Bullion Funder and Knox Nuggets
How is the price of a Knox Nugget calculated?
The short answer
Under the Bullion Funder terms, each Knox Nugget is priced at 1% of the current bullion price shown on Knox's website. That price moves with the gold price and the rand, changes daily and is updated twice a day, between 09:00 and 10:00 and between 12:00 and 13:00. Ask whether the website price includes a premium over the coin's gold content, and compare it with the cash-out price, which is a separate figure.
The building blocks of a gold-linked price
Gold is priced internationally in US dollars per troy ounce, so its rand price moves with both the metal price and the exchange rate. A Krugerrand usually sells for more than the value of its gold content because of minting, distribution and dealer costs, known as the premium. A unit that counts towards a Krugerrand may reflect some or all of these elements, depending on how the provider sets its price.
What depends on Knox policy
The terms fix the basis: 1% of the current bullion price on Knox's website (clause 2.12), updated twice daily (clause 6.3). The buying price and the cash-out price are different figures: cash-out is at the price on the cash-out section of the website, stated in the terms as the gold spot price plus 4.5%, less a 2% administration fee (clause 9.1). The website bullion price is based on the gold spot price plus a premium.
Buying price and cash-out price
With most bullion products, the price you pay is higher than the price you would receive if you sold straight away. This difference, the spread, means the value of a holding needs to rise before you could sell it for what you paid. Under the Bullion Funder terms, the cash-out price is a separate figure: the price shown on the cash-out section of Knox's website, stated in the terms as the gold spot price plus 4.5%, with a 2% administration fee deducted from the amount cashed out (clause 9.1).
What to check before you buy
- How the nugget price relates to the gold price and the Krugerrand price
- How often the price is updated, and whether a quoted price is held while you pay
- Whether a premium or fee is included
- How the cash-out price is worked out
Ask Knox for the current price and terms in writing, and keep in mind that the price of gold can fall as well as rise.
How Knox handles this
Ready for the next step?
Speak to the Knox team about your situation. They will confirm current pricing, availability and requirements before you decide.
