Understanding Premiums Over Spot Price When Buying Gold and Silver Bullion

One term that time and again comes up when delving into the world of bullion investment is “premium over the spot price.” Well, this is a very important concept for new and established investors to understand, given this is an impact point for the cost involved in purchasing gold and silver bullion.

What is the Spot Price?

Spot price is the price of something in the market delivered immediately. This figure varies all through the trading day with regards to worldwide economic activities, supply and demand, market speculation, and geopolitical events.

What are Premiums?

Premiums refer to the extra cost above the spot price that one has to pay at the moment of making a purchase of bullion. It is not only an additional charge but instead refers to many important factors such as mining, refining, production, distribution, and dealer markup. Moreover, premiums will also vary based on the product type, whether it is coins, rounds, or bars, and the size of each item and its design intricacy.

Factors Influencing Premiums

Several factors affect the size of the premium, including:

Product Demand and Scarcity: Highly sought-after or rare items typically carry higher premiums.

Manufacturing Costs: More intricate designs require sophisticated craftsmanship, thus increasing the premium.

Volume of Purchase: Buying in bulk often reduces the premium per unit due to economies of scale. 

Dealer’s Operating Costs: These are incorporated into the premium to cover business expenses and profit margins.

Why Choose AU Bullion?

This is a key place for any investor who may conduct research into gold and silver investments and is keen on identifying a dealer with competitive premiums that would enable them to maximize their investment. AU Bullion has the lowest and most competitive premiums in the market for bullion.

This advantage makes AU Bullion a preferred choice for both new and experienced bullion investors. AU Bullion understands that the premium that is above the spot price that you pay, could mean the difference for a profitable investment. With our commitment to offering the lowest premiums, you can rest assured to find great value that allows your investment to grow. Whether looking to buy for the first time or at an intermediate level seeking to expand the portfolio further, AU Bullion is where to go for affordable investments in gold and silver.