Investing in Classic European Gold and the Swiss 20-Franc Coin
Even for investors who are interested to buy gold bullion, coins continue to provide an interesting choice. While both modern and antique coins are available, there continues to be a strong market for gold bullion coins made prior to World War Two in both the US and abroad. Not only are these coins a good way to buy into bullion, but they are also beautiful numismatic pieces that can sell for several times their bullion value when found in particularly good condition.
European coins did not suffer a recall as the US gold coins did in 1933, however, a great deal of precious metal went missing during World War Two. And, much to the embarrassment of several European governments, a portion of the gold found in several post-war gold coins contains the spoils of Nazi genocide. Coins minted prior to the war are, at least, free of that particularly macabre history.
The twenty-franc gold coin from Switzerland is a good example of classic European gold. Produced from 1897 until 1949 (non-inclusive), these coins feature the obverse profile of a woman known as Vreneli, with braids and a ring of flowers around her shoulders. The world “Helvetia,” which is a Latin term for the whole region, appears above her head. The reverse side is a Swiss shield design with ribbon-tied oak branches.
Nearly all of the “Vreneli Franc” coins are 90% (22k) gold, as was the standard in Europe and North America at the time. A few were minted as 99% gold bullion, but only a few of these test coins still exist. Each of the usual coins weighs 6.45g and, contains 0.187 (or one-fifth of an) ounce of pure gold. Even if you are more interested to buy gold bullion, coins of even 90% purity (as seen in the American Eagle bullion coins) is a perfectly acceptable substitute that can, at times, offer good deals for investors.
They were all struck at the Bern Mint, and there are several years where they were not minted at all, including much of the period between 1927 and throughout the rest of its run before being discontinued. This means that in addition to their value as an opportunity to buy gold bullion, coins with particularly good design retain their value in a way that tends to be independent of the strict spot price of gold on any given day.
The Swiss Franc was was of the last major currencies to be tied to an actual gold reserve, much of the rest of the world having issued as “fiat currency,” for part (if not much) of the 20th century. The Swiss system was such that it required that at least 40% of the currency be backed by physical gold held by the Swiss National Bank. However, in 2000, this rule was changed and by 2005, only 20% of the currency was backed by real physical gold after a massive sell-off in the early ’aughts.
Arthur McGuire
March 5, 2009
