When you buy or sell gold and silver, you’ll quickly notice two numbers: the spot price and the premium. The spot price is the base market value of the metal, while the premium is the added cost you pay when buying (or receive less when selling). Understanding this difference is essential for smart bullion investing.

What Is the Spot Price?

The spot price is the current market price for one ounce of gold or silver, traded on global exchanges like COMEX and LBMA. It reflects the live supply-and-demand dynamics, updated constantly as markets move.

• Quoted in real time during trading hours
• Denominated per troy ounce (31.103 grams)
• Influenced by global demand, central bank policies, mining output, and macroeconomics

Example: If the gold spot price is $3,000/oz, that’s the baseline value for one ounce of pure gold before dealer costs.

What Are Premiums?

A premium is the extra cost above the spot price when buying bullion. It covers:

• Minting and fabrication (striking coins, refining bars)
• Distribution and logistics (shipping, handling, insurance)
• Dealer overhead (operations, staff, marketing)
• Supply and demand pressure (scarcity or high investor demand)

Example: If gold’s spot is $2,000/oz and a dealer lists a coin for $2,060, the $60 difference is the premium.

Premiums on Coins vs. Bars

• Coins (e.g., American Gold Eagle, Canadian Maple Leaf): Higher premiums due to legal tender status, collectability, and smaller sizes.
• Bars: Lower premiums, especially at larger sizes (10 oz, kilo bars).

Many investors start with bullion for stability, then branch into numismatics as a hobby or long-term speculative play.

Why Spot Price ≠ Final Price

It’s a common mistake for new investors to assume they can buy at spot. In reality:

• Dealers buy wholesale near spot, then add a markup.
• Smaller items carry higher percentage premiums.
• In times of market stress, premiums can spike as physical demand outpaces supply.

How Premiums Affect Selling

When selling bullion back to a dealer:

• Expect to receive spot minus a small spread (the dealer’s buyback price).
• Popular, liquid coins often command stronger resale premiums than generic bars.

Tips for Managing Premiums

• Compare product types: Bars are more cost-efficient for bulk storage, while coins are more liquid for resale.
• Check multiple dealers: Premiums vary across the market.
• Watch demand cycles: Premiums often rise in crises. Buying during calmer markets may save money.
• Balance liquidity and cost: A mix of coins and bars provides flexibility.

• Expect to receive spot minus a small spread (the dealer’s buyback price).
• Popular, liquid coins often command stronger resale premiums than generic bars.

Key Takeaways

• The spot price is the baseline market value for precious metals.
• Premiums are unavoidable but vary by product, dealer, and market conditions.
• Coins usually carry higher premiums than bars, but often resell more easily.
• Understanding spot vs. premium helps you buy smarter and manage long-term bullion strategy.