Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in
In the same category

British Gold Sovereigns - The Preserve of Collectors, Savers and Smart Investors

IMG Auteur
 
 
From the Archives : Originally published August 14th, 2008
1796 words - Reading time : 4 - 7 minutes
( 5 votes, 4/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
FOLLOW : Troy Ounce





Gold as Essential Diversification and Financial Insurance


Gold bullion remains an essential diversification and essential financial insurance to have in all properly diversified portfolios. Besides the ever more important factors of inflation hedging and financial insurance, gold is likely to continue to outperform other asset classes and to provide significant returns to gold buyers.


Many of the world's major investment banks are in agreement that gold is again in a long term multiyear bull market. Many believe gold will surpass its inflation adjusted 1980 high of $2,400/oz in the coming years.


Citigroup's former head of technical research and managing director of Yamada Technical Research Advisors LLC., Louise Yamada sees gold on its way to $3,000 within a decade. ``Gold is the purest play against the dollar,' said Louise Yamada, Yamada is highly respected and was voted Wall Street's best technical analyst from 2001 to 2004.


Credit Agricole's (France's largest bank and the fourth largest bank in the world) brokerage, Cheuvreux see the possibility of a rise to $2,000/oz or higher.


How to Invest in Gold in Preparation for 2,000/oz Gold?


Gold and Silver Investments Limited agree and believe gold will surpass its inflation adjusted high of $2,400 per ounce in the next 5 years.


This is why we continue to advocate investors continue to diversify and increase their gold holdings. So, how should one invest in gold?


There are many different ways to invest in gold and one's motivation for buying gold should dictate how one buys gold. Are you a speculator, investor or saver? Are you buying to make a capital gain or as a hedge against systemic risk and using your gold as financial insurance? Is your motivation a little of each?


ETFs, mining funds, digital gold, Perth Mint certificates, gold bullion coins and bars in one's possession and or semi numismatic gold coins are good ways to buy gold.


Given the extent of current macroeconomic and systemic risk a diversified precious metals holding makes sense and it should not be a question of "either or" rather a combination of these various ways.


Having eggs in various gold baskets so to speak is the most sensible and prudent strategy.


As part of this mix, older gold coins should be looked at. Classic European and world gold coinage is an often overlooked but extremely important sector in today's gold market. Pre 1933 and 19th Century European and world gold coins are an intelligent alternative to modern gold bullion coins or bars as there is often more room for appreciation with these beautiful old coins due to their rarity and yet they can often be bought at bullion prices.



2006 Gold Proof Half-Sovereign depicting Saint George


Importantly from an investment point of view is the fact that 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 investment outlined above, British gold sovereigns are also not subject to capital gains tax (CGT). Thus all post-1837 British gold sovereigns due to them being legal tender and having a legal tender face value are capital gains tax free, which is obviously a massive benefit to investors vis-à-vis other gold investments.


The prices of these beautiful coins are only slightly more expensive than modern gold bullion but offer many advantages. Besides not having to pay CGT, other advantages include increasing scarcity, aesthetic value and historical significance. European and British gold coins are recognised as one of the most advantageous ways to invest in "bulk" gold, by sophisticated investors.


European, American and world gold coins are bought by both collectors and investors at a small premium to the price of bullion coins. Perhaps the most popular semi numismatic gold coins internationally are British Sovereigns.


The British Sovereign (originally the one pound coin) is the most widely traded semi-numismatic gold coin in the world. There is constant and excellent liquidity in most countries in the world. For the investor looking for slight leverage to the gold price with the potential for the premium (numismatic value) to rise, British Sovereigns are a good way to invest in gold.


History of the British Sovereign - From Henry VII to James Bond


The first British Sovereigns were minted more than 500 years ago. They were minted under Tudor King Henry VII in 1489. The coin got its name from that first mintage which depicts the monarch seated majestically on the throne facing outward.


