The British Sovereign – A Gold Coin On Which The Sun Never Sets

The British Gold Sovereign is today’s most popular and sought after investment coin. The reason – it is the basis of the monetary reform, which ensured the financial stability of the country since the beginning of the 19th century. Moreover, it is one of the reference currencies for the “gold standard”.

Because of its importance, it continues to circulate as legal tender to this day. The longest reigning monarch in the history of Great Britain, Queen Elizabeth II, was represented on the reverse of the coin with five different portraits . In total, more than 80 million coins have been issued. Her successor, King Charles III, will probably continue issuing new gold sovereign coins.

In this article we discuss the history of the gold sovereign, the reasons and context for its re-emergence in the early 19th century, and why it is such an important coin, still produced and sought after today.

England Without The Gold Standard: The Great Inflation Of The Napoleonic Wars

At the end of the 18th century, Britain became involved in the war against France and approached the matter as before, financing its expenditure by borrowing. It soon became clear as day that he would not be able to survive financially, as between 1793 and 1798 alone his national debt doubled. Interestingly, at almost the same time, the new revolutionary regime in France was already bankrupt, perhaps with the first hyperinflation in history. This development greatly aided Napoleon Bonaparte’s rise to the throne, as we discussed in the article about another popular gold coin, the French franc.

Gold has always been a guarantor of personal financial stability and a limiting factor in government spending. When debts mount, creditors are paid in gold, and when a country’s reserves run out, it goes bankrupt. Due to foreign and domestic borrowing, Britain’s gold reserves had fallen to only 20% by the end of 1795. Private banks were panicking over a possible French attack. Thus, in February 1797, Britain abandoned the gold standard and two years later an income tax was introduced.

But this only makes Britain’s problems worse. She continues to cover her expenses through loans. Much of the borrowed funds are “unfunded” – the government does not receive them from taxes or through any other channel. Moreover, their share of total loans increased significantly – from under 20% to almost 80% by 1808. The main buyer was the Bank of England, and this debt was financed by printing money, i.e. inflation. We are witnessing a similar phenomenon in Europe today.

The amount of money in circulation rose from £10.3 million in 1797 to £27.25 million in 1815 – an increase of 163%. The result is a rapid rise in consumer prices and concerns about the political stability of the rulers. In response, the price of gold in Britain also rose rapidly as people believed in physical gold . The increase on the free markets is more than 20%, although officially its value was fixed by Sir Isaac Newton at 4.25 pounds per troy ounce.

To find out the reasons , the authorities order one of the most famous investigations in monetary history – that of the Gold Committee . The report of the inquiry, published in 1810, recommended a return to the gold standard. The Bank of England has made the same request to parliament repeatedly over the years.

The Second Life Of The British Gold Sovereign

In the early 19th century, the most popular gold coin in the empire was the guinea. At its launch, 2 centuries ago, it would have been equal to a pound or 20 shillings of silver. As gold increased in value relative to silver over time, its value sometimes rose to 30 shillings. Guineas weigh 8.3 grams of 22 carat gold, correspondingly containing 7.7 grams of the yellow metal.

Such fluctuations are not popular with the public. The authorities note that:

“There is a general desire among the populace for gold 20 and 10 shilling coins instead of silver guineas, half guineas and seven shillings.”

So in 1816, the authorities began to create a new standard where one pound equaled 20 shillings. But it has to be more than a gold coin. With it, Britain must demonstrate to the world its power as the victor of the Napoleonic Wars (1804-1815) and as the empire on which the sun never sets. Returning to their roots, they found the most appropriate way to show all this through a single currency – the British sovereign.

The Original British Sovereign, Of Henry VII

After the Wars of the Roses, Henry VII ascended the throne of England as the victor. Among his goals was the task of uniting the country and strengthening its position in international relations. Fourteen years after his coronation, in 1499, he created a gold coin to demonstrate both—the sovereign.

Its name comes from the ruler himself, depicted on the obverse of the coin sitting on the throne with the symbols of power – the crown and the scepter. The reverse shows the coat of arms surrounded by the unified English rose. The coin is massive for its time, with a diameter of over 4 cm, a weight of 15.5 grams of gold and the extremely high purity of .958 or 23 carats. In addition, the original sovereign was highly innovative in British monetary history as it was:

  • The first one pound coin;
  • The largest gold coin issued in England at the time of creation;
  • The first coin to realistically depict the ruler;
  • The coin of the highest purity.

