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Saturday, July 09, 2005

Gold Coin Prices

Are the gold coin prices you are being quoted by your gold coin dealer too expensive?

3 Factors that Effect the Gold Coin Price


1. The gold coin weight

You should expect gold coin prices for coins that weigh less than 1 ounce to be much higher than the current gold price as the coin weight decreases. The weight of the gold coin will have the biggest effect on the gold coin price you are paying. For example 1/10 ounce gold coins can cost as much as 50% above the current spot gold price. While 1 ounce gold coins generaly cost between 4 and 12% above the spot gold price.

2. The number of gold coins you are buying

There are often large discounts for buying more gold coins. If you are buying only 1 gold coin at a time you can expect to pay much much more than if you bought for example 10 gold coins at a time. Generally you need to buy at least 10 gold coins in order to enjoy a reasonable discount.

Due to the low margins which Gold Coin Dealers receive, it is common with large gold coin dealers to require you purchase a minimum of 10 coins at a time.

For example the margin above the current gold price charged by the Perth Mint in Australia on their one ounce 99.99% pure gold bullion coins is 6.5% if you buy only one coin, if you buy 10 or more coins its 4.5%.


3. The Spot Gold Price

How to calculate the gold price you are paying for a gold coin:

Always work out what the gold price per ounce you are paying is and compare it to the spot gold price. If you are paying more than 12% above the current gold price per ounce for a one ounce gold bullion coin then you are probably paying too much! Unless it is a rare gold coin. (This does not include the costs of postage and insurance.)

To calcultate the gold price per ounce you are paying for comparision to the current spot gold price use this table:

1/10 ounce gold coin : mulitply the gold coin price by 10
1/20 ounce gold coin : multiply the gold coin price by 5
1/4 ounce gold coin : multiply the gold coin price by 4
1/2 ounce gold coin : multiply the gold coin price by 2
1 ounce gold coin : the gold coin price equals the gold price
2 ounce gold coin : divide the gold coin price by 2


Example 1. How to calcultate the gold price per ounce you are paying for a gold coin

If a 1/2 ounce gold coin costs $300US. Mulitple the gold coin price ($300) by 2 = $600 per ounce. In this example you would be paying the equivilant of $600US per ounce.

Example 2. How to calculate the percentage above the spot gold price you are paying for a gold coin.

Pecentage above spot gold price = ((Gold Coin Price per Ounce(Calculated in Example 1.) divided by the price of gold per ounce) - 1.

e.g. If we have a current gold price of $440 per ounce and we have calculated in example 2 above that we are paying $600 per ounce then we have:

Percentage above spot gold price = ($600/$440)-1
= 1.36 - 1
= 0.36
= 36%
In this example you are paying 36% above the current gold price.