Posted: 8 November 2022
Category: Company News
Don’t sell gold coins by auction
Gold coins should not be sold in an auction because you will not achieve their true value, after deduction of the auctioneer’s commission.
Simply put gold coins like Sovereigns, Krugerrands, Brittanias and many European, American and South American gold coins are only worth their bullion price, which fluctuates on a daily basis.
Here is a hypothetical example to explain mathematically what we mean. Gold coin A has a bullion value of £1000. If entered into an auction the buyer has to pay, on top of the hammer price, something called a “Buyer’s Premium”. This can range, with VAT on top, from 20% to 30% depending on the auction room. So if coin A is only worth £1000 buyers can’t bid that amount because they have to allow for the buyer’s premium. If we assume the buyer’s premium is, on average, 25% they can only bid £800 because the buyer’s premium will total £200.
So your £1000 coin A only raises £800 in the auction but it gets worse because the auctioneer will also deduct their seller’s commission. This is usually 15%, plus vat, photography and insurance, which totals about 20%. So £800 reduces down to £640.
So in this example your £1000 gold coin, if sold by auction, will only raise £640 or to put it another way only 64% of its true value.
At Nicholas Muston we sell hundreds of thousands of pounds worth of gold coins and jewellery on behalf of our clients every year and only charge 7.5% commission. We are paid the top trade rate by the bullion dealers, which is about 10% more than the price offered to a member of the general public, so you are still better off using us to broker the transaction on your behalf.
So, in this example we will return you £925 for gold coin A, as opposed to the £640 if sold by auction, a difference of £285.
This is the general rule of thumb for bullion gold coins but as we are also coin valuation specialists we will assess your collection and if there are any rarities we will separate them out and either sell them, on your behalf, to a collector or dealer or through a specialist firm of auctioneers.
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