The Gold Sovereign truly is money. Whenever I try to explain to people that the Euro, the Dollar, the Yen and all paper currencies are not money, I usually get a bewildered look. In the simplest of terms Money must serve two basic principles, firstly it must be a medium of exchange and secondly it must be a store of value over time. Immediately it’s obvious then that currencies are not money, as they clearly are not a store of value over time. The most practical example of why gold is money can be seen with the gold sovereign.
The gold sovereign for more than 500 years has been a medium of exchange and a store of value. It’s hard to believe that the sovereign coin can trace its roots back to medieval times but it was Henry VII who first issued the sovereign in 20 shilling denominations in 1489.
The sovereigns appeal was further enhanced in 1816 when George slaying the dragon was introduced under George III. St George 275-303AD was a Roman soldier from modern day Turkey. He was and still is, an Islamic and Christian martyr. St George hugely increased the appeal of the sovereign as is seen, by the fact that he is the patron saint of Canada, Catalonia, England, Georgia, Greece, Portugal and Serbia.
Sovereigns that were minted under Edward VII and George V are the leading pre 1933 gold coins reflecting their dominant position at the time. Later in the 20th century the sovereign had an important role to play in WW2, where the sovereign was believed to be the only true measure of value as fiat currencies crumbled throughout Europe. The Germans use of the sovereign lasted right up until the final days of the third reich, where fleeing officers secured passage to South America with them, the reichsmark at this point had returned to its intrinsic value.
Although the sovereign had periods of time where it was not produced, it always came back due to its reliability as the unalterable measure of value. This can be seen by the fact that immeasurable amount of paper currencies have died in the lifespan of the sovereign. Indeed certain older sovereigns are often considered numismatic or semi numismatic, therefore attracting a premium over their bullion value.
The sovereign which is 11 parts gold and 1 part copper (92%/8%) was designed like this to increase the durability of the coin due to gold’s softness. This made it ideal for circulation throughout the world. Although the sovereign no longer has complete dominance over the gold coin market its reputation was enhanced further by the Krugerrand(the leading 1ozt coin) when in 1967 the South African mint chose to copy the gold and copper alloy known as ‘crown gold’, a testament to the excellence of the sovereign.
The timeless appeal of the sovereign was reflected once again in 2002 when QE II celebrated her golden jubilee. The shield sovereign a rare and unique sovereign last seen in 1887 was re-deployed for this special occasion. So up to this very day the sovereign is being minted and remains much sought after, more than 500 years old. There is no better example of a store of value and a medium of exchange and that is why the sovereign truly is money.
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