A
gold coin is a
coinA coin is a piece of hard material, usually metal or a metallic material and sometimes made of synthetic materials, usually in the shape of a disc, and most often issued by a government. Coins are used as a form of money in transactions of various kinds, from the everyday circulation coins to the...
made mostly or entirely of
goldGold is a chemical element with the symbol Au and an atomic number of 79. It has been a highly sought-after precious metal for coinage, jewelry, and other arts since the beginning of recorded history. The metal occurs as nuggets or grains in rocks, in veins and in alluvial deposits. Gold is...
. Gold has been used for coins practically since the
invention of coinageThe history of coins extends from ancient times to the present, and is related to economic history, the history of minting technologies, the history shown by the images on coins, and the history of coin collecting. Coins are still widely used for monetary and other purposes.All western histories of...
, originally because of gold's intrinsic value. In modern times, most gold coins are intended either to be sold to
collectorsCoin collecting is the collecting or trading of coins or other forms of minted legal tender.Coins of interest to collectors often include those that circulated for only a brief time, coins with mint errors and especially beautiful or historically significant pieces. Coin collecting can be...
, or to be used as
bullion coinA bullion coin is a coin struck from precious metal and kept as a store of value or an investment, rather than used in day-to-day commerce. Bullion coins are usually available in gold and silver, with the exception of the Krugerrand and the Swiss Vreneli which are only available in gold...
s — coins whose nominal value is irrelevant and which serve primarily as a method of
investing in goldOf all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, currency failure, inflation, war and social unrest...
.
History
The first gold coins in history were coined by
EgyptianAncient Egypt was an ancient civilization of eastern North Africa, concentrated along the lower reaches of the Nile River in what is now the modern country of Egypt. The civilization coalesced around 3150 BC with the political unification of Upper and Lower Egypt under the first pharaoh, and...
Pharaohs around 2,700 BC. These gold coins, of variable purity, were used primarily as gifts and not for commerce. Many centuries later,
KingKing may be a title for a head of state.King may also refer to:-Places:* King, Ontario, Canada* King, Indiana, United States* King, North Carolina, United States* King, Lincoln County, Wisconsin, United States...
CroesusCroesus was the king of Lydia from 560 to 546 BC until his defeat by the Persians in about 547 BC. The fall of Croesus made a profound impact on the Hellenes, providing a fixed point in their calendar. "By the fifth century at least," J.A.S...
, ruler of
LydiaLydia was an Iron Age kingdom of western Asia Minor located generally east of ancient Ionia in the modern Turkish provinces of Manisa and inland İzmir. Its population spoke an Anatolian language known as Lydian....
(560–546 BC), began issuing gold coins, with a standardised purity, for general circulation. King Croesus' gold coins follow the first
silver coinSilver coins are possibly the oldest mass form of coinage. Silver has been used as a coinage metal since the times of the Greeks. Their silver drachmas were popular trade coins....
s that were minted by King
PheidonPheidon was king of Argos. At that time, the monarch was purely a traditional figurehead with almost no genuine power. Pheidon seized the throne from the reigning aristocracy...
of
ArgosArgos is a city in Greece in the Peloponnese near Nafplion, which was its historic harbour .-Name:The region of Argos is known as the Argolis, Argolid, or Argeia...
around 700 BC. The
Ying YuanYing Yuan is one kind of gold coin issued by the mint of the Chinese state of Chu. The oldest ones presently known are from about the 5th or 6th century BCE.-External links:*...
was another gold coin minted during this time by the Chinese in the 6th or 5th century BC. Larger units of monetary value and exchange such as the talent were the ancient equivalents of the modern 400-troy-ounce "good delivery" gold bullion bar.
Gold coins then had a very long period as a primary form of
moneyMoney is anything that is generally accepted as payment for goods and services and repayment of debts. The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value, and occasionally, a standard of deferred payment...
, only falling into disuse in the early 20th century. Most of the world stopped making gold coins as
currencyIn economics, the term currency can refer either to a particular currency, for example the US dollar, or to the coins and banknotes of a particular currency, which comprise the physical aspects of a nation's money supply...
by 1933, as countries switched from the
gold standardThe gold standard is a monetary system in which a region's common medium of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold...
due to hoarding during the worldwide economic crisis of the
Great DepressionThe Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
. In the United States, 1933's
Executive Order 6102Executive Order 6102 is an Executive Order signed on April 5, 1933 by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates" by U.S. citizens.-Effect of the Order:The Order required U.S...
forbade the hoarding of gold and was followed by a devaluation of the dollar relative to gold, although the United States did not completely uncouple the dollar from the value of gold until 1971.
