My Gold News | 21 February 2023

Understanding Gold Sovereign Values

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One of the most tangible methods of investing in gold involves sovereign coins. These are literally coins made of more than 91.6 percent of a precious metal like gold and issued from an authorized government mint. Not only does the coin have a government’s official backing of its fabrication and quality, but the coin also states its purity and weight on the coin, which makes the sovereign extremely easy to measure by any party. It's a far better gold investment choice than a ring, necklace, or bracelet. This avoids metal testing and evaluation by a numismatic expert or chemical test. And such coins are always backed by the government that issued them, which is a far more stable authority than a private company or financing entity.

Early Sovereigns For Sale

The British gold sovereign tends to be one of the most famous and first coins issued by a government in later times. Many ancient cultures minted their own coins from gold, like the Romans and Greeks, but the British sovereign followed specific criteria of weight and metal value with production consistency. Numerous other government coins exist today, ranging from the American Eagle to the South African Krugerrand to the Canadian Maple Leaf. However, all of these issued sovereigns have specific commonalities with stamped value and issuance, weight, and metal content consistency. That makes these coins amazingly liquid in terms of investment trading, as well as an ideal investment tool to use that is separated from public markets and banking. And when current markets become shaky, alternative investment channels provide a valuable hedge to protect portfolio value.

Collection Value By Year

An additional value aspect of gold sovereign coins involves their collectability. Certain coins and years of issuance end up becoming rare and hard to find, such as early quarter sovereign, half-sovereign, and double sovereign coins. There are even quintuple sovereign coins! That makes them collectible among numismatic interests, which in turn gives the coin an added value over its precious metal spot price. So, while an ounce of gold might normally have a spot price of US$1,200/ounce, a coin's rarity could add another $300 to the value because the given year of issuance of year is highly limited. It’s an added investment layer to watch out for, especially with older sovereigns versus new ones. There are exceptions; the first year of a new sovereign can become a collectible as well, and proof gold sovereign coins. The challenge of using a large number of sovereigns as an investment, however, involves retaining a secure place to keep them. The fact is, anything small and valuable has a habit of disappearing quickly when left out in the open. So, sovereigns need to be kept secure, whether that’s in a bank deposit box or a home safe. Anyone considering a significant sovereign investment as a hedge should also consider how to store such coins safely and securely. Multiple resources existing for buying sovereigns, and new buyers should be prepared to pay a small premium on top of the spot value of a sovereign when doing so. The cost of this premium goes down by coin when a larger number of coins are purchased at the same time, i.e. in bulk. The highest cost tends to be on individual purchases alone. While coins can be bought from private individuals and odd sources like pawn shops, the safest and most reliable approach is to work with a licensed coin dealer. Customers can set up accounts as well as arrange local storage as needed as well instead of keeping coins at home. 

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Liquidating Holdings

Selling coins and their gold sovereign values works in a similar fashion. When one decides to liquidate coins held, they will sell for a market price at the time unless the coin is a collectible. Then the value will be generally set by the collection market instead. Keep in mind these selling points are squishy; dealers will want a lower price than the market to give them room to make a profit reselling by size. The same goes for lesser quality vendors like pawn shops. Individual buyers can provide liquidation of coins too, but the safety risk goes up because a seller often doesn’t know whom he is dealing with until the sale happens. More than one case of private sales going bad has happened due to unknown parties being involved in private sales. Also, note that most jurisdictions will want tax reporting on your sales of gold sovereigns as any profit on the sale is considered taxable income. So, unless you’re good with a spreadsheet, working through a gold smart dealer gives you the benefit of exact documentation that helps with your tax reporting at the end of the year. For those in and near Auckland, NZ, the central business district is one of the best locations to sell gold sovereigns or buy them. With MyGold just 200 meters from Auckland Sky Tower and SkyCity Casino, professional dealer services are just a heartbeat away and easy to access. If you’re interested in sovereign investing or liquidation, connect with us. We can help and get you started on the right path!