There is no better time than now to invest in gold coin. Historically UK citizens have never been hoarders of gold unlike many other countries in the EU and the rest of the world as we have never suffered the trauma of invading armies, currency crash or totally destroyed economies. In countries where this has happened or threatened, people have turned to gold to protect their wealth knowing that no matter what happened they can exchange their gold coins for essential goods. E.g.  French citizens personally hold 10 times the value of gold that is currently held in the UK gold reserve. We also to not inherently have the “survivalist culture” that exist in the USA where apart from arms, food and shelter, it is seen as essential to own tangible liquid assets such as gold eagles.

Until this century the UK government had discouraged the owning of gold by making it difficult. Until 1971 it was illegal to buy more than four gold coins without a collectors license and then in 1973, VAT was applied to gold coins, which dampened any new found enthusiasm. In common with the EU, the UK removed VAT  from investment gold including  specific coins in 2000.

We have seen a steady increase in the gold price this century until the all time high of $1227 in Dec 2009  after which it dropped rapidly by more than 10%. Is this a concern?. Any downturn is bound to incline towards nervousness; but this is purely a correction as has been exhibited over the last ten years, where there have been savage corrections, followed by periods of consolidation for a few months then the upward trend continues.  Also when gold reached is last all time high in 1980 of $850, the equivalent with inflation is $2200 today.  Experts agree that the gold price still has a long way to go.

The demand for gold coins rose sharply in 2009. This was a result of investors hedging against financial failure or diversifying portfolios into gold as there is a continuing lack of confidence as economies struggle to pull out of the worst recession in most peoples living memory. They also attract a premium over the value of gold which is dependant on supply and demand and currently world mints cannot keep up with demand. The Royal Mint quadrupled production in the last quarter of 2009 and we have seen increased production in Germany, Austria and US where there was a shortage such that “Gold Eagles” were on allocated supply

It is not just panicky individuals but professional investment advisors and sophisticated traders who are purchasing 50 or more coins at a time.

Gold coins are a tangible asset that can quickly and easily be realized and many such as Gold Sovereigns have liquidity that is recognized world wide. However, the sophisticated investor should view gold coins as an insurance policy within a diversified portfolio

Experts agree that somewhere between 5-10% of an investment portfolio should be diversified into gold.

Now in the UK we now have the best environment in the world for owning gold coins and particularly gold coins of legal currency, like Sovereigns as they are now VAT free and provided they were minted after 1817, free from Capital Gains Tax.  Plus you will own beautiful coins that have historic and aesthetic value to insure your wealth and provide a tangible asset that has world wide liquidity.

Maurice Hall

Sovereigns of England and France were to thought to have  the God given power of   healing by touch and they  practised this power to cure sufferers of Scrofula an unsightly tuberculosis commonly known as the “King’s Evil”.In France it was called the “Mal De Roi” . The ceremony and cure was a “laying of  hands ” by the monarch and the touching piece was the talisman of the monarch healing power.

Gold Angel

This developed into crossing the sore of the sick person with a Gold Angel, which was a currency piece that portrayed the Archangel Michael slaying the dragon. This was good overcoming evil and the gold itself stood for purity.  The Angel which became known as a « touching piece » was then worn around the neck until cured. It was believed if the touching piece was removed the disease would return. The sovereigns of the House of Stuart also used the ceremony to help bolster the belief in the ‘divine right of kings’ . The practice peaked with Charles II touching over 100,000 people; but it was discovered that a good number of people were not sick but were attracted by the gold. It was a considerable drain on Royal Coffers.

Maurice Hall

The demand for gold coins has risen sharply in 2009. This was a result of investors hedging against financial failure or diversifying portfolios into gold as there is a continuing lack of confidence as economies struggle to pull out of the worst recession in most peoples living memory.

The Royal Mint more than quadrupled production of gold coins in the third quarter after demand increased as investors sought to hedge against a weakening dollar.

Output rose to 32,735.8 ounces from 7,500.2 ounces a year before, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production in the first nine months more than trebled to 100,391.3 ounces.

Sales of American Eagle gold coins by the U.S. Mint more than doubled in the first nine months to 954,000 ounces, its Web site showed. Harrods Ltd., the London department store, began selling gold bars and coins for the first time in October.

The strong demand for American Gold Eagles has lead to a shortage of blanks  forcing the U.S. mint to sell  on a weekly allocation basis thus dealers are charging a higher premium.

According to Muenze Oesterreich AG, the Austrian mint and the world’s largest marketer of pure gold coins, by the end of Q3 production was up 23 percent more last year’s total sales.

