Kathy M. asks: I have a patron wondering “why the Krugerrand costs more than ‘normal’ gold pieces. I have not found this to be true when I research, but is there any reason why he would think this?
I’m not sure what you mean by “normal” but most coins have some buyer’s premium in relation to the metal content. Most bullion coins, which are coins whose chief value lies in their gold content, trade from 3% to as much as 20% over the world price of gold. This premium reflects the cost of minting, distribution and profit to the dealer. Generally, the smaller the gold unit the higher the percentage premium. This is based on the fact that the cost of minting a 1/10th ounce coin is about the same as minting a one ounce coin.
There often is some differential in the premiums when a particular coin is in much higher demand than its competitors. For instance, the U.S. Gold Eagle series, due to its huge popularity (particularly among Americans), currently has higher premiums than its counterparts in the Krugerrand or Canadian Maple Leaf series.
Also, remember that the price of gold is an indicator of the current market for 100 troy ounce contracts, not the price of a single Krugerrand. Note that under most circumstances, some of the premium is returned when you sell the coin back to the dealer.
