Premium (Agio)
Also: agio, markup, coin premium, dealer surcharge
The premium (agio) is the amount by which the selling price of a precious-metal coin or bar exceeds the current metal value (spot price).
Anyone buying a gold coin or a silver bar almost always pays more than the bare metal value. The gap between the dealer's selling price and the current spot price is called the premium — in financial jargon the agio. The premium is not a hidden fee but compensation for real costs along the physical precious-metal chain: minting, logistics, insurance, dealer margin and — for silver and platinum — VAT.
Formula and calculation
The premium can be expressed in absolute terms (in euro) or relative terms (as a percentage):
Premium (€) = selling price − (spot price × fine weight in oz)
Premium (%) = (selling price / (spot price × fine weight) − 1) × 100
Example: the gold price stands at EUR 2,800/oz. A Krugerrand (916 gold, 1 oz fine weight, gross weight around 1.09 oz because of its copper content) sells in the trade for EUR 2,900.
Premium (€) = 2,900 − 2,800 = EUR 100
Premium (%) = (2,900 / 2,800 − 1) × 100 ≈ 3.57 %
The buying-price calculator shows the mirror image — how much a dealer knocks off on buy-back — and the difference between the buy and sell premium is the spread.
What drives the size of the premium
The premium is not fixed; it turns on several variables:
| Factor | Effect on the premium |
|---|---|
| Denomination | Smaller units (1 g, 1/10 oz) = higher relative premium |
| Product type | Bars < bullion coins < collector coins (proof) |
| Market conditions | Strong demand / supply shortages push premiums up |
| VAT | Silver, platinum, palladium: +23 % Irish VAT, or the margin scheme |
| Origin | EU mintings are often cheaper (no customs/import) |
| Dealer structure | Online direct sellers vs. coin shop / bank |
Denomination effect — gold bars
| Weight | Typical premium (%) |
|---|---|
| 1 g | 8–15 % |
| 5 g | 4–8 % |
| 10 g | 3–5 % |
| 1 oz (~31.1 g) | 2–4 % |
| 100 g | 1.5–3 % |
| 1 kg | 0.8–2 % |
The reasoning is simple: fixed costs for packaging, certificate and insurance arise regardless of weight and are spread over a smaller amount of metal.
Premium on silver — the tax effect
Silver carries the standard Irish VAT rate of 23 %. That accounts for a substantial share of the nominal premium an investor pays. Dealers within the EU may, in some cases, apply the margin scheme, under which only the trading margin is taxed — which lowers the markup. When comparing silver offers it always pays to check whether the quoted price includes VAT. Note: tax effects depend on the individual case — this is not tax advice.
Premium and resale
On sale, the dealer generally pays no premium back — they buy close to spot or slightly below. That means anyone who buys and sells physical metal over a short horizon must first "earn back" the premium before moving into profit. With gold bars carrying a low premium (< 2 %) the break-even threshold is modest; with collector coins on a high premium it can be very high.
For long-term investors the premium matters less, since as a percentage it shrinks as the metal price rises. Anyone buying silver or platinum, however, should bear in mind that VAT paid is not refunded on sale to a private dealer.
Premium comparison: bullion coins at a glance
| Coin | Metal | Typical buy premium (1 oz) |
|---|---|---|
| Krugerrand | Gold | 2–4 % |
| Vienna Philharmonic | Gold | 2–4 % |
| Maple Leaf | Gold | 2.5–5 % |
| American Eagle | Gold | 3–6 % |
| Vienna Philharmonic | Silver | 18–28 % (incl. VAT) |
| Maple Leaf | Silver | 20–31 % (incl. VAT) |
With the melt-value calculator you can establish the pure metal value of a product — the difference to the purchase price is the absolute premium.
Premium as a market indicator
In times of crisis premiums often shoot up: when demand for physical gold and silver outstrips available supply (shortages at mints or refiners), the premium on bullion coins can briefly climb to double or triple its normal level. The premium is therefore an indirect sentiment gauge for physical-metal demand — independent of the spot market price, which is formed via futures and the LBMA fixing process.
In brief
The premium (agio) is the unavoidable surcharge on top of spot that buyers of physical precious metals pay for minting, logistics and dealer margin. It pays to compare premiums actively, to favour cost-efficient denominations, and to factor in the VAT component on silver — because the lower the premium on purchase, the sooner you come out ahead on resale.