How is the price of gold calculated?

Before you buy gold coins or gold bullion from any dealer you need to understand how the price of gold is worked out. You will then have a better understanding of how much you should be paying for your gold.

What is the spot price of gold? – the ‘spot’ price is the number you will see quoted in the financial pages of the newspaper and on the internet. To find out the current spot price you can have a look at the bullionvault price chart. The spot price of gold is often quoted in USD so you will need to take exchange rates into account when making your calculations. Most dealers will sell to you in Sterling if you are buying in the UK or on the internet. Be aware that the price of gold is constantly fluctuating so you will need to look it up on the day you make your purchase.

What is the premium for gold prices? – The premium is the difference between the spot price and the price any dealer is charging for their gold. This is basically the dealers profit. The premium will vary a lot depending on what sort of gold you are buying and where you are buying it from. It also depends on how much gold you are buying. In general though the premium will range from anywhere from 0.1% and 10%. If you are buying gold coins from a local dealer you can expect to pay around 5% -10% over the spot price, although you might be able to get it as low as 3% if you shop around. If you invest in gold via an online broker such as Bullionvault the premium will only be 0.8% which is probably the lowest price around today. This gets even lower if you are buying large quantities of gold.


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