Why do I have to pay a premium above spot price?

The spot price represents wholesale, unrefined metal. Premiums cover the costs of refining, minting, distribution, and dealer margins required to deliver a finished bullion product to your door.

What is a normal premium for a gold coin?

Under normal market conditions, popular 1-ounce government gold coins carry premiums of roughly three to six percent above spot. Premiums can be higher during periods of strong demand or supply constraints.

Why are silver premiums so much higher than gold premiums?

Silver's lower per-ounce price means that fixed manufacturing and distribution costs represent a larger percentage of the total. The silver coin market is also more retail-driven, which can push premiums higher during demand surges.

Do premiums go down when spot prices rise?

Not necessarily. Premiums are driven by supply and demand for finished products, which can move independently of spot prices. Rapidly rising spot prices often coincide with strong retail demand, which can push premiums even higher.

How do I calculate the premium I am paying?

Subtract the current spot price from the retail price per ounce. Divide the result by the spot price and multiply by 100 to get the premium as a percentage.

Should I always buy the product with the lowest premium?

Not always. The lowest-premium product may be harder to resell or less widely recognized. Balance premium cost against liquidity, recognizability, and your specific investment goals.

Do dealers charge different premiums?

Yes. Premiums vary across dealers based on their cost structures, inventory levels, and competitive positioning. Always comparison-shop for the same product across multiple reputable dealers.

Where can I track the current spot price?

MintBuilder's live spot-price dashboard shows real-time gold, silver, platinum, and palladium prices updated throughout the trading day.

Spot Price vs Premium: What You Are Really Paying for Bullion

Understanding the difference between spot price and premium is the single most important concept for anyone buying physical precious metals. The spot price is the benchmark, but the premium is what you actually pay above it for a finished bullion product. In this guide, we explain exactly what the spot price is, how it is determined, what premiums cover, typical premium ranges by product type, and how to minimize the cost of building your bullion position. Bookmark MintBuilder's live spot-price dashboard to track benchmark prices in real time.

What Is the Spot Price?

The spot price is the current market price for immediate delivery of one troy ounce of a precious metal. It serves as the global benchmark from which all physical bullion products are priced. Spot prices fluctuate constantly during market hours, driven by trading on major exchanges and over-the-counter markets.

When you see a gold price quoted on financial news or MintBuilder's gold price page, that figure is the spot price. It represents the cost of unrefined, wholesale gold in large quantities, not the price of a finished coin or bar in your hand.

How the Spot Price Is Set

Spot prices for precious metals are determined by two primary mechanisms:

COMEX Futures

The COMEX division of the New York Mercantile Exchange (NYMEX) is the world's largest and most liquid precious metals futures market. Gold, silver, platinum, and palladium futures contracts trade nearly around the clock. The near-month futures contract price is the primary input for the widely quoted spot price.

LBMA Benchmarks

The London Bullion Market Association administers twice-daily benchmark auctions for gold (the LBMA Gold Price) and a daily benchmark for silver (the LBMA Silver Price). These benchmarks are used by refiners, miners, central banks, and industrial consumers to settle contracts and value inventories.

In practice, the COMEX futures price and the LBMA benchmark converge closely, and the spot price you see on any reputable site reflects this global consensus. Check the live silver spot price and gold spot price on MintBuilder for current quotes.

What Do Premiums Cover?

The premium is the difference between the spot price and the retail price of a finished bullion product. Premiums exist because turning raw metal into a retail product involves real costs:

Refining and fabrication: Raw metal must be refined to investment-grade purity and then minted or cast into coins, bars, or rounds.
Minting costs: Government mints and private refiners incur costs for die production, striking, quality control, and packaging.
Distribution and logistics: Moving metal from refiner to wholesaler to dealer involves shipping, insurance, and security.
Dealer margin: Dealers add a markup to cover their operating costs and earn a profit. This margin varies by dealer, product, and competitive pressure.
Market conditions: During periods of strong retail demand or constrained mint supply, premiums can spike as dealers compete for limited product.

Premium Ranges by Product Type

Premiums vary significantly depending on the metal, product type, and size. Below are typical ranges under normal market conditions. Actual premiums fluctuate and should always be verified before purchasing.

Gold Products

1 oz gold bars: Two to four percent over spot.
1 oz government gold coins (Eagles, Maple Leafs, Krugerrands): Three to six percent over spot.
Fractional gold coins (1/10 oz, 1/4 oz): Seven to fifteen percent over spot. Smaller sizes carry proportionally higher premiums.
Kilo gold bars: One to two percent over spot, offering the lowest per-ounce premium.

Silver Products

1 oz silver bars and rounds: Four to eight percent over spot.
1 oz government silver coins (Eagles, Maple Leafs): Eight to fifteen percent over spot.
100 oz silver bars: Two to five percent over spot.
Junk silver (pre-1965 U.S. coins): Premiums vary widely based on supply, often five to fifteen percent over melt value.

