Silver Price in Pounds Sterling

The pound sterling (GPB) is the national currency of the United Kingdom. It dates back to the 8th century. The pound is the oldest currency still used today. It is divisible into 100 pence, or pennies.

The origins of the name pound sterling are not known, though it is believed to have originated from middle age silver coins that were called sterlings. 240 sterlings equaled a pound. The pound sterling began as the silver penny which began circulating in the 8th century. It weighed 22.5 troy grains of fine silver, or 1.5 grams. The silver penny was the currency most commonly used in Anglo-saxon regions.

Henry II created the Tealby penny in 1158. It was struck from .925 silver. The Tealby penny eventually morphed into the pound Sterling we are familiar with today. The lower purity of the silver used for minting the coins prevented them from wearing out too quickly. A gold penny circulated around this time as well with a value equal to 20 silver pence. However, quantities were limited and it was rarely used. The gold noble was introduced in 1344.

At the beginning of the fifteenth century the value of the penny was reduced to 15 grains of silver (or 0.97 grams). It was further reduced in 1464 by lowering its weight to 12 grains (or 0.78 grams).

Henry VIII and Edward VI were successful in further debasing of the currency. New silver coins were minted in 1544 with a purity of only 0.333 fine. The remaining 66% of the coin was made up of copper. The currency was changed again in 1552 with the introduction of a new sterling silver penny with a weight reduced to 8 grains (or 0.52 grams). This devaluation meant one pound sterling was equal to 60 shillings. This silver standard was named the sixty-shilling standard. Another devaluation in 1601 lowered the penny’s weight to 0.5 grams. This made it equal to 62 shillings. Therefore, the new silver standard was referred to as the 62-shilling standard.

A gold standard was briefly adopted by the introduction of the guinea. Britain issued a new coinage in 1663 in which one troy pound would equal 44.5 guineas, or 20 shillings. But the guinea’s value was extremely unstable and it ended up rising so high in value because of its gold content that it became difficult for British merchants to trade with foreign countries. Silver was sucked out of Britain for paying for imports and gold poured into England as payment for English exports.

British currency was minted with gold and silver all the way up to the establishment of the Bank of England in 1694. Following this the pound was issued as a paper currency backed by precious metals. The paper notes fluctuated freely against gold, adding an important safeguard against inflation. Gold and silver coins were also minted and were used alongside the paper bank notes. A gold standard was adopted in 1816 and the silver standard was devalued significantly, causing the coins to sink to a fraction of their former glory. The new standard changed the silver coin to 66 shillings which significantly reduced the silver so that the silver value of the coin was less than the actual denomination of the coin. The gold sovereign was introduced the next year. It served as a replacement for the guinea at par (20 shillings or 7.3 grams of gold). The sovereign also replaced the Irish pound in Northern Ireland at par with sterling. At the height of the British Empire the pound sterling was used in much of the world.

The beginning of World War I in 1914 had dire consequences for English currency. The gold standard was immediately abandoned so that England could finance the war with treasury notes. By the end of the war, Britain had been transformed from the most powerful economy in the world to a debtor nation. She briefly returned to the gold standard with parallel exchange rates (a rate unfavorable to the individual and another one for banks and government agencies). The gold standard was relinquished again in 1931 during the Great Depression and the pound sterling was immediately devalued by 25%. The pound was later pegged to the US dollar at £1=$4 in 1940 with the Breton Woods agreement. The pound was again devalued 30% in 1949. The pound continued losing value until it was converted to fiat money in 1971 with the cancellation of the Bretton Woods treaty.

The pound sterling has not yet fallen prey to the Euro. However, British politicians have made promises to join the monetary union eventually.

Silver prices in pounds sterling are around £21 per ounce.