How are gold coins made? Who made the first gold coins? What is a karat?
Gold coins don’t magically appear out of nowhere. It takes time, energy, and precision to produce a coin made out of the world’s most admired precious metal.
The art of gold coin making stretches back to the Iron Age in the kingdom of Lydia (present day south western Turkey) where the very first coins were produced. Electrum, a gold and silver alloy discovered in the Pactolus River along the base of Mount Tmolus in Lydia, was the metal used to create these coins. In the fifth century B.C., Greek historian Herodotus wrote of the innovative Lydians and their fortunate location near the mountain that provided them with electrum.
“Lydia does not have many marvelous things to write about in comparison with other countries, except for the gold dust that is carried down from Mount Tmolus.” —Herodotus, The History
That gold dust may not have been pure, but Herodotus was right in calling the natural occurrence a “marvelous thing.” It is that alloy of gold and silver that provided the kingdom of Lydia with a legacy. It is the Lydians we have to thank for the invention of the coin itself and even the very basics of coin making.
Today, we have massive buildings that house different sectors of the U.S. Mint, and within those buildings is the machinery that produces millions of shiny, pristine coins. In the days of the Lydians, however, the process was a lot more crude and tedious. A die with an image carved into it was set in an anvil, and a blank coin was placed on top of the die. The coin maker would then strike the blank using a punch and hammer. The finished coin would depict an image on the obverse and a punch mark on the reverse. The oldest coin ever found, the 2,700 year-old 1/6 stater depicting the image of a lion’s head, was struck this way.
Gradually, this method evolved to the use of two coining dies with negative and positive forms of an image instead of just one. The Lydian coin maker would place a blank between the two dies, strike the upper die with a hammer, and then start all over on another coin. One by one, he did this, and one by one, the world’s first coins were born.
The concept of coin striking hasn’t changed, but the process has greatly improved since seventh century B.C. U.S. gold coins begin as 99.99% pure gold bars that are melted down with traces of silver and copper to strengthen it. Once the gold alloy reaches 2,000 degrees Fahrenheit, it is poured into a graphite chamber, and it emerges a golden ribbon three inches wide and half an inch thick. A refrigeration unit cools the gold by 1,500 degrees. Cut into 20 inch slabs, then pressed with 90 tons of pressure, the ribbon is sent through a stamping press and cut into round, coin-shaped blanks. Once the blanks are complete, they are sent to the U.S. Mint at West Point where they are counted by hand, weighed, and tested for purity. They are then placed, one at a time, between two dies in a machine that strikes them three times to render a detailed image on both obverse and reverse.
King Croesus of Lydia set the standard purity for their gold coins at 98%, which made for a very soft coin. The modern American Gold Eagle coin is 22 karats, which is equivalent to 91.67% pure gold. As explained before, during the heating process, silver and copper are mixed in with the gold bars to create a gold alloy that is more durable than pure gold. Before 1933, gold coins were usually 90.0% gold and 10% copper for even greater durability since gold coins were used as money then and, therefore, changed hands more often. That said, there are some 24kt (99.99% pure) gold coins minted today. Obviously, these coins aren’t as strong as 22kt gold coins, but durability is of little concern in the gold coin market today since investors buy them and keep them safe in plastic casings.
From the kingdom of Lydia to the vaults of West Point, gold coins have been the object of man’s desire for thousands of years. And for good reason! With a 2,700 year track record of high, intrinsic value, gold coins are undoubtedly one of the best investments anyone could make.