Every day on television and in newspapers the value of gold is reported – in US dollars. Generally, when there is an international crisis the value of gold rises. Its value as an industrial material (gold is used in electronics and jewellery) should reflect industrial activity, but for thousands of years gold has played a role in money, and the price changes we see today reflect that old function. Gold remains a material that people believe stores wealth.
1855 Sydney Mint Gold Sovereign (obverse)
Photographer: Jon Augier / Source: Museum Victoria
Modern Gold Coins
Australian mints still strike gold coins. They are not made for circulation, but to sell to people who want to have some of their wealth stored in gold or who want gold in their coin collection. Such coins are sold at a price above their gold value and usually well above their denomination. One coin for example has a face value of $50, contains about $300 gold value and is retailed for about $320. Since 1980 Australia has issued gold coins with face values between $5 and $3000.
Such coins are a modern phenomenon. In the past, coins were made to circulate and the fear was that they would not contain gold to match their denomination. When the First Fleet arrived in Australia, coins both in silver and gold contained their face value in metal. The system at that time was failing, as the relative values of gold and silver metals often changed. In 1816 the British introduced a new gold coin, the sovereign, and new metal content for their silver. The sovereign, worth one pound, contained a pound worth of gold, while the new silver coins contained just enough silver to deter forgery. When gold was discovered in Australia these coins were used.
1855 Sydney Mint Gold Sovereign (reverse)
Photographer: Jon Augier / Source: Museum Victoria
Between 1855 and 1870 Australia also had its own gold sovereigns. They were made at the Sydney Mint and featured the word AUSTRALIA within a wreath as their reverse design. Even though they were made in Australia, they were not legal in any Australian colony until each colony proclaimed them legal tender. Victoria, which wanted a mint of its own, was one of the last colonies to accept the Sydney coins. From 1871 until the last issue in 1931, the gold sovereigns made in Australia were British sovereigns. They were identical in almost every way; only a tiny letter, called a mintmark, differentiated the issues of different mints. Indeed, the three mints in Australia, in Sydney, Melbourne and Perth, were branches of the Royal Mint in London, not Australian mints at all.
Coining Room, Royal Mint, Melbourne, 1899
Source: Museum Victoria
The change to British sovereigns was to coincide with the opening of the Melbourne Mint but there was a delay and Sydney was the first to issue the new coins. All the dies for striking the coins were sent from London and samples of every production were sent back to London for testing. Any variation from the standard, even the use of dies with old dates, brought down London’s wrath. The Australian mints were justifiably proud of their work and advanced world standards in purification of gold through new chemical operations.
Paper Money and Gold Coins
The gold coins were legal tender to any amount, although paper money was often more handy. Early paper money however had to be guaranteed in gold. The first Australian notes bore statements like: “The Treasurer of the Commonwealth of Australia promises to pay the Bearer One Pound in gold coin on demand”.
Gold Coins and Wear
Sovereigns were only legal until they started to show wear. Then they were withdrawn and replaced with new full weight coin at the cost of the British government. Half sovereigns, although technically covered by the same legislation, were used more often and so wore more quickly, making withdrawal too expensive. Production of half sovereigns was to be avoided by the mints if possible.
To have your gold turned into coin was a simple matter; you took it to the mint and came back a few days later to collect the coins. In London the government absorbed the costs of assay, purification, alloying and striking, but in Australia a small charge was made.
The Gold Standard
The “Gold Standard” was a complex international arrangement, elements of which set the value of nations’ currency as a specific amount of gold and guaranteed to accept gold bullion and coin. It really only became fully achievable with the great nineteenth century gold discoveries in Australia, North America and Russia. Although the economic turmoil of the First World War ended the arrangement, efforts to get it going again continued into the early 1930s. Australia went on striking gold coin throughout the 1920s even though most of the coins were melted soon after leaving the country. The last issues were made in 1931 from Melbourne and Perth (The Sydney Mint had closed in 1926).
In addition to the millions of gold coins made for circulation, the Australian mints also made some very rare coins for presentation purposes. These included five and two pound coins from the Sydney mint in 1887 (for Queen Victoria’s Jubilee) and 1902 (for King Edward VII's coronation). There were also coins produced with mirror-like fields (called proofs) made for presentation to VIPs, museums and for collectors.
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