Partners

Posts Tagged ‘Gold coins’

The Panda 1 ounce

Wednesday, December 4th, 2013

The Chinese Gold Panda is a popular series of Gold bullion coins issued by the People’s Republic
of China in Proof-like, brilliant uncirculated quality. They are issued in a range of sizes between
1/20 Oz and 1 Oz with larger 2 and 5 Oz coins being additionally issued in some years.

Details
panda 1 onceChina issued its first Gold coins bearing the Panda design in 1982. These were limited
to sizes of 1/10 Troy ounce along with 1/4 Toz, 1/2 Toz and 1 Toz. From 1983, the 1/20 Toz size was added and additionally a 2 Toz and 5 Toz coin is sometimes issued.
These strikingly beautiful coins are always issued in Proof-like brilliant uncirculated quality and prove very popular.
A different design was issued each year until the 2000. When the 2001 edition was announced, so too was a freeze of the design and thus the 2002 Panda is identical to the 2001. Collectors spoke up on behalf of the annual change and China responded by reversing their policy so that from 2003 onwards, the designs again change each year.
However, on the reverse side, it always features the endangered Giant Panda. It also features the size, Gold fi newness and monetary value.
The main design on the obverse of the coin has hardly changed, save for minor detail changes in the image. It features Beijing’s famous Temple of Heaven (Tien Tien) in the centre with Chinese characters on the top saying “Zhonghua Renmin Gongheguo” meaning People’s Republic of China and at

the bottom the year of issue. If it is a commerative issue, the theme will also be marked here.
There was an adjustment of the face values of the coins in 2000/2001 – please see
the table overleaf for details.
The Chinese mints usually do not employ mintmarks. In certain years, there have
been minor variations in items like the size of the date, the style of the temple and
so on. These allow the numismatist to identify the originating mint. In some years,
but not all, other marks and Proof marks (signifi ed by a ‘P’) have been added. The
four mints involved in the production of the Panda are Beijing, Shanghai, Shengyang
and Shenzhen.

Investment Advice

INVESTMENT ADVICE

All Panda coins are issued as pure Gold fineness, 999.9‰ and in theory have a low premium just above the value of the Gold.
However, their intrinsic beauty makes them very collectable and they attract good premiums.
As with any coin, the best quality grades will attract the best premiums. The early years in particular will be those with the highest premium. Although the coins were issued in Proof form, many were unpacked and have thus been damaged and are at lower gradings. The mintage figures should be carefully examined – the number originally minted is quoted but it has been found that production continues for various years, hence the total mintage may be quite a bit higher some years after.

SPECS

SPECS

KEY FACTS

All investment coins sold by LinGOLD.com

are EF quality or above.

For further information: +44 (0)203 318 5612
info@lingold.com

The Maple Leaf 1 once

Sunday, December 1st, 2013

The Canadian Gold Maple Leaf is one of the oldest bullion coins alongside the Krugerrand. It is a classically beautiful coin, internationally recognised and provides investors with a secure, quality addition to a portfolio.

Details

The Royal Canadian Mint introduced the Maple Leaf in 1979. Along with the Krugerrand, it has been in continuous production ever since. It came about because of the Krugerrand – at the time, there was an economic boycott of South Africa so Krugerrands were not widely available – and thus the Maple Leaf fi lled a gap in the market. It contains virtually no base metals at all and uses Gold exclusively mined in Canada.

MAPLE LEAF 1 ONCE GOLD COIN

The earliest years between 1979 and 1981 had a Gold fineness of 999.0‰ but 1982 onwards is 999.9‰. For those same fi rst years, only a 1 Toz coin was produced. Between 1982 and 1985, the 1/4 Toz and 1/10 Toz sizes were added. Then in 1986 the 1/2 Toz was added and in 1993 a 1/20 Toz coin joined the group. It has remained thus to date except 1994 when a 1/15 Toz coin was produced for that year only. That year, a Platinum 1/15 Toz coin was also produced, possibly for jewellery, but both the Gold and Platinum 1/15 Toz coins were not a success and were dropped. The Maple Leaf is also available in Silver and Palladium.

Each coin features the image of Queen Elizabeth II by Ian Rank-Broadley on the obverse side. It also has the denomination and year of issue. On the reverse is an image of Canada’s national symbol, the maple leaf along with the word CANADA and the Gold fi neness in both English and French. Every coin is guaranteed to contain the stated amount in Troy ounces of fi ne Gold. The coins are identical in design except for the obvious items such as weight.

All Maple Leaf coins are legal tender in Canada although are categorised as “non-circulating bullion coins”. Their Gold fi neness easily puts them into the general category of being VAT-exempt.

On 3rd May 2007, the Royal Canadian Mint unveiled a 100 Kg Gold Maple Leaf with a face value of C$ 1 million although the Gold content makes it worth much more. The coin was produced as a promotional product to give the mint a higher international profi le. However, several interested buyers came forward so the mint announced it would manufacture to order. There are believed to be five confirmed orders and/or deliveries. It held the record for the largest coin until 2011 when an Australian coin superseded it.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

INVEST ADVICE

All Maple Leaf coins are issued as pure Gold finewness, 999.9‰ and in theory have a low premium just above the value of the Gold.

KEY FACTS 1

However, the reality is that a 5% premium should be achieved for a quantity of coins

with higher values for individual coins. As always, the smaller value coins will have higher premiums.
The coins were never really designed to be handled due to the softness of 24 carat Gold, the milled edge and clear fi eld around the image of the Queen. With some coins supplied in tubes, this makes them susceptible to handling marks and other damage. So careful examination of coins is highly recommended.

Specs

SPECS 2

How much does 1 gram of pure gold cost ?

Thursday, November 28th, 2013

Who said that only wealthy people could afford buying gold ?

  • Save from 1 gram of gold per month
  • Secure storage in Swiss vaults – FREE*
  • No administration or signup fee
Sign up for the LSP for free

Gradually build your wealth by simply buying each month a minimum of 1 gram of physical gold, for your LinGOLD Savings Plan (LSP) and benefit from freestorage in Swiss vaults outside the banking system.

How to save with the LSP?

  • Connect to your LinGOLD account or create a new account
  • Signup free to the LSP programme
  • Buy each month a minimum of 1 gram of pure gold
  • The gold you have bought is fully referenced : bar code, photograph, certificate of ownership
  • The gold is stored in a Swiss vault outside the banking system
  • You are free at any time to increase or reduce the amount of your savings, or you can unsubscribe from the LSP with no charge or prior notice.
Minimum Purchase 1g pure gold per month*
Maximum Threshold Unlimited
Storage Charges Free*
Signup Fee None
Availability Immediate Resale
Minimum Engagement None

*The storage charges levied on your gold stored in the LSP are FREE, on the condition that you buy a minimum of 1 gram of pure gold per calendar month, before the last day of each month. If the minimum monthly purchase is not made, storage charges will be applied, currently £4 per month per 200g total weight stored.

What are the products that fall within the LSP?

  • All the fractions of pure gold (1 g, 10 g, 100 g) issued from bars or gold investment coins (Britannia, Sovereign, Napoleon 20F, Napoleon 10F, Panda, Vera Valor, etc)
  • A whole coin : Vera Valor 1 ounce
  • A 1kg bar of pure gold

For further information on the LSP.

Your savings in a safe place

Tuesday, November 26th, 2013

Traditional investments are at risk because they are inextricably linked to the world wide web of paper debt that exists in futures, bonds, hedges and spread bets.

Pension funds, banks, stock markets and even countries are using your investments to pay off their own debts rather than to seek a profit for you.

