When new investors enter the precious metals space, one of the first questions they ask is: “Why is the price of gold or silver higher than the spot price I see quoted online?”
It’s a fair question. And the answer comes down to an important concept many people are not taught before they buy:
The difference between the spot price and the premium.
Understanding how these two work together helps investors compare products accurately, shop with confidence, and avoid confusion when prices fluctuate.
Let’s break it down.
The spot price is the current market value of raw gold or silver. It represents the price at which large-scale trades are executed on global markets in real time.
Spot prices are influenced by factors such as:
Spot price acts as the baseline for pricing precious metals. However, it is not the price you pay to own physical coins or bars.
The premium is the additional cost paid above spot to purchase physical metal.
That premium accounts for:
For example, if silver’s spot price is $30 per ounce and a 1 oz Silver Eagle sells for $36, the $6 difference is the premium.
Premiums are not fixed. They rise and fall based on demand, availability, and market conditions in the physical metals market.
Not all gold and silver products are priced the same, even at the same spot price.
Government-minted coins such as American Gold Eagles or Silver Eagles often carry higher premiums than generic rounds or bars. This is typically due to:
By contrast, privately minted bars and rounds usually carry lower premiums, making them attractive to investors focused on maximizing metal weight per dollar.
Neither approach is “better.” The right choice depends on your goals.
When comparing prices, focusing only on spot can be misleading. Experienced investors look at:
Understanding premiums helps investors:
This context matters far more than trying to time small spot price movements.
At Monument Metals, we believe informed investors make better decisions on both sides of the transaction. That’s why we clearly explain how spot price and premiums work, whether someone is buying or selling precious metals back to us.
For those in the Frederick area, meeting with our team in person allows you to see how pricing is evaluated in real time. Understanding spot price and premiums can help sellers know what to expect during a buy-back, ask better questions, and feel confident in the process.