Gold and Silver are the most common precious metals that are bought and sold almost every day. The metals get their prices decided on the market forces through trading and investing in the commodity markets. That decides the market price (often called spot price) of these metals.
But, when you actually decide to buy gold or silver in the market, whether it is jewelry or coins, you often have to pay more than the market price. That is called paying premium. Premium charges are related to running the business, profit margin, collectible value. These charges are necessary for production and availability.
How can you avoid paying a high premium price?
The market price of gold and silver doesn’t include taxes and making charges. So, when you’re actually making the purchase, the cost incurred by you is actually different. That essentially means when you buy gold and silver in small quantities, you end up paying a lot. For example, the premium that you pay on 10 gm Gold coin will be much lower when you pay the premium on a 1 gm or a 5 gm Gold coin.
Thus, to avoid paying high premiums, one must accumulate and save money to buy higher quantities. This is, of course, a different scenario when you need to buy a particular quantity. But, if you usually buy for investing in these metals, this must be considered and paying higher premiums should be definitely avoided.