Premium Over Spot

How to calculate the premium

Premium (%) = (price paid / metal value at spot - 1) x 100. Metal value is the fine weight in troy ounces multiplied by the spot price in pounds.

Example with fixed numbers

Assume spot is £1,600 per ounce (an illustration, not today's price). A 1 oz gold Britannia contains exactly one ounce, so metal value is £1,600. If the coin costs £1,664, the premium is 1,664 / 1,600 - 1 = 4%. A Sovereign holds 0.2354 oz, so its metal value is £376.64. At £403 the premium is 7%. Small coins nearly always carry a higher percentage premium than 1 oz coins.

What drives the premium

• Size. Minting and handling cost about the same for a small coin as a large one, so smaller pieces cost more per gram.
• Product type. Bars usually have lower premiums than coins; proof and limited editions are priced as numismatic coins.
• VAT. Gold bullion is VAT free in the UK, but new silver carries 20% VAT, which is why silver premiums look so much higher.
• Demand. When buyers rush in, mints and dealers run short and premiums rise.
• Payment and quantity. Many UK dealers charge less for bank transfer than card, and offer tiered prices for larger orders.

Compare the delivered price, not the headline price

A low headline price can hide a delivery charge, an insurance fee or a minimum order. Two dealers with the same coin price can end up several pounds apart once shipping is added, and on a single Sovereign that changes the premium noticeably. That is why metalsradar ranks offers by the real final cost including delivery, not the shelf price.

Also look at the other side of the trade. A low premium is less useful if the dealer's buyback price is weak; the bid-ask spread shows the total cost of buying and later selling.

Start with the lowest delivered premiums on gold coins in the UK, or compare one product across shops on the 1 oz Krugerrand page. For silver, the silver coin ranking includes VAT in the final price.