Every bullion price you see in the UK is built from three layers. Once you understand them you can read a dealer’s quote and know exactly what you’re being charged.

Layer 1 — spot

Spot is the wholesale benchmark price of the metal itself. It’s quoted per troy ounce and reflects the price institutional traders pay each other for unallocated metal on the LBMA market.

  • In GBP terms, the spot price is what you see on this site’s dashboard and /charts/gold.
  • Spot doesn’t include physical delivery, refinement, fabrication, packaging or VAT.
  • Spot moves continuously during global market hours and is “set” formally twice a day by the LBMA Gold and Silver Price auctions.

You can almost never actually transact at spot as a retail buyer. Spot is a reference price, not an offer.

Layer 2 — premium

The premium is what dealers add on top of spot to cover their costs and margin.

  • Coin or bar fabrication.
  • Mint markup (Royal Mint, US Mint etc. charge dealers above spot).
  • Packaging, shipping, insurance, security.
  • The dealer’s own margin.

Premiums vary by:

  • Size: small bars and small coins have higher per-gram premium than 1kg bars. A 1g gold bar might be 18–25% over spot; a 1kg gold bar is 1.5–2.5% over spot.
  • Format: minted bars cost more than cast bars; proof coins cost more than bullion coins.
  • Mint: Royal Mint Britannia carries a higher premium than a generic refinery cast bar.
  • Market conditions: silver premiums regularly spike to 50%+ during retail buying frenzies.

See typical UK premiums → (scroll down to each coin’s “typical premium” line)

Layer 3 — the dealer spread (buy vs sell)

A dealer who sells you a Sovereign for £X will normally buy a Sovereign back from you for £Y, where Y < X. The difference is the dealer spread:

  • Sells at spot + 6% (Sovereign retail).
  • Buys at spot − 1% (Sovereign dealer buyback).
  • Net spread: ~7% of metal value.

The spread is where dealers make their profit. It also defines your immediate “round-trip cost”: if you bought a Sovereign today and sold it back today, you’d lose roughly the spread.

A wider spread means a more expensive dealer. UK bullion dealers compete partly on tightness of spread — comparing buyback offers between dealers before you sell is usually worth 1–3% on the headline value.

A worked example

You see this on a UK dealer’s site:

Gold Sovereign — £660 (sell to buyer) · Spot: £620

That breaks down as:

  • Spot value of 7.32g pure gold at ~£85/g spot = £622.
  • Dealer sell price £660.
  • Premium = (660 − 622) / 622 = 6.1%.

The same dealer’s “we buy from you” page might list:

Gold Sovereign — £615 (we pay you)

  • Their buyback at £615 is 1.1% below spot.
  • Their spread is £45 on this coin (7.3% of metal value).

VAT changes the maths for silver

Add 20% VAT to silver and you get the full retail layer cake:

Spot + dealer premium + 20% VAT = retail silver price.

A 1oz Silver Britannia at £35 spot + £8 premium + £8.60 VAT = ~£51.60 retail. The dealer buyback would be around £33 — a spread of nearly £19 on a £52 coin. That’s why silver only makes sense as a long-term hold, not a quick flip.

VAT on silver, platinum, palladium →

How to use this knowledge

  1. Always check the current spot price before contacting a dealer. The dashboard shows live GBP spot.
  2. Calculate the per-coin/per-bar spot value using the calculator (weight × purity × spot per gram).
  3. Compare the dealer’s quote against that spot value to see the implied premium.
  4. Get quotes from 2–3 dealers — UK bullion dealers all post current buy and sell prices online.
  5. For larger purchases, ask if the dealer will discount the premium. The answer is often “no” on bullion coins (mint price is fixed) but “yes” on cast bars at ≥100g.