15 March 2010
How BullionSupermarket.com saves you money buying Gold and Silver
BullionSupermarket.com founder explains how the site can save you money when buying Gold, Silver and Platinum
So you want to buy some Precious Metal.
What is Premium? And why is it so important?
Gold, Silver and Platinum are traded 24 hours a day, seven days a week by professional traders, bullion banks and institutions on the commodities exchanges. These exchanges publish a benchmark price for these metals, which is the price you see each day in your morning paper. However to actually take delivery of your Gold, Silver or Platinum at the published price, would require you to deal in 400oz bars, which is out of the reach of most private investors.
This creates a large market in smaller bars and coins. But because these smaller coins and bars have higher manufacture, handling and transportation costs associated with them, they tend to sell at a price above the price of exchange traded precious metal. This is known as the premium. As a general rule, the smaller the bar or coin, the higher the premium it will sell for.
However, Premiums are not fixed, they fluctuate with demand and supply. For example at the height of the 2008 financial crisis the premium on a 1 ounce krugerrand was as much as 70% as investors scrambled to Gold for safety. 1 ounce Krugerrands at time of writing are trading at 13.5%
Where BullionSupermarket.com saves you money
So as a buyer, it makes sense to minimize the premium you pay for your Bullion. That is where BullionSupermarket.com comes in, because it gathers thousands of Gold, Silver and Platinum Bullion items for sale together into simple categories, calculates the premium each is selling for and shows this to the user in a simple format. This way the user can easily see what represents good and poor value when buying.
In the markets that BullionSupermarket compares, premiums can vary for lots of reasons. Seller feedback and the quality of the photo for an item can mean that two identical items will sell for very different premiums.
But by using BullionSupermarket the hard work and the mental arithmetic are taken out of the process for you.