It is not just panicky  individuals but professional investment advisors and sophisticated traders who are purchasing 50 or more coins at a time The surge in investors is creating shortages in mints across the world as they struggle to meet demand driving premiums above normal levels.

Gold coins are a tangible asset that can quickly and easily be realized and many such as Gold Sovereigns have liquidity that is recognized world wide. However, the sophisticated investor should view gold coins as an insurance policy within a diversified portfolio.

Maurice Hall

The Gold Sovereign is a highly collectable investment coin.  Introduced in Britain in 1489 at the request of King Henry VII, the modern version first appeared in 1817 featuring the now iconic 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 sought after the world over.

History of the Sovereign from 1489 to the modern day

The first gold sovereign was struck in 1489 for the then King Henry VII.  It depicted Henry VII on the obverse and a Tudor rose and the royal shield on the reverse.  No value was shown on the coin.  Sovereigns continued to be issued by monarchs up until the end of Elizabeth I’s reign in 1603.  The name sovereign is thought to originate from the fact that the reigning sovereign always appeared on the obverse of the coin.   The name was also thought to derive from the fact that Henry VII wanted to demonstrate Britain’s power and splendour.

The first modern Sovereign

Gold sovereigns were re-introduced as legal tender in 1817 as part of a major coin reform led by the then 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 coming up with the beautiful image of St George slaying the dragon.  This design has seen many alterations over the years but is essentially the same.  As a testament to its greatness, it still appears on sovereigns today.  Other reverse designs have at times been used during the reigns of William IV, Victoria, George IV and Elizabeth II.  A royal shield design, as used on the first sovereign of 1489, 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 even 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 however continued to be produced in other mints of the British Empire but at lower quantities than before.  Sovereigns not produced at the Royal Mint in London carry a mintmark to show which mint they were produced in.  Production of sovereigns in other mints stopped in 1932.

Elizabeth II Sovereign

In 1957 the Royal Mint began producing gold sovereigns again to meet world demand and stop counterfeit production which had become rife since the Royal Mint had 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 of 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

Technical specifications of modern sovereigns (post 1817)

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 due to the gold content of the coin.  However the price of sovereigns is not entirely based on its gold content alone.  British 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.

Whilst 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 top 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.  In order to avoid buying a fake you should always buy from a reputable source such as AuCoffer.co.uk.  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 and where the details are blurred. It’s the sign that they have been cleaned and worn away some gold
• 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

Premium

Sovereign Price= Premium + Price of Gold

In the United Kingdom, the current premium is dependant on source, quantity, supply and demand and currently can range from 5% to over 40% depending on source and condition.  But what is this premium for gold coins?

The premium is the difference between the current gold value contained in the coin and the price paid for the coin and is usually expressed as a percentage. The price and premium depend on market factors at the time and are constantly changing.

e.g. a Sovereign may contain gold with a value of £160 but be worth £199 and for a newly minted proof coin £299 . The difference between these two figures, expressed as a percentage, is the premium thus a the proof coin is sold at approximately 46% premium

The premium for a coin is linked to several criteria:

· production: The smaller the coins and the harder they are to produce, the more chance there is that they will have a high premium, this principle that explains why the smaller half sovereign have a higher premium .  The quality of a proof coin usually demands a higher premium

· speculation: the premium changes to reflect supply and demand. In a period where more coins are being sold than are being bought, the premium is zero or slightly negative (in this situation, coins of moderate quality are often melted down). When there is high demand or excess speculation, the premium resulting from this speculation climbs sharply. The premium is therefore a very good indicator of the balance between supply and demand, the latter’s potential and also what actions should be taken. A negative, zero or slightly positive premium should stimulate purchases whilst a high premium of should lead to selling.

· conservation: a quality coin that has no trace of being handled will retain all its premium. Poor conservation conditions (contact with fingers, scratches, wearing…) results in a reduction of 4 – 10% and can lead to a negative premium. When this happens the coins are melted down and sold for the price of their precious metal

· collectors: some coins are rarer due to them being minted in small numbers or because they have special characteristics related to numismatic rarity criteria. In certain years where very few coins were minted a sovereign can cost several thousand pounds depending on its rarity and its condition. This value is therefore completely unrelated to the value of the coin’s gold content.

· geographical location: gold coins are not equally popular in every country and generally speaking coins that were the currency of a country are more popular in that country e.g.: Napoleons are very popular in France but are much less well known in China or the USA and people there prefer to buy local coins the exception is the Sovereign which is the most popular in the UK but also has an international reputation.

Premium differential: This the differential between the basic (normal ) premium and the highest sale price usually in times of crisis where there is great demand.

