Advice on Gold Sovereigns & Other Gold Coins
The Gold Sovereign offers an excellent way to invest some of your money into gold coins or gold bullion. Gold sovereign coins are seen as a good investment since they always retain the value of the gold content, which may vary, as well as some numismatic value to coin collectors - we'll cover this later.
Gold Sovereigns are widely recognised as one of the most common gold coins, they contain less gold (around 1/4 of an ounce of gold) than the Krugerrand, for example, which contains a full ounce of pure gold, which makes them more liquid, or in other words easier to sell, since the cost per gold coin is smaller.
Besides the full gold sovereign, it is also possible to buy half sovereigns, which obviously contain half of the amount of gold than the full gold sovereign, and consequently the gold content is worth around half the price of a full gold sovereign.
It may well be that other gold coins like the Krugerrand, Maple, or Panda may better suit your requirements, or you may be buying gold coins for their aestetic qualities (gold coins do look very attractive!), we'll go into some details of these on our gold coins page.
The Gold Sovereign
The first gold sovereign was minted under the reign of Henry the Seventh in 1489, made in 24ct (24 carat) gold, and derives the name sovereign since that first gold sovereign showed an image of the king seated on the throne.
The first half sovereign was struck in the reign of King Henry the Eighth in 1509. The gold sovereign then underwent a number of transitions, including the minting of 22ct (22 carat) gold sovereign coins (or 91.66% pure gold), which is the gold purity used today.
The modern gold sovereign weighs 7.98 grams and contains 7.315 grams or 0.2353544 of actual gold, making them 91.66% gold, and the remainder being a base metal since 24ct or pure gold is far too soft.
Why Buy Gold Sovereigns?
Gold, silver, and other precious metals have always been seen as a store of wealth, since it's scarcity and universal acceptance as a unit of payment mean that it can never go "out of fashion." This is understandable when you consider that in older times wealthy traders may take their coins (this was before paper money remember) and have them melted down and turned into useful or decorative objects, such as drinking vessels, etc.
This not only advertised their affluence, it also allowed them to take the gold or silver object to the local mint, melt it down, & turn it back into the same number of gold coins or silver coins that they had owned previously if times became harder.
For this reason gold sovereigns, gold coins, and other items made from precious metals are often turned to in times of economic uncertainty (like now!) as an alternative way of holding money.
Not only do gold sovereigns look far more attractive than paper money, they are a good hedge against inflation, and against weakening currencies - right
now gold prices are at record highs when valued in £Sterling due to the weakening of the Pound, and so the value of gold sovereigns and other gold coins is correspondingly high.
The only real downsides with gold sovereigns themselves are that newer gold coins like the krugerrand contain one full ounce of gold, and so it is easier to calculate the gold content value, but a small amount of simple maths can easily overcome this problem! Another potential downside is the numismatic value of each gold sovereign.
Since buyers will have to pay a premium over the spot value of gold (ie the market price of 1 ounce of 24 carat gold) anyway, the additional cost of the numismatic value of each coin can inflate the price difference further.
In other words, if you wanted to buy 1 ounce of gold you could buy 1 krugerrand, which would mean paying the premium over the market price of gold, plus a small premium for the actual coins value, or you would buy 4 sovereigns at the same premium over the market price for gold, plus 4 lots of numismatic value, one for each coin.
Although this may not be a huge difference, if you are buying gold sovereigns for investment purposes, or to protect your money, then clearly you want to keep the price that you pay as close to the market price for gold as you can.
One other risk with buying gold sovereigns or indeed any gold coins. is that the value or price of gold is constantly changing, and so if the price of gold drops then the gold content of your coins will be worth less, meaning that you could lose money if you then sell your gold coins - this risk is inherent in all investing, but at least your gold sovereigns or gold coins can't go bust like stock market investments!
If you want to sell gold sovereigns then usually you can find a large number of dealers who will be happy to buy your gold sovereigns off you, but you need to shop around to get the best prices, just like you would if you wanted to buy gold sovereigns .
See our buy gold & sell gold sections for more details
Other Ways to Invest in Gold
If you are only interested in gold as an investment, rather than in gold coins, then you might want to think about buying scrap gold, since you can buy it at a price that is closer to the gold prices. and also you could buy different grades of gold, that is 9ct, 14ct, 18ct, 22ct, or 24ct.
This allows you to buy even broken jewellery, etc instead of gold coins .
2012 Gold Sovereign coin featuring Paul Day's new design of St. George slaying the Dragon - CGT Free
Elizabeth II Decimal Portrait or Second Portrait Gold Sovereign coin issued between 1974 and 1984 - CGT Free
2005 Gold Sovereign and 2002 Gold Sovereign to commemorate the Queen's Golden Jubilee - CGT Free