A pound doesn’t seem like a significant amount. But five centuries ago it was the wages of a craftsman for three months and a servant for a year. Probably a small proportion of the English at that time had never seen the sovereign alive. But it was a symbol of royal power, circulating among and through the rich, rulers and merchants – throughout Europe. It became such an emblem of stability and monarchy that, although Henry VIII reduced its purity to 22 carats, it is still the standard for monetary systems in the English-speaking world today.

Birth Of The Current Sovereign Gold Reforms

The purity of the sovereign issued in sec. the 19th is 22 carats but contains 7.31 grams of pure gold. It is smaller than both the original sovereign and the guinea, and the reason was the equalization of its value from one pound to 20 shillings.

Fittingly, the introduction of the British sovereign began with a gigantic monetary enterprise – the Great Coinage . This is the second such operation in British history, the last having been carried out over a century earlier when William III remelted hand-struck silver shillings. In the process, a huge amount of guineas were melted down to produce the new money.

The creation of the gold sovereign was not only a new chapter in England’s financial history, it marked the emergence of Britain’s most popular coin, which is still issued today without changing standards. In addition, today it is produced according to the most rigorous standard in the world , its pure gold content is guaranteed to five decimal places.

British Gold Sovereign Design

The first sovereign was issued in 1817. The obverse features George III, whose profile faces right. Tradition says that kings should only be represented in profile and facing the opposite direction from their predecessor . For example, when the first King Charles III effigy coins are issued, his portrait will face left.

The first issue of the 1817 British gold sovereign, featuring King George III on the obverse and St George and the dragon on the reverse

The obverse of the first sovereign coin depicts the scene with St. George and the dragon, made by Benedetto Pistrucci. Because the image was so detailed, the masters of the Royal Mint could not use ordinary steel molds, so the artist had to make the mold himself. If in the original image Saint George had a broken spear in his hand, four years later it was replaced by a short sword, which has not been changed.

Timothy Nod created an author’s design, so St. George is represented in medieval armor and helmet, and this design was used on coins only in 2005. Seven years later, the coin again has a unique design, namely St. Gheorghe stabs the dragon with a spear. The design was created for Queen Elizabeth II’s Diamond Jubilee and only 750,000 coins were produced.

The Presence Of The Royal Coat Of Arms On The Coin

The coat of arms of Great Britain appeared on the gold sovereign for the first time in 1825, by order of King George IV. Five years later it was modernized by William IV, and in 1838 it was renewed by Queen Victoria. All three designs belong to Jean-Baptiste Merlin of the Paris Mint.

The new look does not enjoy the popularity of the image of St. George, who is the spiritual patron of England. So, in the early 1870s, it was returned to the reverse of coins, including the special 1887 issue produced to mark Queen Victoria’s golden jubilee. When they were made, the Finance Minister indicated that Pistrucci’s image was:

“Marked by tradition and recommended for its exceptional beauty .”

Although the coat of arms is still occasionally used (including on the 2022 Elizabeth II coins), from the late 19th century, the iconic design of St. George and the dragon is still used today . It has adorned the sovereign for over two centuries and has been used by every monarch of the United Kingdom in the 20th century. It can be said that the image is as stable as the sovereign itself, which also does not change its characteristics.

Other Versions Of The Sovereign

Again, in the early 1820s, denominations of two pounds (13.324 grams of pure gold) and five pounds (33.3720 grams) began to be produced. Rarely used for payment, they are not regularly minted and their editions are generally limited. The original £5 coins produced during the reign of George III were also collectors’ items rather than legal tender.

In addition to these, coins of quarter and half pound denominations are struck, including today. The latter were also introduced in 1817 and had a relatively high circulation. Apart from the difference in physical characteristics and the 3.6575 gram pure gold content, the half-sovereign coins originally featured the coat of arms instead of the image of St. George and the dragon, but this was later changed.…

The World’s Main Gold Currency: The British Sovereign Through History

The gold Sovereign was legal tender between 1817 and 1814. During this period , over a billion coins of various denominations were minted . While one of the most common means of payment in Continental Europe, the French franc , only 600 million coins were minted.

At the height of the British Empire, the sovereign was used as a means of payment in more than 30 countries. No other currency in human history has been used on a larger scale.

Thanks to the stability of the gold standard and the sovereign in particular, during this almost a century the British enjoyed an unprecedented rise in the standard of living . A Bank of England report shows that the price level is falling by 30%, while real wages are rising by almost three times. Britons have never before experienced such stability of personal finances. In the last century, real wages have only increased twice.