These paper investments are all at the mercy of the debt cycle and could be lost completely or become worthless at any time. What happens when these massive debts are called in and can’t be repaid ?  This will happen but nobody knows when. How bad will it be ? How long will it last ? Politicians publicly pretend it can’t happen because they couldn’t handle the panic and their main preoccupation is preserving power or surviving their ‘shift’.

Did you know?

– You can still buy a new car today with the same weight of gold as you needed to buy a new car 90 years ago.

– 300 years ago 2 oz of Gold could buy a cow, the same amount as you need today!

– Current devaluations are decreasing your ‘paper’ savings, investments and pension funds

– Since  2000 stock markets have slumped while the price of gold has increased more than 5 times

LinGOLD.com’s commitment to doing things differently is exemplified through its ‘Vera Valor’ gold coin.  The ‘Vera Valor’ is the first ethically produced coin made from “clean extraction” gold, which is 100% traceable from mine-to-mint.

LinGOLD.com’s vault storage facility is based in the highly secured facility of Geneva Freeport and is independently audited to ensure total propriety and counterparty.

investment in lingold

investment in lingold

Britannia 1 ounce Gold Coin

Saturday, November 23rd, 2013

The Gold Britannia is a 1 Troy ounce investment coin. Whilst the figure of Britannia has graced coins since Roman times, it is only since 1987 that the modern Gold Britannia coin has been produced. The Gold Britannia is also available in fractions and the Silver Britannia is 1 Troy ounce of pure Silver.

It is probably Athena, the Greek goddess of wisdom and war who set the pattern for powerful maidens, like Britannia, to personify the characteristics of the nation they represent. It was the Romans who first portrayed Britannia on their coins. However, in the mists of time, it seems Britannia was depicted as resisting the invasion of the Roman Empire paying tribute to the fighting spirit of the island’s inhabitants, the Ancient Britons. In modern times, Britannia remains the universally recognised personification of Britain.

BRITANNIA 1 OUNCE

BRITANNIA 1 OUNCE

The coin history can be traced through Roman coins, those of Charles II and Elizabeth I through to today. Queen Elizabeth II came to the throne in 1952 and by that time, Britannia had been on coinage continuously for the previous 300 years. These coins were made from copper, and later bronze. In 1971, Britain adopted decimal currency and Britannia was chosen for the 50p copper/nickel alloy coin. In 1987, Britannia was finaly “promoted” to grace the Gold bullion coin which is known today as the modern Britannia. Ten years later in 1997, a Silver bullion Britannia was also issued.

In modern times, different aspects of Britannia’s history and character have been interpreted by different artists. The portrait by David Mach is the ninth to appear on both the 2011 Silver and Gold coins of Elizabeth II’s reign. The 2012 and 2013 coins were designed by Philip Nathan with the obverse continuing to show the acclaimed monarch effigy by Ian Rank-Broadley FRBS.The first Gold Britannia coins were produced in 22 carat form.

The 2013 edition is pure Gold, 24 carat. See full specifications below :

Although it is 1 Troy ounce of pure Gold, the Britannia is in fact the highest denomination coin in Britain. So as well as being free from VAT as it is investment-quality Gold, it is also free from Capital Gains Tax on any sale or transfer which is advantageous over other bullion coins and bars as an investment instrument.

There are various grading systems in use around the world. However, the British system is as follows:

BRIT 2

The Gold Britannia is issued in weights of 1 Troy ounce, half-ounce, quarter-ounce and tenth-ounce. The Silver Britannia is produced in a weight of 1 Troy ounce only and has a face value of £2.00. The large coins are those which attract the best premium. The reason for this is the costs of manufacture are approximately the same regardless of size and therefore Gold content.

The premium of Britannia coins is determined by the quality of the coin, design features, mintage and Gold content. From 1987to 1989, the coin was alloyed with Copper. From 1990 to 2012 it was alloyed with Silver. From 2013, it is pure Gold.

BRIT 3

The British Royal Mint has issued Proof editions every year and these should be sought where possible. Generally, the Britannia is not a high mintage coin. The years with the lowest numbers minted are 1990 to 2000. Coins minted in the years 1990, 1991 and 1997 are particularly sought after as their proof mintage was 262, 143 and 164 respectively. There are several design variations of the reverse, notably the year 2003 which featured Britannia’s head only as opposed to the usual full figure.

Silver Britannia tends to be sold in bulk because of the much lower value of Silver. Beware that Silver prices are much more volatile than Gold.

BRIT 4

China remains the world’s largest gold consumer in Q3’13.

Tuesday, November 19th, 2013

China bought 210 tons of gold during that third quarter as announced by the World Gold Council. It actually increased by 18% compared to Q3’12. This includes jewellery, gold bars and coins. China purchased even more gold than India. Traditionally, this latter is the largest consumer of gold but it does not seem so anymore. India bought 148.2 tons of gold which means that their consumption decreased by 32% year on year.
Demand for jewellery has been the most significant part of the global gold demand according to the World Gold Council since it registered a total of 487 tons (increasing by 5% compared to last year Q3). Global demand registered some 869 tons, decreasing by 21% over a year. However, demand remains strong in most countries and areas.

Guerre des monnaies
Does that mean that China is lacking confidence in the US dollar ? One thing for sure, China’s central bank keeps buying more and more gold for its reserves and particularly as a replacement for dollar assets. As we all know China is working on the yuan for it to be a rival to the US dollar on the long term on world markets.
Lack of confidence … should it be extended to banks ? In some countries, they are even talking about confiscating a quarter of their customers’ savings as part of a bail-in. Physical gold remains the best asset but should not be kept in banks vaults at all.

For best alternative, please visit Lingold.com.
Extr : Lingoro.com, World Gold Council & SwissAmerica.com

Special Offer on LinGOLD.com

Tuesday, October 8th, 2013

We would like to make all our readers aware of a special offer that LinGOLD.com is currently running. For the low price of 89.99 GBP, it is possible to buy 1g Gold Britannia, 1g Gold Sovereign and 1g Gold Vera Valor. So 3g Gold combined into one low price. It is below the value of buying each item separately so there is a saving to be made. It is an excellent time to take advantage of such offers while the price is comparatively low before the inevitable rise as various financial crises take hold. If you want to read more about the offer, click here.

Gold: The perils of possession and gold investment by post

Friday, July 5th, 2013

I have never seen the benefit of adding transport risk and cost to an investment but gold seems to attract the need to physically possess it, thus somehow reassuring the owner of its certitude. Imagine applying this logic to all investments – would having a desk and chair from the company you have “shares” in make you feel better, reassured that your investment was in good hands because you could touch it whenever the need arose?

Obviously most investments on the market do not require physical possession to prove their value or existence and yet so many of them carry far more risk to the investor e.g. “Paper” assets are vulnerable to macroeconomic instability and they could fall to zero in a crash. Gold can never fall to zero value.

However, the most important factor is the effect possession has on your resale options and therefore the potential of your investment to yield a profit. Vault stored gold offers investors immediate resale at a price they define and thus being able to react promptly to market changes. Postal gold limits your resale options and especially the resale price.

State intereference can ruin everything!

One of the other risks is that some unforeseen measure is introduced by the Government blocking your investment resale path …… read on.

The French government recently introduced a measure effectively banning the delivery of precious metals by post. This caught investors unaware and those that prefer physical possession at home are now in a quandary as the only resale method they have is to take their gold to a shop in person. It has also wiped out several companies that only sold through the post. The ban also includes the “we buy any gold” type operators which is no bad thing given their poor pricing of an ounce of gold.

Once again this is indication of how a government decision can suddenly unwind your investment strategy and probably cost you money.

If this sort of ban came into the UK most coin dealers operating through the internet would lose their business model immediately as the predominant method offered is to buy and resell by postal transfer.

