UK Gold Sovereign Coins – Choosing the Best Issues for Your Investment Purposes

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The British gold Sovereign is undoubtedly one of the most iconic British coins. The coin was a part of the great re-coinage, dating back to 1816. Since then, it has been around for more than two centuries and has an unmistakable look, featuring the design of St George and the Dragon on the reverse, along with their initials of the designer, Benedetto Pistrucci.

Apart from the British versions, the coin was struck across the world in colonial mints from 1850 to 1932. Therefore, there are several versions in circulation that were struck in Australia, Canada, South Africa and even India. Due to its long history, the Sovereign enjoys a vibrant secondary market and is viewed by investors as an attractive, bullion coin for investment. It is also considered to be a coin with great liquidity and choice. In this article, we will explore the best issues you can buy to enhance your investment portfolio.

Buying Sovereigns released in current years

A great strategy can be to buy Sovereigns released in the current year. As the Sovereign continues to be struck even today, buying the current year of issue is one option not to be overlooked. Unlike older Sovereigns, which attract large premiums based on rarity and age, the recent ones are available at far lower premiums. Ultimately, this will enable you as an investor to extract greater value by purchasing these coins at a lower price point.

However, an important point to note is to avoid purchasing these coins in the last month of the year as premiums tend to rise in anticipation of the next year’s issue. An added advantage in buying current issues is availability. Due to the popularity of these bullion coins, the Royal Mint manufactures them in large numbers and most dealers have them in plentiful supply. Due to its wide availability, you may be able to secure substantial discounts on larger volume purchases, as well, as shop around for the best prices.

A 2009 Sovereign in proof finis

Buying larger coins can be an added advantage

The Sovereign is available in different sizes and the full gold sovereign weighs a quarter of an ounce. As a savvy investor, you need to be aware that smaller coins incur higher production costs. This simply boils down to the costs of designing and cutting a smaller coin.

Larger coins, on the other hand, are available at a slightly lower price per gram. This can be an advantage, particularly if you are considering buying in large numbers. When buying Sovereigns, you can take this approach and buy the quintuple Sovereign. This is otherwise known as a 5 pound gold coin. Some dealers may charge a premium due to commemorative issues, but as long as you steer clear of these, it can be a great buy. Due to its size, the quintuple Sovereign benefits from far lower production prices and can be a great addition to your gold portfolio.

Buying pre-owned sovereigns

Perhaps the biggest mistake that many investors make is buying obscure and rare gold coins, including gold Sovereigns. Often an investor will end up paying a much higher premium based on desirability and rarity value. Unless you’re an expert in this field with in-depth knowledge about these coins, this is usually a bad idea that can go wrong. You may find that you ended up paying too much to start with and are unable to recover the value of your investment when cashing it in the secondary market. Due to this, it’s a good idea to focus on pre-owned coins that are between 3 to 10 years old. Many dealers buy them back from investors and sometimes, they are available even cheaper than new Sovereigns. Since they are fairly recent, they do not qualify for premiums based on rarity and age.

A 1914 half Sovereign minted in Sydney depicting the image of King George V

Choosing older Sovereigns

The British gold Sovereign has travelled through time across the reigns of several monarchs. The early ones featured the head of George IV who took the throne in 1820 and William IV (1830). The Victorian era Sovereigns feature the young head, the old head and the Jubilee head. Of course, it’s important to note that the worldwide popularity of the Sovereign was initiated during the reign of Queen Victoria. Proof sets of older sovereigns can be even more valuable. For example, in 1937 a proof set was created in anticipation of the reign of King Edward VIII. However, due to the young king’s abdication in 1838, these were never released and are considered to be extremely rare and valuable. You need to do your homework well if you intend to purchase an older Sovereign. Many of them are readily available like the Young Head Victoria, which can be purchased around £300 each. Needless to say, the premium you pay should be worth the buy. So, always consult your dealer before making a purchase.

Identifying older Sovereign coins through a dealer

While older Sovereign coins may be high in value, there can be a brief period in the market when the price dips due to higher supplies of that particular coin. This can be an excellent time to invest in such coins. But, how will you know when this happens? The trick is to build an excellent relationship with a reputed dealer. Once you’ve done your research and identified the specific coins you’re after, you should let your dealer know. Dealers are usually aware of what’s going on in the market and they can provide you with important information on how and when to buy. Identifying a reputed dealer is easy. You need to ensure that they are registered with a governing body like the BNTA.

In summary

Undoubtedly, the British Sovereign is a ubiquitous choice for collectors and investors alike. It is often considered to be a flagship coin for investment, just like the gold Britannia. Selecting the right Sovereigns and adding them to your portfolio can generate great returns in the years to come. So, by following the steps discussed, you should be able to identify a wide range of modern gold Sovereigns, with a healthy distribution between recent and older coins, that can greatly enhance the value of your gold portfolio.

Image Credits: Wikimedia Commons, Adam Greig and Wikimedia Commons