Understanding the mechanics of the physical bullion industry is the key for successful precious metal investing.
The buying price for gold and silver is higher than the gold and silver commodity price, also referred to as spot price. This is linked to manufacturing costs, packing, shipping, insuring and the bullion company's margin. As the premium on the product is the only way for the physical bullion industry to adjust to supply and demand premiums fluctuate.
At CelticGold we aim to sell always at lowest possible premiums.
The Buy and Sell Spread
The Buy and Sell Spread brings the answer to the question: "How much do I get back if I were to sell right away after I bought gold and silver?
As the physical bullion industry involves a real effort to refine, produce, ship, insure and handle the gold and silver products from the mined raw material the buying price includes the above described premium.
When selling the gold and silver product the bullion industry can't buy back including the premium as the handling and screening need to be factored in again.
Very good bullion companies buy-back from customers at around spot price, meaning the pay approx. 100% of the spot price. For example most "Cash for Gold" shops pay 75% of the spot price.
The average buy and sell spread with the most common gold products ranges between 1% and 5% and naturally silver production and handling is more expensive and the buy and sell spread is higher ranging between 11% and 20%.