New investors often ask us, why can’t I buy gold and silver at the spot price? In this blog, we’ll hopefully address some of the reasons for this, and give you a few tips on how to save money when buying your precious metals.
The Spot Price
‘Spot’ is the term for the current market price for 1oz of gold or silver which changes minute-by-minute throughout the day. These prices fluctuate with the world market and are a standard used by precious metal dealers around the world to set their premium prices in order to sell to their customers. Most online bullion dealers host the live spot prices in real time on their website – you can see ours here.
However, it is nearly impossible to buy gold and silver at spot, as traders will always charge a premium over the spot price. The spot price does not account for the other costs associated with the sale or purchase of gold and silver - and understanding this is important as investors will naturally want to purchase their metals as close to spot as they possibly can.
Reasons for Premiums
Premiums are added onto the spot price of gold for a variety of reasons. These are usually due to the costs associated with the acquiring and manufacturing of the metals.
Gold and silver bullion dealers must make a profit. A dealer will always have costs associated with running a business including; labour, storage, shipping, office & warehouse expenses, marketing, customer service, and other costs.
It’s also worth remembering that refining and creating a bar or coin adds to the cost of the product. A bullion coin is more than a lump of raw gold or silver – there are costs involved in the creation of your beautiful Britannia coins! Most investors and collectors don’t consider the expenses and details that go into creating and minting a gold or silver coin – maybe we should write a blog about that in the future? (keep your eyes peeled!)
Another factor to consider is the supply chain. Bullion coins and bars are usually manufactured by a government or private mint who will then sell their product on to a dealer. Some bullion dealers are able to buy directly from these mints and can then sell on their product at a lower premium. However, some dealers cannot, and so must purchase from an authorised distributor, which adds a middleman to the process - and therefore another cost.
Tips to Save When Buying Gold & Silver
The industry of buying and selling of precious metals is highly competitive, and dealers will often compete for business by selling at a lower premium than their competitors so it’s always worth doing your homework. Be sure to not only check prices, but also be sure to check reviews etc. to ensure you are shopping with a retailer you can trust.
Coins or bars? If you are interested in investing for purely the value of the gold and silver only, and not for the collectable or numismatic value, it’s worth considering bars over coins. Bars are usually cheaper as there are less expenses and detail that goes into creating and minting a bar than a coin.
Buying second-hand coins or bars can save investors a considerable amount of money. These bullion items are often sold at a discounted premium compared to brand new ones and are quite often in excellent condition.
- Buy in bulk & check for deals
It’s always worth checking for promotions and deals! Here at Atkinsons we offer volume pricing on many of our gold and silver coins and bars which can help you save money when buying a larger quantity.
We also run our ‘mix & match’ deal all year round, which allows you to pick & mix your favourites from an assortment of gold or silver bars & coins and still save money by buying in bulk. A wide range of investment bundles are also available to choose from in our special offers section.
Keep an eye out, as we occasionally like to run special offers or give you lower premiums on some of our best-selling coins every now and then, especially on bank holiday weekends!
Remember – it is normal to pay over the spot price of gold or silver, but a wise buyer who has done their homework can make the best decision for them and their own needs. Happy investing!
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.