Last Updated on October 7, 2024
The yellow metal’s early history wasn’t in gold coins but in big lumps of uncoined metal. Various forms of commodity money had been used up to that point but gold emerged as the superior option.
However in its uncoined form, trade using gold as money was inefficient as merchants had to assess the weight and purity. This time and expense meant gold could only be used for very significant transactions.
The development of standardised gold coins was a game changer for the yellow metal and helped propel it to the dominant form of money in both the ancient and modern world.
This article gives you a brief history of gold coins from the the Lydian stater to modern bullion coins.
Gold Coins in the Kingdom of Lydia
The ancient Kingdom of Lydia is where the monumental development of standardised coinage first occurred.
Lydia is in modern day Turkey and predates the great Achaemenid or Persian Empire.
Lydian King Alyattes minted an electrum coin called the stater around 600 BC. Electrum is a gold-silver alloy.
His son, King Croesus went one step further and minted staters out of gold. These staters were known as Croeseid.
The key development here is that the state mint was standardising the weight and purity of the coins so that merchants didn’t have to.
This made commerce much easier and was a practice that would soon spread all over the ancient world.
Gold Coins in the Persian Empire
King Croesus was defeated by Persian King Cyrus the Great at Sardis in 546BC.
Lydia became a province of the Persian Empire.
The Persians adopted the Lydian’s monetary developments and introduced their own standardised coinage.
The most famous Persian coin was the Daric, named after King Darius I, the successor to Cyrus the Great.
The Persians operated a bimetallic system with the gold Daric circulating alongside the silver siglos. One gold daric was worth 20 silver Sigloi.
The daric became the dominant currency in the ancient world and was used extensively within the Persian Empire and across the Mediterranean.
It remained the dominant currency until the Persians were defeated by Alexander the Great.
Gold Coins in Ancient Rome
Ancient Rome is much more famous for its silver coin, the denarius, than it is for its gold coins. But there are historically significant gold coins to have come out of Rome.
First there was the aureus, originally valued at 25 denarii, contained just over 8g of gold. This coin existed during the Roman Republic, however it was never minted in significant quantities until 46BC, when Julius Caesar decided to mint it in larger amounts as a way to pay his soldiers.
As the Republic became the Empire, the aureus continued to be used and was the standard gold coin under Augustus.
Over the next few centuries, Ancient Roman coinage underwent a great debasement. Both the denarius and the aureus were debased by lowering the precious metals content. This caused runaway inflation.
In order to arrest this monetary decline, a new gold coin was introduced, the solidus.
This was first introduced by Diocletian in about 301AD, but only in small quantities. It was in 312AD that Constantine permanently replaced the aureus with the solidus.
Constantine’s solidus contained 4.55g of gold and equivalent to 275,000 denarii.
He was able to maintain the fixed weight of the solidus and avoid debasement and was therefore successful in bringing some stability to the Roman economy.
However, while effective in the short term, Constantine’s reforms were not able to prevent the economic decline of Rome in the long term.
The Roman empire fell in 476AD but the solidus survived as the dominant coin in the Byzantine empire.
Gold Coins in the Byzantine and Ottoman Empires
The fall of Rome in 476 refers to the fall of the Western Roman Empire.
The Eastern Roman Empire, centred on Constantinople survived. This Eastern Roman Empire is also known as the Byzantine empire.
They continued to use the gold solidus long after the fall of the West.
After Rome fell, Europe turned to feudalism and saw gold and silver outflows as the precious metals moved to the new centers of power in the east.
The Byzantines influenced developments in the Arab world, which was an emerging power.
Initially, the Ottoman Empire had used credit and promissory notes as money. Soon they adopted precious metal coinage, minting the gold dinar and the silver dirham.
Gold Coins in the Italian City States
Precious metals had all but disappeared in Europe after the fall of Rome.
But as trade developed between the city-states of Italy and the east, wealth and power started to shift back to Europe.
The first time gold coins re-emerged in Europe was in 1252 in the Republic of Florence with the introduction of the Florentine florin or fiorino d’oro.
Florence had become extremely wealthy and wanted a monetary standard that would provide more stability for savings and investment.
The florin quickly became a widely used coin in commercial transactions and soon became the dominant currency in Europe.
It was so successful that other Italian city states soon followed by minting their own equivalents.
The Venetians introduced the ducat, Genoa introduced the genovino.
Other European coins were also modelled on the Florin, such as the Hungarian forint and the Dutch guilder.
Spanish Gold Coins
Wealth and power shifted again with the declining influence of the Italian city states and the rise of Spain.
Spain had discovered enormous amounts of gold and silver in the new world and these precious metals flowed back into Europe.
Ferdinand and Isabella introduced the ducado (or Spanish ducat) as part of their famous 1497 monetary reform.
A subsequent reform in 1535-1537 by Charles I created the escudo. The Spanish also minted the doubloon which was worth two escudo.
Minting of the escudo continued until 1864.
British Gold Coins
Charles II introduced the gold guinea in 1663 after the English Civil War and they continued to be minted until 1814.
The guinea was originally 8.3g with a fineness of 91.34%. The name comes from the Guinea coast in West Africa, where the British obtained the gold.
A significant monetary reform in 1816 put Britain on a formal gold standard with the pound now defined as a weight in gold rather than silver.
The guinea was replaced by the gold sovereign, which became one of the most dominant gold coins in the world.
French Gold Coins
The écu d’or was a French gold coin minted from 1266 to 1640.
In 1640 the écu d’or was replaced by the Louis d’or, named after Louis XIII. It was modelled on the escudo and, like the Spanish, included a double Louis d’or.
The Louis d’or continued to be minted until 1792, when it was discontinued during the French Revolution.
After the Revolution, Napoleon reintroduced gold coinage with his 1803 monetary reform.
Coins known as Napoleons were struck in several denominations, however the 20 franc gold coin is the most famous.
Napoleon’s monetary reforms remained largely intact even after his downfall, right up until the abandonment of the gold standard during World War One.
Gold Coins in the United States
In 1792 the United States passed the Coinage Act, which defined the dollar as a weight in silver as well as establishing a bimetallic standard.
However, gold coins were not minted until 1795.
The first gold coins were the Eagle ($10), half eagle ($5) and quarter eagle ($2.50).
The double eagle ($20) began being minted in 1849 after the discovery of Californian gold.
Gold dollars were also minted in 1849, and three dollars from 1854. Both ceased production in 1889.
The United States ceased production of gold coins in 1933 as part of President Roosevelt’s monetary reforms.
Bullion Coins
Now that the world no longer operates on the gold standard and the price of precious metals freely floats in dollar terms, the metal value of gold coins far exceeds their face value.
Technically, now they have been restored as legal tender, however nobody uses them for that purpose.
They are used either as an investment vehicle or as a form of money that will preserve its purchasing power.
Government mints now produce investment grade gold coins for this market.
The South African Krugerrand was the first such modern bullion coin, minted in 1967.
Many other countries have followed such as Canada with the gold maple, China with the gold panda, the U.S with the gold eagle, the U.K with the gold sovereign and Australia with the gold kangaroo.
Conclusion
Gold coins have a long history and have been used as money for over 2500 years.
They were first used in Ancient Lydia before the practice spread all over the ancient world.
Wherever an empire was wealthy and powerful, they minted gold coins.
The Florin re-established gold coinage in Europe in 1252 and over the subsequent centuries every major power adopted some form of gold coinage.
When the United States emerged, they too recognised the value of gold.
Today precious metals are no longer used as day to day money, but people who know their history still hold gold coins in their portfolio as money that preserves its purchasing power.
Image Credits
Irene Solidus is in the public domain
