# How To Calculate Premiums on Your Gold and Silver Coins

April 11th, 2020

To understand how to calculate the premium of your precious metals, we first have to understand several terms.

**Spot**: The current price for one troy ounce. This is referred to as the spot price.

**Troy Ounce**: 31.1 grams make a troy ounce.

** Coins Weight**: The weight of your particular coin in troy ounces, decimal form. For example, 1 troy ounce is 1.0, a half ounce coin is 0.5, and a quarter ounce is 0.25, etc.

**Premium**:
The dollar amount you paid for your coin over the spot value of the coin, represented in a percentage.

## Here is the formula in an image:

** Formula to calculate premiums: **

- Take the purchase price of the coin and divide it by the decimal number of weight in troy ounces
- take the remainder from step 1 and subtract the current spot price of an ounce.
- take the remainder from step 2 and divide it by the current spot price
- convert the decimal number from step 3 to a percent.

** An example using a half ounce gold coin priced at $924.67 with a spot price of $1697.40: **

- 924.67 divided by 0.5
- 1849.34 subtract 1697.40
- equals 0.0895
- which is 8.95% premium over spot for a half ounce gold coin.

## What About Calculating Premium Price for Non-Pure Coins?

Let's take the French 20 Franc Rooster, it has a gross weight of 6.45 grams; with a purity of 90%. It costed me $338 USD.

**First, let's calculate the gold content**:

6.45 divided by 31.1 = 0.207 troy ounces

with a purity of 90%; 0.207 x 0.9 = 0.187 ounces of pure gold or 5.8 grams of pure gold.

Now let's continue with the above formula:

- 338 divided by 0.187 = 1807.48
- 1807.48 - 1697(spot) = 110
- 110 divided by 1697(spot) = 0.064
- which is 6.4% premium over spot for 5.8 grams of pure gold.

The above purchase was fair. Anything under 7.5% premium for retail gold is reasonable.