Gold premiums: what you pay above the metal
The premium is the only part of a gold purchase you can negotiate, because the metal price is set elsewhere. It is also the part most buyers never calculate.
How to calculate the one you are being charged
Take the dealer price, divide it by the melt value of that exact product, subtract one, and multiply by a hundred. That is your premium as a percentage. Every product page on this site shows the melt value live, so the arithmetic takes seconds.
Do it before you compare dealers, not after. A dealer quoting a dollar figure on a day when spot has moved is not comparable to one quoting yesterday - percentages are, and dollars are not.
What the premium is actually paying for
Four things, roughly in order of size: fabrication - refining, striking and packaging; distribution - the mint sells to wholesalers who sell to dealers, and each takes a margin; the dealer's own costs and profit; and the cost of holding inventory in a market that can move several percent in a week.
None of that is unreasonable. But it explains why the same troy ounce of gold can cost 2% or 15% above melt depending entirely on the form you buy it in.
Premiums move independently of the gold price
This surprises people. When retail demand spikes, mints ration supply and dealer premiums widen even though spot has not changed - buyers in 2020 and again in 2022 paid unusually large premiums for exactly the same coins. When demand cools, premiums compress.
So the total cost of buying gold has two moving parts, and watching only one of them tells you half the story. A good entry can be spoiled by a bad premium, and a mediocre spot price can be rescued by a narrow one.
The spread, not the premium, is the real cost
What actually costs you is the round trip: the premium you pay on the way in, plus the discount to melt you accept on the way out. A dealer with a 4% premium and a 3% buyback discount costs you 7% over the life of the holding.
Ask for the buyback price at the moment you buy. It is the number that tells you what the whole transaction costs, and a dealer unwilling to state it has answered the question anyway.
Questions people ask
- What is a gold premium?
- The gap between the metal value and the price on the ticket. If a one-ounce coin holds $4,415.86 of gold and the dealer wants $4,636.65, the premium is 5%. It covers fabrication, distribution, the dealer's costs and the risk of holding stock in a moving market.
- What is a normal premium on a one-ounce gold coin?
- Low single digits in calm conditions, considerably wider when retail demand spikes and mints ration supply. Because it moves independently of the gold price, the same coin can carry very different premiums in the same month - which is why the premium is worth checking separately rather than assumed.
- How do I calculate the premium I am being charged?
- Divide the dealer price by the melt value of that exact product, subtract one, multiply by a hundred. Every product page on this site shows the melt value live, so the only number you need to supply is the dealer's.
- Why does the premium matter more than the spot price?
- Because you control it and you do not control spot. The round trip - premium paid on the way in plus discount accepted on the way out - is the real cost of owning physical gold, and on small products it can exceed a year of price movement.