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.
Formula to calculate premiums:
An example using a half ounce gold coin priced at $924.67 with a spot price of $1697.40:
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:
The above purchase was fair. Anything under 7.5% premium for retail gold is reasonable.