One of the most common questions we receive from clients is why the price of a bullion product is higher than the spot price they see online or in financial news. To understand this, it’s essential to distinguish between the spot price and the premium applied to physical bullion.
What is the Spot Price?
The spot price represents the current market value of one ounce of raw precious metal. It is primarily used in electronic trading within the commodities market and does not account for the costs associated with transforming raw metal into a finished bullion product.
Why is Bullion Priced Above Spot?
Bullion is a physical asset, and bringing it to market involves real costs. These include:
- Mining & Refining: Extracting and purifying the metal.
- Fabrication: Producing bullion bars and coins.
- Transportation & Storage: Safely moving and storing the products.
- Dealer Costs: Secure handling, distribution, and operational expenses.
Additionally, premium variations exist based on factors such as product size, brand, and demand. Generally, larger bullion products have lower premiums per ounce because they are more cost-efficient to produce.
How Does This Affect Pricing?
The final price of a bullion product is determined by taking the spot price and adding the premium. At Coastal Treasures, we ensure transparent pricing by displaying live spot prices on our website. This allows our customers to easily see the premium they are paying for any product, ensuring competitive and fair pricing in the market.
For expert guidance on purchasing bullion, contact Coastal Treasures today!