Academy · Foundation

Bars, coins, and where the premium goes

Lesson 07 of 089 min readFree · no sign-in

Jewellery, coins and bars are three different products, and the difference between them is the size of the gap between what you pay and what the metal is worth. Jewellery carries the widest gap because you are buying craftsmanship. Bars carry the narrowest because you are buying almost nothing but metal. Coins sit between, and where exactly depends on their size and who struck them.

The premium is not hidden and it is not unreasonable. Somebody refined the metal, cast or struck it, assayed it, sealed it, insured it and shipped it. This lesson is about knowing which of those you are paying for, and how much.

The three spreads, roughly

Expressed as the percentage over the underlying metal value, all-in, at the point of purchase.

  • Jewellery. Widest by a distance. Lesson 05's worked example landed at 13.7% over the metal for a plain 10% making charge, and heavy handmade work runs well past that.
  • Coins. Middle. The premium depends far more on the size of the coin than on anything else, and on whether it is a plain bullion coin or one with collector interest.
  • Bars. Narrowest, and the gap shrinks as the bar gets bigger. A large bar is the cheapest legal way to own gold per gram.

The trade runs in the other direction too: a bar is the hardest of the three to sell in small pieces, and the least useful for anything but holding.

Why small units cost more per gram

This is the single most useful idea in the lesson, and it surprises people every time.

Refining, striking, assaying, packaging and handling cost roughly the same per piece whether that piece holds one gram or a hundred. Spread over one gram, that fixed cost is enormous. Spread over a hundred, it nearly disappears.

TYPICAL PREMIUM OVER METAL VALUE, BY UNIT SIZE 1 g COIN ≈ 12% 5 g COIN ≈ 8% 10 g COIN ≈ 6% 50 g BAR ≈ 4% 100 g BAR ≈ 3% 1 kg BAR ≈ 1.5% ILLUSTRATIVE — CONFIRM WITH THE DEALER'S OWN QUOTE
The shape is the point, not the exact numbers, which vary by dealer, brand and day. Ten one-gram coins and one ten-gram coin hold the same gold; they do not cost the same.

Ten separate one-gram coins can cost several per cent more than a single ten-gram coin holding identical metal. If the reason you want small units is divisibility — being able to sell a little at a time — that is a real benefit and it has a price. If you were buying small units because they felt affordable, you paid for a feeling.

What you are actually paying for

  • Refining. Getting the metal to 999 or 999.9 fineness, and proving it.
  • Fabrication. Casting a bar or striking a coin. Struck (minted) bars with a decorative finish cost more than plain cast bars of the same weight.
  • Assay and packaging. The sealed card with the serial number on it. Cheap to produce and disproportionately valuable at resale — which is why the next section matters.
  • Brand. A recognised refiner's mark sells more easily and for more than an unknown one. That is a genuine benefit, not just branding.
  • Distribution and dealer margin. Storage, insurance, transport and somebody's shop.
Do not open the packaging Modern small bars come in a tamper-evident assay card carrying the serial number and the refiner's certification. That card is part of the product. Break the seal and you have turned a certified bar into an anonymous piece of metal that the next buyer must assay themselves — and they will price that risk. Keep it sealed, keep the invoice, keep the two together.

Coins worth knowing about

  • Plain bullion coins and rounds. Priced on metal plus premium. Nothing more to them, which is the appeal.
  • Sovereign bullion coins — the Krugerrand, Maple Leaf, American Eagle, Britannia and the British Sovereign among them. Government-issued, universally recognised, and the easiest gold in the world to sell. Note that several are 22-karat: a Krugerrand contains one troy ounce of fine gold but weighs more than an ounce, because of the alloy. Buy on fine content, not gross weight.
  • Numismatic and commemorative coins. A different market entirely. The price includes rarity and condition, which can be worth a great deal or nothing at all depending on the buyer. If you want gold, buy bullion. If you want to collect coins, learn coins first — treating one as the other is how people lose money in both directions.
  • Jeweller-issued coins. Common in India, often 916 or 995, and typically carrying a making charge of a few per cent. Convenient, and easy to exchange at the shop that sold them.
Bank-sold coins: a one-way door Banks in India sell gold coins. As a rule they do not buy them back. You are buying from a seller with no obligation ever to be a buyer, which leaves your exit to jewellers and dealers — who will price it as ordinary metal, packaging or no packaging. The purchase premium is often higher than a dealer's too. Convenient, and rarely the cheapest way in.

Digital gold, plainly

Several Indian platforms let you buy fractional quantities of gold, held by a custodian on your behalf, redeemable for physical metal above a threshold. It is convenient, the units are tiny, and it removes the storage problem.

The thing to understand is the regulatory position. On 8 November 2025 SEBI stated that such schemes operate outside its regulatory purview, that these products are "not recognised as securities or regulated commodity derivatives under existing laws", and that "no investor protection mechanisms applicable in the securities market would cover investments in such unregulated digital gold or e-gold schemes."

That is not a statement that digital gold is a fraud, and it should not be read as one. It is a statement about where you stand if something goes wrong: the securities market's grievance machinery is not available to you, and your position rests on the platform's own contract and the custodian's arrangements. Read those, and understand who holds the metal and in whose name.

Weigh it against the alternatives on their own terms. Physical metal you hold has storage and insurance costs and no counterparty. Regulated instruments have a regulator and no metal in your hand. Digital gold sits between and, on SEBI's own account, currently has neither the regulator nor the metal in your hand.

SEBI wording quoted from its 8 November 2025 caution as reported by All India Radio's news service, read 24 August 2026. Regulatory positions change; check the current one.

Storage, which nobody costs in

Physical metal has to live somewhere. A bank locker has an annual fee and limited access hours, and what a bank owes you if the contents go missing is narrower than most people assume — read the locker agreement. Home storage means a safe and, ideally, insurance, and household policies frequently cap precious-metal cover at a low figure unless specifically declared.

None of this makes physical gold a bad holding. It just means the cost of owning it is not zero after the purchase, and a full comparison against any alternative has to include it.

What this lesson cannot tell you

It cannot tell you which form to hold. Jewellery that is worn and enjoyed is not a failed investment; a bar in a locker is not a superior one. They are answers to different purposes, and the premium is the price of the purpose.

What it can tell you is that the premium is knowable before you pay it, in every one of these products — which is more than can be said for most of what is sold alongside them.

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Educational content only. Not financial, investment or tax advice. Aurix does not buy, sell, store or broker metal, and does not quote executable prices.