Concerned that its gold reserves would disappear with the outbreak of World War I, Canada withdrew nearly 250,000 newly minted gold coins from circulation in 1914.
The currency, minted between 1912 and 1914, represented the first gold coins ever minted by Ottawa. The coins would spend the next century in cloth bags inside a Bank of Canada vault.
Some 30,000 of the $5 and $10 pieces were offered for sale to collectors late last year, but the remainder will be melted down, part of the Conservative government’s efforts to help balance the country’s books.
The $10 coins sold for either $1,000 or $1,750 each, depending on whether they were classified as “premium” quality or not, according to the Globe and Mail.
Final figures connected with the sale, which just closed, won’t be known until spring, but a mint official confirmed that nearly all coins were sold.
The publication, in fact, described the sale as a creating a bit of gold rush among Canadian collectors.
“It’s the most popular topic for 2013, for sure,” said Michael Wang, a Vancouver coin collector who bought individual coins and also paid $12,000 for a six-coin set. “My wife was about to kill me when I told her I bought this thing.
“Just to hold a piece of history in Canada, that’s really the important part,” Wang added. “This is Yukon gold or Ontario gold from back in the 1910s. It’s not like recycled gold that people are getting now from jewellery and other things that are being melted and refined. This is the actual, physical gold that came out of the ground.”
During Canada’s first 45 years as a dominion of Great Britain it had no gold coinage of its own, although various foreign gold coins were used, including British sovereigns and several US denominations.
Late in the reign of England’s Edward VII the government decided Canada should have its own gold coinage, and the initial steps for the production of $2-1/2, $5, $10 and $20 pieces were taken, according to the website coinsandcanada.com.
George V, however, was on the British throne by 1912 when the first Canadian gold coins were actually produced for circulation. From 1912 to 1914, coins were produced and issued, but only in the $5 and $10 denominations, the site added.
The sale is unlikely to make a big dent in Ottawa’s bottom line, but it is among a string of recent moves by the federal government to unload public assets as it moves to balance the books by 2015, the Globe and Mail reported.
“Ottawa is in the process of selling off a variety of items, from foreign embassies to port lands,” according to the publication. “But the government’s decision to cash in on high gold prices by selling and melting the coins upset some coin collectors. Those who already had the coins in their collection did not appreciate the flood of new coins into the market, which could push down the value.”
They should have melted them back in at the beginning of World War I, said Frank Rossi, owner of Universal Coins in Ottawa.
Collectors who already had these coins were not pleased with the sale because it drove down the value of their collections, Rossi said.
“A market had been established,” he added. “Then all of a sudden all of these coins start appearing. … This has diluted the market. I don’t even think those coins that they did issue were in that great of a shape anyway. The coins were way overvalued. … They sold the sizzle, they didn’t sell the steak.”
Canadian currency was pegged to the price of gold from the pre-Confederation days in 1854 to 1914, reflecting a common international practice of the time. These were the first gold coins to feature a Canadian symbol: the Arms of the Dominion of Canada. The other side features King George V.
Canada briefly returned to the gold standard in 1926, but effectively abandoned it for good in 1929.
The fate of the 246,000 gold coins minted in the two-year window prior to World War I had long been a mystery among Canadian numismatists.
“We knew the Bank of Canada had scooped them up, but the exact information, how many were there, whether they still existed even was not known,” said Bret Evans, managing editor of Canadian Coin News. “The hobby has long been fueled by rumours of what were in the bank’s vaults.”