King Ibn Saud’s 35,000 British sovereign gold coins
When Saudi Arabia’s King Ibn Saud sold oil concessions to the major oil companies in 1933, he demanded a payment of 35,000 British sovereigns — a gold coin many of our clientele hold in their own sovereign wealth funds today. The good king understood the difference between the value of gold and the value of a paper promise. At the time, British sovereigns were valued at $8.24 each, or $288,365 for the 35,000 coin lot. The price of oil in 1933 was about 85¢ a barrel. A British sovereign, as a result, could buy about ten barrels of oil.
In August, 2018 those same sovereigns would bring a little less than $10 million at melt value ($282.50 each/$1200 per ounce gold price) and a barrel of oil is selling for about $75. Thus, a British sovereign today can buy less than four barrels of oil — a statistic that gives you an inkling of gold’s current under-valuation. For gold to buy the same amount of oil now that it did in 1933, the metal would have to go to $3186 per ounce.
“The only remaining problem,” writes Daniel Yergin in “The Prize” about the famous gold for oil transaction, “was how to obtain that much gold. Because America had just gone off the gold standard, Socal’s efforts to dispatch the gold directly from the United States were turned down by Assistant Secretary of the Treasury Dean Acheson. But finally, the Guaranty Trust’s London office, acting on behalf of Socal, obtained thirty-five thousand sovereigns from the Royal Mint, and they were transported on a ship belonging to the P&O line. Care had been taken that all the coins bore the likeness of a male English monarch, and not Queen Victoria, which it was feared, would have devalued them in the male-dominated society of Saudi Arabia.”
Had Ibn Saud known that he was sitting on a pool of oil so massive that it would make Saudi Arabia one of the most important pieces of real estate in the world, he might have asked for more. To this day, Persian Gulf royalty become squeamish whenever it appears the value of its oil is being diminished by the over-production of paper currency, hence a continued, well-known attachment to the yellow metal.
Old British sovereigns, like the ones in the photo above, are a preferred acquisition among safe-haven investors. We now have a quality selection of George V sovereigns available at attractive bullion-related prices.
Prized by gold investors in 1933 and still prized today!
You can order direct at our Online Order Desk or call 1-800-869-5115, X100.