Buying Gold and Silver at Spot Price, photo courtesy of Metals.com
Those new to buying gold and silver will often wonder how they can purchase precious metals at spot. The spot price for several precious metals can usually be found on dealer websites and will fluctuate depending on the price associated with precious metals futures. Although everyone wants to buy their bullion at spot, this is usually never possible, as buyers must purchase through dealers who, understandably, add a premium to the per-oz price. These premiums go to cover things such as marketing, shipping, insurance and more. Furthermore, it should be expected that dealers try to make a small profit on every item they sell.
While precious metals buyers are not able to buy bullion at spot, they can usually try to get as close to spot as possible ? depending on the type of bullion being purchased and where they make their purchase.
Deciding on the type of bullion to buy
There are a variety of bullion types to choose from, including coins, rounds and bars. The most valued and collectible bullion items usually carry the highest premium over spot. Those items can include the American Gold Eagle, the Canadian Gold Maple Leaf, the American Silver Eagle and the Canadian Silver Maple Leaf. In addition, there are minted coins available from other countries around the world in addition to very rare coins that carry a high premium due to their scarcity and collectability.
To get closer to spot prices requires moving from coins to rounds. Rounds are similar to coins and many feature nicely designed faces and backs, but they are not legal tender and carry no face value (no denomination is stamped on the coin). Their value is based solely on the value of the metal content and collectability.
Bars will help buyers get even closer to spot price. While not as collectible as coins and certain types of rounds, bars can be an excellent way for beginners to begin purchasing gold and silver bullion with reduced premiums over spot.
Once a buyer gets a sense of the day?s spot price and the kind of bullion they would like to purchase, it?s worth comparing prices across several online dealers. While dealers with a physical presence inside a store also sell bullion, there is usually a slight mark up over similar bullion sold online from a reputable dealer, such as Metals.com.
It?s relatively easy to compare prices from one online dealer to the next by simply going from site to site. It?s also important to make sure the comparison is apples to apples. In other words, a 2019 American Silver Eagle, brilliant uncirculated, will carry a slightly different price than the identical coin that was minted in 2009. The same goes for almost every other coin minted by different governments and categorized as legal tender featuring a face value.
Understanding other costs related to purchases
Obtaining knowledge about fluctuating spot prices and the premiums dealers charge is a good first step in getting the best price when purchasing bullion. It?s also important to understand the additional costs associated with buying precious metals, even if done so online.
Additional costs can include shipping, insurance and packaging. There is also a different price when buying bullion online with a credit card or check/wire payment.
Buyers should also be aware that when buying larger quantities, the premium over spot begins to shrink. Although not everyone can buy a quantity of 500 coins a pop, starting with a purchase of 20 to 25 coins at a time will usually result in a slightly reduced premium.
Finally, dome dealers will actually place some of their bullion on sale. It?s worth searching different dealers at different times and watching out for limited specials. Some dealers also offer to send email notifications when a limited special does occur.
Though not rocket science, there are several factors that go into buying precious metals at the lowest premium possible. Regardless of how buyers do it, the important thing is to get started.
The Metals.com Staff