Premium (Agio)
Also: agio, premium, coin surcharge, dealer surcharge
The premium (agio) is how much the sale price of a precious-metal coin or bar sits above its current metal value (spot price).
Buy a gold coin or a silver bar and you will nearly always hand over more than the bare metal is worth. That gap between what the dealer charges and the prevailing spot price is known as the premium — or, in market parlance, the agio. Far from being a concealed charge, it covers the genuine costs of the physical precious-metal chain: striking the product, transport, insurance, the dealer's margin and — in the case of silver and platinum — value-added tax.
Formula and calculation
You can state the premium either as an absolute figure (in euros) or as a proportion (a percentage):
Premium (€) = selling price − (spot price × fine weight in oz)
Premium (%) = (selling price / (spot price × fine weight) − 1) × 100
Example: Suppose the gold price is €2,800/oz. A Krugerrand (916 gold, 1 oz fine weight, gross weight around 1.09 oz owing to its copper content) is priced at €2,900 by the dealer.
Premium (€) = 2,900 − 2,800 = 100 €
Premium (%) = (2,900 / 2,800 − 1) × 100 ≈ 3.57%
The purchase price calculator shows you the reverse side of the coin — namely how much a dealer knocks off when buying back — and the gap between the buy-side and sell-side premium is the spread.
Factors influencing the size of the premium
The premium is anything but fixed; several variables push it around:
| 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 situation | High demand / supply shortages drive premiums up |
| VAT | Silver, platinum, palladium: 18% VAT (Malta standard rate) or margin scheme |
| Origin | EU mintings often cheaper (no customs/import) |
| Dealer structure | Online direct dealers vs. coin trade/bank |
Denomination effect – gold bar table
| 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 logic behind this is straightforward: fixed outlays for packaging, the certificate and insurance accrue no matter the weight, so they are shared across a smaller amount of metal.
Premium on silver – the tax effect
In Malta, silver carries the standard VAT rate of 18%, which makes up a sizeable slice of the headline premium an investor ends up paying. Under certain conditions EU dealers can apply the margin scheme, taxing only the trading margin — which brings the surcharge down. Whenever you weigh up silver offers, check whether the quoted price already contains VAT. Note: tax effects depend on the individual case — this is not tax advice.
Premium and resale
When you sell, the dealer normally hands none of the premium back — they buy at, or just under, the spot price. The consequence: sell physical metal soon after buying it and you first have to recoup the premium before you move into profit. On gold bars with a slim premium (< 2%) the break-even point is close by; on high-premium collector coins it can sit a long way off.
For those investing over the long haul the premium matters less, since as a percentage it dwindles as the metal price climbs. That said, anyone buying silver or platinum should bear in mind that the VAT paid is not returned when selling to a private dealer.
Premium comparison: bullion coins at a glance
| Coin | Metal | Typical buying 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 | 15–25% (incl. VAT) |
| Maple Leaf | Silver | 16–28% (incl. VAT) |
Feed a product into the melt value calculator and it returns the pure metal value — the shortfall against the purchase price is the absolute premium.
Premium as a market indicator
When crisis strikes, premiums often surge: once demand for physical gold and silver outstrips what is on offer (supply shortages at mints or refineries), the premium on bullion coins can briefly climb to two or three times its usual level. In this way the premium doubles as an indirect gauge of sentiment toward physical metal — separate from the spot market price, which is set through futures and the LBMA fixing process.
In brief
The premium (agio) is the inescapable mark-up over the spot price that buyers of physical precious metals pay to cover minting, logistics and the dealer's margin. It rewards you to shop premiums around, lean toward economical denominations and account for the tax element on silver — because a lower premium at purchase means you break into profit sooner when you resell.