When purchasing gold and silver bullion you are most likely motivated by the spot price, or market driven price, of your desired commodity. However, when it comes to purchasing your physical bullion there’s a little thing called a “premium” that can increase your overall purchase by a significant margin.

In an ideal world you’d get what you paid for at the intrinsic price, but in the wonderful world of business and economics the product must be processed, shipped to a wholesaler, then sometimes to a retail distributer, and finally to your bullion dealer. Precious metals are no different than the shirt on your back and the iPhone in your pocket. There’s a “premium” or an additional cost to bullion above and beyond the market value of the precious metal commodity it contains.

Premiums can also vary in the type of coin or round. Even at the same weight, the price could differ. An American Eagle can have a higher premium than let’s say your run of the mill one ounce round because of wholesale pricing, demand, and condition.

But what is a fair mark up on an ounce of gold or silver?

In the industry anything below 7% seems to be a fair markup. Or at least that’s what the market seems to be spouting. So before adding in your tax on the purchase (which is isn’t a problem in some states) you also need to add the 5-7% premium to the current spot price to find what you’ll actually be paying for the metal. If you’re purchasing from a dealer that is tacking on more than 7%, you should reevaluate. Might I add, that even 7% is the high end of the fair premiums. There are plenty of places online and near you that can probably offer you a much better price.

For more advice on how to shop for the best bullion dealer, read Peter Schiff’s latest Gold Scam Report.

Happy buying!

-Megan