What Are Gold Sovereign Coins? Should You Buy Them?

by | Jan 14, 2021

Gold has proven to be a safe and profitable investment throughout history. This precious metal offers an excellent portfolio balance, protection against inflation, and security against political and economic uncertainties. There are several ways to invest in gold, and sovereign gold coins are one of the best for many reasons.

Unlike paper investments or speculations, sovereign coins have a real and permanent tangible value. These coins boast the intrinsic security of bullion or precious metal in a pure form. Additionally, they can deliver extra profit potential, thanks to their historical and aesthetic appeal. Read on to learn more about gold sovereign coins and why you should invest in them.

What Are Gold Sovereign Coins?

The United Kingdom’s sovereign is a gold coin with a nominal value of one sterling pound. It features Queen Elizabeth II (or the current monarch at the time of minting) on the front. The reverse of the coin features St. George’s image slaying a dragon.

Because the sovereign coin has a long, exciting history (more on that soon), it continues to be a popular choice among gold enthusiasts. Today, sovereigns are bullion coins, and sometimes they are mounted in jewelry. They remain one of the most popular gold coins you can find on the precious metals market.

Many investment experts recommend investing in gold sovereign coins as part of a diversified portfolio. Most people investing in these coins usually do so intending to hold on to them for the long term. The amount to invest in gold coins will depend on your specific situation.

Financial advisors recommend that you only invest in an amount with which you’re comfortable. The small size of sovereign coins means that you can safely store them at home, giving you quick access whenever you need them. What’s more, you can easily sell them, meaning that you can quickly access the capital held in them during an emergency.

History of Gold Sovereign Coins

The minting of gold sovereign coins dates back more than 500 years ago to 1489 during King Henry VII’s Tudor reign. Today’s design type was introduced about 300 years later in 1816 during George III’s reign.

The minting of the sovereign continued consistently up to 1932 when Britain went off the gold standard. The British sovereigns minted under Edward VII and George V are perhaps the most popular pre-1933 gold coins.

The sovereign gold coin in its current form came into existence in 1816. As the British Empire grew during Queen Victoria’s reign in the 1800s, this sovereign grew to be the most widely distributed gold coin globally.

Initially minted in London, this gold coin came to be minted worldwide as South Africa and Australia became one of the world’s leading gold producers. Gold mints in Perth, Sydney, Ottawa, Bombay, Melbourne, and Pretoria minted thousands of gold sovereign coins in the late 1800s and early 1900s.

Three Reasons Gold Sovereign Coins Are a Great Investment

tax exempt text describing one of the benefits of gold sovereign coins

Those who choose to invest in sovereigns do so primarily for their rich history, ease of trade, and tax exemption.

Historic Appeal

As mentioned earlier, this coin has a vibrant history and has seen leaders’ portraits come and go. Different monarch’s portraits creating different versions of the coin excites collectors looking for new additions for their collections. The most famous part of the coin’s design, St. George slaying a dragon, was introduced in 1817 and is the product of celebrated engraver Benedetto Pistrucci.

We’ve observed that the late 1800s and early 1900s saw the minting of thousands of this coin in various locations worldwide, especially in South Africa and Australia. The more modern sovereign coin turned 200 years old in 2017, and investors cherish it for its rich historical endowment and the culture it represents.

Tax Exemption

If you’re in the United Kingdom, you’ll enjoy tax-free gold if you invest in gold sovereign coins. These coins are exempt from Capital Gains Tax (CGT) for U.K. residents. Gold sovereign coins are legal tender in the country, and the government doesn’t tax the movement of legal currency.

That means that unlike other popular coins like the Maple Leaf and Krugerrand, you get to keep 100% of your profits when you liquidate your sovereign coins instead of remitting 28% of your earnings to the tax collector.

Easy To Acquire and Sell

While gold sovereign coins have a one-sterling pound value, the coin’s true worth is much more significant because it contains  0.235 troy ounces of gold, which is a little more than a conventional ounce.

