What does premium over spot mean?

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The term "premium over spot" refers to the additional cost you pay when purchasing precious metals (such as gold, silver, or platinum) above their spot price. The spot price is the current market price for an ounce of the metal, as quoted by major financial markets. The premium over spot considers various factors that ultimately influence the final price of the metal from reputable retailers or dealers.

The process of refining, minting, packaging, and distributing precious metals increases expenses that are then reflected in the premium. These costs can vary depending on the type and form of the metal, the mint or manufacturer, and the market conditions. If you are purchasing coins or bars, there may be an additional premium associated with the craftsmanship, design, and minting process. Coins with intricate designs, limited editions, or collectible appeal may have higher premiums due to their added numismatic value. This is why less finely processed bullion like bars tend to have lower premiums per ounce.

Additionally, market conditions, supply constraints, and retail markup can impact the premium over spot. If there is high demand for a particular metal or limited availability, the premium may increase. The dealer markup (or margin) is also added as part of the premium to compensate for services including storage, insurance, handling, and customer support.

As you buy precious metals, we recommend comparing prices from different dealers and consider the premium over spot as part of your overall cost. Fortunately, we make that process easy. On Bullion.com you can compare the premium pricing [link] of our bullion against our competitors so you can be sure you are getting the best deal on your investment.