Premium over spot is the amount you pay above the metal value of a coin or bar, usually shown as a percentage. It covers minting, dealer costs, delivery and, where it applies, VAT.
How to calculate the premium
The formula is short:
Premium % = (final price − metal value) ÷ metal value × 100
Metal value is the fine weight multiplied by the spot price in AED. Use fine weight, not gross weight; a Krugerrand weighs 33.93 g but holds one troy ounce of gold.
Worked example with round numbers
Imagine the metal value of one ounce is AED 11,000 (an illustration, not today's price). A dealer lists a 1 oz Britannia at AED 11,330 with delivery at AED 50. Your final cost is AED 11,380, so the premium is 380 ÷ 11,000 = 3.5%. Another dealer lists a TT bar, which holds 3.75 oz. Metal value AED 41,250, price AED 42,075, free collection: premium 2%. The bar is cheaper per ounce, but you need a larger budget.
What drives premiums in the UAE
- Size: small bars of 1 g to 10 g carry the highest premiums; kilobars and TT bars the lowest.
- Product: famous coins cost more to mint than cast bars.
- VAT: gold below 99% purity, such as a 22 carat coin, attracts 5% VAT, which acts as an extra premium. See VAT on gold in the UAE.
- Demand: when buyers rush in, dealers widen margins.
- Payment method: some dealers price card payments higher than bank transfer.
- Delivery: insured shipping across the Emirates is not always included.
Why we compare the final price
A low listed price can hide a delivery fee or a card surcharge. Our cheapest gold coins in the UAE ranking sorts offers by the real final price, delivery included, and expresses it as a premium so a 1 oz coin and a 1 kg bar can be judged on the same scale. For silver, where premiums run higher in percentage terms, see the cheapest silver coins ranking.
Remember the other side too. A low entry premium matters less if the dealer's buy back price is weak. The full round trip cost is the bid-ask spread.
Related terms
Spot Price Bid-Ask Spread VAT on Gold in the UAE Troy Ounce
FAQ
What is a good premium over spot for gold in the UAE?
There is no fixed number, because premiums change daily with demand, but large bars and common 1 oz coins usually carry the lowest premiums.
Why is the premium on small gold bars so high?
Minting, packaging and handling cost almost the same for a 1 g bar as for a 100 g bar, so the cost per gram is much higher.
Does the premium include VAT?
It should, because VAT is part of what you pay; comparing prices after VAT and delivery gives the real premium.