Standard features:
- Bought and sold at prices that are not fixed but based on the Gold market price. This enables the coins to be traded by dealers and investors as Gold investment products at prices that reflects the international Gold price.
- Mass-produced in large quantities. This normally ensures that the premiums at which they are traded above the value of their fine Gold content are relatively stable.
- Legal tender coins in their country of issue. Like all coins, their technical specifications are guaranteed by national Acts and regulations.
- Nominal or no face values. Whether issued with or without monetary face values, their market value is directly related to the value of their fine Gold content.
Most Gold bullion coins, issued around the world, are denominated in troy ounces, or parts of an ounce.
The Krugerrand (South Africa), the first ounce-denominated Gold bullion coin, was launched in mass-produced quantities in 1970. The Krugerrand and the US Eagle coin both have copper added as a hardening agent, making these coins an alloy.
The most popular coins for our clients are the 1oz Canadian Maple, 1oz Australian Kangaroo and the 1oz Austrian Philharmonic. These coins are all .9999 pure Gold.
A quick summary of the factors that affect the premium and spread on bullion coins.
- Premium Components:
- Refining and Manufacturing: The cost of converting raw Gold into coins, including minting and quality control.
- Delivery: Transporting the coins to the dealer, which may include shipping, insurance, and handling costs.
- Dealer Overheads: Operating expenses such as storage, security, labour, and marketing.
- Market Availability:
- A scarce coin or one in high demand may carry a higher premium due to limited availability or rarity, even if the Gold content is standard.
- Volatility and Spread:
- During periods of high price volatility, dealers may widen their spreads (the difference between buy and sell prices) to compensate for the increased risk in fluctuating Gold prices.
- Taxes and Duties:
- Local duties, sales taxes, or VAT (where applicable) can be factored into the price. Some dealers absorb this into their pricing, while others itemise it separately.
- International Transfers:
- If transferring bullion across borders, customs restrictions, import taxes, or other regulations may come into play, potentially complicating the transfer or increasing the cost.
It’s important for investors to be aware of these variables when purchasing bullion coins, especially in times of market uncertainty.
