Why the buying price sits below the market price
Every price page carries two figures: the market price of the moment and what we pay. The second is always lower. Here is why, and how much lower it ought to be for which kind of gold.
What the market price is, and is not
The price you see everywhere – on the exchange, in the news, at the top of this site – is the price at which large lots of pure metal change hands between traders. A thousand ounces at a time, in a recognised vault, with a certified fineness.
Your chain is not that. It has to be weighed, tested, collected, transported, melted and refined before anything exists that can be traded at that price. That work costs money, and the difference is the margin.
So a buyer who says “we pay the day price” is saying something that cannot be. There is always a difference; the only question is whether they name it.
Where the difference goes
Four items, and they are nearly as high for ten grams as for a kilo. That is exactly why a larger lot earns a better price per gram: the fixed costs weigh far less heavily.
- Establishing what it is. Weighing, reading the hallmark, and in case of doubt an acid or X-ray measurement.
- Refining. A small part is lost in melting, and the refinery charges per lot – even when that lot is not full.
- Transport and insurance. Precious metal does not travel by ordinary post.
- Price risk. Time passes between the moment we pay you and the moment the lot is sold. In that time the price can fall.
You can always check it yourself. Every product page shows the price per gram and the amount we pay. Divide the second by the first and you have the percentage we hold back. We show those two figures side by side deliberately.
Why a bar sits closer to the market price than an old coin
Not all gold costs the same work. A bar from a recognised producer carries its fineness, weight and serial number on itself; it moves on virtually unchanged and never needs the smelter. That is where we hold back least.
A modern bullion coin – Krugerrand, Maple Leaf, Philharmonic – sits just behind it. Fixed weight, fixed fineness, tradable worldwide.
A Dutch ten-guilder piece or a Belgian twenty-franc coin asks more: checking the year and mint mark, judging whether the piece rises above material value, and it sits longer before a buyer appears. With historical coins that holds more strongly still.
Jewellery and scrap gold stand at the other end. Unknown fineness until it is measured, stones and springs that have to come out, and the melt is unavoidable.
What you may expect from a fair offer
Three things, and all three can be checked before you hand anything over.
The weight on calibrated scales, while you watch. The fineness, with the measurement shown – not “this is 14 carat” but a hallmark you can see yourself or a measurement you are standing next to. And the sum spoken out loud: so many grams, times that fineness, times the price per gram of fine metal.
If what comes out is a figure you cannot retell, there is no calculation but an outcome. Ask further, or go somewhere else. A valuation costs nothing and commits you to nothing.
- Collector value or material value: when not to meltMost gold and silver is worth its material, but not all of it. Which signs mark a piece that rises above melt value – and what not to do when it does.Read on
- Recognising and selling platinum and palladiumPlatinum weighs a third more than white gold and carries a different mark. How to tell them apart, where palladium sits, and why weight says more than colour.Read on
- Selling dental gold: what it fetchesCrowns often hold 60 to 90 percent precious metal but carry no hallmark. What dental gold weighs, why colour tells you nothing, and why you can leave the porcelain on.Read on
Questions about why the buying price sits below the market price
How far below the market price is the buying price?
That differs by type. Bars and bullion coins sit closest to it, scrap gold and jewellery furthest away. You can read today's exact percentage off any product page by dividing the amount we pay by the price per gram; both are shown.
Why do I get more for a larger lot?
Because the costs of testing, transport and refining are largely fixed. On a kilo they weigh far less per gram than on ten grams. We give that back in the price, not as a favour but as arithmetic.
Why does one buyer pay more than another?
Usually a different margin, sometimes because costs are deducted that only come up afterwards: melting fees, valuation fees, an administration charge. Always ask for the amount you will actually receive, not for the price per gram alone.
Can the price change between my valuation and the payment?
The market moves all day, so in theory yes. In practice we settle at the price at the moment of the transaction, and that figure is on the form you take home.
Is your question not listed? Ask it below, call 085 060 3009 or go to contact.
Still something unclear?
Ask it here. You will receive a personal reply by email, usually within one working day – no automated message and no phone call you did not ask for.
- An answer from a valuer, not from a template
- We keep your question so that you need not repeat anything
- No sales pitch afterwards
Sources
Where you can verify what you have just read.
- LBMAThe London gold and silver price our daily rate is built on
- WaarborgHollandThe Dutch assay office that verifies fineness and strikes hallmarks
Rather just have it looked at?
A valuation is free and without obligation, at a location near you.