Understanding the “spot price” of gold and the “premiums”
When you buy and sell gold you will hear the words: “spot price” and “premiums” mentioned a lot. The price that a gold buyer pays for an ounce of bullion is made up of the spot price of gold and the premium. For instance, the final price of an American Eagle coin will be made up of the spot price plus 16% premium.
By definition, the spot price of gold is the price of an ounce of gold exchanged on the commodities market.
The bullion premium is the additional price that a gold bullion dealer will add to the spot price.
Understanding the difference may help you navigate your way around the gold dealing industry.
The bullion premium depends on a couple of factors:
The supply and demand factors that affects the bullion market
The supply and demand for gold is a major influe...