Have you ever noticed that two gold coins containing the same amount of gold could be sold at a different price ? This is explained by the premium, an important criteria when looking to invest in gold by buying coins. Explanation in this article.

 

The Krugerrand, Maple Leaf, $ 50 Eagle: these three parts contain the same amount of fine gold (1 oz). Yet their prices differ. Why ?

Le Krugerrand, la Maple Leaf, la 50 dollars Eagle : ces 3 pièces contiennent la même quantité d’or fin (1 oz). Pourtant leurs prix de vente diffère.  Pourquoi ?

 

What is the gold coin’s premium ?

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The premium of a gold coin is simply the difference between the price of a gold coin and the value of the metal it contains.

It is therefore the amount added over the value of gold that contains the coin. A piece of an ounce of gold can therefore cost – for various reasons – more expensive than other room also containing an ounce of gold.

 

Example 1 :

 

 

A Maple Leaf contains one ounce of fine gold (31,103g). If the gold price is at 1060 $ and the coin is sold at 1110,5 $, so its premium is :

1110,50 – 1060 = 50,5 $ so a 5% premium.

 

A 50 dollars Eagle contains also one ounce of pure gold. But if it’s sold at 1100 $, so its premium is less important !

1100 – 1060 = 40 $ so a 3,96 % premium.

 

Example 2 :

A french gold 20 Francs Napoleon contains 5,81g of pure gold. On calcule ainsi la valeur en or que la pièce contient de la façon suivante :

• Calculation of the gold price per gram = gold spot price per kilo / 1000

so 34 130 $ / 1000 = 34,13 $ per grams of fine gold. 

• 34,13 $ x 5,81g = 198,29 $

If the sell price of the french gold 20 francs napoleon is at 205,03 $, so the premium of the coin is :

 

205,03 – 198,29 = 6,74 € so a 3,4 % premium.