Spread
Also: Bid-ask spread, Bid-offer spread, Dealing spread
The spread is the difference between the buying price (bid) and the selling price (ask) of a precious metal, and it represents the dealer's implicit trading margin.
The spread — also called the bid-ask or bid-offer spread — is one of the key figures when buying and selling precious metals. It denotes the gap between the price at which a dealer buys (the bid) and the price at which the dealer sells (the ask). Anyone who buys a gold coin today and sells it again straight away inevitably takes a loss equal to the spread — without the market price having moved by so much as a cent. The spot price always sits somewhere between the bid and the ask.
Formula and calculation
Spread (absolute) = Ask price − Bid price
Spread (in %) = ((Ask − Bid) / Ask) × 100
Example: a dealer offers a 1-ounce gold coin for EUR 2,380 (ask) and buys it back for EUR 2,310 (bid). The spread is EUR 70, or roughly 2.9%.
The buying price calculator shows you what a realistic buy-back value would be at current market prices.
Spot market versus physical trading
On the professional interbank market (the OTC spot market in London) spreads for gold are extremely tight: large participants trade standard lots of 100 troy ounces at spreads sometimes as narrow as 0.05–0.30 USD per ounce. Private investors buying physical gold or silver pay considerably wider spreads, because the following cost factors are priced in:
- Minting and manufacture (particularly high on coins)
- Logistics and insurance (transport, storage, delivery)
- The dealer's liquidity buffer (protection against price swings in inventory)
- Distribution and operations (platform costs, staff, regulation)
Spread comparison by product type
| Product | Typical spread over spot | Liquidity |
|---|---|---|
| Large gold bar (400 oz, LBMA Good Delivery) | 0.1–0.5% | Very high |
| Kilo gold bar (private investor) | 0.5–1.5% | High |
| Krugerrand / Maple Leaf 1 oz | 2–5% | Medium–high |
| Small gold bar (1 g) | 8–15% | Low |
| Silver coin 1 oz | 5–15% | Medium |
| Kilo silver bar | 3–7% | Medium |
| Platinum coin 1 oz | 4–10% | Low |
Note: these figures are guide values and vary with the supplier, market conditions and order size.
What drives the size of the spread
1. Market liquidity: gold is the most liquid physical precious metal in the world — and its spreads are correspondingly tight. Silver, platinum and palladium generally show wider percentage spreads at the same denomination.
2. Denomination: small units carry relatively high manufacturing costs — a 1-gram gold bar costs almost as much to make as a 10-gram bar, yet its metal value is ten times smaller. As a result the percentage spread rises sharply as size falls.
3. Market volatility: in times of crisis, during sharp price moves, or when liquidity is thin (public holidays, say), dealers widen their spreads to cover the increased price risk. Keeping an eye on the current gold price helps you recognise such phases by rapidly changing quotes.
4. Competition: where many suppliers compete, margins fall. High-volume online dealers can offer tighter spreads than local coin shops.
5. Premium (agio): in physical trading the spread is often communicated as part of the premium. Besides the dealer's spread, the premium also covers manufacturing costs and, where applicable, taxes (VAT on silver in Ireland at 23%).
The spread on selling: the buying price
Anyone selling physical precious metal always receives the buying price — the dealer's bid. This sits below the current spot price. The gap between the price paid on purchase (ask) and the price received on resale (bid) equals the full spread that you as an investor have to bear.
For a realistic return calculation the spread should therefore be understood as an "entry cost": the metal must first rise in value by at least the spread amount before a position moves into profit.
Note: return and tax calculations vary from person to person. This does not constitute investment or tax advice.
Spread versus premium: the difference
The term premium (agio) is used more broadly in physical precious-metal trading. It describes the entire mark-up over the spot price — including minting costs, logistics, the dealer's margin and (on silver) VAT. The spread in the narrow sense is only the gap between the buying and selling price of the same dealer. In practice, though, the two terms are often used interchangeably.
Quick recap
The spread is the unavoidable transaction cost of physical precious-metal trading: the larger the denomination, the more liquid the metal and the calmer the market, the narrower the spread. Comparing offers before you buy and sticking to standardised products noticeably reduces the spread disadvantage — and thereby improves the return efficiency of your investment.