The premium of a gold coin is the difference between its negotiated sale price, and the actual value in weight of gold it contains, also called “spot” value.
Depending on its rarity and supply and demand, a coin may benefit from a premium that will allow its owner, at the time of resale, to benefit from a capital gain compared to the spot value. The premium does not or very little concern gold bars, the price of which is mainly defined by their weight in pure gold.
What are the criteria for the premium on bullion gold coins?
It is necessary to differentiate between the criteria for defining a gold coin as investment gold and the factors that influence the premium of a coin.
To benefit from the resale taxes applicable on investment gold, the coins must meet a certain number of criteria:
- They must have been minted after 1800;
- their gold purity must be greater than or equal to 900/100;
- they must be or have been legal tender in their country of origin;
- the premium should not exceed 80% of the spot value of the coin.
The last point is the one that will interest us the most: highly prized coins are not considered investment gold if their aggregate value exceeds their price per weight in gold. In this case, it is the fixed tax on precious objects that applies at the time of resale.
Two main factors affect the premium amount of an exchangeable coin :
- Scarcity, depending on supply and demand;
- The general condition of the piece: conservation, scratches, traces of wear or fingers…;
- Pieces are classified according to their quality, from BE (Belle Epreuve, the optimal level) to M 1-2 (Mediocre).
Fund premium and premium differential
The background premium is the average premium of a coin outside of times of global economic or financial crises. A low premium means that the price of the coin is close to the value of its weight in gold. The premium differential refers to the difference between the background premium and the highest premium observed on a coin. For example, in normal times the premium of a 20 Franc Napoleon coin is low or zero. However, during the economic crisis of 2008, his premium rose sharply, and the premium differential reached around 45%.
Particularly popular, Napoleons are a good example of low-premium coins to invest in. To increase your chances of benefiting from a resale premium, favor the purchase of parts with a low background premium and a high premium differential.
Which parts are affected by the bounty?
Very popular with investors, Napoleons are a good investment to benefit from a premium. Among them are pieces such as the Napoleon 1st, the Napoleon III, the Marianne Coq, the Louis Philippe, and even the Bonaparte. Some of them, like the Louis Philippe and the Bonaparte, have high premiums and will be hard to find at the spot price. On the other hand, Napoleon III and the Marianne Coq are ideal for investment: their value tends to increase in times of financial crisis, and stagnate when the financial markets are doing well. It is therefore easy to buy it at the spot price and then resell it at a premium.
Napoleon coins, depending on their date of minting and their type, can be potentially premium: for example, the Napoleon III laureate head has a higher premium than the Napoleon III bare head, for historical reasons.