Gold-colored coins have made a comeback in many currencies. However, "gold coin" (in numismatic terminology) always refers to a coin that is (more or less) made of (real) gold, and does not include coins made of manganese brass or other alloys. Furthermore, many countries continue to make
legal tenderLegal tender or forced tender is an offered payment that, by law, cannot be refused in settlement of a debt, and have the debt remain in force....
gold coins, but these are primarily meant for collectors and investment purposes and are not meant for circulation.
Collector coins
Many factors determine the value of a gold coin, such as its rarity, age, condition and the number originally minted. Gold coins coveted by collectors include the
AureusThe aureus was a gold coin of ancient Rome valued at 25 silver denarii. The aureus was regularly issued from the 1st century BC to the beginning of the 4th century AD, when it was replaced by the solidus...
,
SolidusThe solidus was originally a gold coin issued by the Romans, and a weight measure for gold more generally, corresponding to 4.5 grams.- Roman and Byzantine coinage :...
and
Spur RyalThe Spur Royal was an extremely rare English gold coin issued in the reign of King James I. The coin is a development of the earlier Rose Noble, or Ryal which was worth ten shillings when issued by Kings Edward IV and Henry VII, and fifteen shillings when issued by Queens Mary and Elizabeth I.The...
.
In July 2002, a very rare $20
1933 Double EagleThe 1933 double eagle currently holds the record for highest price paid at auction for a single U.S. coin when it was purchased for US$7.59 million...
gold coin sold for a record $7,590,020 at
Sotheby'sSotheby's is the world's third oldest auction house in continuous operation.-History:The oldest auction house in operation is the Stockholms Auktionsverk founded in 1674 and the second oldest is Uppsala Auktionskammare founded in 1731, both Swedish...
, making it by far the most valuable coin ever sold to date. In early 1933, more than 445,000 Double Eagle coins had been struck by the U.S. Mint, but most of these were surrendered and melted down following
Executive Order 6102Executive Order 6102 is an Executive Order signed on April 5, 1933 by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates" by U.S. citizens.-Effect of the Order:The Order required U.S...
. Only a few coins managed to survive.
In 2007 the
Royal Canadian MintThe Royal Canadian Mint produces all of Canada's circulation coins, and manufactures circulation coins on behalf of other nations...
produced a 100 kg gold coin with a face value of $1,000,000, though the gold content was worth over $2 million at the time. It measures 50 cm in diameter and is 3 cm thick. It was intended as a one-off to promote a new line of
Canadian Gold Maple LeafThe Canadian Gold Maple Leaf is the official bullion gold coin of Canada and is produced by the Royal Canadian Mint. The brainchild of Walter Ott, it is one of the purest gold coins of regular issue in the world, with a gold content of .9999 millesimal fineness , with some special issues .99999 fine...
coins, but after several interested buyers came forward the mint announced it would manufacture them as ordered and sell them for between $2.5 million and $3 million. As of May 3 2007 there were five confirmed orders. Austria had previously produced a 37 cm diameter 31 kg Philharmonic gold coin with a face value of
€The euro is the official currency of 16 of the 27 Member States of the European Union . The states, known collectively as the Eurozone, are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain...
100,000.
In October 4, 2007, David Albanese (president of Albanese Rare Coins) stated that a $10, 1804-dated eagle coin (made for President
Andrew JacksonAndrew Jackson was the seventh President of the United States . He was military governor of Florida , commander of the American forces at the Battle of New Orleans , and eponym of the era of Jacksonian democracy...
as a diplomatic gift) was sold to an anonymous private collector for $5 million.
Bullion coins
While obsolete gold coins are primarily collected for their numismatic value, gold bullion coins today derive their value from the metal (gold) content — and as such are viewed by some investors as a "
hedgeIn finance, a hedge is a position established in one market in an attempt to offset exposure to price fluctuations in some opposite position in another market with the goal of minimizing one's exposure to unwanted risk...