Sovereigns were then struck for Henry VIII from 1509. Henry VIII needed to raise revenue as he was engaged in George Bush style over spending which led to a flow of gold and silver to Europe (equivalent of dollars to Russia, OPEC nations and China today).


The current design type with St. George slaying a dragon on the reverse and the monarch on the front was introduced nearly 200 years ago in 1816 under George III. The sovereign was minted almost continuously from that date until 1932 when Britain went off the gold standard.



Sovereign, 1558


Thus he was responsible for debasing and devaluing English money when he reduced the precious metal content from 23 carat to 22 carat to 20 carat (96% to 91.6% to 83.33%). Silver coins were debased even more and by 1551 silver coins had been reduced to 25% of their face value in what became known as the ‘Great Debasement'.


British sovereign 'kings' minted during the reigns of Edward VII and George V are probably the most widely owned and recognized pre-1933 gold coins -- so much so that the U.S. Army included them as part of its special forces survival pack for a number of years.


In 1816 the British Sovereign as we know it today was first introduced, and as the British Empire expanded under Queen Victoria during the 1800's, this coin came to be the world's most widely distributed gold coin. Minted originally in London, the Sovereign came to be minted all over the world as Australia and South Africa came to be large gold producers. Mints in Pretoria, Bombay, Ottawa, Melbourne, Sydney and Perth minted thousands of sovereigns during the late 1800's and early 1900's.


The design of Saint George, aboard his brave steed, slaying the dragon is common to the reverse of all variations of the coin. Saint George who is believed to have lived from 275 to 303 AD was a soldier of the Roman Empire, from Anatolia, now modern day Turkey. He was venerated as an Islamic and Christian martyr.


George was immortalised in the tale of George and the Dragon in a collection of hagiographies and lives of the saints known as The Golden Legend or Legenda Aurea. He is the patron saint of Canada, Catalonia, England, Ethiopia, Georgia, Greece, Montenegro, Portugal and Serbia, as well as a wide range of professions and organisations. This gives sovereigns an international appeal not enjoyed by many coins.







Actual Gold Content: .2354 troy ounce.
Purity or Fineness .917
Minted 1816 - 2004

Kings:
Edward VII (1901-1910)
GeorgeV (1911-1936)
Edward VIII (1937)
George VI (1938-1952)

Queens:
Victoria (1838-1901)
Elizabeth II


When coins were sent to places such as the United States for international payments between governments, coins were frequently melted down into gold bars because of the Federal regulations then in force. When gold coins were finally withdrawn from circulation in 1933 in the US, many thousands of British gold sovereigns were consigned to the melting pot in this way.


Gold sovereigns were accepted as money and as payment throughout the world at the height of the British Empire and indeed this international currency may have helped create and strengthen the Empire.


More recently, many armies around the world (including the US army) gave their servicemen an emergency supply of gold sovereigns. They are still recognised in most parts of the world and unlike paper dollars will not be damaged by shredding, water or intense heat.


This is why Q gives James Bond 50 gold sovereigns in From Russia with Love. Near the beginning of the movie Q gives Bond a special black briefcase. Hidden in the case are 40 rounds of ammunition; a flat throwing knife; an AR-7 folding sniper's rifle and imbedded in 2 straps hidden inside the lining of the case are 50 gold sovereigns.


Conclusion


It is estimated that only 1% of all gold sovereigns that have ever been minted are still in collectible condition. It is this relative rarity in relation to bullion coins and bars that leads to leverage whereby in gold bull markets, the value of these coins increases by more that the actual price of gold.


Unlike paper investments or speculations, British gold sovereigns have a real and permanent tangible value. Therefore, they offer two ways to build wealth. They can 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 can also offer additional profit potential due to their aesthetic and historical appeal.


The legal tender gold British Sovereign has always been a popular coin for collectors and is becoming increasingly popular with risk conscious value investors seeking to avoid having to be capital gains tax (CGT).


Today premiums remain very low on the world's most famous gold coin and even beautiful Queen Victoria sovereigns from the second half of the 19th century can be bought at great value bullion prices, near spot or melt value.


