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One Gold Coin Bonus

The premium of a gold coin is an integral part of numismatics. Coins with the same amount of gold can have different values. Its calculation is of great importance to collectors, as well as to informed investors and traders. We'll explain in this article.

The Gold Coin Bonus

This is the difference, in euros or as a percentage, between the negotiated price of a gold coin and the value of the fine gold contained in it.
Let's take an example:
a 20 Franc Napoleon gold coin is quoted at 255.40 euros, higher than the value of the gold contained is 247 euros.

Negative premiums are possible, but rare. In this case, the coin's negotiated price is lower than the value of the metal it contains.

Factors linked to the Gold Premium

The premium of a gold coin, and therefore its value, is linked to several factors.

Condition: logically, a quality piece has a much greater chance of being awarded its full premium. This will depend on the presence or absence of scratches, wear or finger marks, for example.
Speculation: the law of supply and demand. If more coins are bought than sold, the price will rise, and vice versa.
Geographical location: gold coins are not sought after in the same way all over the world. Each country has its own collectors and specific demands for gold coins. In the United States, for example, Gold Dollar coins are highly sought-after, while Napoleons are less so.
The collection: some pieces are rarer than others. This may be because the print run is limited, or because the piece presents a singularity (typing error, re-strike, etc.).
Manufacture: the more difficult it is to manufacture, the higher the premium of the risk gold coin. Compare the higher premium of a 10 franc gold coin, which is smaller than a 20 franc coin.

Calculating the Part Premium

The premium is calculated as follows:
Premium (in %) = [(coin price - gold value)/gold value]/100

To find out the gold value, simply multiply the quantity of pure gold contained in the coin by the gold price.

Let's take an example with the 20 Francs Or Coq Marianne coin on 11/02/2020 at 13H15 :

The price of the coin on this date was 273.90 euros.
It contains 5.80 grams of pure gold.
The spot price for gold is 46.23 euros per gram of pure gold.
Its gold value is therefore 5.8 x 46.23 = 268.13 euros

We apply the following formula: [ (273.90 - 268.13) / 268.13 ] x 100

The result of this calculation gives us the value of the premium, which is 2.15%.

Complementary Notions

In addition to this basic concept, there is the background premium, which corresponds to the average premium in normal times, i.e. excluding times of crisis.

Specialists also refer to the premium differential, which is the difference between the bottom premium and the highest observed. It's an indicator of leverage when buying a gold coin.