Gold Content of Sovereign Bullion Coins

Introduction to Gold Sovereign Coins

The Sovereign is a quintessential bullion coin that comes in 5 sizes, steeped in rich history and crafted from 22-carat gold (.916 fineness). This distinguished composition renders the coin a slightly bronze hue, owed to its copper content, which enhances its durability while maintaining a high gold content. Since its inception, the Sovereign has been adorned with a variety of artistic designs, making it not only a staple of financial security but also a piece of collectible art. The most iconic of these designs is Benedetto Pistrucci’s classic depiction of St George slaying the Dragon, a symbol of valour and strength that resonates through British heritage. However, the Sovereign’s face has seen other regal designs as well, including the Royal Arms. The blend of aesthetic appeal, monetary value, and tax-advantaged status (see below) makes the Sovereign a fascinating subject for both investors and numismatists alike.

The Quarter Sovereign Gold Coin

• Gold content: 0.0588 troy ounces (1.667 grams)
• Nominal face value as legal tender: 25p Sovereign
• Smallest coin in The Sovereign series
• Even knowing its weight in advance, I found this coin surprisingly small and light

The Half Sovereign Gold Coin

• Gold content: 0.1176 troy ounces (or 3.334 grams)
• Nominal face value as legal tender: 50p Sovereign

The Sovereign Gold Coin

• Gold content: 0.2354 troy ounces (or 6.673 grams)
• Nominal face value as legal tender: £1 Sovereign

The Double Sovereign Gold Coin

• Gold content: 0.4708 troy ounces (or 13.347 grams)
• Nominal face value as legal tender: £2 Sovereign

The Quintuple Sovereign Gold Coin

• Gold content: 1.1771 troy ounces (or 33.370 grams)
• Nominal face value as legal tender: £5 Sovereign

How to Calculate the Premium for Gold Bullion Coins

To calculate the premium you’re paying to invest in gold through these coins, you must work out the difference between the market value of the pure gold content and the price paid for the coins. Take the gold content from above (excluding the weight of other metals in the alloy composition) in troy ounces or grams and multiply it by the going gold price to work out how much the coin would be worth if it were melted down for its gold.

Here is an example of calculating the premium of a best-value Sovereign coin from the Royal Mint in May 2024:

• 1x The Sovereign Best Value Gold Bullion Coin: £461.64
• Market price of gold per gram: £59.40
• Sovereign gold content: 6.673 grams
• Market value of Sovereign gold content: £396.38
• Premium = £461.64 – £396.38 = £65.26

The premium for gold bullion coins is often much lower than coins struck in other precious metals because investment gold is exempt from VAT. As legal tender, these coins are also exempt from capital gains which makes them particularly tax-efficient vehicles for investing in gold.

Tax Advantages of Investing in Gold Sovereigns

The premium for gold bullion coins is often much lower than coins struck in other precious metals because investment gold is exempt from VAT. As legal tender, these coins are also exempt from capital gains which makes them particularly tax-efficient vehicles for investing in gold.

How to Minimise the Premium on Gold Sovereign Coins

You can keep the premium to a minimum when buying these bullion coins by buying best-value coins and buying in bulk. Best value coins by the Royal Mint are a random selection from their vault. You won’t be told in advance which year your coins will be from or which design they will feature. This is fine if you are interested in the coins for their gold content and special tax status which will be the same regardless. The Royal Mint also offers a slight discount for orders of multiple coins. A large order of 100 coins from the example above would produce a per coin price of £455.56 at the time of writing lowering the premium to £59.18 per coin versus £65.26 for an order of a single best-value sovereign.

Is the Premium Important for Gold Investing?

The premium is an important measure to be aware of if you’re only interested in these coins for their gold value. It would not be a good idea to pay a high premium on non-collectible gold because a high premium would require a big spike in the market price of gold to be recouped when exiting an investment in gold.

If you’re looking to invest in collectible coins, then the market value of the gold is less relevant. The market value of the gold content provides a floor in terms of a coin’s value but many Sovereigns will be worth far more than their gold content due to their age and year of minting, rare designs, minting location (e.g. India during WW1 due to naval blockades) and also minting errors.

Minting Errors on Sovereign Coins

Collectors find minting errors interesting because they occur so infrequently. The Royal Mint has hundreds of years’ experience designing, minting, and checking its coins to iron out any mistakes yet some errors still manage to slip through their quality control processes. Minting errors might be a coin being struck through (when dust comes between the metal and the coin die during the striking process), the wrong finish (e.g. proof rather than brilliant), or a missing feature (e.g. no denomination struck).

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