Premium when buying gold & other precious metals
Whoever buys a gold coin with 1 ounce of fine gold from a precious metal dealer or a bank always pays more than the "gold spot", i.e. the general gold price on the world market, currently shows. This difference, i.e. the additional cost of a gold, silver or platinum coin at the time of purchase compared to the current price of the metal is called the "premium".
What is the composition of the premium?
The production, trading and storage of precious metal products incur costs. In addition, precious metal dealers also have to make a profit on the sale of their products in order to run their business.
All these costs are included in the premium that investors pay for physical gold, silver, platinum....
Is the premium always the same?
No, the premiums of different gold, silver or platinum products sometimes differ significantly from each other. In general, it can be said that the premium for bars is usually lower than for coins.
For the simple reason that bars usually cost less to produce than minting a coin.Unit cost also makes a difference in the premium. If you buy ten 1/10 ounce gold coins, you will pay more in total for the same amount of gold than if you buy one 1/1 ounce gold coin.
In addition, there is also the market principle of supply and demand. In case of increased demand and/or reduced supply of a physical gold product, sellers can increase the premiums because buyers are willing to pay them.
When demand for physical gold increased rapidly during the first Corona Lockdown, resulting in supply problems for coins and bars, dealers were also able to increase premiums. As a result, the availability and mobility of a product also has an impact on the price premiums. For common gold coins, the markup is lower than for "exotics".
Taxes on gold and other precious metals.
While gold is tax-free in Austria, as in the entire EU, other precious metals (silver, platinum or palladium) are subject to sales tax. This alone makes these products more expensive to buy than money.
While the cost of manufacturing, trading and storing silver products is similar to that of gold, it represents a higher percentage relative to the lower material value.
Usual premiums for gold & silver
In recent months and years, the premiums for gold in common denominations have been in the range of 2% to 5%, with the premium for bars always being lower than that for coins.
For silver products, the premiums were long between 25% and 30%. However, due to the end of the common differential taxation, these rose in October to up to 50%(!) for silver coins.
Buy gold with low premium
Therefore, if you want to buy gold and other precious metals with the lowest possible premiums, it is recommended to buy common products in large denominations.
But be careful! The supposedly most favorable offer is not always the best for you and your individual situation. Depending on the goal you are pursuing with your gold investment, other characteristics may be important in addition to the premium. Come to one of our branches at any time for a personal, non-binding and serious consultation.
In a personal conversation we get a picture of your motives to invest in gold. Based on this, we work together to develop a denomination that is tailored to you personally, from the metals that are most suitable for you.