Gold Bullion Premiums

One of the most frequently asked questions from our precious metals customers is why there are differences in the premiums for the different types of precious metals. In the last issue I covered silver bullion premiums. In this issue I’ll talk about gold bullion premiums.

The most popular gold bullion coins we sell are Gold Eagles, Gold Buffalos and Canada Maple Leafs. We occasionally have customers for Krugerrands and bars.
Premiums vary because of varying wholesale costs and supply and demand.

Like the American Silver Eagles, Gold Eagles and Gold Buffalos are made by the U.S. Mint and sold through selected distributors around the country. The mint and the distributors mark up these products minimally before they reach our store. Usually just a few dollars over their cost. Currently, Gold Eagles sell for spot plus $79 and Gold Buffalos sell for spot plus $83. Gold Maple Leafs are not as popular as Eagles and Buffalos and also carry a smaller premium at spot plus $63 due to lower distribution costs. We do occasionally sell Krugerrands and Gold Bars which carry a premium of spot plus $75.

The re-sale premiums for the above gold coins vary according to their retail premiums so the buy sell spreads between them is usually nearly equal. For those who do not have the budget for 1 oz gold, purchasing smaller sizes of coins is a nice alternative. The Gold Eagles, Maple Leafs, and Krugerrands are available in 1/10th, 1/4th and 1/2 oz sizes. Besides being a good option for smaller budgets, it may be advantageous when the price of gold is quite high to be able to sell back gold in smaller quantities instead of 1 oz at a time.
Since the manufacturing costs for smaller coins are similar to the 1 oz coins, the premiums per ounce for the smaller coins are much higher.

The current premiums for fractional gold are as follows:

1/10 oz Eagles spot + 16%
1/10 oz Maple Leafs + 16%
1/10 oz Krugerrands spot + 15%
1/4 oz Eagles spot + 12%
1/4 oz Maple Leafs spot + 12%
1/4 oz Krugerrands spot + 11%
1/2 oz Eagles spot + 9%
1/2 oz Maple Leafs spot + 9%
1/2 oz Krugerrands spot + 8%

While you most likely would get a higher re-sale back on the smaller gold coins, it is still more cost effective to buy the 1 oz coins. Availability for fractional gold coins can be quite limited depending on which type it is.

The price of gold and silver is quite low right now and it seems it would be a very good time to make an investment. The experts at Christopher’s Rare Coins can answer any other questions you might have regarding precious metals investments and which options are best for you.

Chris Seuntjens,
Christopher’s Fine Jewelry and Rare Coins