How Physical Bullion Is Priced: Spot, Weight, Purity, Premiums and Spreads

When you request a quote on a gold coin, the number you are given is higher than the spot price you saw quoted that morning. That gap is not a markup hidden from you. It is made up of identifiable components, and once you can name them you can compare quotes from different dealers on equal terms.

This guide explains each part of a bullion quote. It is worth reading alongside Gold IRA Fees Explained, which covers the separate account-level costs that apply when metal is held inside a retirement account.

Spot is the reference price for unfabricated metal, derived from trading in wholesale and futures markets. It describes metal in bulk form, before it has been refined into a specific product, verified, packaged and distributed.

Retail buyers do not transact at spot. Spot serves as the benchmark from which a quote is built, which is why every dealer's price moves when spot moves, and why two dealers quoting the same coin on the same day can still differ.

Spot also changes continuously while markets are open. A quote is generally held for a limited window, and dealers commonly lock a price at the point of order confirmation.

Precious metals are measured in troy ounces. A troy ounce is approximately 31.10 grams, whereas the avoirdupois ounce used for everyday goods is approximately 28.35 grams. A troy ounce is therefore heavier, by roughly ten percent.

This matters when comparing quotes. A price quoted per gram, per troy ounce, or per kilogram describes different quantities of metal. Converting everything to a single unit before comparing is the only way to see which quote is actually higher.

Purity is expressed as fineness, the proportion of the item that is the stated precious metal. A coin marked .9999 fine is 99.99 percent gold. One marked .9167 fine, as with some traditional bullion coins, contains a deliberate alloy of copper or silver for durability.

A common point of confusion follows from this. A one-ounce bullion coin normally contains one full troy ounce of pure gold. Where the coin is alloyed rather than near-pure, the alloy is additional, so the coin's total weight exceeds one troy ounce. The gold content is the same; the gross weight differs.

IRA-eligible bullion must meet minimum fineness requirements set out in the tax code, which is why the eligible product list is narrower than the range of bullion available generally.

The premium is the amount charged above the spot value of the metal contained in the product. It is not a single fee but the accumulation of several costs along the chain from refinery to buyer.

Premiums vary by product. Smaller units generally carry a higher premium per ounce than larger ones, because minting and handling costs are spread across less metal. Widely produced bullion coins typically carry lower premiums than limited-mintage or collectible pieces.

Dealers quote two prices for the same item: the ask, at which they will sell to you, and the bid, at which they will buy from you. The difference is the spread.

The spread is the clearest single indicator of transaction cost, because it tells you the gap the metal price must close before a sale returns what you paid. A product bought at a high premium and repurchased near a lower bid carries a wider spread than one with a narrow, stable premium on both sides.

Spreads are not fixed. They vary by product, by dealer, and with market conditions. Some dealers publish both sides of their quote; others provide the bid only on request.

To compare two quotes on the same product, reduce both to the same terms. Identify the spot price at the time of each quote, the exact product including its weight and fineness, the total price, and the dealer's current buy price for the same item.

From those figures you can calculate the premium as a percentage over spot, and the spread as the gap between buy and sell. Those two percentages allow a direct comparison. A headline price alone does not, since it moves with spot and reveals nothing about what the dealer would pay to take the item back.

Questions that produce the figures you need:

This guide describes how bullion pricing is constructed. It does not address whether any product, quantity or purchase method suits your circumstances, and nothing here is a recommendation to buy or sell.

I have more than 20 years of hands-on experience evaluating precious metals, jewelry, art and estate property. Pricing conventions are observable facts about how the market quotes metal. How they apply to a particular decision depends on circumstances this site cannot assess.