The extra cost of postage and insurance should be deterrent enough for savvy investors as adding costs to procure your investment is rather self-defeating. Similarly, reselling by post has never offered a true reflection of the gold’s value because the buyback price is always below spot (and no greater than 98% of spot). In the case of gold coins this means an even greater loss as the premium is negative instead of being healthily positive.

Investors using these methods are poorly advised but that is also because the business model is simple and based on buying and selling with a defined spread always favouring the coin merchants.

Why add risk to your investment?

Ideally investors should be able to set their own resale price (ask price) and even better if they can propose this to a multitude of interested parties that seek to buy gold. This type of model is offered by companies who included vault storage so the gold doesn’t have to move and just the ownership changes once transactions are paid and completed.

GOLD: SAVINGS AND PENSIONS

Thursday, June 13th, 2013

By Mark Rogers

“Save for a rainy day.” The old adage, but does anyone do so nowadays?

“Saving” is much more likely to mean pensions nowadays, the likelihood of ever having one, and the certainty, if one has been saving towards one, that the recent and continuing bouts of Quantitative Easing (QE) have eroded it. “As much as £30,000 could be wiped off a £100,000 pension pot.” (This is Money, November, 2012)

But QE is only inflation speeded up; paper money is inflationary in and of itself over the long term, and with high tax regimes thrown in, no savings are safe. Those who remember the late 1970s will recall the prudent people who realised that money sitting in the bank was money evaporating, so they reasoned: why not spend it? Slap up meals, theatre tickets, luxury holidays – use it now before it is gone. During the Weimar inflation, industrial wages were eventually paid on the hour, with workers rushing out to spend them before they lost such value as they had by the second.

Converting your savings into gold sounds good, but – those ingots?? Is gold for the ordinary person?

Connect to LinGold.com (either click here, or on the box below this article) and find out. Signing up as a Member of the LinGold Savings Plan at a minimum purchase of 1gm of gold per month gives you a foot on the gold savings ladder: the cost of 1gm of gold compares favourably with the cost of, say, travel passes on London transport. Figures for 2012 on average household expenditure give the highest weekly cost as transport at £65.70, with half of that going on running a car; weekly expenditure on groceries averaged £44.20, with 80% being spent at supermarkets – doubtless because of the loyalty schemes and loss leaders that help keep prices down, as well as all the other prices wars that the supermarkets are more or less permanently engaged in.

Gold therefore, if saved for nothing other than the rainy day of retirement, compares very well with other necessary expenditures. After saving money on the weekly shop at the supermarket, it would be well to consider putting the balance into gold – and thanks to the unique LinGold.com Savings Plan, you too can do it! The democratization of gold is here to stay.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD STANDARDS III

Wednesday, June 5th, 2013

By Mark Rogers

I have discussed in Gold is Money, and the previous Gold Standards I and II the advantages of understanding that gold is not a commodity, that it is money that serves the usual purposes of money, as a store of value and a means of exchange, but with the vital difference that it also serves as a standard unit of measurement. The latter function is owed to its intrinsic qualities.

However, in Paper Money Collapse, Detlev Schlichter expounds Carl Menger’s view that gold, like all other things that people have found a use-value for, can indeed be considered a commodity, at least in historical terms. (I have looked at this book twice before in Gold Money A Currency of the Past and What Are Banks For?)

How does this argument work? Menger, says Schlichter, that “money could only have come into existence as a commodity”. It was not the creation of the State, there were no issuing authorities; money arose from mutual trading activities in which all commodities had a use-value. Without that use-value, no commodity was worth anything. Schlichter explains:

“For something to be used, for the very first time, as a medium of exchange, a point of reference is needed as to what its value in exchange for other goods and services is at that moment. It must have already acquired some value before it is used as money for the first time. That value can only be its use-value as a commodity, as a useful good in its own right. But once a commodity has become an established medium of exchange, its value will no longer be determined by its use-value as a commodity alone but also, and ultimately predominantly, by the demand for its services as money. But only something that has already established a market value as a commodity can make the transition to being a medium of exchange.”

Gold the Supreme Embodiment of Value

This anthropological-historical understanding of the emergence of money puts the market, trading, at the heart of the valuation process. Which, in turn, reminds us that the ultimate source of value, what something is worth, is its value to the parties, few or numerous, who engage in the transaction. So what in turn is required of a monetary medium, a currency, is a value that as far as possible stands outside that arbitrary subjectivity. Money itself, whatever its currency embodiment, is an attempt to render value objective in that the currency can be used in any exchanges, unlike bartering.

So in turn, the more objective the currency can become, the more it can become a standard (and this is where it is easy to see why it therefore becomes a unit of measurement), the more reliable, the more valuable that currency unit becomes.

And again, in turn, it is easy to see why gold quickly established itself as the supreme embodiment of exchange value: “it is no surprise that throughout the ages and through all cultures, whenever people were left to their own devices and free to choose which good should be used as money, they most always came to use precious metals.”

Gold is Money

Historically then we can enlarge Turk’s and Rubino’s contention that gold is not a commodity, not at least a commodity like oil or eggs, by allowing that the currency standard will have had a life as an object with use-value until other properties lead people to realise that it may have a value above its use-value. People have become familiar with these properties until it is singled out in use as being dominated by these properties and becomes money.

And the dominant characteristic of gold is its stability: soon all other characteristics were subordinated to this one, thereby changing not its nature but its purpose.

Of course, gold can be re-commodified as jewellery or ornament, as Jocelyn Burton, gold– and silversmith, demonstrates in her extraordinary work. People will always have these uses for gold, which are not intrinsically opposed to its properties as money: jewellery after all carries a premium and can, somewhat philistinely perhaps, be regarded as a form of storage, but then this form of storage shares with gold coins the property of portability.

And money can be re-subjectivised, in the past by mutilating it, clipping and shaving gold and silver coinage; and in the present of course the rolling of the printing presses with paper money has made money supremely subjective, its value becoming volatile and it storage properties destroyed.

It may be objected that we have little ancient anthropological evidence for this process, but we do not need to rely upon this as merely an explanation of what “must have happened”, we need only look at how those living in a territory with a devalued currency deal with the depredations of their government: in the twentieth century they have singled out dollars. When I asked an acquaintance from Zimbabwe how Zimbabweans coped with all those noughts, he laughed and said: “We just use dollars.”

The idea that money, and gold as money, emerged from the free trades of people going about their ordinary business also helps explain the deep disdain for gold in today’s political establishment: the idea that people are incapable of looking after themselves has become rooted in modern political thinking.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD SOVEREIGN: THE WORLD’S MOST SOUGHT AFTER GOLD COIN

Thursday, May 30th, 2013

By Mark Rogers

The Gold Sovereign is a highly collectable investment coin and the oldest coin struck by the Royal Mint. It is perhaps the World’s most famous gold coin and is the most widely traded semi–numismatic gold coin. The Sovereign is 22 Carat and is a highly collectable investment coin.

It was first minted at the order of King Henry VII in 1489; the modern version first appeared in 1817 with the now famous image of St George slaying the dragon engraved on the reverse. Today’s sovereign contains 0.235421 ounces (7.315 grams) of gold and is highly sought after throughout the world.

Henry VII

On October 28th 1489, Henry VII issued instructions to the Royal Mint to strike “a new money of gold”. Gold coins had been in circulation for the previous 150 years, this was the largest yet both in size and volume. It had yet two other intriguing features: while being large, it was also very thin, with a diameter of one and a half inches.

