The Mail on Sunday

Don’t be fooled by £450 rip-off gold sovereign’s fancy box

Don’t be fooled by the fancy box...new gold Sovereigns cost twice what they are worth

- By Toby Walne

GOLD coin buyers face a right Royal Mint rip-off with its latest Sovereign coins being sold for almost twice their market value. A commemorat­ive ‘ limited edition’ 2019 gold Sovereign in a fancy wooden box is being sold by Royal Mint – owned by Her Majesty’s Treasury – for £450. But on the bullion market a Sovereign sells for £240.

The latest coin is a ‘proof’ which means it has been struck with a highly polished die. It has a sharper mirror-like surface than other Sovereigns and has never been in circulatio­n. Although this can excite coin collectors – numismatis­ts – it is unlikely to add any value for investors who just see it as bullion.

Even the marketing boast of being a ‘limited edition’ of perhaps 9,500 is unlikely to make it worth any more.

The fancy packaging – a walnutvene­er box for the coin to sit in plus a ‘certificat­e of authentici­ty’ – is also mainly for looks and adds no value. Similar presentati­on boxes can be bought for £20 from auction websites such as eBay.

The Sovereign is legal tender, thereby exempting investors from capital gains tax on any gains. As investment grade gold there is also no VAT to pay on the coin. Although it has a £1 face value, it comprises 0.235 troy ounces of gold so its true value is much higher.

A troy ounce is slightly heavier than a traditiona­l ounce. The coin is 22-carats – being 22 parts gold and two parts copper. The alloy is used to toughen up the metal so it is harder to damage.

Lawrence Sinclair, head of bullion at auction house Spink, says: ‘I like trading gold – and do not care if it sits in a pretty box. I might buy a gold Sovereign off you for £230 and then sell it for just under £ 240. It is only worth its gold value unless it is a particular­ly collectabl­e piece. What the coin comes in is of no investment interest to bullion dealers.’

Sinclair adds: ‘If I could read the future for gold coin prices I would not be talking to you, but enjoying life on a luxury yacht. Yet Sovereigns will l always be worth something, g, no matter what happens s– – unlike some shares or crypto ypto currencies.’

He concedes that on rare e occasions, proof Sovereigns surprise urprise the market by being worth h more than their intrinsic value. For example, an unusual proof from 2017 – with a special George and the Dragon design to commemorat­e the 200th anniversar­y of the modern Sovereign coin – can now sell for more than £800 if in pristine condition.

Another highly sought-after proof is a 1989 Sovereign to mark the 500th anniversar­y of earlier minted Sovereigns – for King Henry VII in 1489. These coins can change hands for more than £1,000.

The earliest historic Sovereigns stopped being minted in 1604. They were bigger and heavier than the present coin – and a more pure 23- carat gold. These are historic pieces and not beholden to the price of gold in the market – costing some £10,000.

Jim Brown, a numismatis­t from auction house Dix Noonan Web, says: ‘ There is something about gold coins that makes people think they are a great investment, but this is not necessaril­y so.

‘Buy a new car for £10,000 and if a few years later it is worth £5,000 no one is surprised. Yet the same could happen with gold coins.’

Brown understand­s the need for Royal Mint to put a high price tag on its proof coins – as it has production and marketing costs to cover. He says: ‘P ‘Purchases are often driven by emotion. emotio For example, grandparen­ts might want to buy a coin made in the year of a grandchild’s birth and pay extra for a fancy display case. They should not confuse this with buying a shrewd investment.’

Brown warns buyers against being pressured into a purchase by clever advertisin­g. Instead he suggests anyone interested in buying should contact the British Numismatic Trade Associatio­n.

Chris Barker, research manager at Royal Mint, says: ‘Proof gold coins are struck to the highest standard and are works of art. Do not simply contact a bullion trader if you want to sell but visit a coin specialist as they might offer you more.’

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 ??  ?? PRIC PRICEY: The Royal Mint’s 2019 Soverei Sovereign, in veneer box, costs £450
PRIC PRICEY: The Royal Mint’s 2019 Soverei Sovereign, in veneer box, costs £450

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