Understanding Bullion Premiums: Why Prices Vary Between Dealers
Every price you see for a bullion coin or bar is the metal's spot value plus a premium. Understanding what that premium covers, and why it varies so much between products and dealers, is the difference between spotting a fair deal and overpaying.
What the Premium Actually Pays For
The premium covers minting costs (striking a coin costs more than casting a plain bar), the dealer's own margin, handling, insurance, and secure delivery. None of this is unusual or a sign of a bad deal, it's the real cost of turning raw metal into something you can buy, hold and later resell.
Why Premiums Differ by Product
Smaller, more intricately designed coins generally carry higher premiums than large plain bars, more minting work goes into each unit relative to its metal content. A 1oz coin typically has a higher premium than a 1kg bar of the same metal, even though both are pure bullion, because the fixed costs of production are spread across far less metal per unit on the coin.
Why Premiums Differ by Dealer
The same coin can carry very different premiums at different dealers, driven by their own overheads, order volumes, stock levels, and how competitively they choose to price. A dealer low on stock of a popular coin may raise its premium simply because demand is outstripping what they can source, this is the main reason premiums shift day to day even when spot barely moves.
Why This Site Ranks by Premium, Not Just Price
Two products with different weights can't be compared on price alone, a 1/4oz coin will always cost less in pounds than a 1oz coin of the same design, that doesn't make it better value. Premium over spot is the number that actually tells you who's charging the most for the metal itself, which is why every comparison on this site is built around it rather than the raw price.
Rules of Thumb
Popular, widely recognised coins (Britannias, Sovereigns, Krugerrands) tend to carry lower premiums than obscure or limited designs, because higher demand and production volume bring costs down. Bars generally beat coins on premium per ounce at the same dealer. Comparing the same exact product across several dealers, rather than comparing different products at one dealer, is the most reliable way to find genuine value.