History of Gold Coins

Gold Coins
For over 4 thousand years gold coins have been produced and used. Here are some of the highlights of that long and distinguished history.

The Greeks
The first people to make and use coins of any sort were the Greeks. Beginning around 643 B.C. in Lydia, they fashioned very rudimentary coins using a mixture of gold and silver called electrum. Later the Greeks discovered gold deposits allegedly created by King Midas cleansing himself in the Pactolus River in an attempt to end the "Midas Touch". Approximately a century later, the Lydians and Ionians mastered the art of separating gold and silver, allowing King Croesus to issue both gold coins and silver coins. When the Persians captured King Croesus in 546 B.C., they chose to use gold as their primary metal for coins. However, the Greeks became split on which metal to use, as some preferred silver. This led to a division between those entities who used primarily gold coins and those who used silver, although often the decision depended in part on which metal was most readily available. Yet despite the prevalence of silver coins, gold coins were still generally considered the more valuable of the two.

The Celts
Along with the Greeks, a number of Celtic tribes living in Britain and other locations produced both silver and gold coins. Although most Celtic gold coins are not inscribed, some were, thereby becoming the sole written records of the Celts who were often wrongly thought not to have a written language.

The Romans
Early on the Roman Republic issued only a limited number of gold coins, as mostly they used silver for their coinage along with lesser metals for coins in smaller amounts. After Julius Caesar died, gold coins took on a more significant role. However, due to their conquests, the Romans came across a variety of metals, and thus ended up issuing silver and copper as well as gold coins in different regions according to which was most available.

The British Monarchs and their Gold Coins

King Henry VII

We now jump ahead many centuries to 1489, when King Henry VII caused the first gold sovereign coin to be issued. This gold coin had the value of the pound sterling, which had been in use for centuries but never embodied in a coin. The new coin weighed in at 240 grains, equaling 0.5 troy ounces or 15.55 grams. It was created using the standard gold coinage alloy of 23 carat, which is the equivalent of 95.83% fine. The gold coin took the designation "sovereign" because of its design, in which King Henry is depicted sitting on his throne. The opposite side featured a shield with the royal arms, with a big double Tudor rose also being displayed.

The purpose of this design was twofold, in that it allowed England to join other European countries in issuing large gold coins while asking people to take note of the new Tudor dynasty. Accordingly the country called on Alexander of Bruchsal from Germany to do the engraving. As this gold coin was considered the greatest achievement of the English mint, Alexander himself rose to even greater fame as the force behind English coin portraits. In addition to the single sovereign, Henry VII ordered a double or treble sovereign to be created from the same dies as the sovereign, however these bulkier gold coins may have been meant more as presentation pieces than currency.

Although the first sovereigns represented only a single pound sterling, the ones still in existence now sell for 7,000 times that amount.

King Henry VIII

In between his many marriages, King Henry VIII broadened the range of British gold coins to include the first half sovereign. He also increased the official value of British gold coins in 1526 by 10%. Other new gold coin denominations used lesser qualities of gold fineness or weighed less.

Edward VI
Although Edward VI's reign was very brief, a number of sovereigns, half sovereigns, and double sovereigns were issued during this time. There also came to be a variation in the worth of sovereigns, as "fine" versions issued from 1550 to 1553 were valued at 30 shillings, while the "standard" sovereign remained at 20 shillings.

Mary
Before Mary's marriage to Philip of Spain, she continued to have "fine" sovereigns issued with the same value as during her brother's reign, but no more were issued after Philip joined her on the throne.

Elizabeth I
Elizabeth continued the Tudor family tradition during her extended reign of Elizabeth II by issuing "fine" sovereigns valued at 30 shillings which bore an extremely high (99.4%) gold content. She also continued the duality of sovereigns by issuing a different, one pound gold coin valued at 20 shillings.

James I
As the Tudor dynasty gave way to the Stuarts, from 1603 to 1604 King James I continued to issue sovereigns valued at 20 shillings. Despite a history spanning back a century, these sovereigns became the last to be issued before more modern times when they were discontinued in favor of a new and lighter pound coin named a "unite", which celebrated James' unification of England and Scotland.

The unite underwent revaluation in 1612 to be worth 22 shillings, then found itself replaced in 1619 by a lighter coin, the laurel.

Charles I and Charles II

King Charles I continued minting the unite coin, although again revaluing it to be worth only 20 shillings. This gold coin remained in production during Oliver Cromwell's time and appeared in Charles II's coinage until 1662.

The guinea appeared during the coming of machine-made coins under Charles II. This gold coin drew its name from the gold from which it was made. It was brought into the country from the African state of Guinea by the Africa Company, whose elephant and castle symbol marks many guineas. A steady rise in the value of the guinea from 20 to 30 shillings created a monetary crisis in 1695, where a choice had to be made between devaluing gold coins or restoring silver ones. As silver won, a gold standard was created based on the concept a pound sterling would be a fixed weight of gold. The guinea outlasted a number of monarchs to be the primary main gold coin until 1813 during George III's reign.

The Modern Sovereign and the Introduction of Paper Money

The Industrial Revolution brought about a large change in British coins by making production much easier. From its new home on Tower Hill, the British Mint employed the steam-powered coining presses of Matthew Boulton and James Watt to create the modern sovereign.

One of the new designs of Italian engraver Benedetto Pistrucci featured Saint George slaying the dragon, an image that remains on gold sovereigns today, as this sovereign has become one of most recognized coins in the world.

While some trace the concept of the first "banknote" to 1633 with the first known check appearing in 1659, metal still reigned over paper money until after 1910. However World War I placed a great burden on the British government to conserve gold to finance the war. As banknotes began to be used in regular circulation, the gold sovereign began to disappear. In 1917, the Royal Mint stopped producing them except for a few minted in 1925. However mints in the colonies continued for a few more years until finally ceasing: India (1918), Canada (1919), Australia (1931), and South Africa (1932).

By 1933, only a handful of countries were still producing gold coins for circulation. Those that were minted were primarily for commemorative or other purposes rather than everyday use. Therefore because of their rarity, gold coins minted at this time tend to have much higher prices than their intrinsic worth.

Although gold coins had disappeared from circulation, some countries did continue to issue gold coins for investors and other people who wanted security against currency devaluations or political instability.

Because the world was no longer producing gold coins, their value began to increase from 1914 forward to achieve values greater than their intrinsic gold content. The world banks, as part of their gold reserves, now hold circulated gold coins. Gold coins, which are instantly recognizable because of their design, have remained especially popular.

In 1967, South Africa introduced the first modern gold coin: the Krugerrand. With a standardized amount of gold (one ounce) as compared to previous gold coins where the actual amount of gold fluctuatee, the Krugerrand is especially convenient in determining the exact value of a particular holding. Because of its popularity, not only have many millions been produced in South Africa (including variations containing fractional sizes) other countries have also generated and produced their own versions of these one-ounce gold coins. Although intended for investment purposes, these gold coins have also attracted collectors, thus leading to their being issued in many different designs.

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