Below is some translated correspondence that occurred with our partner in France:

LORetLARGENT.info editor and a reader about the premium:

Xavier (blog reader): Why do you consider that the ingot is “banal”? Although its premium is not high, or even zero, isn’t this the simplest means of buying investment gold at its market price? When the price goes up (very high, I hope), the deal becomes interesting. A coin currently has a high premium so is interesting if you want to sell but not necessarily if you want to buy…

LORetLARGENT.info: If you want to invest 2,000 Euros, don’t buy an ingot. Wait until the premium for Napoleons drops below 5% to develop your position.
The premium has a real lever effect. Consider the cases of buying, in a few months, an ingot or the same value of 20 FRF Napoleons with a premium of zero. If you sell when you need your capital (don’t forget that gold is an insurance against the crisis but not against life’s challenges – in this latter case, other investments are better), you will have at least 20% more for equal weights with your coins (the premium) without considering the greater ease of selling them.
In summary, starting from the principle that gold coins are an anti-crisis investment, an insurance where you get back what you pay (normally insurance is lost money), you have to take account of the concept of the premium from the start, especially the premium differential. You must buy gold coins with the greatest potential growth from their base premium (the average premium outside of crisis periods) and the highest premium recorded during a crisis. There is a differential of 5% for an ingot but 76% for a half Napoleon. Consider what this means for our investment of 2,000 Euros when we come to sell. Obviously, the coins must be in excellent condition. (Above all, avoid buying via generalist on-line auctions where about 1/3 of the coins are good for the smelter even if the photos are flattering).
Bear in mind that the only thing that should determine your gold purchase (coins or other) is its resale (when and how). Usually, you should do it quickly and at the best price. The ingot is not a winner in this type of competition…

Xavier: (…) Can the premium fall as the value of gold increases or if we see, as at present, an explosion in the demand all over the world, especially in France?

LORetLARGENT.info: Trying to compare the changes in the price of gold with the premium on a Napoleon is like trying to compare the ethics of American and English bankers with those of French households. My proposition is a bit exaggerated but it is a good reflection of the fact that the criteria leading to an increase in the price of gold are not the same as those determining the premium on a Napoleon. To confirm this, look at the sharp rise in the price of gold in March 2008 and the dead calm for the premium during the same period. In March, the French only had a vague idea that a crisis was coming and continued to sell Napoleons until September. You should be aware that our own bankers were using every conceivable method to try and sell gold coins to us in January 2008 whilst they had no difficulty in offering us LYXOR GOLD. In summary, we are talking about the same precious metal but certainly not the same investment instrument and the premium is an excellent indicator of the difference between the price of gold on the markets, linked mainly to changes in the price of oil and the US Dollar, and the value of gold coins sold in France, which is more linked to the moral of small investors with tangible values such as the readers of this blog.

Xavier: OK, I accept your arguments, which are logical. It’s a question of investment instruments and we can consider that the moral of small investors has not yet bottomed out whilst the price of gold already reflects the decline forecast by the major speculators (or the beginning of the end of the manipulations on COMEX). The future will give us the answer.

The quality of investment specific gold coins

Electronic scales are used to detect worn coins.

Electronic scales used to detect worn coins

All too often, buyers of investment gold tend to forget the quality of the coins they are buying, until they come to sell them, when they are greeted with an unpleasant surprise. In reality, when you sell gold coins they are evaluated as numismatic objects.

Saying “it’s a Liberty Double Eagle so I can sell it with a premium of 40% in the event of a crisis” can very quickly turn to ashes if you have not taken the trouble to understand the quality that you are buying.

The dealers who buy your coins do not want to negotiate the quality of the coins that you offer them and will use any argument to reduce the premium. They will want to buy your coins by weight, less their commission and any standard reduction due to the fact that you have handled the coins. In short, at the end of the day, you have made no profit.

Obviously, the greater the rarity of a coin, the lower the quality required to get a good price. However, this is purely a numismatic argument and we are speaking about investment here. Obviously, we are not going to buy a rare coin in the same way as investment gold. In practice, a rare coin is not greatly effected by crisis or the rise and fall of gold but mainly by the supply and demand for coins of the same type.

What is the minimum condition for a coin to have a premium?

A good magnifying glass to detect defects on gold coins

A good magnifying glass to detect defects on gold coins

Usually, it’s the EF or VF quality level that is required to obtain a premium with current coins. Your purchases of investment gold should be concentrated on this type of coin. With the exception of a few rare coins, the VG and F quality coins are sold for their weight in gold. As for the UNC (uncirculated new coins), we recommend that you do not buy these as an investment because they are rare coins with a base premium (average premium over gold value) that is already high and a low premium differential( the difference between base premium and the highest actual premium). These are very good quality coins that should be reserved for the pure numismatist.