The End Of The Sovereign And The World Wars

Paradoxically, its use was discontinued for the exact opposite reason for which it was created. After guaranteeing the country’s financial stability for a century , the sovereign ceased to be legal tender with Great Britain’s entry into the First World War on August 4, 1914. The reason was that the population, frightened by the conflict , withdrew physical gold again, causing the Bank of England’s reserves to collapse by 60% in just three days .

In its place, notes with a face value of one pound and 10 shillings were created. With this, gold coins are no longer used in day-to-day transactions in the country. The Bank of England could withdraw all gold, which had a face value of over £100 million, from circulation.

However, the sovereign continued to be struck until 1925 in London (with a break after 1917) and until 1932 in the former colonies. The main reason is that they are used as reserves by the Bank of England and for British foreign debt payments.

Two limited editions were produced in the late 1930s and 1940s. The second depicts King George VI (father of Elizabeth II), but was made using dies from 1925. But the 1930s coins, which are the most limited series in history, they become recorders.

The Most Expensive British Gold Coin In History

Edward VIII was on the throne for less than a year – from 20 January to 11 December 1936 and was the shortest reign in British history. He was also the first ruler to abdicate and the first to insist on being depicted on coins in left profile like his predecessor because he liked it better. During this short period the Royal Mint managed to produce a very small number of coins bearing his image, none of which entered circulation.

After the abdication, they were collected in a box and hidden in the office of the deputy director of an institution. They remained there until the 1970s, when most became part of the Mint Museum. But it seems that some of the coins ended up in the possession of private individuals. Thus, in 2020, a sovereign coin with the face of King Edward VIII was sold to a private collector for £1 million , making it the most expensive British coin in history. A year later, however, another sovereign Edward VIII coin, with a face value of £5, which sold for £1.65 million .

Restoration Of The Sovereign Under Elizabeth II

With the accession of Elizabeth I to the throne of Great Britain in 1952, the Royal Mint prepares the first new series of coins. Their circulation is extremely limited and today they are kept in the British Royal Collection at the Royal Mint. Series production began four years later. Not only is the Queen reintroducing this popular coin, she is also the monarch with the most portraits engraved on the sovereign – five over seven decades. Over 80 million coins were produced during this interval.

There are many reasons for reissuing the legendary coin. The stoppage of production during the First World War created a vacuum in the markets and the demand for gold increased. Therefore, some countries issue almost identical copies of the sovereign for example Saudi Guinea (7.3217 g pure gold, fine .917), produced between 1950 and 1957. But one of them is the fight against counterfeits that have started to flood the markets. after the First World War, produced in particularly large quantities in Italy and Syria.…

Gold Or Stock Exchanges? Which Grow More Over Time

An analysis of the return on assets such as gold, stocks and other investment assets should be done over the long term . In this way, short-term trends are eliminated and predictions can be made about future dynamics based on what happened in the past.

But when we look at the data in retrospect, we can lose sight of the context. “Null” figures would hide, for example, previous regulations or the structure of the financial system. Or, we could think that, during certain periods of communism, there was no inflation. Thus, if we were to analyze only the prices , we would not know that they were controlled by the state, that there was a shortage of goods and their quality was often low .

The same thing happens when we compare different categories of investments. It is not fair to take them out of the context in which they appeared. A prime example is the chart below that compares changes in US stock market indices and the price of gold and silver over the past century.

The Price Of Gold In Financial Systems In The 20th Century.

We must not forget that, for the first two thirds of the 20th century, the US was either on the gold standard or on some variation of it. By 1933, a troy ounce of gold was worth $20.67. After President Franklin D. Roosevelt confiscated Americans’ gold, the US currency was instantly devalued by 70% , and a troy ounce of gold equaled $35.

After World War II, the Bretton Woods system was introduced – major Western currencies are pegged to the dollar, which remains at a constant rate of $35 per troy ounce against gold. The system lasted until August 15, 1971, when President Richard Nixon removed all ties between the US dollar and gold. In any case, until the early 1970s, the value of gold was fixed .

This means that, relative to the US currency, the value of the yellow metal cannot go up or down for administrative reasons. Since the value of an asset cannot change and stock indices can move freely, it is not fair to compare them. It would be like comparing apples with pears .

Gold And The Stock Market – Which Rises Higher?

After 1971, gold was free to move separately from the dollar. Therefore, it is correct to analyze in parallel their evolution from that time until now.

How has the price of gold and stock indices changed from then to today?

  • The S&P 500 averaged 100 points in August 1971 and is up 3,856% since then
  • Dow Jones – 850 points and up 624.2%
  • Gold – $35 and up 4,777.1%
  • Silver was at $1.6 a troy ounce, up 1,023.2%.

