Buying Price
Also: Buy-back price, Bid price, Purchase price
The buying price is the price a dealer or refinery pays a private seller to purchase precious metals - it is always below the current spot price.
The buying price denotes the amount a precious-metal dealer, a bank or a refinery pays a private seller for their gold, silver, platinum or palladium. It is the opposite side of the dealer selling price and is fundamentally below the current spot price, because dealers must factor in their purchasing, their operating costs and their price risk.
When selling coins or bars, you should know the current gold price or silver price in order to assess your own offer correctly.
How does the buying price arise?
The starting point of every buying calculation is the international spot market price, established at the LBMA in London or the COMEX in New York. From this the dealer subtracts various items:
- Trading spread - the difference between buy and sell price, which covers operating costs and profit.
- Melting and testing costs - for scrap gold, jewellery or dental alloys the fineness must first be analysed (X-ray fluorescence analysis, melt sample).
- Price and storage risk - prices can fluctuate between purchase and onward sale.
- Minting premium or deduction - for collector coins with a premium price, the dealer may take market demand into account.
The calculation formula is, simplified:
Buying price = spot price × fineness × weight - dealer deduction
Specifically for a 14-carat gold ring with 5 g gross weight (assumed spot price £70/g):
Fine weight = 5 g × 0.585 = 2.925 g
Material value = 2.925 g × £70/g = £204.75
Buying price ≈ £204.75 × 0.90 = £184.28 (example, 10 % dealer deduction)
The exact value for your own objects is determined by the Melt Value Calculator or the Purchase Price Calculator.
Buying price by product category
The size of the discount to the spot price depends heavily on how easily the material can be resold:
| Category | Typical discount to spot | Note |
|---|---|---|
| Standard coins (Krugerrand, Philharmonic) | 0 - 3 % | High liquidity, simple authenticity verification |
| Common gold bars (LBMA Good Delivery) | 0.5 - 2 % | Immediate onward sale possible |
| Small bars (1 - 10 g) | 2 - 6 % | Higher unit costs relative to value |
| Jewellery / 585 gold | 5 - 15 % | Melting costs + alloy analysis |
| Dental gold / dental alloys | 8 - 20 % | Elaborate processing |
| Broken gold, granules | 5 - 18 % | Strongly variable by fineness |
Note: These ranges are guideline values and vary by dealer, market situation and quantity.
Distinction: spot price, bid price and buying price
The terms are frequently confused in everyday use:
- Spot price - the current market price on international exchanges for immediate delivery, usually per troy ounce in US dollars.
- Bid price - the price at which a market maker buys on the interbank market; in wholesale only a few cents below spot.
- Buying price (retail) - the actual amount a private seller receives; includes the full trading spread plus any testing and melting costs.
The spread between buying price and selling price is thus the central quality feature of a dealer's offer.
Tax notes
In the United Kingdom, no VAT is charged on the sale of investment gold (999 bars, qualifying coins). Gains on the disposal of precious metals may, however, be subject to Capital Gains Tax where they exceed the annual exempt amount; UK legal-tender coins from The Royal Mint (such as the Sovereign or Britannia) are CGT-exempt. There is no German one-year speculation period. This is not tax or investment advice; please consult an accountant in individual cases.
Dealers buying precious metals must comply with the UK Money Laundering Regulations, which require customer due diligence and identity verification - the seller must then identify themselves with valid photographic ID.
Tips for the best possible buying price
- Obtain comparisons: get at least three offers - an online buyer, a regional dealer and a refinery.
- Watch the timing: selling when the spot price is high considerably improves the absolute yield.
- Identify the product: common coins achieve better terms than unknown pieces, because the dealer has no testing effort.
- Bundle quantity: larger quantities are often bought on more favourable terms.
- Know the fineness: for jewellery it is worth knowing the fineness in advance - for instance from the stamp (585, 750) - to assess offers better.
In brief
The buying price is always the price from the dealer's perspective - the dealer buys, the private seller sells. The more liquid and standardised the precious metal, the smaller the discount to the spot price and the fairer the achievable result. A simple comparison with the current gold price or the Melt Value Calculator helps to spot excessive deductions.