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Is Buying Fractional Gold a Good Investment?

April 9th, 2020


Having precious metals in your portfolio is important, but we cannot all afford making our gold purchases in one ounce increments. Lets take a look at buying fractional gold as an investment to determine if it's worth it. An image of gold coins from the Royal Canadian Mint in various sizes. Currently the Royal Canadian Mint offers gold coins in 1 oz., 1/2 oz., 1/4 oz., 1/10 oz., 1/20 oz. and even 1 gram coins. The most important thing about fractional gold is the premium you pay over the spot price of the coin. Typically the lower the weight in troy ounces the higher the premium.

Formula to calculate premiums:

  1. Take the purchase price of the coin and divide it buy the decimal number of weight in troy ounces
  2. take the remainder from step 1 and subtract the current spot price of an ounce.
  3. take the remainder from step 2 and divide it by the current spot price
  4. 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:

  1. 924.67 divided by 0.5
  2. 1849.34 subtract 1697.40
  3. equals 0.0895
  4. which is 8.95% premium over spot for a half ounce gold coin.

I have visited a popular online shop to compare how much of a premium each coin comes with. I should note that out of the coins listed below, the 1/4 ounce, 1/10 ounce and 1 gram weights were sold out.

At the time of this article an ounce of gold is trading at $1697.40 USD

NOTE: The site used for the making of this article was goldstocklive.com. I am not affiliated with them. I chose to use them for this example because at the writing of this article most major online gold retailers are out of stock.

1 ounce Gold Maple Leaf:

  • 31.10 grams pure gold or 1.0 troy ounce
  • US retail price: 1802.35
  • premium: 6.1%

1/2 ounce Gold Maple Leaf:

  • 15.55 grams pure gold or .5 troy ounce
  • US retail price: 924.67
  • premium: 8.9%

1/4 ounce Gold Maple Leaf:

  • 7.77 grams pure gold or 0.249 troy ounce
  • US retail price: $480.33
  • premium: 13.6%

1/10 ounce Gold Maple Leaf:

  • 3.11 grams pure gold or 0.1 troy ounce
  • US retail price: 191.71
  • premium: 12.9%

1/20 ounce Gold Maple Leaf:

  • 1.55 grams pure gold or 0.049 troy ounce
  • US retail price: 126.84
  • premium: 52%

1 gram Gold Maple Leaf:

  • 1 gram pure gold or 0.0321 troy ounce
  • US retail price: 74.51
  • premium: 37.5%

What I found surprising is that a 1/10 ounce coin had a lower premium than a 1/4 ounce coin, which usually is not the case. Furthermore, a 1/20 ounce Canadian Gold Maple Leaf comes with an absolutely insane premium of over 50%. From an investment standpoint, it is always better to save your money and purchase ounces in whole.

You are paying double the premium or more for coins that are a quarter ounce or less. Remember if you walk into a local coin shop and try to sell your gold coins, you will likely get offered 1% over spot. You can obviously get a better price if you make the effort to sell privately through Kijiji or Craigslist, but time and effort must be factored in.

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