When we compare comparable categories, the picture changes a lot. Since its price was no longer pegged to the dollar, gold rose more than the two major stock indexes . If we index their values ​​towards the end of 1970 (that is, at the end of December the considered categories are equal to 100 points), the picture will look like this:

The data shows that over the past 52 years, gold has generally outperformed stock indexes. Unsecured money sooner or later reaches the intrinsic value of 0. Given this and economic history, we can expect the price of gold to continue to rise in the future and serve as a very effective means of protecting our buying purchase power.…

How To Invest Smartly In Gold Bullion: What You Need To Know

Gold has always been a symbol of wealth and prosperity, and objects made of this precious metal are synonymous with luxury. In Romania, gold is still extremely popular, both in the form of jewelry and as an investment. If you also want to invest in gold, you can do so by purchasing bullion.

This method is very safe and advantageous and can turn into an extremely profitable investment in the long run. Learn more about the benefits of investing in gold bullion and how you can do it.

Why Invest In Gold Bullion?

Have you wondered why it would be worth investing in gold bullion over, for example, stocks? Here are some clear advantages that might convince you to consider this practice.

Gold Retains Its Value

Gold bullion investments are among the safest in the world because gold can maintain its value over time. More precisely, it remains valuable, and the chances of suffering losses are very small. Over time, there have been few declines in the price of gold, while its value continues to rise.

Additionally, this high monetary value is not influenced by inflation or other political or economic changes that typically affect currencies. Even in times of crisis, gold bars will retain their value.

The Supply Of Gold Is Still Limited And The Demand Is Increasing

Gold bars cannot be found at every turn and compared to other investable assets, they are quite limited. However, the demand for gold is constantly on the rise, which has led to an increase in its value. If you have invested in gold bars and decide to sell some of them, you could make a significant profit.

Gold Is An Internationally Recognized Capital

Unlike certain currencies that you may have difficulty trading abroad, gold is universal. It usually has a standard value all over the world, so if you want, you can sell it to other countries without problems. More precisely, the gram of gold in bullion has a certain price, and even if it increases, its value will be the same regardless of the country in which you are.

The Investment Is Exempt From Vat

Investment in gold bars is the only one for which you will not have to pay VAT. Instead, you will have to pay taxes on any other types of investments.

When Is The Right Time To Invest In Gold Bullion?

In general, the price of gold bullion tends to be higher during periods of economic, political, etc. crisis when other assets fall. But since the current geopolitical and economic context undergoes numerous fluctuations constantly, it is difficult to choose a strategic moment. You could choose to make this investment at any time.

However, an ideal time to invest in bullion is when you want to make some savings or secure your wealth. If you have a large amount of money, you want to invest it, but you want a domain as safe as possible, without losses, an inspired choice is to buy gold bars.

How Can You Invest Smartly In Gold Bullion?

There is no specific rule by which you should invest in gold, just as there is no minimum amount that should be spent. So you can purchase as much gold as you want. Here are the things you should keep in mind.

Types Of Ingots

Ingots have different weights with different values. In general, it is recommended to go for the 20 gram, 50 gram or 100 gram, as these are the most profitable options.

As mentioned, there is no standard rule that stops you from purchasing larger or smaller ingots. However, it is more advantageous to buy several ingots with a lower weight in favor of a single one with a higher weight. Thus, if you want to sell them, you will be able to do so more easily.

Buy Only From Authorized Dealers

To ensure that your bullion is exactly what you are paying for, choose to purchase it only from authorized dealers. These may also be available at different banks.

Store Them Carefully

To keep them safe, store the bullion in a safe place. If you want to keep them at home, it is recommended to buy a safe, but do not forget that there is always the risk of being the victim of a robbery. That’s why you should also consider storing them at the bank in a safety deposit box.

Is Buying Jewelry As Advantageous As Investing In Gold Bars?

Gold jewelry has a different value than bullion when it comes to buying it. If you have a choice between purchasing a bullion and a gem that, in terms of weight and carat, have the same value, the gem will be more expensive. This is because, in the case of jewellery, VAT comes into play and the price difference between selling and buying is greater. In contrast, in the case of ingots, this difference is below 5%.

Also, if you buy jewelry and then want to sell it, the process won’t be as simple. They have no international value like bullion and the price can vary widely. Instead, once you decide to sell a bullion, you’ll know exactly how much money you can get for it.

Gold bullion is a very safe investment destination. They retain their value, are not taxed and can be sold without problems anywhere in the world. In addition, you forget about the worry of inflation and you don’t have to worry about suffering losses due to economic and political events that sometimes destabilize the financial situation of the globe.