Understanding Precious Metals Premium
Share on:When you buy precious metals, you need to think about the ‘Premium’. This is the extra amount you pay above the metal’s value at the current spot price. When you sell, you might get back some of this premium, but usually not as much as you paid.
The premium is usually shown as a percentage of the base cost. It covers costs such as production, shipping, marketing, dealer profits, taxes, storage, and transaction fees. The type and size of the metal you’re buying also matter. For example, the premium for a 1,000-ounce bar is usually less than that for a 100-ounce bar. Bars typically have lower premiums than coins or rounds because coins are easier to verify without special tools. Additionally, bars are considered harder to sell since they require extra verification by dealers, which incurs additional costs and time.
Lots of countries make their own gold and silver coins, like Canada’s Maple Leaf 🍁, South Africa’s Krugerrand 🦏, and the US’s American Eagle 🦅. These coins usually have higher premiums because they’re easier to check and harder to fake, which means they cost more to make.
At the time of writing, the premium for gold can be as low as 2-3% for a 1 ounce coin, but for silver, it’s usually between 20-25% for a 1 ounce coin. So, investing in silver is usually a longer-term plan because it can take a while for the price to go higher than what you paid, including the premium. 💰📈✨
Track Premium in the Precious Metals Manager App
In the Precious Metals Manager iOS app, you can track the amount of premium you are paying on every purchase, and everything is calculated for you automatically. Simply input the unit price you paid for a particular item and enable the ‘SPOT ON …‘ toggle that fetches the spot price on the order creation date. In a split second, the premium ratio is calculated and displayed below. Now, it’s up to you to judge if it was a good deal. Alternatively, you can input the spot price that you wish.
Once the item is saved, you can see how much premium you paid for the item on the item detail screen.
But that’s not all. The total paid premium for each metal and the average premium ratio are displayed on the Analytics screen 📈🚀.
