The History of Gold Coins

Ancient Gold Coins

Known as the “lifeblood of Mediterranean trade in the 2nd millennium BC,” gold coins were instrumental in commerce going back to the ancient civilizations of Sumer and Egypt. At first, they were traded by weight. They then could be cut up into small chunks or drawn into wire. At that time, they were viewed as a standard of accounting or used to pay taxes to rulers or temples. They were not generally used among the common folk.

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Lydian gold coin issued under the reign of Croesus (Fifth century BC) – Obverse – Source Sacra-Moneta.com

The first real gold coins were produced in Lydia, Western Turkey, in the 6th century BC. These coins were made from electrum, a natural alloy of gold and silver found in the region’s rivers. The coins typically showed a picture of a lion or bull on face and a punch mark or seal on the other side. They weighed from 17.2 grams (0.55 troy oz) to as little as 0.2 grams (.006 troy oz). The introduction of these  coins to the masses is said to have been by the Lydian King Croesus (561-547 BC). Refinement improvements led to the distinct minting of gold coins.

When Alexander the Great (336-323 BC) united the Greek Empire with the Persian Empire, he inherited a huge amount of gold coins accumulated by the Persians from gold sources on the river Oxus in northern Afghanistan. Supposedly, Alexander became heir to 22 metric tonnes (700,000 troy ounces) of gold coins from the Persians. For both Philip II and Alexander, this kind of coins were the perfect way of paying their armies and other military costs. Under the Greek Empire, gold  coins were stamped with the head of the king instead of lions, bulls and rams that had graced the faces of coins elsewhere.

roman gold coins

Roman Gold Coins

The Romans, who also used gold coins to pay their legions, emulated the practice of printing the emperor’s head on their aureus gold coins. They were usually 950 fine (22 carat) and weighed 7.3 grams (0.23 troy oz); 45 aurei gold coins weighed one roman pound (libra). While too valuable for most daily transactions, these coins were used by administrators and traders as well as for army payments, e.g., a legionnaire was paid one aureus gold coin monthly. In Britain, one aureus gold coin could purchase 400 litres (28.57 gallons) of cheap wine or 91 kilos (200 pounds) of flour. Smaller gold coins, called solidus, weighing 4.4 grams (0.14 troy oz) were introduced after 300 AD when supplies of these  coins from Spain and Eastern Europe diminished.

The Romans minted gold coins at a rate that was unheard of until modern times. Between 200 and 400 AD, millions and millions of gold coins were produced and distributed across the Roman Empire. Their widespread circulation led them to infiltrate Europe, especially Britain. The Roman Empire is known for establishing an amazing unity throughout most of Western Europe, mainly with established public institutions and gold coins. When the empire disintegrated just after 400 AD, nearly one thousand years passed before the widespread use of gold coins resumed. Solidus coins of gold survived as the main gold coins of the Mediterranean world since they were minted by the Byzantine emperors in Constantinople as bezant, the medieval term derived from Byzantine for a gold coin.

The bezant was used from the fall of the Roman Empire until the rise of Venice, known for its silver and gold coins. However, a shortage of gold supplies led to scarcity and the make-up of gold coins became increasingly distorted. By 1081 their content was only 250 fine (six carats). In 1092, Emperor Comenus tried to regain credibility with new gold coins of 4.4 grams (0.14 troy oz). These were called hyperpyron, still nicknamed bezant by many and called perpero by the Venetians. But these coins never became fully appreciated since gold supplies were still limited.

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Gold Coins from Medieval Europe

By 1200, Venice’s growing power fostered more trade between the Islamic world and Europe. This new prosperity was founded on gold coming in from the Sahara desert by camel caravans from West Africa to North Africa. In Sicily in 1231, gold coins were minted using African gold. This practice then moved to Florence and Genoa in 1252. Venice soon became the leading market for gold, opening its gold mint in 1284. The next year the first ducat gold coins of 3.55 grams (0.114 troy oz) were produced. They quickly became a badge of wealth and power for the next five hundred years and were the most widely accepted coins since the Romans’ aureus and solidus gold coins.

