Which are better - coins or bars?
This depends primarily on your purpose for buying physical precious metal. We discuss some of the issues to consider on our Product Comparison webpage and Bullion Bars webpage.
What are premiums?
Premiums (also known as fabrication charges) represent the cost of refining precious metal to a required purity (for example 99.99%) and then manufacturing it into various forms (such as bars and coins).
Why are gold premiums higher than silver for the same size product?
The price difference is due to:
- Refining - gold has to go through more processes to reach 99.99% purity than silver needs to reach 99.9%.
- Manufacturing - because silver is harder than gold, it can be stamped more quickly. Gold's softness means more care has to be taken during the manufacturing process to achieve the same quality finish.
While silver premiums are lower, as a percentage of the metal value they are quite high because silver is much cheaper per ounce than gold.
Will I get my premium back when I sell?
Bullion dealers usually buy back physical metal at spot price or just below spot price but above spot prices can be offered. Factors that determine buy back prices include:
- Physical condition and age - if the coin or bar is scratched, tarnished or has an old date (in the case of coins), the bullion dealer may not be able to resell it and it will have to be sent back and melted. It is therefore a good idea to keep coins in their protective capsule.
- Rarity - this is usually more of a factor with numismatic coins, but as The Perth Mint's smaller bullion coins do have limited mintages, rarity value can occur. Bars rarely gain rarity value, unless they are very old and/or unusual.
- Demand - if the bullion dealer has local demand for that size coin or bar, it will be cheaper for them to buy-back than pay for new stock from the manufacturer.
It is a good idea to contact your local bullion dealers, as prices can vary depending upon their individual situation. The same applies to purchasing. For example, if a bullion dealer has just purchased a large number of coins from a seller, they may be keen to sell them to you at a discount rather than paying to ship them back to the Mint for melting.