Spot Price vs. Premium: Why You Always Pay More Than the Market Price for Gold and Silver

If you've ever looked at the price of gold online and then checked the price of a gold coin at a dealer, you've noticed a gap. That gap isn't a scam — it's the premium, and understanding how it works will make you a smarter buyer.

What Is the Spot Price?

The spot price is the current market price for one troy ounce of a precious metal in its pure, unrefined form. It's set by global commodities markets and fluctuates throughout the trading day based on supply, demand, futures contracts, currency movements, and macroeconomic factors.

Think of spot as the wholesale price of raw metal. It's a benchmark — not a retail price. You can track live spot prices for gold, silver, platinum, and palladium on our Spot Prices page, updated every 10 seconds.

What Is the Premium?

The premium is the amount above spot that you pay when purchasing a finished product — a coin, bar, or round. It covers the real costs involved in turning raw metal into something you can hold in your hand:

Minting and fabrication — Refining, striking, packaging, and quality control
Distribution — Shipping, insurance, and secure logistics from mint to dealer
Dealer margin — The dealer's operating costs and profit
Government fees — For sovereign coins like American Eagles, the U.S. Mint charges authorized purchasers a fixed markup

Premiums are expressed either as a dollar amount over spot or as a percentage. For example, if gold spot is $3,000 and a 1 oz American Gold Eagle sells for $3,150, the premium is $150 (or 5%).

Why Do Premiums Vary Between Products?

Not all gold (or silver) products carry the same premium. Several factors drive the difference:

Sovereign coins vs. generic rounds and bars. Coins issued by government mints (American Eagles, Canadian Maple Leafs, South African Krugerrands) carry higher premiums because of their legal tender status, recognizability, and guaranteed weight and purity. Generic rounds and bars from private mints are typically cheaper because they lack that government backing.

Size matters. Smaller products carry higher percentage premiums than larger ones. A 1/10 oz gold coin costs more per ounce than a 1 oz coin because the fixed costs of minting, handling, and packaging are spread over less metal. If you're buying purely for metal content, larger sizes are more cost-efficient.

Supply and demand. When demand spikes — during economic uncertainty, inflation fears, or geopolitical events — premiums rise because physical inventory gets scarce. Mints can only produce so much, and dealers pay more to acquire product. During calmer markets, premiums tend to compress.

Condition and rarity. Certified, graded, or collectible coins carry numismatic premiums above and beyond the metal value. These are driven by collector demand rather than metal markets.

Silver Premiums Are Usually Higher Than Gold Premiums (by Percentage)

This surprises a lot of new buyers. A 1 oz silver coin might carry a 15–25% premium over spot, while a 1 oz gold coin might carry only 3–7%. The reason is simple: it costs roughly the same amount to mint, ship, and handle a silver coin as a gold coin, but the underlying metal value of the silver coin is far lower. Those fixed costs represent a much larger percentage of the total price.

This is also why buying silver in larger formats — 10 oz bars, 100 oz bars, or kilo bars — dramatically reduces your per-ounce premium.

What Happens to Premiums When You Sell?

When you sell back to a dealer, the buyback price is also based on spot — but the premium you recover depends on what you're selling. Sovereign coins with strong name recognition (Eagles, Maples) typically command better buyback premiums than generic products. Bars and rounds from well-known refiners also hold up well.

This is worth thinking about before you buy. A product with a slightly higher purchase premium but a stronger resale premium can actually be the better long-term value.

At Florida Gold Exchange, we post live buyback bids for gold and silver products on our website so you always know what we're paying before you visit.

The Bottom Line

Premium isn't waste — it's the cost of owning physical metal in a form you can store, sell, and verify. The goal as a buyer is to minimize it without sacrificing liquidity. That generally means buying well-known products in the largest size that fits your budget, and buying from a dealer with transparent pricing.