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This is a common question we get asked all the time. “Why buy gold Sovereigns ” Do they really add value to your portfolio How are they different from other popular gold coins like the Krugerrand or the Britannia Well, it’s one of the oldest British coins and has been in circulation for more than two centuries. It was first issued in 1489 during the reign of King Henry VII. Its production was stopped in 1604 and then resumed once again in 1817.
Modern sovereigns have been minted across the reigns of several monarchs – Queen Victoria, Edward VII, George V, George VI and Queen Elizabeth II. On the reverse, the coin features an image of St George slaying a dragon, which is a design created by the famous Italian engraver, Benedetto Pistrucci. As such, it has an unbeatable reputation as one of the most famous British coins of all time.
The gold Sovereign is very easily available and enjoys an extremely vibrant secondary market. Its availability is a direct result of its long years of production. So, you can easily find Sovereigns issued in many different years at different price points. Due to its popularity, it’s very easy to sell and this enhances the liquidity of your portfolio. In terms of divisibility, the Sovereign is a winner. There are many different sizes to choose from, including the half and quarter Sovereign, the full Sovereign, the double Sovereign (2-pound coin) and the quintuple Sovereign (5-pound coin). The quintuple Sovereign has the largest gold content found in any British coin. Due to its variety of sizes, you can distribute your gold investments, enabling you to take advantage of different price points in the market, when selling.
Old Sovereigns are small in size and therefore affordable. Having been produced for over 200 years, they’re very easy to sell and can make a good investment if the gold price goes up. Their value generally increases with age and any profit made on their sale is completely tax-exempt in the UK. Older Sovereigns can, therefore, attract a premium due to the numismatic value. This means that its market price far outweighs the value of its gold content.
Newer Sovereigns, on the other hand, may not attract a rarity premium but can make a sound investment, due to their ability to lock in value. All sovereigns produced post-1817 are minted using 22-carat gold. This means that the coin has 11 parts crown gold and one part copper, which make up all 12 parts of the coin.
The gold Britannia is a larger coin and it weighs one Troy ounce. This makes it affordable for investors with modest means. However, the Sovereign allows access to the gold market for these investors. In terms of choice, the Sovereign is a better option due to its variety of monarchs and years of issue.
Owning several different Sovereigns adds balance to your portfolio. In terms of tax efficiency, both the Britannia and the Sovereign benefit from their status as UK legal tender. Capital gains tax is exempt on both. However, the same tax advantage isn’t shared by other famous gold coins like the Krugerrand, since these coins are not legal tender in the country.
Call the investment team at Physical Gold on (020) 7060 9992. Our team is always available to work with you to identify the right sovereigns that can help you attain your investment goals. You can also get in touch with us online with any queries regarding gold Sovereigns.
Image credit: Wikimedia Commons
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.