Avoid.
If, despite the following table, you are not able to judge the quality of the coins you buy, we recommend that you do not buy from private individuals and, generally, avoid on-line auction sites, such as Ebay (where you can only evaluate your purchase based on photos, which tend to mask defects). Remember that it’s the most worn side that determines the coin’s general condition. One third of coins sold by on-line auction sites are not of an adequate quality. Worse still, they are often sold by unscrupulous dealers who know that they can not sell them directly to their own clients…
Be wary of coins that are too shiny and where the details are blurred. It’s the sign that they have been cleaned with abrasive products or instruments, initially to mask defects but which has ended up removing some of the gold. The weight test is usually determinant to a standard quality. The Sovereign weighs 7.93g to 7.98g. so avoid anything that weighs less than 7.93g (0.7% from newly minted weight). Coins can be verified using a Fisch gold coin gauge which tips the balance at 0.7% of the newly minted weight or as above weighed on an accurate digital scale to detect gold loss through wear.

Table of the different conditions or degrees of conservation for coins

• UNC (Uncirculated). Coin in perfect condition (no scratches, no wear, no traces of shocks) just as it left the minter’s die. This condition assumes that the coin has not been in circulation, only the patina and oxidation indicates that the coin is old. UNC is in its mint condition with all its mint sheen. No defect is acceptable. This is a rare condition because even coins that have never entered circulation but which have been transported in bags do not have this quality due to the fact that they have had shocks during their transport. These coins are reserved for numismatists. They are not considered as part of a strategy of investing in gold because of their high base premium.
  Equivalent terms in other countries:
  - France : FDC (Fleur de Coin)
  - Germany: STG (Stempelglanz)
  - Italy: FDC
  - Spain: SC

• EF or XF (Extremely Fine). This is the condition of an almost perfect coin that has not circulated much where the defects, hardly visible to the naked eye, can only be seen clearly with a magnifying glass (slight scratches, slight wear on some reliefs such as the hair, beard, moustache, feathers…). The mint sheen has gone and there are minor shocks related to transport.
  Equivalent terms in other countries:
  - France : SUP (Superbe)
  - Germany: VZ (Vorzüglich)
  - Italy: SPL
  - Spain: EBC
• VF (Very Fine). Condition of a coin where the wear shows clearly that is has been in circulation but it still presents very well with slightly tired reliefs, a rim that may be a bit flattened but which is still net. The signs of wear are visible but the coin is still in a good condition. This is an average plus state of conservation which still allows the coin to obtain a premium.
  Equivalent terms in other countries:
  - France: TTB (Très Très Beau)
  - Germany: SS (Sehr Schön)
  - Italy: BB (Bellissimo)
  - Spain: MBC
• F (Fine). Condition of a coin that has been in circulation for a long time. Some details of the engraving start to disappear (ribbons, hair, inscriptions on the side, etc.). The metal’s surface is dull (or, in contrast, too shiny ‘to be true’), criss-crossed by little scratches and accidents may be visible (shocks to the rim, large scratches). Its appearance is still acceptable to a numismatist but investors avoid this type of coin because it is usually bought without a premium when it is a current gold coin.
  Equivalent terms in other countries:
  - France: TB (Très Beau)
  - Germany: S (Schön)
  - Italy: MB (Molto Bello)
  - Spain: BC+
• VG (Very Good). Often referred to as “Good”, the condition of these coins means they are relegated to being bought and sold for their weight in gold. These are worn or very worn coins with a mediocre appearance. You can only just determine their type. The writing is partially deleted, the effigy is no longer sharp, many accidents can be seen. This is a coin that has been in circulation for a very long time and which will end up one day soon in a smelter unless it is a rare type.
  Equivalent terms in other countries:
  - USA / UK: VG (Very Good)
  - France: B (Belle)
  - Germany: SGE (Sehr Gut Erhalten)
  - Italy: B (Bello)
  - Spain: BC

There are no Swiss banks in Goldfinger although “Goldfinger, in ready money, is the richest man in England. In Zürich, in Naussau, in Panama, in New York, he has twenty million pounds’ worth of gold bars on safe deposit.” But Goldfinger uses Switzerland as the hub of his gold trafficking (which was illegal at the time in some European countries). There he has a discreet plant where he melts down car parts made of solid gold to then discreetly bank them or ship them on. Switzerland never had capital controls that prevented the free flow of gold or other precious metals, and this makes it even today the world’s first market for gold. In the movie, Goldfinger uses this Swiss freedoom to his advantage.

