The Simplest Way to Compare Prices of Gold
On most of our gold bullion pages we give a table showing the "premium" for various coins in different quantities. We believe this is often the quickest, easiest, and most meaningful way to compare the prices of different gold coins.

What Do We Mean by "Premium"
Although we thought our meaning was clear, we get many people asking what we mean by "premium". Simply it is the amount over and above the value of the intrinsic gold content, expressed as a percentage, so that if gold were £200 per ounce, a 5% premium on Krugerrands would mean a price of £210. It would also be possible to state this as a premium of £10, because a premium can be an actual amount as opposed to expressing it as a percentage, but in our experience, expressing premium as a percentage is the more useful method.

Standard Advice - Buy the Cheapest
Our standard advice about which gold coin to buy is to go for the lowest premium within reason. Instead of comparing actual prices, it is better to compare premiums. We will give a simple example:-

Compare Prices or Compare premiums?
At a gold price of £200 per ounce, could you tell whether a sovereign was a better buy than a Krugerrand if the price of the sovereign was £49? It's quite difficult isn't it? What about a French 20 Franc priced at £40?
If you look at the percentage premium over the gold content, it is quite easy to compare, and this is why our pages contain references to "premium". To answer the questions we just posed, here is a table showing the answers, all calculated assuming a spot gold price of £200:-

Example

Coin	Fine Gold Content	Intrinsic Gold Value	Price	Premium
Krugerrand	1.00	£200	£210	5.00
Sovereign	0.2353544	£47.07	£49	4.10
20 Francs	0.186681	£37.34	£40	7.12

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Proof and Commemorative Coins Carry Higher Premiums - Usually...
For obvious reasons, specially produced proof and commemorative coins and sets tend to command higher premiums than mass produced bullion coins. When they are first released, for example, the mint's production costs are higher, and its selling prices need to be higher also. If the resulting coins are more desirable for whatever reason, then they will tend to retain a higher premium than bullion coins in the long term, even though their initial premium may decline.

...But Not Always...

...Proof Bargains
It does not always follow that proofs are always at a higher premium than bullion coins. Some proof and commemorative issues get "forgotten". Perhaps because they are over-marketed when new, they become overbought, and there can be times when there is a market glut of one or more special issues. These can sometimes for a brief period of time, be bought for little more than bullion coins. We sometimes find it difficult to understand why, but we think that this can be due to investor laziness or blindness. Somebody perhaps reads in an investment guide that Krugerrands are the best buy, which is reasonable general advice, and will then ignore hard facts and figures, and reject or ignore other gold coins which may be offered at a lower premium because they are afraid to rely on their on intelligence rather than received wisdom. In other cases, it may be that an investor is too lazy to make calculations about the intrinsic gold content of a sovereign or some other coin, and therefore sticks to "one ounce" bullion coins instead.
In December 2005, we added a page about premiums on proof coins being low after substantial bullion price rises, leaving many collectable coins at bargain prices, in our opinion.