What Is Premium Over Spot? (And How to Calculate It)
The spot price is the current market price for one troy ounce of raw metal. You can't buy a coin at spot: every retail product sells for spot plus a premium, which covers minting, distribution, the dealer's margin and payment costs.
The formula
Premium ($) = Price − (Spot × troy ounces of metal)Premium (%) = Premium ÷ (Spot × troy ounces) × 100
Use the pure metal content, not the coin's total weight. The American Gold Eagle is 22-karat (91.67% gold) but is struck to contain one full troy ounce of gold, so its melt value is 1 × spot (Wikipedia – American Gold Eagle (composition 91.67% Au; 1 oz coin = $50 face, 1 oz fine gold)).
Example
If gold spot is $4,000 and a coin costs $4,200, the premium is $200, or 5%. Our comparison tables do this calculation automatically for every live price.
What makes premiums higher or lower
- Product type: generic bars and "random year" coins typically carry lower premiums than current-year, proof or graded coins.
- Size: fractional coins (e.g. 1/10 oz) cost more per ounce than 1 oz pieces. Compare the 1/10 oz Gold Eagle with the 1 oz.
- Payment method: dealers list a lower price for check/wire than for card/PayPal (APMEX product page volume-pricing table (check/wire vs. card/PayPal); SD Bullion product page pricing table).
- Quantity: per-unit prices drop at higher quantity tiers on most dealer pages.
FAQ
Can I buy gold at the spot price?
Generally no. Retail coins and bars sell at spot plus a premium that covers fabrication, distribution and dealer costs.
Is a lower premium always better?
For pure bullion investment, a lower premium means more metal per dollar. Collectible or graded coins carry higher premiums for reasons unrelated to metal content.