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Face Value and Real Value of Gold Coins

Face Value and Real Value of Gold Coins

by admin on July 30, 2012

One decision you will have to make when buying Gold coins is choosing their denomination or face value. The face value is usually different from a coin’s numismatic or precious metal value and determines the coins gold content and premium value.

Using the gold eagle coin as an example. At the present time a 50 dollar gold coin will have a gold content of 1 oz and cost over $1200, a 25 dollar gold coin contains half an ounce and costs over $600, the 10 dollar gold coin one quarter and a 5 dollar coin contains one tenth of an ounce of Gold.

Here is a table showing the face value and gold content of various American Eagle coins:
SizeFace Value (USD)Diameter (mm)Weight (Grams)FineGold Content (Grams)Gold Content (Troy Ounces)
One Once5032.734.0500.91731.1041.000

Here is a graph showing the current and historic value of gold:

The value of gold coins are determined by the content of gold. However there are other factors to consider.

Higher Premium on Smaller Sized Lower Denomination Gold Coins
A ‘coin premium’ is the additional cost of a bullion coin above and beyond the market value of the precious metal commodity it contains. The premium cost is to cover manufacturing, distribution, and administration costs incurred by the mint or refiner in making the coin, plus a “mark-up” representing the cost of sale and the profit for the wholesaler selling the coin to a retail dealer.

The fractional sized gold coins (less then 1 oz gold) have higher premiums with the smallest sizes having the highest premiums. This is because the smaller fractional coins have never been as popular as the full one ounce gold coins. Also most bullion houses do not want the bother of handling small quantities of low value coins.

Using the Gold Eagle bullion coin as an example a $50 dollar gold coin (1 oz of Gold) will have a premium of just over 10% where as a $5 dollar gold coin (Tenth ounce of Gold) may have a premium of over 30%.

The current value of gold is $1137 per ounce therefore a $50 dollar gold coin with a premium of 12% would make it $1273. However If the coin is highly sought after by collectors or very rare it could be worth much more.

If you choose to purchase the lower face value coins you will have to pay a higher premium. Also it is more difficult to find better details on smaller coins. However there is less risk purchasing a lower value coin should the coin turn out not to be genuine.

Face Value of a Coin Provides Recession Protection
Owning Gold dollar coins provides recession protection simply by the virtue of being coins. Since every coin has a face value if you owned a one-ounce coin with a face value of 50 dollars you can still use the coin for its face value of 50 dollars in the unlikely event that Gold plummeted to less then 50 dollars per ounce. Conversely if gold was to skyrocket in value you can also use the coins value in gold.

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