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I have a quick question concerning the pricing of gold bullion. I've never purchased gold as I've always been more interested in silver but I priced buying some Gold Eagles and noticed that both the buying price and the selling price on APMEX were above spot price at that time. Is that typical of gold? For silver, I'm more accustomed to seeing buy prices 7% below spot and selling price either at spot or just above (for ASEs).

I'm trying to figure out why the market would have a spot price that is less than the buy price. Was that just an anomaly with APMEX for yesterday? I know I could watch the market and visit other selling sites to answer this question in one form by myself. I suspect that there is always a premium for physical gold above spot that causes this but what I'm really interested in is getting that presumption confirmed. And augmented if there's another factor at play here that I'm overlooking.

Thank you in advance for your response.

SilverJack wrote:I have a quick question concerning the pricing of gold bullion. I've never purchased gold as I've always been more interested in silver but I priced buying some Gold Eagles and noticed that both the buying price and the selling price on APMEX were above spot price at that time. Is that typical of gold? For silver, I'm more accustomed to seeing buy prices 7% below spot and selling price either at spot or just above (for ASEs).

I'm trying to figure out why the market would have a spot price that is less than the buy price. Was that just an anomaly with APMEX for yesterday? I know I could watch the market and visit other selling sites to answer this question in one form by myself. I suspect that there is always a premium for physical gold above spot that causes this but what I'm really interested in is getting that presumption confirmed. And augmented if there's another factor at play here that I'm overlooking.

Thank you in advance for your response.

The disparity you note is related to supply and demand function. The harder it is for them (online dealers) to source gold (APMEX told me they CAN'T keep gold fracs in stock) the more of a premium they're willing to offer above spot to buy. This premium is a truer indication of scarcity than fluctuations in the melt price of gold, regardless of all the market rigging that occurs. During price drops (when people are unwilling to sell to them), you'll observe the premium increase and, likely, during price spikes (when many rush to sell) you'll see the disparity narrow and fall back closer to, or below, melt. You're already aware that Krugs carry the lowest premium, AGE's and Maples the highest... again, related to their availability on the secondary market.

SilverJack wrote: For silver, I'm more accustomed to seeing buy prices 7% below spot and selling price either at spot or just above (for ASEs).

Where are you buying ASE's for spot [or even just over] ?
a 10% premium is about the lowest I see the go for.

Right now it is typical for dealers to pay $30-$50 over spot to acquire gold eagles.
They will then sell them for more than their buy price.
There is a lot of demand right now because gold spot is kinda low.
Maples are lower than eagles.
bars are lower than maples.
The pricing is because of desirable coins versus less desirable coins.
Foreign gold usually is less than the above mentioned.
When gold skyrockets the buy prices will be less above spot because there will be less buyers.