“The king is seated on a throne of elaborate design which fills the field of the obverse; the reverse type is the same which he adopted for the ryal, but usually the work is more crowded, a fleured tressure being added around the rose, and lions and fleurs inserted in the small intervening spaces. The coin, in spite of the somewhat restless effect produced by the massing of detailed ornamentation on the reverse, is a wonderful creation of Tudor art; the compositions of the throned figure, adapted most skillfully to the circular field, and the powerful handling of perspective to defeat the limitations of the shallow relief which was necessary in the engraving of the dies for striking so thin a flan, show a complete mastery of technique combined with the highest artistic inspiration.” (Coinage, by R.H. Dolley, Assistant Keeper of Coins and Medals, British Museum, in Lane Poole, Austin: Medieval England, Volume I, Clarendon Press, Oxford, 1958).

The coin weighed 240 grains and had a current value of twenty shillings. The king is in full coronation regalia on the obverse, and the reverse shows the royal arms against a double rose symbolizing the union under Henry VII of the Yorkists and the Lancastrians after the turmoil of the Wars of the Roses.

It was named a Sovereign and it is interesting to speculate why, the Wars of the Roses being an indication. England had been long troubled by the conflicts between the nobles and their contending champions for the crown. A weak Henry VI who could not rule France and barely controlled England was usurped by Richard III, who in turn was beaten at Bosworth Field by Henry VII, who was duly crowned king as victor in battle. However, Henry did have legitimate claim: he was Earl of Richmond in his own right, and claimed descent from the Lancastrian side, while politically he was a Yorkist. He was a powerful ruler, aided in this by his subjects who craved a quiet life and the dissipation of the nobility, many of whose lines died out on the battlefield as male heirs perished, often enough upon capture and execution.

While it is true that plots and subterfuges continued behind the scenes of Henry’s rule, the country at large was at peace and united for the first time under his reign. This imposing gold coin, emblazoned with the image of the victorious sovereign was perhaps intended as a symbol of how he had and was to continue to rule, hence the name. It set a seal on this the reign of the first Tudor, which was to be consolidated in the reign of his son, Henry VIII.

“Large and handsome, it was clearly intended to augment the dignity of the king and to propagate a political message of stability and prestige rather than to fulfill any commercial or domestic need. As such, it was struck in turn by each of the Tudor monarchs, its issue coming to an end early in the reign of James I. A Sovereign was not to appear again for 200 years.” (The Royal Mint) (Clicking on this link will not only give readers the Royal Mint’s perspective on its oldest and most famous coin, but a view of the obverse and the reverse of Henry’s Sovereign: a coin that richly merits the fulsome description given above by Assistant Keeper Dolley.)

The first modern Sovereign

Gold sovereigns were re-introduced as legal tender in 1817 as part of a major coin reform conducted by the Master of the Royal Mint, William Wellesley Pole.  A young Italian engraver, Benedetto Pistrucci, was appointed to create the reverse design of the new sovereign; he realized the beautiful image of St George slaying the dragon.  This design has been varied over the years but is essentially the same.  As a testament to its greatness, it still appears on sovereigns today.  Other designs for the reverse designs have appeared at times, during the reigns of William IV, Victoria, George IV and Elizabeth II.  A royal shield, as used on the 1489 sovereign, has often been used in various different formats.  The obverse of the sovereign followed the trend established for the original sovereigns and portrayed an image of the reigning monarch which remains the case up until today.

Gold sovereigns were withdrawn from circulation at the start of World War I in 1914, although production continued at the Royal Mint until 1917.  They continued to be struck in other mints of the British Empire but in lower quantities than before.  Sovereigns not produced at the Royal Mint in London carry a mintmark to show which mint produced them.  Production of sovereigns at other mints stopped in 1932.

In 1957 the Royal Mint began producing gold sovereigns once more, in part to meet world demand and  in part to prevent counterfeit production – which became rife after the Royal Mint stopped production in 1917.  They were not however reintroduced into everyday circulation.  Prior to 1979 only gold bullion coins had been issued and it was in this year that the first gold proof sovereigns were issued.  Between the years 1983 and 1999 the Royal mint ceased producing gold bullion sovereigns and only minted gold proof sovereigns.  Gold bullion sovereigns were re-introduced in 2000.

1989

To celebrate the 500th anniversary  a special 500 commemorative design was produced, showing Queen Elizabeth II seated facing on a throne. This was only issued as a proof and demand  has grown steadily over the past few years, because as a single-date type coin, it is in demand by both date collectors and type collectors.

2005 – New Modernistic design

In 2005, the Royal Mint issued another new sovereign designed by Timothy Noad a herald painter at the Royal College of Arms actually a modernistic version of Saint George slaying the dragon with the shield as a focal point. This coin was issued in both normal circulation (bullion) and proof versions for 2005 only

2007 – 2010

The Royal Mint have used re-cut dies to take the design  back almost two centuries to portray Pistrucci’s St. George and the dragon in its neo-Classical glory

Types of Sovereign

Aside from the full sovereign, the Royal Mint today produces the following sovereigns in gold proof and gold bullion versions for general sale: quintuple (£5) sovereign, double (£2) sovereign, half sovereign and for the first time ever, 2009 saw the general release of a quarter sovereign.

Sovereign designs and dates

Monarch Obverse design Reverse design Dates
George III Laureate head St George and the dragon 1817-1820
George IV Laureate head St George and the dragon 1821-1825
George IV Bare head Shield 1825-1830
William IV Bare head Shield 1831-1833, 1835-1837
Victoria Young Head Shield 1838-1839, 1841-1866, 1868-1887
Victoria Young Head St George and the dragon 1871-1887
Victoria Jubilee Head St George and the dragon 1887-1893
Victoria Old Head St George and the dragon 1893-1901
Edward VII Bare head St George and the dragon 1902-1910
George V First Type (large head) St George and the dragon 1911-1928
George V Second Type (small head) St George and the dragon 1929-1932
George VI Bare head St George and the dragon 1937 coronation proof set only
Elizabeth II First portrait St George and the dragon 1957-1959, 1962-1968
Elizabeth II Second portrait St George and the dragon 1974, 1976, 1978-1984
Elizabeth II Third portrait St George and the dragon 1985-1988, 1990-1997
Elizabeth II Sovereign portrait Shield and Tudor rose 1989
Elizabeth II Fourth portrait St George and the dragon 1998-2001, 2003, 2004, 2006-2009
Elizabeth II Fourth portrait Shield 2002 Jubilee
Elizabeth II Fourth portrait Modern St George and the dragon 2005

Technical specifications of modern sovereigns (post 1817)

  Quintuple sovereign Double sovereign Sovereign Half Sovereign Quarter sovereign
Purity 22 carat gold 22 carat gold 22 carat gold 22 carat gold 22 carat gold
Weight (grams) 39.94 15.98 7.99 3.99 1.997
Diameter (mm) 36.02 28.40 22.05 19.30 13.50
Actual gold content (troy ounces) 1.1771 0.4708 0.2354 0.1177 0.0588

Gold sovereigns: to invest or not to invest?

As one of the oldest coins in the world the British gold sovereign is highly sought after by both investors and numismatists alike.  As with all gold coins, the price of sovereigns fluctuates with the price of gold because of the gold content of the coin.  However the price of sovereigns is not entirely based on its gold content.  Gold sovereigns generally fetch a higher premium than the price of gold for the same gold content.  For example the 2009 gold proof sovereign retails at about £299 for 0.23 ounces of gold.  The current price of an ounce of gold is around £680 therefore the price for 0.235 ounces is around the £160 mark.  Therefore the 2009 sovereign is worth almost twice as much as the price of gold.

The premium of a sovereign obviously depends on its quality and whether it is easily available or not.  Some sovereigns fetch a much higher premium than others.