" against
inflationIn economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real...
or a
store of valueTo act as a store of value, a commodity, a form of money, or financial capital must be able to be reliably saved, stored, and retrieved - and be predictably useful when it is so retrieved....
.
South AfricaThe Republic of South Africa is a country located at the southern tip of Africa, with a coastline on the Atlantic and Indian Oceans. To the north lie Namibia, Botswana and Zimbabwe, to the east are Mozambique and Swaziland, while Lesotho is an independent country surrounded by South Africa.Modern...
introduced the
KrugerrandThe Krugerrand is a South African gold coin, first minted in 1967 to help market South African gold. It is produced by the South African Mint Company.-History:...
in 1967 to cater to this market; this was the reason for its convenient and memorable gold content — exactly one
troy ounceThe troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight and therefore the price of precious metals....
. It was the first modern, low-premium (i.e. priced only slightly above the bullion value of the gold) bullion gold coin. Bullion coins are also produced in fractions of an ounce – typically half ounce, quarter ounce, and one-tenth ounce. Bullion coins sometimes carry a
face valueThe Face value is the value of a coin, stamp or paper money, as printed on the coin, stamp or bill itself by the minting authority. While the face value usually refers to the true value of the coin, stamp or bill in question it can sometimes be largely symbolic, as is often the case with bullion...
as
legal tenderLegal tender or forced tender is an offered payment that, by law, cannot be refused in settlement of a debt, and have the debt remain in force....
,
The face value is minted on the coin, and it is done so in order to bestow legal tender status on a coin, which generally makes it easier to import or export across national borders. However, their real value is measured as dictated by their
troy weightTroy weight is a system of units of mass customarily used for precious metals, black powder, and gemstones.Named after Troyes, France, the troy system of weights was known to exist in medieval times, at the celebrated fair at Troyes in North Eastern France...
, the current market price of the
precious metalA precious metal is a rare naturally occurring metallic chemical element of high economic value,which is not radioactive . Chemically, the precious metals are less reactive than most elements, have high lustre, are softer or more ductile, and have higher melting points than other metals...
contained, and the prevailing premium that market wishes to pay for those particular bullion coins. The face value is always significantly less than the bullion value of the coin. Legal tender bullion coins are a separate entity to bullion gold. One enjoys legal tender status, the latter is merely a raw commodity. Gold has an international
currencyIn economics, the term currency can refer either to a particular currency, for example the US dollar, or to the coins and banknotes of a particular currency, which comprise the physical aspects of a nation's money supply...
code of
XAUXAU can mean multiple things:* A currency code under the ISO 4217 standard, denominating one troy ounce of gold.* A symbol for the Philadelphia Gold and Silver Index, an index of precious metal mining company stocks that are traded on the Philadelphia Stock Exchange.* XAU Limited - A company...
under
ISO 4217ISO 4217 is the international standard describing three-letter codes to define the names of currencies established by the International Organization for Standardization...
. ISO 4217 includes codes not only for currencies, but also for precious metals (
goldGold is a chemical element with the symbol Au and an atomic number of 79. It has been a highly sought-after precious metal for coinage, jewelry, and other arts since the beginning of recorded history. The metal occurs as nuggets or grains in rocks, in veins and in alluvial deposits. Gold is...
,
silverSilver is a chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
,
palladiumPalladium is a chemical element with the chemical symbol Pd and an atomic number of 46. Palladium is a rare and lustrous silvery-white metal that was discovered in 1803 by William Hyde Wollaston, who named it after the asteroid Pallas, which in turn, was named after the epithet of the Greek...
and
platinumPlatinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is in Group 10 of the periodic table of elements...
; by definition expressed per one
troy ounceThe troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight and therefore the price of precious metals....
, as compared to "1 USD") and certain other entities used in international finance, e.g.
Special Drawing RightsSpecial Drawing Rights are potential claims on the freely usable currencies of International Monetary Fund members. SDRs have the ISO 4217 currency code XDR.-Definition:...
.
Gold bullion coins usually come in 1 oz, 1/2 oz, 1/4 oz, 1/10 and 1/20 oz. sizes. Most countries have one design that remains constant each year; others (such as the
Chinese Panda coinsChinese Panda coins are bullion coins produced by the People's Republic of China.* Chinese Silver Panda* Chinese Gold Panda...
