Why do Smaller Bars, Coins, and Rounds Cost so Much?
A premium is the price you pay over spot for a precious metal product.
The price of a gold coin is determined by several key factors, the chief of which is the gold spot price. The other contributing element is the premium, which encompasses relative scarcity, historic significance, brand, and manufacturing costs.
What am I Paying for When I Pay for a Premium on Gold?
Anything you purchase has a premium attached to it.
Restaurants and grocery stores add a premium to the price of food. Designers add it to the price of clothes and shoes in the MSRP.
And it is factored into any precious metals purchase you make.
Consider the labor and machinery required to produce a gold coin.
The costs of mining, refining, minting, assaying, transporting, and storing are factored into the premium. If those are spread somewhat evenly across all products a mint produces, then smaller items would bear the bulk of the burden.
The same, or at least a very similar level of effort is required to produce fractional gold coins as it is to produce larger gold coins. This added cost would be built into a premium.
What are Other Reasons One Gold Coin Would Cost More Than a Larger Coin?
The relative scarcity of a coin can greatly contributes to its value. If there were only a few Gold Half Eagles available from 1899, they would be more expensive than a larger gold coin like a contemporary 1 oz Gold American Eagle. In this case, the scarcity of the 1899 Half Eagle would contribute to its higher price as much as its historic value would.
Additionally, the condition of the coin can also impact its value. A well-preserved gold coin may be worth more than a similar coin that is in poor condition.
Furthermore, the age of the coin can also play a role in determining its value. Some ancient coins, even if they are small, may be highly sought after by collectors and can command soaring prices.
The value of a gold coin is influenced by a variety of factors beyond its weight, including rarity, historical significance, condition, and age.