While there is no official grading system in existence, sovereigns are generally graded in the following manner in the UK:

FDC/proof  – perfect quality

UNC – uncirculated

EF – extra fine

VF – very fine

F – fine

(see article on quality of gold coins)

Whilst older sovereigns were produced in much larger quantities than those produced today it is much more difficult to source a good quality sovereign from these times.  Sovereigns from the reigns of George III, George IV and William IV are extremely rare in good quality.  EF quality coins can be found but are quite rare and as such would fetch a high premium.  FDC and UNC coins are extremely rare for these periods and when sold fetch very high premiums.  A George IV sovereign from 1825 made £14950 in a sale in March 2004.  Early Victorian shield sovereigns are also highly sought after and therefore an EF quality coin would fetch a high premium whilst extremely rare FDC and UNC coins would fetch incredibly high premiums.  Later Victorian sovereigns are less rare than the earlier coins in good condition, however they are again fairly rare in top condition therefore sovereigns of UNC and FDC grade would fetch a high premium.

Edward VII and George V sovereigns are also fairly easy to obtain in EF condition and were produced in very large numbers so do not fetch such a high premium.  As with later Victorian sovereigns, it is more difficult to find UNC and FDC grade coins and these would therefore fetch a higher premium.  No sovereigns were issued for Edward VIII, however a few official pattern coins were produced.  If any of these were ever to be sold they would fetch an incredibly high price due to their extreme rarity.  During the reign of George VI no sovereigns were issued apart from a very limited amount of collectors sets to commemorate his coronation.  This was a gold proof set and as such can be found today in FDC condition.  This set would today fetch around double the price of a 2009 4 piece gold proof set.  When gold sovereigns were reintroduced during the reign of Elizabeth II they were produced at much lower quantities than for other monarchs as they were no longer in everyday circulation.  However despite the fact that much fewer coins were produced they were all of FDC or UNC quality.

The majority of coins were released during Queen Elizabeth II’s reign and are not difficult to find in prime condition.  For this reason they fetch a lower premium than UNC or FDC coins from earlier periods, although they are still worth investing in as they do fetch a higher premium than the price of gold and are likely to become more sought after in the future.

Certain sovereigns are much rarer than others; some that are worth looking out for include:  1817 sovereign – the first modern sovereign and any other UNC or FDC coins from the reigns of George II, George IV and William IV (or even EF graded sovereigns from these periods), 1838 the first Queen Victoria sovereign, 1841 the rarest Queen Victoria sovereign, 1917 London minted sovereign (very few in existence as it was the year London stopped producing sovereigns) and out of Elizabeth II sovereigns the 1989 special commemorative 500th anniversary sovereign.   British sovereigns are an excellent investment choice and will continue to be so. For as long as Britain keeps its currency, it seems inevitable that the Royal Mint will continue issuing sovereigns every year for collectors, investors and enthusiasts.  However, if the UK joined the Euro would this signal the end for this iconic coin? If that were the case gold sovereigns would surely become more sought after than ever and consequently represent an even greater investment opportunity.

How to spot a fake

Many fake sovereigns have been produced over the years.  To avoid buying a fake you should always buy from a reputable source such as LinGold.com.  We have however, created a list of key things to look out for to avoid buying a sovereign forgery:

  • The feel of the coin: fakes are often very smooth or can have sharp edges
  • Be wary of coins that are too shiny with blurred details. It’s a sign that they have been cleaned and, therefore, some gold has been worn away
  • Dates: check for missing dates or check that sovereigns were actually produced in the year stated in the design shown
  • Mintmarks: if there is no mintmark check that the London mint produced sovereigns in that year, if there is a mintmark check that the mint in question produced sovereigns in that year
  • Weight, size and depth: check these correspond with official figure

GOLD STANDARDS

Wednesday, May 29th, 2013

By Mark Rogers

The proposition was examined in the last posting, Gold is Money, that gold is not a commodity or at least not in the sense that other commodities are (a distinction that will be looked at in a later posting). This proposition leads to an important observation, that gold is a unit of measurement, but an even more momentous observation arises from this: that whether there exists a gold standard of the classic kind (England from the end of the Seventeenth Century up to 1914, for the world at large 1870 to 1914) or the more controversial gold exchange standard of the interwar years, or the patched up standard of Bretton Woods, as a unit of measurement gold always provides a standard.

As long as gold remains largely in private hands and circulates, its exchange value determined by the markets, with banks holding a modicum of gold reserves, then gold will act as the benchmark against which currencies are measured, its prime function in a world of debased paper currencies to tell us what those currencies are actually worth, a bellwether that provides the information we need about how we manage our assets and how we exchange them for the safe haven.

There is another aspect of this, therefore, that throws up an interesting answer to the question that Turk and Rubino ask in their book discussed in “Gold is Money”. They point out that all paper currencies have collapsed and the reaction of governments has been, perhaps to confiscate wealth, perhaps to tighten currency controls, to generally adopt measures limiting the freedom of action of their subjects.

But this time round, it may not be governments who will take the initiative. The likelihood that the US government will confiscate gold as it did in 1933 must be set against the far less trusting, more cynical attitude of the general public towards government.

Gold has been remonetized in Utah, the Swiss People’s Party recently won the right to a referendum on the Swiss National Bank’s ability to sell off gold reserves, and the same party is arguing for a Swiss gold franc as circulating currency.

More and more people are realising how gold may be managed in such a way that investors are, in effect, re-inventing a free gold standard for the conduct of their monetary and financial affairs. Another example of a spontaneous order emerging? Let us hope so.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD IS MONEY: DOES IT HAVE A PRICE?

Sunday, May 26th, 2013

By Mark Rogers

I recently looked at the question of why there has been no price rise in gold commensurate with Central Banks’ buying? This was raised at this year’s Money Week conference and caused some puzzlement. But perhaps there is another way of looking at the issue, one found in James Turk’s and John Rubino’s The Coming Collapse of the Dollar (see an earlier mention Gold and Permanent Value).

At the very beginning of their book, they insist that gold is money. “Generally, when gold is mentioned in the financial media, people refer to its ‘price’. This is incorrect, because gold is not a commodity like oil or eggs. […] And since we don’t talk about the ‘price’ of euros or yen, but instead discuss their exchange rate, in this book we treat gold in the same way, as in ‘gold’s exchange rate was $410 per ounce on December 31.’”

Gold is not a commodity?

It is often assumed that money has three basic functions: it serves as a store of value, a means of exchange and can itself be exchanged. If this latter function is a true function of money, then this means that money is a commodity along with its other two functions.

Now, it is not true, as Messrs Turk and Rubino claim, that “we don’t talk about the ‘price’ of euros or yen”, because we do. The Money Changers not far from me advertise their wares on electronic price boards, and against the currencies on offer are ranged two columns: “We Buy” and “We Sell”. It is very common to talk of the prices of currencies and to treat them as commodities: it is possible to make money by watching the exchange rates and converting into favorable currencies and back again, making a profit on the way. (It is probably safest to do this in a Swiss bank, as a friend of mine used to do.)

We also speak of cheap money and dear money: what do we mean? Cheap money is when monetary policy is loose, people are exhorted to borrow and encouraged to do so by low interest rates; dear money is when policy is tight and lenders aren’t lending or only cautiously, and interest rates are concomitantly high. Is interest not, therefore, the “price” we pay for the money we have borrowed? While Turk and Rubino assert that we talk of exchange rates rather than prices, it would seem odd, would it not, if we were to talk of the exchange rate of pounds for pounds that we pay for bank loans? And if “the price of money” in terms of interest makes better sense when dealing in and with a domestic currency, and “exchange rate” makes better sense when we are swapping unlike for unlike, even if it is still currency rather than oil or eggs, then where does that leave gold: as a commodity or as not a commodity?

Assets and Exchange

However, this is not to be pedantic; sometimes it pays to split a hair, and in the case of the puzzle referred to in the first paragraph, it may be highly instructive to do so.