…
Colonel Smithers explains the British secret service’s interest for Mr Goldfinger operations during the dinner at the Bank of England:

‘The great thing to remember about gold is that it’s the most valuable and most easily marketable commodity in the world. You can go to any town in the world, almost to any village, and hand over a piece of gold and get goods or services in exchange. Right?’ Colonel Smithers’s voice had taken on a new briskness. His eyes were alight. He had his lecture pat. Bond sat back. He was prepared to listen to anyone who was master of his subject, any subject. ‘And the next thing to remember,’ Colonel Smithers held up his pipe in warning, ‘is that gold is virtually untraceable. Sovereigns have no serial numbers. If gold bars have Mint marks stamped on them the marks can be shaved off or the bar can be melted down and made into a new bar. That makes it almost impossible to check on the whereabouts of gold, or its origins, or its movements round the world. In England, for instance, we at the Bank can only count the gold in our own vaults, in the vaults of others banks and at the Mint, and make a rough guess at the amounts held by the jewellery trade and the pawn-roking fraternity.’

‘Why are you so anxious to know how much gold there is in England?’ [How much gold is there in England today?]

‘Because gold and currencies backed by gold are the foundation of our international credit. We can only tell what the true strength of the pound is, and other countries can only tell it, by knowing the amount of valuta we have behind our currency [valuta = the value of a currency expressed in terms of its rate of exchange with gold (or some other currency)]. And my main job, Mr Bond-’Colonel Smithers’s bland eyes had become unexpectedly sharp – ‘is to watch for any leakage of gold out of England – out of anywhere in the sterling area. And when I spot a leakage, an escape of gold towards some country where it can be exchanged more profitably than at our official buying price, it is my job to put the CID Gold Squad on to the fugitive gold and try get it back into our vaults, plug the leak and arrest the people responsible. And the trouble is, Mr Bond-’Colonel Smithers gave a forlorn shrug of the shoulders-’that gold attracts the biggest, the most ingenious criminals. They are very hard, very hard indeed, to catch.’

‘Isn’t all this only a temporary phase? Why should this shortage of gold go on? They seem to be digging it out of Africa fast enough. Isn’t there enough to go round? Isn’t it just like any other black market that disappears when the supplies are stepped up, like the penicillin traffic after the war?’

‘I’m afraid not, Mr Bond. It isn’t quite as easy as that. The population of the world is increasing at the rate of five thousand four hundred every hour of the day. A small percentage of those people become gold hoarders, people who are frightened of currencies, who like to bury some sovereigns in the garden or under the bed. Another percentage needs gold fillings for their teeth. Others need gold-rimmed spectacles, jewellery, engagement rings. All these new people will be taking tons of gold off the market every year. New industries need gold wire, gold plating, amalgams of gold. Gold has extraordinary properties which are being put to new uses every day. It is brilliant, malleable, ductile, almost unalterable and more dense than any of the common metals except platinum. There’s no end to its uses. But it has two defects. It isn’t hard enough. It wears out quickly, leaves itself on the linings of our pockets and in the sweat of our skins. Every year, the world’s stock is invisibly reduced by friction. I said that gold has two defects.’ Colonel Smithers looked sad. ‘The other and by far the major defect is that it is the talisman of fear. Fear, Mr Bond, takes gold out of circulation and hoards it against the evil day. In a period of history when every tomorrow may be the evil day, it is fair enough to say that a fat proportion of the gold that is dug out of one corner of the earth is at once buried again in another corner.’

Ian Fleming – “Goldfinger”

Could eggs be a useful currency?

Let’s imagine it’s 2018. The western world has gone through years of deflation then the flame returns as massive inflation repeating what happened in Germany in 1923.

John was still selling luxury yachts on the Côte d’Azur in 2008. Following the financial crash and the economic crisis that followed it, he now rears a few chickens on a farm on the outskirts of a small town in the Auvergne. In this article, he talks to us about his most recent discovery in a world where every day brings its new rules. He explains to us the characteristics of a good currency.

I arrive in the village square which is already full of people and a lay out my farm produce at my feet: pairs of chickens with their feet tied together and baskets of pats of butter wrapped in leaves, lying on a base of fresh and smooth eggs. I have some concerns because the Euros, which we usually use in the country, they have been refused by everyone since the State started issuing them willy-nilly. The screens where you enter the amount for a credit card transaction are no longer big enough to display the amounts that have to be paid for our everyday requirements. We are now a country without currency. What’s going to happen?

I think I will get the old Sovereigns out from their hiding place behind the bookcase, tomorrow…