Learn / Price and market basics
Bid, ask, spreads and premiums
Why a gold coin costs more than its spot value, why dealers pay less when you sell, and how to compare the true cost of different products before you buy.
This page is general education, not financial or investment advice. Prices, premiums and taxes vary. Talk to a licensed professional before buying or selling.
Three prices to know
| Term | Meaning |
|---|---|
| Spot price | The wholesale market price for gold. See spot price |
| Ask (offer) | The price a dealer charges when you buy |
| Bid | The price a dealer pays when you sell |
The spread is the difference between the ask and the bid. It is the round-trip cost of buying and immediately selling. The premium is how much the ask price is above spot, usually given as a percentage or a dollar amount per ounce.
Why premiums exist
A dealer selling you a coin is covering:
- Minting or fabrication: turning raw gold into a coin or small bar.
- Distribution: shipping, insurance and wholesale margins.
- Dealer costs: staff, storage, security and payment processing.
- Profit.
- Supply and demand: in busy markets, premiums can jump sharply because products sell out.
What affects the premium
| Factor | Usually lower premium | Usually higher premium |
|---|---|---|
| Size | Large bars, such as 1 kg | Small items, such as 1 gram bars or fractional coins |
| Product type | Generic bars and rounds | Government coins and collectible designs |
| Market conditions | Calm markets | Panics and shortages |
| Payment method | Bank transfer or check | Credit cards, which carry fees |
| Condition | Standard bullion | Proof or graded collector coins |
Small products cost more per ounce because minting a tiny coin takes almost as much work as minting a large one.
The buyback side
When you sell, a dealer typically pays a price related to spot, sometimes slightly below, sometimes slightly above for popular coins. The bid depends on:
- How easy the product is to resell.
- Whether it needs testing or refining.
- Condition and packaging.
Scrap jewelry gets the lowest bids, because it must be assayed and refined. See assaying.
Calculating the real cost
Suppose a 1-ounce coin has an ask of spot plus 5 percent and a bid of spot minus 1 percent. Your spread is about 6 percent. The gold price would need to rise by about that much before you could sell at break-even, before any taxes or storage costs.
Comparing products fairly
- Convert every price to cost per troy ounce of pure gold.
- Check the premium over spot at the time you compare.
- Ask for the dealer's current buyback price on the same product.
- Add shipping, insurance and payment fees.
- Check sales tax rules where you live; these vary by state and country.
Collectible versus bullion
Numismatic or collectible coins are priced on rarity, condition and demand, not just gold content. Their premiums can be very large, and resale value depends on collector demand. If your goal is gold exposure, bullion coins and bars usually carry lower premiums. See bullion coin comparison.
Red flags
- Pressure to buy collectible coins as an "investment" with huge markups.
- Prices far below spot, which may signal counterfeits. See how to spot fake gold.
- Dealers who will not quote a buyback price.
- Unclear fees or storage charges.
For a full checklist, see buying gold safely.