For Turk and Rubino point out two other incontestable matters, which throw a lot of light on this vexed problem of what money actually is and therefore how it behaves and we must speak of it. In the first place, if money is not to be considered a commodity, it is indubitably a standard of value – “a generally agreed-upon measurement used to express the price of goods and services.” And this measurement is of the same order as other standard units of measurement: feet and inches, pints and gallons, ells and yards, perches, furlongs and chains. Some of these units have been abolished or fallen into disuse, but as standard units of measurement – and here is the rub – they do not change over time. An ell has ever been an ell, even if no longer used; nor do we change our feet daily.

Now it follows from this that, when it comes to a unit of measurement that is a medium of exchange, that is money, “only money can extinguish an exchange for some good and service. That is, an exchange is extinguished when assets are exchanged for assets. If you accept a money substitute (for instance dollars) when you sell a product, the exchange is not extinguished until you use those money substitutes (those dollars) to purchase some other good or service.”

We begin to get to the heart of the matter: money substitutes. These are what cause the confusion, because by definition they are not money itself only its token or emblem. We take for granted that money takes the form of currency, and are liable in our paper age to therefore confuse “money as currency” with money itself. But currency as such is merely the instrument of exchange unless it also happens to be specie: that is, if gold (and/or silver) is the standard unit of value and gold passes in the form of gold coins, then there is no distinction between the standard of value (gold) and how it is represented (gold coins): the currency IS the money.

Furthermore, if the most important function of money is as a standard of value then it is possible to say that money is not a commodity, though it is still a store of value and a medium of exchange. To illustrate the point about units of measurement (standard of value) Turk and Rubino point out the unchanging nature of gold: “A gram of gold has bought roughly the same amount of wheat since the Middle Ages.” (A similar point is made about ounces of gold, Pharaonic oxen and contemporary oxen in “Gold, A Different Point of View”.)

Gold Is Money

We can begin to see how the question that puzzled the Money Week conference might be viewed, and in particular what gave rise to it, the observation that since the “price” collapse, central banks had been buying gold hand over fist and yet the price hadn’t moved. If gold is not a commodity, but is rather money, is the unit of measurement for value, then to look at gold as having an exchange rate is very fruitful: what it now tells us is just how bad the dollar is. If the unit of measurement doesn’t change, and the number of dollars or pounds that are measured against it is greater or smaller than it was, say, yesterday, or an hour ago, we are being told something about the currency, in this case a money substitute, and not the gold.

It is easy to grasp what is going on when gold goes through the roof, but we need to change our metaphor: gold has stayed where it was, it just takes more dollars or pounds (which, remember, today are money substitutes) to exchange for an ounce. Now, adopting Turk’s and Rubino’s vocabulary, the exchange rate of the dollar against gold fell in April, though it was still high compared to four or eight years ago. In the following weeks, notwithstanding the boom in the purchase of gold coins (away from ETFs) and the purchases of central banks, that exchange rate remained stable: commodities don’t behave like that, especially not scarce ones. So we were instead being told something about the dollar. The unit of measurement wasn’t behaving obdurately. Therefore, was what happened in April, not a calamity for gold, but a respite for the dollar?

Prices versus Exchange Rates

In considering how we speak about value and prices and fiat money and borrowing and cheap and dear money, it might concentrate the mind if we did indeed speak of the “cost” of a loan, the “price” the bank charges us for lending, or perhaps selling, to us. My bank lends me (sells me) £5,000 pounds over three years, with total interest of £760, and everybody commends me on my bank – what a reasonable rate of interest! But if instead I was to boast that I had bought £5,000 for £5,760, well, that wouldn’t seem such a good deal. It is because it is repayable over a term (over which of course, thanks to inflation, the inevitable accompaniment of money substitutes, it will in fact be costing more) that one doesn’t quite realize what has been “exchanged” or “bought”.

This of course raises the intriguing possibility that in getting our nomenclature as much as our metaphors backwards in speaking of money, we are indulging in loose talk, and that this in turn may be a result and feature of fiat money systems.

In What is Money? I raised the issue of the relation between money, value and property:

“The idea that money is a realisation of value inherent in property means currency is the result of a property holding system which, to be realisable, must have clear title. Then, on the basis of that title, the value of the asset can be ascertained and then realised as capital which then has a representational form as currency. That is, money as a representation of value, as a means of realising that value and being a store of that value is the result of a legal system that can render property fungible – that is, that the asset can be more than one thing.

“This, of course, means that property is a form of savings, and that savings are therefore at the root of money. […] The failure to realise the necessity of savings and their wider functions in a workable economy is at the root of the financial crisis.”

And the hostility to savings translates into hostility to gold and the failure to understand it as a unit of measurement. Turk and Rubino are right: gold is not a commodity and in realising this we may start to understand the dense fogs of the currency wars.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

SIR ISAAC NEWTON AND THE END OF MUTILATED MONEY, 4TH MAY 1969

Thursday, May 16th, 2013

By Mark Rogers

In the Seventeenth Century, “[t]he financial system of England had staggered through the disturbances of the Civil War and had grown worse during the inefficiency and corruption of the Stuarts … the current money had deteriorated to a state of confusion.” (Louis Trenchard More, Isaac Newton: A Biography (first published 1934), Dover Publications, Inc., New York, 1962)

This state of confusion resulted from the mutilation of money, rendering its recoinage a matter of urgent necessity. In the 17th century counterfeiting and adulterating the coin of the realm was so common that a coin worth its original face value was extremely rare. Both crimes were capital offences.

Louis Trenchard More describes the debauched currency and its consequences:

“The standard currency of the country was silver; and till the reign of Charles the Second the minting of the coin had been carried on by the process introduced by Edward the First in the thirteenth century. The metal was cut with shears and then shaped and stamped by the hammer. Coins made thus by hand were not exactly round nor true in weight and, as they were neither milled nor inscribed on their rims, they were easy to clip, or file, without detection. Clipping thus became one of the most profitable kinds of fraud. The custom had become so detrimental that, in the reign of Elizabeth, it was treated as high treason [hence the death penalty M.R.]. At the time of the Restoration, a large proportion of the coins had been more or less mutilated. To remedy this condition, a mill worked by horses was set up in the Tower which stamped the coins accurately and inscribed their edges with a legend; as, however, the old money was kept in circulation, the remedy was useless. The new coins were either hoarded, or melted down and shipped abroad; the old coins persisted as the medium of business, and they continued to shrink in weight and value. In the autumn of 1695, it was found by actual and careful test that the average value of a shilling had been reduced to six pence. Every transaction was accompanied by a bitter altercation between the buyer and the seller; the former insisting on estimating the coins by tale, and the latter by weight. Every Saturday night, all over the country, was a period of riot and bad feeling between employer and employee. The labourer and the clerk might receive the stipulated number of shillings, but for their purchases they acted like sixpences or less. We have, as a startling witness of these troubles, the complaints of Dryden that his publisher, Tonson, on one occasion included forty brass shillings in a payment of clipped money, and at another time the money was so bad that all of it was returned. If the foremost writer of the day was so treated, we can easily imagine the distress of the common people. … During even a most disturbed and evil rule, the common people manage to pursue their personal affairs, but such a state of the money as then existed affected every moment and every transaction in their lives.”

The situation was worse than impossible, and in 1695 King William III, addressing Parliament, recommended that the coinage be reformed. Thus, Charles Montague, the Chancellor of the Exchequer, prepared a Bill to this effect.

Charles Montague

Montague was the fourth son of a younger son of the first Earl of Manchester; he was later ennobled as Lord Halifax. Although Isaac Newton’s junior by nineteen years, Montague struck up a deep and lasting friendship with the great philosopher, then Lucasian Professor of Mathematics at the University of Cambridge, when he, Montague, matriculated at Trinity College as a Fellow-Commoner.