Experienced, knowledgeable investors have long known that semi numismatic gold coins can be solid investment choices. They retain their value in times of global geopolitical instability and when there is economic uncertainty, during systemic and monetary crises and in recessions and depressions. With systemic risks increasing and more banks runs possible in the coming months, the wisdom of holding a few gold sovereigns in one's possession or in a depository will be clearly seen by all.


It is important that investors look at their portfolios holistically and have a financial insurance component to their portfolio. Used correctly, a small allocation to British sovereigns can be a highly effective component of a properly diversified investment portfolio.


Mark O’Byrne

Gold.ie


Gold Investments will provide further information or contact details on any of the options listed above to interested parties. Questions and comments are welcome to mark.obyrne@gold.ie . Gold Investments do not endorse any of the offshore bullion storage options listed (except for the PMCP and VIA MAT) and investors should do their own due diligence on all providers. 

Mark O'Byrne is the Managing Director of Gold and Silver Investments Limited, Ireland's Asset Diversification and Wealth Preservation Specialist ( www.gold.ie ). He is regularly quoted and writes in the financial media and was awarded Ireland’s prestigious Money Mate and Investor Magazine Financial Analyst of 2006.





 







<< Previous article
Rate : Average note :4 (5 votes)
>> Next article
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
MOST READ
March 27, 1980 : Silver Thursday, or the end of the The Hunt Brothers Story - History of Silver - Playboy  (4)
The US Constitution and Money - Michael S. Rozeff - Mike S. Rozeff  (8)
The Gold Bug (Edgar Allan Poe) - Treasures and Gold Fever - Edgar Allan Poe  (13)
What is Money? - Mike Hewitt - Dollar Daze
Most commented articles More... 
TOP RATED
The Gold Bug (Edgar Allan Poe) - Treasures and Gold Fever - Edgar Allan Poe  (13)
Discovery of Governmentium, the heaviest known element - Food for thought - Hat Trick Letter  (17)
The US Constitution and Money - Michael S. Rozeff - Mike S. Rozeff  (8)
Introduction to Economic Sophisms - Frederic Bastiat  (4)
Most commented articles More... 
MOST COMMENTED
100 Items That Disappear First in a Disaster - Beans Bullets Bullion and Bible - 24hgold  (17)
Most commented articles More... 
Latest Comments
‘Real’ Performance Comparison
26 MarChristopherbalz
Question: In the method of figuring inflation referenced, what is the rationale for adding population growth to productivity growth? Sugge...
100 Items That Disappear First in a Disaster
23 Markevthorne
68, 69 probably not that safe - particularly if you're growing your own vegetables - keep a Maine Coon cat instead: does the job automatically.
Farage Interviews Le Pen: “Prison of the EU”
21 Marneville1
BRITANNIA RULES THE WAVES AND NOW BREXIT WAIVES THE RULES. GO FOR IT FRANCE AND RID YOURSELVES FROM THE CHAINS OF IDIOTS. NOT SIN...
How the Fed Operates — And Why It's a Problem
20 Marramasart
In a nutshell, the Fed facilitates the theft of the value of the dollar, as they can control the increase in supply which at the same time inverts ...
How the Fed Operates — And Why It's a Problem
20 Marneville1
With all due respects for outlining how the crooked american Fed works or should work. From all our research we find the following the Fed...
Sparta - Gold prohibition in a collapsing economy
18 Markevthorne
You've answered none of the authors points: your comment is flat rubbish.
America Too Broke to Fix Crumbling Infrastructure? “Bridges, Roads,...
16 MarCameron Waugh1
Just like the leaders of the Bolshevik revolution were not Russians, those formulating belligerent US foreign policy are not Americans, and they ha...
POTUS at SOTUS
16 MarDRGEORGE1
Try explaining that to my patients dying on public waiting lists or getting ripped off by exorbitant private specialist fees!
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS