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The British Sovereign is one of the most historic gold coins in the world, with a history dating back to 1489 and the reign of Henry VII. Originally valued at one Pound Sterling and containing half an ounce of metal with a gold content of 95.83 percent, it was the gold backing behind the currency of England, then the British Empire and even the early USA. The current design, dating back to 1817, was known as the “golden cavalry” because of its depiction of St George killing the dragon and its frequent use as a tool of British foreign policy.
Original English sovereigns were minted from 1489 to 1604. These are in high demand with coin collectors and prices can be extremely high, so they don’t make sense as a vehicle for investing in gold. A far better option is the post-1817 British sovereign. These have been produced intermittently but in huge numbers – it’s estimated that over a billion have been made, although millions have been melted down or recoined - and are one of the most widely traded gold coins on the market.
Most bullion coins either weigh one ounce or contain an ounce of pure gold, but the sovereign is much smaller. This is a result of its long use as a circulating coin – when the modern sovereign was introduced its gold value matched its face value of £1 Sterling. A Sovereign weighs 0.2354 ounce and is less than an inch in diameter. Half Sovereigns (0.1176 oz) were also produced in vast numbers as circulating coins until 1926 and many are traded as bullion. Modern Half Sovereigns, along with Double Sovereigns and Five Pound coins, are now only produced as commemorative editions which are of little interest to gold investors. In the case of the larger coins even older ones have a value far above the intrinsic worth of their gold content.
All Sovereigns and Half Sovereigns are made from Crown gold and share a common design. The face carries a profile of the reigning monarch – currently Elizabeth II – and the reverse has an image of St George killing the dragon and the date of production. Since 1817 the coins are minted from Crown gold, containing 91.67 percent gold with the balance being copper.
If you’re interested in Sovereigns as a means of investing in gold it’s best to avoid older coins which have considerable historical value, as well as commemorative editions and the more elaborately finished Proof and Brilliant Uncirculated grades. Stick to bullion grade Sovereigns; normally we recommend including a proportion of smaller coins, but as the Sovereign is a small coin anyway it allows for flexibility in selling off holdings.
Even bullion grade Sovereigns carry a fairly high premium above spot price; currently they sell for £220, or around $370, while their metal value is closer to $320. The best way to minimize the premium is to concentrate on secondhand Elizabeth II coins, with the lowest overheads being found on those struck after bullion coin production resumed in 2000.
The Sovereign has a long and rich history, and is still an excellent form of bullion today if you buy them at the right price. There’s also the potential for even bullion coins to develop considerable value to collectors, for example if they’re minted in the last year of a monarch’s reign, so as well as buying a secure asset in terms of metal value there’s the possibility of an unexpected bonus in the medium to long term. In any case, wise purchases of Sovereigns remain as good an investment as they’ve always been.
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