Montague was a man of superlative ability and quickly impressed himself upon the political life of the nation. His highest achievement, the great recoining, came about after his appointment as Chancellor of the Exchequer in 1694. He also instituted the Bank of England, as a private body. As a result of his friendship with Newton, he secured the latter the position of Warden of the Mint in 1696. It was this partnership that was to carry out the new minting. According to Montague, the success of this project was due to the administrative work of Newton.

The Great Recoinage

The first remarkable aspect to note of the proposed recoinage, was that this was to be done at a time of war: this was the war between France and the League of Augsburg (known as the Nine Years’ War 1688-1697, or the War of the Grand Alliance), which King William III joined soon after becoming King of England with his wife Mary as Queen, on the occasion of the Glorious Revolution of 1688. The North American theatre of this war, known as King William’s War, finally settled the issue of the American colonies between France and England in the latter’s favour.

To embark on the wholesale refashioning of the national coinage, and to complete it in a short time, at a time like this was a remarkable feat and owed everything to Charles Montague’s fortitude and eloquence. Although the Jacobites tried to discredit the government and the Whigs advised half-hearted measures, Montague managed the House of Commons so adroitly that the Bill was passed into law on the King’s signature on 1st January, 1696.

It provided for the recoining to be to the old standard of weight and fineness, and for all new coins to be milled. The public exchequer was to bear the loss on the clipped coins. Most expeditiously, the time at which no mutilated money could pass ever again was set at 4th May 1696: this great task, therefore, was to be carried out in a mere four months. We must assume that such was the pressing need to address this huge task as Montague and Isaac Newton, the new Master of the Mint, understood it, that no time was to be lost.

This new coin was the cause of the window tax, which was not as unpopular as legend has suggested. It came about like this: the loss to the exchequer referred to above was not easy to estimate, but Montague obtained a loan from the Bank of England which was secured by the new tax levied on the number of windows of the houses; however, inhabitants of cottages were to be exempt from the new tax in compensation for the cruel harassment they had undergone at the hands of the assessors of the now defunct hearth tax.

A month after the bill became law, the recoining had begun. Furnaces were erected in the gardens behind the Treasury and vast quantities of mutilated money were melted in them and cast into ingots which were at once conveyed to the Tower for minting. Although there had at first been widespread panic at the thought of money, however bad, being withdrawn from circulation, its relative scarcity did not become a serious factor and the panic soon subsided.

Isaac Newton assumed responsibility for the work in March, and under his direction branches of the mint were set up in several towns, thus easing the passing of the old money in exchange for the new throughout the country.

4th May

Loius Trenchard More describes the result:

“The real agony began in May when the clipped coins were no longer received by the government in payment of taxes. There was little of the old money which would pass the test and the new money was just beginning to trickle from the Mint; but, by means of barter, of promissory notes given by merchants, and of negotiable paper issued by the Exchequer, the summer slowly wore away. It was not till August that the first faint signs of returning ease in the money situation appeared, and there is no doubt that the able administration and indefatigable industry of Newton shortened this period of distress. He wrote peremptorily to Flamsteed that he would not be teased about mathematical things nor trifle away his time while he was about the King’s business. The Wardens of the Mint had previously been fine gentlemen who drew their salaries and rarely condescended to do any work.”

But work Newton certainly did: “It had been considered a great feat to coin silver to the amount of fifteen thousand pounds weight a week; but under the energetic management of Montague and Newton, the weekly coinage soon rose to sixty thousand pounds, and finally to a hundred and twenty thousand pounds. But even this rate was inadequate, and normal conditions were not restored till the following spring.”

Thus on 4th May 1696, mutilated money was finally abandoned for true coins, which were far harder to counterfeit, and a proper system of milling and guaranteeing the standardised value of the coinage came into being, overseen by one of the greatest scientific minds of all time, Sir Isaac Newton. We shall see what he thought of debasers of currency below.

“When was the last time you read your money?”

The question is posed by the analysts Daniel Brebner and Xiao Fu in their report for Deutsche Bank, London, Gold: Adjusting for Zero (discussed here). They go on:

“It is useful to do so as it will call attention to its subtle warnings. A £20 note reads: I promise to pay the bearer on demand the sum of twenty pounds. Two immediate questions arise: 1) 20 pounds of what? 2) Who is I, and can he/she be trusted? The US dollar bill is more prosaic, its nebulous message being: This note is legal tender for all debts, public and private. Our only comment would be that since fiat money is inherently a form of obligation (liability) that it is simply a tool for exchanging debts of different riskiness and thus underscores that there is an inherent risk in such an instrument.”

That risk is well brought out in a passage I have quoted in an earlier article. It is by C.H.V. Sutherland (then Keeper of Coins at the Ashmolean Museum, Oxford, in “Gold: Its Beauty, Power and Allure”)

“Collapse of the gold standard was followed by the era of credit currency. We accept a bank-note for the payment of £1, but in accepting it we receive in fact only the bank’s promise to pay £1. We accept a cheque, similarly; but a cheque again is no more than its drawer’s promise that his bank will pay us another bank’s promises. The growth of ‘money’ in this sense – and of course it is not money at all, in any true sense, but an extension of credit – is one of the most remarkable features of economic life since 1914 [emphasis added].”

The risk is presently underscored by quantitative easing and low interest rates: capital/worth is fiercely undervalued, with millions of pounds being wiped off pensions and savings.

In other words the promise on a modern English banknote is meaningless, and as such is a breach of trust with the general public. At one time the note was no more than a convenient substitute for gold and silver coins, and the strength of the currency depended on knowing that should anyone wish to hold the “I” to account, the promise on it would be redeemed in actual gold/silver coin or bullion. Knowing this was sufficient to keep the notes rather than coins in circulation; the trust was reciprocal in that the Bank of England did not dare print more of them than could be practically redeemed, thus keeping faith with the general public that the value stated on the note was a real value.

Mutilated Money Now

While the mutilation of the imperfectly guaranteed silver coinage in the seventeenth century was obvious to all, hence the squabbles in trading and on payday that an English note is itself mutilated money is not so obvious. The comparison can be made with the PAYE system: the vast majority of people in work in this country is on PAYE and as such receives their salary/wages net of tax, it having been deducted by the business they work for before the wages are paid over. In other words, not having to write out a cheque to the Inland Revenue, most people are only aware of the taxes they pay in the abstract – it is not a painful moment of reckoning each time tax is paid as it is for those of us who are business owners or freelance.

In this sense, the promise on a bank note represents mutilated money at one remove: we take it on trust that we can proffer these notes in exchange for goods and services, so we tend to think of the notes themselves as money. But they are not: I have remarked before that QE is the state forging its own currency, but without gold backing, even before QE, the actual “currency” in circulation is fake. And of course the coins we use are made of base metals and not precious ones, and are therefore far easier to forge. Indeed it was estimated earlier this year that three in every £100 pounds worth of pound coins is counterfeit.

This is the denouement of the situation described above by Keeper Sutherland.

