Selling Price / Dealer Price
Also: Selling Price, Retail Price, Ask Price (retail), Offer Price
The dealer price is the price at which a precious metals dealer sells a product to the buyer – it is always above the spot price and includes minting or refining costs, the dealer margin and, where applicable, VAT.
The dealer price – also called the selling price or offer price – is the price a buyer pays when acquiring precious metal products (bars, coins, granules) from a commercial dealer. It is made up of the current spot price and a premium (agio) that covers all of the dealer's costs and margins. The dealer price is therefore always higher than the pure raw-material price on the international futures markets.
Composition of the Dealer Price
The dealer price results from several layers of cost:
| Component | Description | typical magnitude |
|---|---|---|
| Spot price | Current market price of the troy ounce | Base (100%) |
| Minting/production costs | Manufacturing effort for coins or bars | 1–4% |
| Dealer margin | Distributor's mark-up | 1–5% |
| Logistics & insurance | Transport, storage, insurance | 0.5–2% |
| VAT (where applicable) | 20% on silver, platinum, palladium; 0% on investment gold | variable |
For investment gold, VAT does not apply in the United Kingdom (HMRC; the metal is VAT-exempt), which is why the dealer premium is comparatively low there. For silver, platinum and palladium, on the other hand, most dealers charge the full standard rate of 20% VAT on the gross price. Some silver dealers instead apply the margin scheme (VAT Margin Scheme), under which VAT is levied only on the trading margin – this results in an effectively lower mark-up, but it varies from supplier to supplier.
Formula
Dealer price = spot price × fine weight + premium (abs.) + VAT (where applicable)
If you want to know the pure metal value of an item, you can determine it with the Melt Value Calculator. The difference between the melt value and the dealer price paid corresponds essentially to the premium.
Dealer Price vs. Buying Price
The buying price is the counterpart: the price at which the dealer buys the same item back. The difference between the dealer price (sale) and the buying price (buy-back) is known as the spread.
- Dealer price (ask): the buyer pays this price when buying.
- Buying price (bid): the seller receives this price when selling back.
- Spread: dealer price minus buying price – the implicit transaction fee.
A narrow spread (e.g. for 1 oz standard coins such as the Krugerrand) points to a liquid, competitive market. Exotic products, collector coins or small denominations often have considerably wider spreads.
Factors Influencing the Dealer Price
- Spot price movement: rising or falling precious metal prices immediately affect the dealer price.
- Denomination: small units (1 g, 2 g) carry proportionally higher production costs.
- Product type: minted bullion coins are more expensive than cast bars of the same weight.
- Demand situation: in times of crisis or supply bottlenecks, premiums can rise considerably.
- Dealer competition: more suppliers in the market push margins, and thus the dealer price, down.
Using the current gold price as a baseline, and comparing offers with the Purchase Price Calculator, helps buyers assess offers from different dealers objectively.
Tax Notes
From a tax perspective the dealer price is the acquisition cost. It is relevant for calculating any capital gain on disposal. In the United Kingdom, gains on the disposal of precious metals may be subject to Capital Gains Tax (CGT) above the annual exempt amount; UK legal-tender coins from The Royal Mint (such as the Sovereign or Britannia) are CGT-exempt. Note: this is not tax or investment advice – for your individual situation please consult a qualified adviser.
In Brief
The dealer price is the actual purchase price paid for physical precious metal and is always above the spot price. When comparing offers, always use the total price including shipping and taxes – the mark-up over the spot price is the decisive comparison criterion.