) have variations each year, and in most cases each coin is dated. A 1/10th oz bullion coin is about the same size as a U.S. dime. A 1 oz. gold bullion coin is about the size of a U.S. half dollar.
Other gold bullion coins, many named after their design features, include:
- Austrian Philharmonic
- British Britannia
The Britannia is a British bullion gold coin issued since 1987, which contains one troy ounce of gold and with a face value of £100. There are also fractional Britannia coins, weighing a half, quarter, and one-tenth of an ounce, with face values of 50, 25, and 10 pounds respectively...
- Canadian Maple Leaf
The Canadian Gold Maple Leaf is the official bullion gold coin of Canada and is produced by the Royal Canadian Mint. The brainchild of Walter Ott, it is one of the purest gold coins of regular issue in the world, with a gold content of .9999 millesimal fineness , with some special issues .99999 fine...
- Chinese Panda
Chinese Panda coins are bullion coins produced by the People's Republic of China.* Chinese Silver Panda* Chinese Gold Panda...
- Gold Dinar
The modern Islamic gold dinar is a bullion gold coin made from 4.25 grams of 22-carat gold that is a recent revival of the historical gold dinar which was a leading coin of early Islam...
- Russian Chervonets
Chervonets is a former currency of the Russian Empire and Soviet Union. Originally a term for coins of purer alloy the name was later applied to various sums in Russian rubles.Before the reign of Peter I the name chervonets was applied to various foreign...
- Swiss Vreneli
Vreneli is the informal name for a range of legal tender gold coins produced in Switzerland. The formal name is: Tête d'Helvetia , Helvetiakopf or Helvetia Head . The coins were issued between 1897 and 1936, in 1947 and in 1949.-Description:These coins had face values of 10, 20 and 100 Swiss...
- French Napoleon
The Napoleon is the colloquial term for a former French gold coin. The coins were minted in denominations of , , , , and francs. This article will focus on the 20 franc coins issued during the reign of Napoleon, which are 21 mm in diameter, weigh 6.45 grams and, at 90% pure, contain .1867 troy...
Counterfeits
For most of history, coins were valued based on the precious metal they contain. Whether or not a coin was actually made by the party that it is claimed to be made by was of secondary importance compared to whether or not it contains the correct amount of metal, that is, right weight and fineness (purity). Genuine appearance was simply a convenient shortcut to avoid time-consuming tests in everyday transactions.
Unlike silver, gold is denser than almost all other metals, hence whether something is made of gold is extremely hard to fake. Simple determination of weight and volume should be sufficient. A coin that is the right size but is not gold, or has too much base metal, will be "light"; alternately, a coin that weighs right will be somewhat larger. (Platinum was unknown in ancient times;
platinumPlatinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is in Group 10 of the periodic table of elements...
is denser than gold, but since the price of platinum is usually much higher than that of gold, making a fake coin out of platinum would make no sense. In theory, fake coins could be made of
uraniumUranium is a silvery-white metallic chemical element in the actinide series of the periodic table that has the symbol U and atomic number 92. Besides its 92 protons, a uranium nucleus can have between 141 and 146 neutrons. The most common uranium isotopes are U-238 and U-235 . A uranium atom has...
, but this does not appear to be a practical problem. One element that has just about the same density as gold is
tungstenTungsten , also known as wolfram , is a chemical element with the chemical symbol W and atomic number 74.A steel-gray metal, tungsten is found in several ores, including wolframite and scheelite...
. Alloying gold with tungsten would not work for several reasons but a coin with a tungsten center and gold all around it could not be detected as counterfeit by density measurement alone.
An old practice to test whether a gold coin was counterfeit was to bite down on it. Since pure gold is relatively soft any base metals mixed with the gold to lessen its value will also harden the coin, and so make it harder to bite on.
The majority of bullion counterfeits (of all types) are rare, and fairly easy to detect when comparing their weights, colors and sizes to authentic pieces. This is because the cost of reproducing any given coin precisely can easily exceed the market value of the originals.
