GOLD chart by TradingView
Why is the gold price per ounce for American Gold Eagle Coins and Gold Buffalo Rounds so different? It's perhaps the most commonly asked question of bullion dealers from first-time buyers.
The answer must inevitably begin with the definitions of "spot price" and "premium." The gold price quoted on standard price charts is the "over-the-counter" spot price for a one thousand troy ounce Gold bar on the commodities exchange. While these bars are available for mass market investors, they are far less popular than one-ounce coins.
There are many factors which contribute to the "premium" for Gold bullion. The premium is the markup above the spot price charged by mints and dealers for the cost of minting, sourcing, storing, and shipping Gold bullion to customers.
As a general rule, the larger the denomination of Gold, the lower the premium per ounce. For example, the premiums per ounce for a one-hundred-ounce Gold bar are typically much smaller than a one ounce Gold coin or round, since the minting cost is much smaller.
COMPARE THE PRICE OF GOLD PER OUNCE
But this still doesn't answer the question of why an American Gold Eagle Coin carries a premium of $2.50+ and a generic Gold Buffalo Round can be sourced for a premium of around $1. The difference is a question of legal tender. In fact, the term "coin" is used exclusively in reference to legal tender bullion coins issued from a government mint. A "round" is a non-legal tender one ounce Gold medallion issued from a private mint. The Gold weight and content remain identical, but the notional value amongst investors is markedly different.
THE DIFFERENCE IN GOLD PRICES
Experts offer mixed opinions regarding the better investment between coins or rounds. Nevertheless, the government incentivizes those who favor federal coinage by allowing these coins to be used in IRAs and other retirement accounts.
On GoldPrice.com, we analyze and compare gold prices among a large pool of dealers for all types of Gold products. The differences in gold prices amongst these dealers is the result of many variables, including shipping and insurance charges, brokerage fees, and other factors.
It is our aim to navigate through the murky waters of fees, shipping times, and volume-based pricing to help you, the investor, get the best gold price for coins and bars and the most bang for your buck!
We will soon be able to offer out gold price per ounce charts as follows:
Gold price per ounce in USD
Gold price per ounce in EUR
Gold price per ounce in GBP
You can always check our gold price per ounce
Gold price: Supply and Demand -
Gold has been a means of trade long before the Roman Empire and will continue to be a form of money till the day we find an item that can match its value and use. When it comes to Supply and Demand in the Gold markets we must look at the broader picture of things. We will have to go far beyond our thinking of just the people around us purchasing and selling their jewelry at your local jeweler. We have to look at the entire world far beyond the boarder of the U.S. There are people purchasing jewelry in Asia, India and every other country. Not only does Gold have an aesthetic value but Gold also has a commercial use. Gold is used in the circuitry of everything from cell phones to satellites that hoover the earth. Once we look outside of the consumption of Gold then we must look at the metal in another light. Gold is a store of wealth for many people. The great thing about Gold is that it is a natural earth metal so humans cannot simply create it in a lab. With that in mind we look know that miners make up the supply side and consumers will make up the buyers side. If production increases and consumers want less Gold, then prices will fall until consumer feel Gold is at a good value. Conversely if production falls and consumers demand remain the same price of Gold will increase. Supplying Gold When we talk about the supply side of Gold we have to look at a few components. There are a few "Suppliers" that make up the supply side of the market: Miners, Government Sales, Scrap Gold and a few other sources Demand in Gold Demand takes a form of its own and here we will take a look at some of the areas of consumption in Gold that help drive the price of Gold to different levels. One thing to keep in mind when it comes to Gold is that Demand = Supply. Whatever Gold is mined throughout the year is eventually used to calculate demand. You may be asking how that is possible and the answer is simple; the Gold must go somewhere. Gold can be sold to refineries, photograph companies or held as reserve which is considered a company's investing asset. The selling of Gold to multiple industries is the demand side of the Supply and Demand model. The price is dictated by the amount a particular industry is willing to pay to take control over the supply miners produce. There are 5 major industries that purchase Gold in high quantities: Jewelry, Industrial, Photography, Goldware and Coins, Metals. The amount of demand within each of these industries drives the need for Gold, higher which allows specific buyers to demand more Gold for products. For example imagine Gold is primarily being used in producing film from cameras in 1940 but as cell phones become more popular in 1990 they require more Gold to produce more cell phones. Now that cell phone demand is increasing; cell phone manufacturers must demand more Gold from the miners and are willing to pay more to get there hand on the Gold. Now the price of Gold must rise to match the demand. If prices were not raised cell phone manufactures could buy up all the Gold overnight and leave nothing for other industries. The demographics of Gold have changed from 2001 - 2010. As you can see that demand in some areas have increase dramatically over the decade while other have declined greatly. 232% increase in Coins and Metal (Gold Bars) 40% increase in Industrial use (Electronics) -66% Decline in Photography
Future Outlook – Gold prices
While Gold has steadily increased in its commercial use in electronics and the demand for electronics will continue to increase, there is a surprising increase in coinage. With the demand increasing heavily in Gold coins and metals there is bound to be price spike like we have never seen before. Why is that? Well instead of just a few private investors purchasing Gold as a store of wealth and a company purchasing it for their products there has been a vast influx in private purchase by average citizens. Gold is now an internationally purchasable commodity that can be bought through world-wide coin dealers, on the internet and even at your local coin shop. More importantly as investors and institutions lose faith in the currency of their nation we will see a huge demand spike in Gold bars and coins. These investors are willing to pay higher prices in order to protect their wealth. This demand for more Gold will cause prices to drive higher as to prevent a repeat of what the Hunt Brothers did back in the 80's. Not only do you have individual investors purchasing physical Gold but you have stock exchanges purchasing Gold as a part Futures contracts. These futures contracts allow an investor to "own" Gold without having to store the Gold themselves. They can demand their Gold at any time by exercising their contracts. The futures market is a lot larger than you can imagine and prices will move based on the demand. Remember all this price action has occurred without the public really purchasing Gold as a last resort in the event there is turmoil in their currency. Once the people of the world wake up and see that their purchasing power has greatly decreased there will run gold prices up the same way they did housing in 2003-2008 and before that the tech bubble of 1990-2000. Hold on tight because the demand in the Gold market will exceed anything that happened in the real-estate and in the tech markets. The real-estate bubble was a United States problem when it occurred and so was the Technology bubble. The currency problem extends far beyond the U.S soil and now the entire world will be demanding Gold; which in turn will drive prices to level never seen.