Today, we value gold by its total weight and the fineness of the gold content.
For example, 10 grams of 9 carat gold compared to 10 grams of 22 carat gold. However, coins were originally valued by weight only and compared against other metals. In the early days, for example, one piece of gold was worth 20 pieces of silver, it was a simple as that.
The early system of valuing gold against other metals originated between the trading nations of the Lydians and Persians as far back as the 6th Century BC. Surprisingly though, this system lasted for an extremely long time, continuing through the reign of the Roman Empire, and survived in Britain until the First World War. Around the time of the World War I, the Gold Sovereign was worth 20 Silver Shillings.
There have been many changes to the actual purity of gold used in gold coinage in the UK, before it was finally standardised. The first legal standard (UK) for gold began in 1300. At one point, the levels of fine gold found within Medieval coinage was as high as 23 carats. In 1477 the standard was reduced to 18 carats, by 1545 it was 20 carats, and in 1575 it became 22 carats of gold purity, which still applies today.
Eventually, as metallurgy techniques became more sophisticated and fineness could be better perfected, the British purity standard of its gold content was set at 22 carats (.9167 fine). This ‘new’ fineness was originally referred to as “Crown Gold” because it was first used in the production of the ‘Crown’ coin.
Whilst it took the British several centuries to decide how many carats they had in their gold coinage, we were not the only ones toiling over this important decision. There were other nations who were also unable to agree on the exact gold content used in their most valuable coinage.
The USA had already been using the same grade of fineness in their coinage between 1795 and 1834, but eventually decided to change it and use a standard of .900 fine.
Mexico decided they didn’t want to do the same as the USA, so their gold standard was set at .875. Not to be out-done by each other, France and Germany both standardised at exactly the same fineness (.900).
The first major bullion coin of modern times is the South African Krugerrand (1967). One of the most practical and hard-wearing coins, and at a fineness of .9167, it is the same fineness as our own Gold Sovereign.
Now that each of these nations had decided the exact purity of gold coinage they wished to issue, the race was on to refine that purity even more precisely. Metallurgy techniques were put to work to achieve the greatest purity possible within their bullion issues (gold and silver).
It was Canada who first achieved the coveted landmark
of the highest purity possible in 1979,
with the Canadian Maple Leaf bullion coin.
It was .999 (99.9%) fineness.
Not satisfied with this new standard of the highest quality, refining was improved yet further. The ultimate standard was achieved in 1983. The famous “Four Nines” .9999 (99.99%) was born. Although this has since been improved upon yet further, with the “Five Nines” .99999 (99.999%) purity.
Modern bullion bears both the weight of the item and the fineness of the precious metal within it. This is generally inscribed on the item, thus avoiding any uncertainty as to the precise quality of the bullion.
So remember, if someone asks you the opening question of
“How many carats are there in a gold coin?”
You can either blind them with science or tell them that it is a trick question.
Because there are lots of different answers to the same question !!