Platinum and Palladium Products

1 oz platinum coins and bars: Four to eight percent over spot.
1 oz palladium bars: Five to ten percent over spot.

For a comparison of product formats and how they affect premiums, see our coins vs bars guide.

How to Calculate Your Total Cost

Calculating the total cost of a bullion purchase is straightforward:

Total Cost = Spot Price + Premium (per ounce) × Quantity

Or equivalently:

Total Cost = Retail Price per Ounce × Quantity + Shipping

Always factor in shipping and insurance costs, which some dealers include in the product price and others charge separately. Some dealers offer free shipping above certain order thresholds.

To evaluate premium as a percentage:

Premium Percentage = ((Retail Price - Spot Price) / Spot Price) × 100

This formula lets you compare products on an apples-to-apples basis regardless of the absolute price.

How to Compare Dealers

Not all dealers charge the same premiums. Smart investors comparison-shop. Here is what to look for:

Premium over spot: The most important number. Compare the same product across multiple dealers and calculate the premium percentage for each.
Shipping costs: A lower premium is meaningless if shipping fees eat up the savings. Factor total landed cost.
Payment methods: Some dealers offer discounts for payment by check or wire transfer versus credit card. The difference can be one to three percent.
Reputation and reliability: A rock-bottom price from an unverified dealer is not a bargain. Look for established dealers with transparent pricing and positive customer reviews.
Buyback policies: The best dealers offer competitive buyback prices when you are ready to sell. A low purchase premium combined with a tight buyback spread minimizes your round-trip cost.

For a comprehensive buying framework, see our bullion buying checklist.

Tips to Minimize Premiums

Here are practical strategies to get the most metal for your money:

Buy larger sizes: Per-ounce premiums decrease as product size increases. A 10-ounce bar costs less per ounce than ten 1-ounce bars.
Choose bars over coins: When liquidity is not your top priority, bars offer lower premiums than government coins.
Pay by check or wire: Avoid credit card surcharges when possible.
Buy during calm markets: Premiums tend to be lowest when demand is moderate and supply is plentiful. Avoid panic-buying during price spikes.
Consider secondary-market products: Previously owned coins and bars from dealer inventories often carry lower premiums than newly minted products.
Consolidate orders: Buying in bulk and meeting free-shipping thresholds reduces per-ounce acquisition costs.

For a beginner's guide to making your first purchase, see our how to buy gold guide.

Why Premiums Matter for Your Returns

The premium you pay on purchase is a cost that must be recovered before you profit. If you buy gold at a five percent premium, the spot price must rise at least five percent before you break even when selling at spot. In practice, you will also sell at a slight discount to spot (the dealer's buyback spread), so your breakeven is slightly higher.

This is why minimizing premiums is one of the highest-impact things a bullion investor can do. The difference between a three percent premium and a seven percent premium on a large purchase is significant real money. For a deeper look at gold-specific premiums, see our gold premiums guide, and for silver, our silver premiums guide.

Frequently Asked Questions

Why do I have to pay a premium above spot price?: The spot price represents wholesale, unrefined metal. Premiums cover the costs of refining, minting, distribution, and dealer margins required to deliver a finished bullion product to your door.
What is a normal premium for a gold coin?: Under normal market conditions, popular 1-ounce government gold coins carry premiums of roughly three to six percent above spot. Premiums can be higher during periods of strong demand or supply constraints.
Why are silver premiums so much higher than gold premiums?: Silver's lower per-ounce price means that fixed manufacturing and distribution costs represent a larger percentage of the total. The silver coin market is also more retail-driven, which can push premiums higher during demand surges.
Do premiums go down when spot prices rise?: Not necessarily. Premiums are driven by supply and demand for finished products, which can move independently of spot prices. Rapidly rising spot prices often coincide with strong retail demand, which can push premiums even higher.
How do I calculate the premium I am paying?: Subtract the current spot price from the retail price per ounce. Divide the result by the spot price and multiply by 100 to get the premium as a percentage.
Should I always buy the product with the lowest premium?: Not always. The lowest-premium product may be harder to resell or less widely recognized. Balance premium cost against liquidity, recognizability, and your specific investment goals.
Do dealers charge different premiums?: Yes. Premiums vary across dealers based on their cost structures, inventory levels, and competitive positioning. Always comparison-shop for the same product across multiple reputable dealers.
Where can I track the current spot price?: MintBuilder's live spot-price dashboard shows real-time gold, silver, platinum, and palladium prices updated throughout the trading day.

Shop smarter with MintBuilder. We display our premiums transparently alongside the live spot price so you always know exactly what you are paying. Browse gold products or browse silver products now to compare premiums and find the best value.