Premiums, Spreads and Fees
The spot price is only one part of a precious metal transaction. Understand the purchase premium, the difference between buying and selling quotes, and other costs that may apply.
What is a premium?
A premium is an amount added above a metal reference price when a product is sold. A physical bar or coin needs to be refined, made, handled and distributed. The quoted purchase price may reflect those costs and the seller's margin.
Premiums can differ by product, size, seller and market conditions. Compare the full price and the fine metal content, rather than assuming two differently sized products have the same cost per gram.
What is the spread?
The price a dealer quotes to sell you a product and the price it quotes to buy it back are usually different. The gap between those two quotes at the same time is the buy–sell spread.
Buyback quotes can depend on the product, its condition, the buyer and current market conditions. A future quote may change as the metal price or exchange rate changes.
Premium
The amount above a metal reference price in the quoted purchase price.
Spread
The difference between a current purchase quote and buyback quote for the same product.
Other fees
Separate charges may apply to trading, holding or receiving physical metal.
A simple example
Imagine the metal reference value in a product is AUD $100. The dealer offers to sell the product for AUD $108 and quotes AUD $102 to buy it back at that moment. The purchase price is $8 above the reference value. The gap between the two dealer quotes is $6.
These figures are illustrative only, not FirstGold prices or fees. If you bought and immediately sold at those unchanged quotes, you would receive $6 less than you paid before any separate charges. Future quotes will change with market conditions.
Remember: The reference price, the price you pay to buy and the amount offered when you sell are three different figures.
What other costs might apply?
Depending on the product and provider, separate costs may include a transaction charge, storage or insurance charge, or the cost of fabrication, handling and delivery when requesting a physical product. Some costs may instead be included in a quoted price.
Check the provider's applicable terms and the full amount payable. A lower advertised premium does not necessarily mean a lower overall cost.
How should you compare offers?
Check the exact product and fine metal weight, the total Australian dollar amount you would pay and the current buyback quote for that product. Ask about every charge that could apply to buying, storing, selling or taking delivery. Also check when the quote becomes fixed.
The key idea: Look at the complete buying and selling arrangement, not just the displayed spot price or the advertised premium.