Understanding Spot Price, Premiums & What You Actually Pay
When you buy precious metals, you'll notice the price is higher than the 'spot price' you might see quoted. Here's exactly what you're paying for and why.
What is spot price?
The spot price is the current market price for one troy ounce of raw, unrefined metal — essentially the wholesale cost of the metal itself in its raw form. It changes continuously during market hours based on global supply and demand.
What is a premium?
The premium is the additional cost above spot price that covers everything required to turn raw metal into a finished, deliverable product — minting, fabrication, packaging, quality assurance, distribution, and dealer margin.
Why do premiums vary by product?
|
Product Type |
Why the Premium Is What It Is |
|
Large bars (100 oz silver, 1 kg gold) |
Cheaper to manufacture per ounce — fewer steps, less packaging. Lowest premiums. |
|
Mid-size bars (10 oz, 1 oz) |
More intricate production than large bars, but widely traded. Moderate premiums. |
|
Government-minted coins (Eagles, Maple Leafs) |
Carry official legal tender status and high collector/investor demand. Highest premiums. |
|
Private mint rounds |
Similar to coins but no government backing. Slightly lower premiums than sovereign coins. |
What about the sell price?
When you sell your metals back to us, you receive the current bid price — which depends on market conditions and product type. You can see all sellback prices when you are logged into your account online.
The difference between the buy price and the sell price is called the spread. During periods of high market volatility or low liquidity, spreads can widen. This is a function of the physical metals market — your metals' underlying value has not changed.
Note: Precious metals are considered long-term store of value. The buy/sell spread means short-term trading is not cost-effective. Most clients hold metals for years, during which time market appreciation typically far exceeds the spread.