Understand the real value of a gold coin and calculate its price is important before any selling decision. In this article, we present the different steps to calculate the value of your gold coins.
The price of a gold coin depends mostly on its gold content. Therefore you will need 3 variables to calculate its intrinsic value:
- Its weight
- Its purity
- The gold spot price
Let’s take the example of a gold sovereign.
1. Calculate the fine gold content of the gold coin.
In the case of the sovereign, we have:
- Weight on the scale (gross weight) = 7.99 grams
- Purity = 91.67 %
Therefore a british gold sovereign contains:
7.99 x 0.9167 = 7.32 grams of fine gold
2. Calculate the gold spot price per gram
Here, we will use the british pound (GBP) to calculate the price of the gold coin. The gold spot price is quoted in troy ounce (oz), a unit of mass used in precious metals and gemstones. A troy ounce is equivalent to 31.1035 grams.
So if today, the gold price is trading at 930 £ / oz, to obtain the gold price per gram, you will do:
gold price per g = 930£ / 31.1035 = 29.90 £.
3. Calculate the intrinsic value of your gold coin
In order to do that, you then have to multiply the gold price per grams by the fine gold weight of the coin (calculated in Step 1).
So for our gold sovereign, it will be:
29.90 x 7.32 = 218.87 £
This is what your gold sovereign coin is worth right now, at the current gold price. However, bear in mind that if you resell a gold coin to a bullion dealer such as Gerrards, you will be charged a reselling commission, around 2 to 3%.
4. Additional Step: look if your coin has a numismatic value.
Some gold coins with specific dates are really rare, because they have been minted in small quantities, melted down in the past to make new gold coins, or lost during ships travels. Therefore, this scarcity of some specific gold coins creates what we call the numismatic value.
The numismatic value has nothing to do with the gold price as a precious metals. Here the gold coin is considered as a collectible coin, rather than a bullion coin.
It is really rare to have a really rare gold coins with a real numismatic value. And it is extremely difficult to assess the numismatic value of a gold coin.
If you are interested in Numismatic, you can look at some numismatic books that show the number of coin minted as well as price benchmarks of the collectible market for those specific coins in a certain country. Spink offer a really good catalog for british coin collectors.
Just like you wouldn’t think to sell your car without knowing how much you can ask for it, so too should you carefully research the value of a coin collection before exchanging it for cash value. Before you sell, look into the proper worth of your gold coins.