The small size of sovereign coins makes them much more prevalent among investors than one-ounce coins like the Krugerrand and Britannia. It is easy to trade small amounts of these coins, and they’re cheaper to buy and sell, even when you compare them gold bars.

Which Sovereign Coins Are the Best for Investing?

two gold sovereign coins

After making up your mind to invest in gold sovereign coins, you need to figure out the amount to invest and the coins to buy. Financial advisors often recommend diversifying investments. Let’s explore some of the sovereigns you should consider acquiring.

Pre-1604 Gold Sovereigns

Thanks to their scarcity value, gold sovereign coins produced in 1604 or earlier are an attractive investment. These coins feature purer 23-carat gold and are larger and heavier than today’s gold coins. The gold market prices don’t affect these coins’ prices, meaning they can cost thousands.

Rare Gold Sovereigns

Even a gold coin in not-so-great condition can far exceed the pure gold bullion price, especially if it is rare. King George III 1819 Sovereign is an excellent example of a rare sovereign. Only ten of these coins are known to exist.

Due to their scarcity, these coins command incredible prices, even when not in the best shape.  In 2013, one of the rare sovereigns attracted a whopping £186,000 at an auction.

Another rare and most sought-after gold sovereign coin is the 1859 Victoria ‘Ansell’ coin. Less than 25 of these coins exist, and a fine example sold for at least £15,000 in 2012.

Other rare sovereigns include:

  • 1924 George V Pretoria Mint
  • 1926 George V Sydney Mint
  • 1908 Edward VII Ottawa Mint
  • 1917 George V London Mint
  • 1922 George V Melbourne Mint
  • 1874 Victoria ‘Young Head’ Shield
  • 1916 George V Ottawa Mint
  • 1923 George V Sydney Mint
  • 1920 George V Sydney Mint
  • 1921 George V Melbourne Mint

Gold Proof Sovereigns

Some gold sovereign coins weren’t used as legal tender. Mints could produce gold proof coins to test the coin’s quality and design before mass production. Over time, proof coins became collectible.

Recently, the British Royal Mint made gold proofs of their sovereign coins public and sold them in a display case featuring a limited-edition certificate. While proof coins hardly rise above their spot value,  they perform incredibly well in some situations.

A unique 2017 gold-proof sovereign with a special St. George and the Dragon design to mark today’s sovereign coin’s 200th anniversary can now attract about £800 to £900 in pristine condition.

Another highly sought-after gold proof is the 1989 proof sovereign that commemorated the 500th anniversary of gold coins minted during  King Henry VII’s reign in 1489. This gold proof can command up to £1,000.

Half Sovereigns and Quarter Sovereigns

Introduced by the Royal Mint in 1817, the Half Sovereign provides an easy entry to gold coin investment as it carries a half-pound or 10 shilling face value.  The Half Sovereign’s popularity grew so much that the Royal Mint decided to add a Quarter Sovereign to capitalize on the success.

Both sovereigns have had an excellent performance when it comes to investment thanks to their pure gold value.

European and Overseas Sovereigns

While many investors overlook the European and overseas gold sovereign coins, they can also be a great investment option thanks to their scarcity. Due to their historical significance and aesthetic appeal, these sovereigns can deliver the best potential increase in coin collecting value for close to gold bullion prices.

Conclusion

Gold sovereign coins are one of the best ways to invest in gold. They have a rich history, are exempt from tax for U.K. residents, and are easy to acquire and sell. If you want to invest in sovereigns, you must understand the different types to choose the right one for your investment portfolio. Some of the sovereigns to consider are the pre-1604 sovereigns, rare sovereigns, gold proof sovereigns, half sovereigns, and quarter sovereigns.

If you’re interested in learning more about gold sovereign coins and other gold-related investments, Learn About Gold is the one-stop-shop for you. The website provides all the information you need to decide whether gold is an ideal investment for you.

In addition to blog posts and articles on gold-related investments, Learn About Gold also takes pride in matching prospective investors with the best gold IRA providers on the market.

If you’re looking to invest in gold, check out our website to see how our IRA partners can help you.

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