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What is the gold coin premium?

Question
I found out today that there is some sort of premium attached to coins, it’s what makes the price of coins higher, so I guess it is a fee of some sort? Could anyone explain a bit more what this premium is exactly and why do we have to pay it?

Answer 1
Premium on products would be the added cost that the manufacturer or the reseller puts on the product in order to cover any additional possible costs that were present during the manufacturing and handling of the item. The same is true for premium on coins.

This kind of discrepancy in price of coins and the spot price of gold is something that confuses newcomers who are only starting in the world of bullion coins. Coins which are made from pure gold and which weigh exactly 1 troy ounce will not have the spot price of gold, which would be around 1700$. Depending on how many hands the coins went through it could have a pretty high price. The mint might add a small percentage of the spot price to the overall price in order to make a small profit, the same is true for the reseller, the middle man between the mint and the buyer. If the coin went through high number of hands it could fetch considerably higher price. The resellers are also adding a small fraction and it could end up as a pretty high price. So premium is sort of like a profit which the people who are handling or reselling the coins add in order to make some money.

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