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This blog discusses The Perth Mint's bullion coins and bars, providing information about our latest designs, mintages, sales volumes and sell outs. On a broader front, we share relevant research and opinions for anyone interested in gold and silver bullion investing.

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Bullion pricing – how it works

Topics [ gold prices buy silver bullion online buy gold bullion online ]

 

So, you’ve made the decision that it’s time to add gold and/or silver bullion to your investment portfolio. Now it’s time to understand how the price of your coins and bars is calculated.

Spot Price & Futures Price

There are two benchmarks for precious metals – spot prices and futures prices. These prices are determined by ‘over-the-counter’ markets and ‘futures exchanges’. We’ve explained more about both of these here

Even though they tend to be reported on TV and radio news, spot and futures prices are unavailable to retail buyers of gold and silver bullion coins and bars.

Retail price

When setting the price of bullion for retail investors, The Perth Mint takes into account these international benchmarks. Our calculations include a ‘premium’ over the metal price to cover the cost of fabrication of raw gold into coins and bars. To ensure we have a viable business, the Mint’s premium also includes a profit margin.

 

There are a couple of general rules worth knowing about premiums.

They are lower on bullion cast bars because the fabrication process is fairly straightforward. Bullion coins, which offer a number of important benefits including legal tender status, greater divisibility, rarity and detailed designs, are more complex to fabricate. As a result, the premium paid is slightly higher.

Notice, however, that premiums per ounce are usually lower on larger coins. You’ll also be able to discount the premium per ounce by taking advantage of volume breaks.

Live price

Taking their lead from international benchmarks, retail prices of gold and silver bullion fluctuate during the course of the day. To reflect this, our advertised prices are constantly updated.   

When placing an order for bullion on the Mint’s bullion website, you have one minute to lock-in the ‘live’ price of gold or silver before it is automatically revised – either up, down or no change.

When ordering by telephone, a customer service officer will confirm the price before completing a purchase on your behalf.     

Local currency

The price of gold and silver bullion is also directly affected by the relationship between the U.S. and Australian dollars.

This is because precious metals are U.S. dollar denominated commodities. But for the convenience of local customers, The Perth Mint prices its bullion in Australian dollars.

So if the Australian dollar strengthens relative to the U.S. dollar, the local price of bullion will fall. Conversely, if the value of the Australian dollar weakens relative to the U.S. dollar, the local price of bullion will rise.

The Australian dollar last hit parity with the U.S. dollar in 2013, negating this effect. More recently, the Aussie’s value has declined somewhat, explaining why the price of gold in Australian dollars has remained strong.

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