Soon after 1300, the supply of gold grew from new Hungarian mines. All of Europe quickly began to make gold coins. The French King’s mints produced nearly 10 tonnes (350,000 troy oz) of gold coins in 1338-39. In 1344, the mints of Florence, Genoa, Venice, Bruges (Flanders) and London together coined more than five tonnes (170,000 troy oz).
(Today, the variety of gold coins can be seen at the British Museum in London, which displays 25 types of gold coins from European nations and city states minted during the 13th and 14th centuries.)

More History of Gold Coins

By 1500, the movement of gold supplies had drastically changed, first with more gold coming from West Africa to Europe by sea and then new sources appeared in the Americas. For example, in 1457, Portugal issued new cruzado gold coins made of African gold. In England in 1489 Henry VII minted the first sovereign gold coins of 15.55 grams (0.5 troy oz) at 958 fine (23 carats), valued at £1.00. By 1503 a mint in Seville was handling gold from the Americas. Thereafter much of that gold was turned into Spanish crowns exported to England, the Netherlands (then under Spanish rule), Genoa and Venice, and often recast into local gold coins. However, South American gold was relatively limited compared to the widespread availability of silver so during the 16th and 17th centuries silver coinage was used much more in Europe than gold coins.

In 1558 in England, Queen Elizabeth I introduced new gold coins (angels) and crowns to restore the status of gold coins which had been degraded by her father Henry VIII. Gold coins really made their reappearance after the discovery of gold in Brazil in the 1690s, which brought a new aspect to world production. Britain then switched to an unofficial gold standard with gold coins replacing silver as the main circulating currency.

Gold from the New World

Brazil’s gold coins, moedas de ouro, were minted in Rio de Janeiro and Lisbon and many of these coins travelled to England where they were recoined into guineas, which first had been struck in 1663. The guinea gold coins, named after Africa’s ‘gold coast’, weighed 0.27 troy oz (8.7 grams) at 916.6 fine with a nominal value of £1. The mint in London coined over 31 tonnes (one million troy oz) of gold into guineas gold coins between 1713-1716.

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This new flow of gold into England coincided with a slight over-valuation of gold coins compared to silver at the mint. As a result, traders learned it was profitable to send gold to be minted while selling silver for shipment to India and China where it was more highly valued. The premium for gold coins was confirmed in 1717, when Sir Isaac Newton, as Master of the Mint, set the historic gold price of £4.4.11½d (£4.35). This remained for two hundred years. His decision confirmed the preference for gold coins and put Britain on a gold standard, where gold coins became the major coin circulation until 1914 when World War I broke out. Throughout the 18th century, huge quantities of guineas gold coins began circulating with the British mint typically producing three to four million gold coins each year. Virtually no silver was coined. Not since Roman times were gold coins so widely used and accepted both in Britain and abroad, although most other nations stayed with silver coinage.

The United Kingdom gold coins, which replaced the guinea gold coins under the Coinage Act of 1816, established the gold standard as official. These coins, of 0.25 troy oz (7.77 grams) at 916 fine, then became the only standard of value and had unlimited legal tender.

Gold Coins Reached Their Pinnacle

Gold coins reached their pinnacle after the gold rushes in the United States and Australia after 1848, when gold production rose five-fold. The minting of gold coins rocketed in France and the United States in the 1850s. Eventually most nations switched from silver to gold coins by 1900, when the United States finally changed to the single gold standard from a bimetallic gold and silver policy.

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Virtually all gold mined during the 19th Century was transformed into gold coins. Sovereign gold coins in Britain and Australia, Eagle gold coins in the U.S., Mark gold coins in Germany, Rouble gold coins in Russia, Crown gold coins in Austria, Florin gold coins in Hungary and Napoleon gold coins in France accounted for over 13,000 tonnes (418 million troy oz) in the classic period of the gold standard prior to World War I.

But when the world went to war in 1914, governments started to store their gold, the minting of gold coins largely stopped and gold coins were often recollected. In 1933, during the Great Depression, the U.S. recalled all gold and gold coins from their citizens. And with that one dramatic swoop, the era of universal gold coins usage ended.