When you buy larger rounds and bars, you pay less per ounce than you do when you buy smaller bars and rounds.
The price of precious metals products is determined by more than just the weight of the metal. The expenses the manufacturer and dealer incur in mining, minting, and storing the metal are factored into the price.
If you compare smaller bars, like one-ounce bars, with ten-ounce bars, the higher cost per unit of the smaller bar represents a higher premium. This higher premium represents a fixed cost to produce a round or bar, regardless of the size of the product.
Since this is a fixed cost, the premium per unit is lower for rounds and bars with more units.
What Determines the Premium of a Precious Metals Product?
When you buy a gold or silver product, you pay more than the current spot price for the metal.
The cost of a precious metal product depends on factors like the spot price, market demand, the amount of precious metal in the product, and the product’s production cost. We refer to the amount over the live spot price of gold or silver as the premium.
The premium reflects production costs and the demand for an item.
The production cost represents mining, refining, minting, transporting, and storing a product before it is sold and shipped. Unique bars and rounds, or those requiring special dies, may carry a higher premium since the production workflow represents high production efforts.
Bars and rounds with a higher quantity of precious metal are less expensive per ounce because their production costs are proportionately lower than smaller bars and rounds.
In addition to production costs, demand can also drive the premium. With increased demand comes increased scarcity, which is one of the driving forces of the expenses for precious metals.
Other Factors That Impact the Premium of a Precious Metal Product
Smaller bars are often more popular for buying than larger bars, which adds gravity to the premium of smaller products.
Another factor that can impact the premium on a precious metals product is the bar’s or round’s manufacturer.
Bars and rounds produced by well-known manufacturers are often in greater demand than those not, and some buyers may consider these well-known products to be higher quality. While they may have the same amount of precious metals with the same level of fineness, their demand results in greater scarcity, which can also impact the premium.
Can I Buy Silver or Gold at Spot?
The spot price reflects the actual value of the metal, and the added premium is essential for maintaining the operations of the entire supply chain. Without this premium, the metal would remain unmined, and a viable market would not exist. Should you encounter silver priced below the spot price, skepticism regarding the offer is advisable.
What Products Have Lower Premiums?
For those interested in obtaining substantial silver holdings with the benefit of lower premiums per ounce, our selection of 100 oz silver APMEX bars is an ideal choice. These bars not only offer a cost-effective way to invest in silver but also provide the convenience of holding a significant amount of silver in a single, easily manageable form. Perfect for both seasoned investors and those looking to expand their portfolios, 100 oz silver bars strike a balance between value and practicality.
Another way to reduce the premium you pay on your precious metals is to purchase trusted secondary market options. These offer slightly lower premiums compared to brand new gold and silver products. For example, our 100 ounce secondary market silver bars are a popular way to help you maximize your investment.
