as money throughout most of the world and used to settle dues between countries.The gold-standard may be no more, but the good reputation of the gold sovereigns for purity persists to this day and they are  the most widely traded semi-numismatic gold coins in the world.In many parts of the former British Empire sovereigns are included in prized jewellery. There is a ready market for these gold coins worldwide,especially in the commonwealth, so they are pretty liquid investments.

Sovereigns minted since 1817 have been produced to a standard specification as follows.Well-worn or used coins may be marginally under manufactured weight and size.

  • Weight: 7.9881 grams
  • Thickness: 1.52 mm
  • Diameter: 22.05 mm
  • Fineness: 22 carat = 91.67%
  • Actual Gold Content: 7.3224 grams = 0.2354 troy ounce

The sovereigns are small coins that are difficult to accurately replicate economically.If base metals are used,the fake coin will not meet the above specifications.Unlike pure gold,there is no fear of 22 carat gold being substituted by titanium.In any case the thinness of the coin means we can reliably test it under a carat meter and check the alloy against the standard alloy used to mint the genuine coins.Since 22 carat gold must be used to fake sovereigns,the only sovereigns that are worth copying are the rarer ones with higher numismatic value. Thus by buying sovereigns we largely sure of securing atleast the bullion value of the coins.To ensure that the premium we are paying for the numismatic value of the coin is justified, we need a bit more work.We can start with the information at :-http://www.goldsovereigns.co.uk/datesexist.html .Here we can check if coins were actually minted in a given year,look up different mint marks and compare coins with good pictures.This should save us from buying blindly.

If it is a coin issued before 1817  it’s time for a bit more work.Check here for pictures to identify the coin  http://www.coins-of-the-uk.co.uk/pics/sov.html and look up prices here  http://www.coins-of-the-uk.co.uk/values/sov.html .The prices are from 2008 so they need to be bumped up in relation to the increase in price of gold.This should give you an idea of what the coin is worth.Then it’s upto you to haggle to get the best price.

For the investor looking for good value from his/her bullion purchases,sovereigns are a good buy.They offer the best of bullion and numismatics in one investment. They contain the intrinsic security of bullion or precious metal in a pure form and also offer an additional profit potential due to their aesthetic and historical appeal.

In Victorian times it was the practice of the Bank of England to remove worn sovereigns and half sovereigns from circulation and have them recoined. Consequently, although a billion sovereigns have been minted in total, that figure includes gold that has been coined and recoined a number of times. It is estimated that only 1% of all gold sovereigns that have ever been minted are still in collectable condition as in many cases the coins have worn out or been melted down.So sovereigns are  rarer than ordinary bullion coins and bars and so as time goes by the value of the sovereigns increases by more that the actual increase in the price of gold.

Moreover in the EU, gold bullion and older gold coins are not subject to VAT, due to the EU Gold Directive. Even more important is the fact that, unlike the other forms of gold investments, British gold sovereigns issued post 1837 are also not subject to capital gains tax (CGT)in the UK on account of being considered legal tender.So sovereigns are becoming increasingly popular with investors seeking to avoid having to pay capital gains tax on their gold investments.This increase in the number of potential investors without a similar increase of  older sovereigns makes sovereigns, especially historically significant ones a compelling buy.

The same arguments apply to the British half sovereign coins too.Modern half sovereigns, from 1817 onwards, have a diameter of 19.30 mm, a weight of 3.99 g, are made of 22 carat  gold alloy, and contain 0.1177 troy ounces (3.7 g) of gold.

Here is the link to more information on modern half- sovereigns. http://www.taxfreegold.co.uk/halfsovereignsindx.html .This page lists the older half – sovereigns and half-guineas. http://www.coins-of-the-uk.co.uk/halfs.html .And this link will help get some idea of their price.http://www.coins-of-the-uk.co.uk/values/halfs.html

These links will be of help if you are considering double sovereigns :                                                                                http://www.coins-of-the-uk.co.uk/values/halfs.html                                                                                                       http://www.coins-of-the-uk.co.uk/values/dsov.html

And these for the 5 pound coins  :                                                                             http://www.taxfreegold.co.uk/fivepoundsinfo.html                                                                                                            http://www.coins-of-the-uk.co.uk/values/fivep.html

 

About Keerthika Singaravel
Engineer,Investor,Businessperson

26 Responses to Investing in Gold Sovereigns

  1. margarita says:

    Very useful post.Thanks.

  2. Collin says:

    I don’t buy the idea of investing in gold.Gold is the ultimate chimera set to ruin people for the simple reason that it relies on the greater fool theory of someone else buying gold at a higher price. Gold pays no interest or dividends and is as such nothing more than a dubious “investment”.

  3. Gold Coin says:

    An excellent idea!

  4. Rigoberto Gladhart says:

    Amazing piece. Very helpful info.

  5. Doloris Schreur says:

    Great post.

  6. Pearl Winfree says:

    Excellent post.Very helpful information .Thank you.

  7. Madeleine Sivick says:

    Very helpful post.

  8. Lakita Plate says:

    Nice post. Interesting investment idea.

  9. Solomon Copping says:

    Very useful information .Thank you .

  10. Alecia Mastoris says:

    Nice post.

  11. Jonathon Czapor says:

    Nice article.

  12. Mary Allabaugh says:

    Extremely helpful information.Thank you.

  13. Asa Russwurm says:

    Very useful links.

  14. Pearl Winfried says:

    Great idea-investing in gold sovereigns.

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