What gold really costs: spot price, premiums, spreads and fees

The spot price

The spot price is the price of one troy ounce of gold for immediate delivery in the wholesale market, quoted in U.S. dollars. It changes throughout the trading day. Retail buyers almost never pay spot for a coin or bar. It’s the starting point that everything else is added to. Our guide to the spot price explains where it comes from.

The premium

The premium is what you pay above the value of the gold. It covers the mint’s or refiner’s charge, the distributors’ margins and the dealer’s own margin. It depends on:

• The product. Bars usually cost less than coins, and bullion coins much less than proofs or collector coins.
• The size. Small coins and bars cost more per ounce than 1 oz pieces.
• Demand. When many people want to buy at once, popular products run short and premiums rise.
• How you pay. Many dealers charge a few percent more for credit cards than for bank wires or checks.

Here’s how that looks at a gold price of $4,000 an ounce:

Product	Premium over gold value	Price
1 oz gold bar (illustrative)	2.5%	$4,100
1 oz bullion coin (illustrative)	4%	$4,160
1 oz proof Gold Eagle from the U.S. Mint	About 22.5%	$4,900

The spread: what you get back

Dealers buy gold for less than they sell it for. The gap between the two prices is called the spread, and it’s what buying and then selling straight back would cost you. It already includes the premium you paid over spot, so don’t add the premium on top of it.

Say a dealer sells a coin at 4% over spot and would buy it back at 1% below spot. With gold at $4,000, you’d pay $4,160 and get $3,960 back, so if the price doesn’t change, buying and then selling costs $200. That’s 5% of the gold’s value, or about 4.8% of what you paid. For proof and collector coins, the gap can be much wider, because much of the premium you paid isn’t paid back.

That’s why it’s worth asking, before you buy, what the dealer would pay you for the same product today. Our monthly premium check lists recent prices and buyback quotes from three large online dealers.

Other costs

• Shipping and insurance on online orders, often free above a minimum order.
• Sales tax, which depends on your state. Some states exempt bullion and coins, some tax them, and some exempt only larger purchases.
• Storage and insurance. A home safe and extra insurance coverage, a bank box, or a depository’s annual fee.
• IRA fees, if the gold is in a retirement account. Our gold IRA fees guide shows two custodians’ published fee schedules.
• Tax when you sell. Gains are taxed as gains on collectibles, at up to 28% for gold held more than a year.

Where costs get out of hand

Regulators keep finding the same pattern: a dealer sells common coins at huge markups, often to retirees moving IRA money. The Commodity Futures Trading Commission says it has seen markups of 30% to 300% or more. In one case it brought with 30 states in 2020, dealers sold bullion coins to more than 1,600 people, mostly elderly, at 100% to more than 300% over the market price. In another, customers paid about $69 million for coins worth about $30 million.

Our list of red flags when buying gold covers how these sales work.

How to check a quote

1. Look up the spot price at the moment you get the quote.
2. Ask for the premium per ounce, in dollars and as a percentage.
3. Ask what the dealer would pay you to buy the same product back today.
4. Price the same product at two or three other dealers.
5. Get every fee in writing before you pay. The CFTC calls missing written fees a red flag.

Frequently asked questions