When buying physical gold or silver, the price of a bar or coin is usually higher than the current spot price. The difference is known as the bullion premium.

Premiums vary between products. A large cast bar may have a relatively low premium, while a smaller minted bar, bullion coin or collectable can cost considerably more per ounce.

Understanding why these differences exist helps you compare bullion properly and choose the product that best matches your priorities — whether that's lower cost per ounce, smaller denominations, a particular coin or the ability to build holdings without taking physical delivery.

The spot price represents the current market value of the gold or silver itself.

Physical bullion costs more because there are additional costs involved in refining the metal, manufacturing the bar or coin, transporting and insuring it, and supplying it to the customer.

The amount paid above the value of the precious metal is the premium.

For example, if silver is trading at $100 per ounce and a 1oz silver coin costs $115, the $15 difference is the premium.

The size, manufacturing method, condition, availability and demand for a product can all affect its premium. This is why two bullion products containing the same weight of gold or silver can have different prices.

How Premiums Differ Between Bullion Products

Larger cast bars will generally have some of the lowest premiums per ounce among physical bullion products.

Cast bars are relatively simple to manufacture, while the costs of producing, handling and supplying each bar are spread across a larger amount of metal.

For buyers primarily focused on acquiring more physical gold or silver for their money, larger gold bullion and silver bullion cast bars are often worth comparing.

Smaller minted bars and coins will generally have a higher premium per ounce.

There is less metal across which to spread manufacturing and handling costs, while minted products can also require more detailed production, finishing and packaging than cast bars.

The trade-off is flexibility. Owning several smaller bars or coins allows you to sell part of your holding without having to sell one larger bullion product.

 provides another way to reduce the premium on physical bullion.

These are pre-owned bullion products offered at a lower premium than their equivalent new products. Year and condition vary with available stock, and products may show handling, storage, toning or other cosmetic marks.

Each Dealer's Choice product is checked for weight and purity before resale. Best Bullion also buys Dealer's Choice bullion back based on the same metal value as an equivalent new bullion product, meaning cosmetic condition does not reduce its underlying bullion buyback value.

For buyers primarily interested in the gold or silver content rather than receiving a brand-new product or particular year, Dealer's Choice can provide a lower-premium physical bullion option.

Vault Held approaches premiums differently because you build your holding by weight rather than purchasing an individual bar or coin.

 is purchased at 2.5% above spot. Storage and insurance are included at no additional cost.

You can continue holding, add to your balance or sell during Best Bullion's trading hours from anywhere in New Zealand without needing to transport physical bullion back to us.

If you later want to take physical bullion, your holding can be redeemed towards an available bar or coin, with the applicable conversion cost paid at that time.

Collectable and limited-mintage products can carry higher premiums than standard investment bullion.

Their price may reflect additional manufacturing, detailed designs, presentation or packaging, limited production and demand for the particular release.

This makes the buying decision different from a standard cast bar. If your main objective is acquiring the greatest metal weight for your money, the additional premium may not be necessary. If you value a particular design, series, mint or limited release, those characteristics form part of the product you're purchasing.

The premium should be considered alongside what you want from the product.

 - lower premiums per ounce and suited to buyers focused on acquiring more physical metal for their money.

- higher premiums, but provide smaller denominations and greater flexibility when selling.

 - lower-premium physical bullion for buyers who prioritise metal content over receiving a new product or specific year.

- our lowest premium option for building precious-metal holdings, with gold available at spot and silver at 2.5% above spot. Your holdings are securely stored and insured at no additional cost, with no need to take physical delivery.


 - generally higher premiums, with additional value placed on factors such as design, mintage, presentation and demand for the particular product.

There is no single premium or product type that suits every bullion buyer. The important part is understanding what you're paying above the metal value and what you're receiving in return.

You can compare current products and prices across Best Bullion's 

London Bullion Market Association — Precious Metals Prices and Market Information

This article is for general information and education only. It does not provide financial, investment or personal advice. Precious metal prices can rise or fall.

Learn why physical gold and silver cost more than spot and how premiums differ across bullion products.