Hang Them

As observed in above, counterfeiting and adulterating the coin of the realm were capital offences: death by hanging in these instances. It is interesting that the public did not approve: although the debased coinage was an economic disaster which enveloped everyone, the act of skimming a few shreds of precious metal from a handful of coins seemed, in itself, too insignificant for such a draconian punishment. “The sympathy of the people extended to the malefactors: juries would not sentence except in flagrant and wholesale cases, and judges would not sentence; while the evil effect of the practice spread its poisonous influence throughout the trade and life of the nation.” (Trenchard More)

The gallows did nothing to curb the practice because it was too easy to perform, thus ensuring that many people of course went undetected. While he was Warden of the Mint, Sir Isaac Newton had the fate of a counterfeiter drawn to his attention. He was firmly on the side of upholding the existing law, and the short letter in which he does so is worth quoting in full:

Newton to Lord Townshend

My Lord,

I know nothing of Edmund Metcalf convicted at Derby assizes of counterfeiting the coin; but since he is very evidently convicted, I am humbly of the opinion that it’s better to let him suffer, than to venture his going on to counterfeit the coin and teach others to do so until he can be convicted again, for these people very seldom leave off. And it’s difficult to detect them. I say this with the most humble submission to His Majesty’s pleasure and remain,

My Lord, your Lordship’s most humble and obedient Servant,

Is. Newton, Mint Office Aug. 25, 1724

Of course, the problem is in many ways worse now because whereas the counterfeiters and adulterers of yore were common criminals and ordinary folk on the make, and the problem was the cumulative result of the individual acts of hundreds of people, the debasers of the currency today are government ministers and state officials: debasement is official policy, the inevitable consequence of fiat currencies.

Is hanging too good for our lords and masters today?

A Statue Commemorating Sir Isaac’s Service to his Country as Master of the Mint on the Fourth Plinth at Trafalgar Square:

Among the ideas for a permanent memorial on the plinth at the North West corner of Trafalgar Square, there have been from time to time suggestions that the statue should be of a notable civilian.

In keeping with the other statues – one King, two generals and one Admiral – a life which contained some signal service to the country at large ought to be the guiding principle on which such a civilian should be chosen.

It is suggested here that an eminently suitable candidate for this honour is Sir Isaac Newton. Apart from Sir Isaac being universally known for his astonishing scientific achievements, his claim to notice in the context of a public statue in Trafalgar Square is the heroic effort he put into the Great Recoinage of the debased gold and silver currency which eradicated mutilated money and thus put an end to the argument and riot that habitually took place when pay day drew nigh or payments fell due.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD MONEY: A CURRENCY OF THE PAST… AND THE FUTURE?

Tuesday, May 7th, 2013

By Mark Rogers

When buying numismatic rare gold coins, it is well to remember that many of them were minted for use, as currency. For example, one of the perennially popular collector’s coins, the South African Krugerrand is minted in two kinds. The South African Mint strikes proof Krugers, while bullion Krugers are struck at the Rand Refinery. Proof coins are issued in smaller quantities for the collectors’ market. They are important to collectors who are interested in “a perfect uncirculated” coin; when the Krugerrand was first struck the bullion coins were intended to circulate as currency.

While currency wars and devaluations are very much a thing of today, it is worthwhile taking a look at the origins of one of the first real currencies… and who knows, one that may take its place once more as a trusted, true exchange of value.

Money, a concept born out of necessity

Before money existed, goods were traded in the form of exchange and bartering. There were obvious difficulties because in the long term it is perhaps impossible to equate the value of items in terms of each other, oxen for example in proportion to wheat or potatoes.

A popular and plausible hypothesis by H. Hauser (Gold, Vuibert & Nony, Paris, p.307) is that as gold was also being traded against various goods, its weight was ultimately agreed upon as the unit of exchange. It cannot have been longer before people realised that gold was easily divisible into a variety of weights which equated to multiples of its value and therefore the value of other commodities. This led to the concept that of weights of gold were indeed useful “units of value” and quickly prices for oxen, sacks of wheat etc became equivalent to a certain weight of gold.

Gold is ideal for this purpose because it is easily divisible and impossible to fake and is a store of real value being a precious and rare metal.

The birth of gold coins

In Egypt, gold was exchanged against goods in the form of rings which had fixed weights and therefore different multiples of value could be used for pricing goods. Elsewhere however, gold stayed in the form of ingots for a long time but their weights were often variable, that is, there was no standard size of bar, so bars would naturally be of different weights depending on how much gold was in them. Trading was difficult and tedious because of these discrepancies. Weight variations meant that trades were seldom a direct equivalent to the goods being traded and so much haggling ensued.

In search of something more convenient, reliable and safe, small gold discs of a fixed weight were made and each one had a value struck on it. They were easier to carry around and allowed trade to be more flexible, retail as well as wholesale. Thus the first gold coins were born and indeed the first recognisable currency. This took place around 700 BC according to Erik Chanel.

Whilst gold was not the only metal used for coins – silver has been widely used as well- gold, however, was the ideal metal because of its unique combination of properties such as: it is stainless, rustproof, divisible, malleable, ductile and of course rare, which made it from the outset a symbol of riches.

Is Money as good as Gold?

The Gold Specie Standard was a system that associated units of money to gold coins in circulation or when lesser metal coins drew their reference of monetary value from a circulating gold coin.

The Gold Exchange Standard was when circulating coins made of various metals such as silver and copper drew their reference monetary value from a fixed value of gold independent of their own metal value.

The Gold Bullion Standard did not involve circulating coins. This was when governments had agreed to sell gold bullion at a fixed price in exchange for a quantity of circulating currency. In other words, each unit of currency effectively had a value related to gold. This allowed the mass introduction of paper currency, which was easily transportable and practical for payments.

So far so good; but more and more governments after 1914 disassociated themselves from gold standards of any kind, seeing how easy it was, from their point of view, to inflate their “wealth” by simply printing more and more pieces of paper, which led to the credit creation system, fractional reserve banking, loans and mortgages.

Without Gold, Money is Debt

The Gold Bullion Standard ended in 1971 when Nixon decided to deal with the economic strain of expenditure on the Vietnam War and so untied the value of the dollar from gold. This therefore effectively untied all the other currencies which had been part of the Bretton Woods Agreement to form the IMF (International Monetary Fund) in 1944.

Thereafter currencies were and are not covered by a relationship to gold or any other fixed unit of reference so they can become extremely volatile, easily devalued and printed at infinitum. The problem is that today’s money is based on pieces of paper that are printed with a nominal value. What this means is that currency value is nowadays derived from economic confidence. When there is none the currency becomes worthless and it is not because the central bank has printed a number on a piece of paper that it becomes meaningful. While it is true that Human Action is the ultimate source of value, human confidence is a much more precarious matter, easily swayed, easily duped.

As Detlev Schlichter argues in his immensely important book (Paper Money Collapse, John Wiley & Sons, Inc., New Jersey, 2011):

“Large sections of the public today embrace a strong and interventionist state. They consider the government a magic cure-all and the answer to everything. Given […] the consistently devastating historical record of state paper money, it is remarkable that those who advocate commodity money today are either marginalized as slightly eccentric or made to extensively explain their strange and atavistic-sounding proposals while the public readily accepts a system of book entry money in which the state can create money without limit. […] The result has been and will continue to be yet more money printing, more debt, more privileged treatment of banks and more government intervention in the economy. Given the interests of the political establishment, the views of the mainstream media, the vested interests of the financial industry, and the state zeitgeist, a timely return to hard money can almost be ruled out.”

Note that Schlichter says “timely”. Earlier in his book, he had noted that the “Achilles heel of this system may then be seen, more accurately, not in a fickle public but instead a banking sector that issues uncovered claims against itself.” Such a system was bound to cause panics from time to time, or what politicians and bankers saw as panics, but which were rather “attempted shifts by the public out of uncovered fiduciary media issued by the banks and previously accepted by the public, into money proper.”

That is, people looking for ways to protect their wealth outside of paper money.

Gold as a future currency?

Gold as a currency of the future may seem far-fetched but given the state of paper money and the increasing interest in gold who knows, it is already being planned as an alternative stable money in certain places. Even if gold coins do not re-enter circulation they are being used as a more certain tangible investment, thus protecting and covering other forms of wealth.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES