Why Premiums on Gold and Silver Are Elevated Right Now

If you've been shopping for gold or silver recently, you've probably noticed that premiums — the amount above spot price — are higher than they used to be. This isn't arbitrary. Several structural forces are pushing premiums up across the industry.

Demand Has Outpaced Supply

Global demand for physical precious metals has surged. Central banks, institutional investors, and retail buyers are all competing for the same limited supply of minted products. Mints can only produce so many coins and bars per year, and when demand spikes, the pipeline backs up.

This is especially visible in silver, where industrial demand (solar panels, electronics, EV components) is growing at the same time investment demand is rising. The result is tighter physical supply, longer lead times, and higher premiums.

The Refinery and Wholesale Bottleneck

Mints and refineries operate on fixed capacity and can't scale instantly to meet demand surges. But the current environment goes beyond normal capacity constraints — it's a systemic bottleneck across the entire supply chain.

Multiple major global refiners have temporarily paused accepting new scrap metal shipments, suspended advance payments, or imposed significant processing delays. On the wholesale bullion side, major secondary market wholesalers have suspended price locks, instituted multi-day settlement delays, or partially limited purchasing altogether. These aren't isolated incidents — they reflect industry-wide strain driven by extreme demand, constrained lending environments, and inventory backlogs.

When refiners and wholesalers pull back, dealers compete more aggressively for the available product, and those higher acquisition costs get passed through to buyers. At Florida Gold Exchange, we provide real-time updates on how these conditions affect our operations on our Market Updates page.

Logistics and Insurance Costs

Moving precious metals is expensive. Armored courier services, insurance, and secure shipping have all gotten more costly. These are real line items in a dealer's cost structure, and they contribute to the premium you pay.

The Spot Price Doesn't Reflect Physical Market Reality

This is the most important point and the one that surprises most people. The spot price is derived from futures contracts — paper trading on commodities exchanges. It represents the price of gold or silver for future delivery, not the current cost of a finished, deliverable product in your hands.

When physical demand is strong, the disconnect between paper prices and physical prices widens. The premium is the market's way of resolving that gap. In periods of extreme demand, the "real" price of gold or silver — meaning what you actually have to pay to take delivery — can diverge significantly from the quoted spot price.

What This Means for Dealers (and Their Customers)

When refiners pause payments and wholesalers freeze settlements, dealers face a cash flow squeeze. Some dealers respond by reducing what they pay sellers, limiting what they buy, or pausing purchases entirely. Others may offer deferred payment terms — meaning you sell today but receive payment in a few business days rather than on the spot.

At Florida Gold Exchange, we've been transparent about how these conditions affect our operations. When industry conditions require it, we may offer short-term deferred payment terms (typically 1–7 business days) on certain products and quantities. We continue to buy gold in any quantity and maintain the ability to lock prices. Current terms are always posted on our Market Updates page and our Gold Bids page.

Will Premiums Come Down?

Premiums tend to compress when demand normalizes and supply catches up. This has happened in previous cycles — premiums spiked in 2008–2009, 2020, and other periods of acute demand, then gradually returned to more normal levels as production caught up.

However, there's no guarantee of when that happens. If the structural drivers (central bank buying, industrial demand, monetary policy concerns) persist, elevated premiums may become the new normal for a while.

What This Means for Buyers

If you're buying precious metals, premium awareness is critical. A few strategies to consider:

Compare products, not just spot prices. A bar with a $2 premium per ounce is a better deal than a coin with a $6 premium, all else being equal.
Buy larger sizes when possible. Premium per ounce drops significantly as you move up in size (1 oz → 10 oz → kilo → 100 oz).
Check for specials. Dealers periodically offer products at reduced premiums to move inventory or attract volume.
Don't wait for "normal" premiums if you believe in the thesis. If you're buying because you think gold or silver prices are going higher, the premium is a small fraction of the total position. Waiting for a lower premium while the underlying price rises can cost you more than the premium savings.

What This Means for Sellers

Elevated premiums are good news for sellers. When premiums are high, dealers are competing more aggressively for product, which means better buyback offers for you. If you're sitting on gold or silver and considering selling, check current bids — you may be pleasantly surprised.