Premium (Over Spot)
Definition
A premium is the amount you pay above the spot price when buying a physical coin or bar. It covers minting, distribution, and dealer costs, and is usually quoted as a dollar amount or percentage over spot.
Premiums explain why a one-ounce coin costs more than the metal it contains.
Why it matters
The premium is the part of the price you have the most control over. Two products can hold the same amount of metal yet carry very different premiums depending on form, brand, mintage, and demand. Watching premiums helps you avoid overpaying.
In practice
Larger bars generally carry lower premiums per ounce than small coins because fabrication is spread across more metal. Government-minted coins like American Eagles often cost more than generic rounds. Premiums also widen during periods of high demand or tight supply.
Common confusion
A premium is not the same as a numismatic value. Bullion premiums are tied to fabrication and market conditions, while numismatic premiums reflect rarity and collector demand. When selling, you usually recover little of the premium you paid, so it is best treated as a cost of acquiring physical metal.