Numismatic fake samples
There are well made
counterfeitA counterfeit product is an imitation which infringes upon a production monopoly held by either a state or corporation. Goods are produced with the intent to bypass this monopoly and thus take advantage of the established worth of the previous product...
gold coins in circulation. For example, the
St. Gaudens Double EagleThe St. Gaudens Double Eagle is twenty dollar gold coin, or Double Eagle, produced by the United States Mint from 1907–1933. The St. Gaudens is named after its designer, the sculptor Augustus St. Gaudens, who designed the obverse and reverse. St...
omega counterfeit is infamous for its complexity and has fooled many
numismaticsNumismatics is the study or collection of currency, including coins, tokens, paper money, and related objects. While numismatists are often characterized as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and...
experts. It is a high relief
business strikeRegular issue coinage is a term that distinguishes coins created for commerce from commemorative coins. Regular issue coins are normally produced in relatively large numbers, and are primarily meant to be used as pocket change, not collected...
, and due to the extensive wear on the die, these coins were not made for many years.
Another example is the US $20 gold coin ("
double eagleA Double Eagle is a gold coin of the United States with a denomination of $20. . The coins are made from a 90% gold and 10% copper alloy....
"), which has raised lettering around its rim. If the coin is uncirculated, the letters will be flat on top. If slightly rounded, and the coin is uncirculated, it is a counterfeit. However, some counterfeits do not have this defect. There are other counterfeit double eagles in which the gold and copper alloy was not thoroughly mixed. These counterfeits will have a slightly mottled appearance.
Gold as a suitable currency
- Gold is liquid, easily trade-able, and with a low spread between the prices to buy and sell. A low spread typically occurs when an item is fungible.
- Gold is easily transportable, as it has a high value to weight ratio, compared to other commodities.
- Gold can be divided into smaller units, without destroying its value; it can also be melted into ingots, and re-coined.
- The density of gold is higher than most other metals, making it difficult to pass counterfeits.
- Gold doesn't decay as quickly as other commodities.
- The scarcity of gold stabilizes it's value.
See also
- Carat (purity)
The carat is a measure of the purity of gold alloys. In the United States and Canada, the spelling karat is used, while the spelling carat is used to refer to the measure of mass for gemstones .- Measure :As a measure of purity, one carat is purity by mass:whereHistorically, in England the carat...
- Gold bar
A gold bar is a gold ingot which may be produced in many different types, weights and categories.Although gold bars come in many forms, in movies we generally see the "400 ounce London Good Delivery" bar , held by most central banks...
- Gold as an investment
Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, currency failure, inflation, war and social unrest...
- Gold standard
The gold standard is a monetary system in which a region's common medium of exchange are paper notes that are normally freely convertible into pre-set, fixed quantities of gold...
- Silver coin
Silver coins are possibly the oldest mass form of coinage. Silver has been used as a coinage metal since the times of the Greeks. Their silver drachmas were popular trade coins....
- Palladium coin
Palladium coins are a form of coinage made out of the rare silver-white transition metal palladium. Palladium is internationally recognised as a form of currency under ISO 4217. Tonga commenced issuing palladium coins in 1967, which included the Tonga Palladium Hau...
- Platinum coin
Platinum coins are a form of currency. Platinum has an international currency symbol under ISO 4217 of XPT. Platinum bullion coins include the American Platinum Eagle, the Canadian Platinum Maple Leaf, the Australian Platinum Koala and the discontinued Russian Ballet series issued by the Soviet...
- History of coins
The history of coins extends from ancient times to the present, and is related to economic history, the history of minting technologies, the history shown by the images on coins, and the history of coin collecting. Coins are still widely used for monetary and other purposes.All western histories of...
- Numismatics
Numismatics is the study or collection of currency, including coins, tokens, paper money, and related objects. While numismatists are often characterized as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and...
- Precious metal
A precious metal is a rare naturally occurring metallic chemical element of high economic value,which is not radioactive . Chemically, the precious metals are less reactive than most elements, have high lustre, are softer or more ductile, and have higher melting points than other metals...
- British sovereign
A Gold Sovereign is a gold coin first issued in 1489 for Henry VII of England and still in production as of 2009. While the coin typically had a nominal value of one pound sterling or 20 shillings, the sovereign was primarily an official piece of bullion with no mark of value anywhere on the coin...
- Euro gold and silver commemorative coins
This article covers the gold and silver issues of the euro commemorative coins . It also includes some rare cases of bimetal collector coins . See :€2 commemorative coins for circulating commemorative coins....
Further reading
- Robert Friedberg, Gold Coins of the World: From Ancient Times to the Present - An Illustrated Standard Catalogue with Valuations (Coin and Currency Institute, 2003) ISBN 978-0871843074
External links