If you've browsed gold or silver products online, you've likely encountered the term "spot price." Understanding what this means — and why the retail price differs from it — is essential for making informed bullion purchases.
Let's break down how precious metals are priced, what drives spot prices, and what you're paying for when you buy physical bullion.
What Is the Spot Price?
The spot price is the current global market price for one troy ounce of a precious metal, typically quoted in US dollars. It represents what buyers would pay for immediate delivery of raw metal on the wholesale market.
Key characteristics of spot prices:
- Quoted per troy ounce (1 troy ounce = 31.1035 grams)
- Updated continuously during global trading hours
- Set by global markets, not by any single dealer, mint, or government
- Based on trading on major commodities exchanges like COMEX (New York) and LBMA (London)
At New Zealand Mint, our product pricing is based on live spot prices, which we display transparently on our website.
What Determines the Spot Price?
Spot prices fluctuate throughout the trading day based on:
- Global supply and demand — When more buyers enter the market, prices tend to rise
- Currency strength — Gold and silver are priced in USD, so US dollar movements affect pricing
- Economic conditions — Inflation expectations, interest rates, and market sentiment all play a role
- Geopolitical events — Uncertainty or instability can affect investor demand
- Central bank activity — Purchases or sales by national banks can influence global pricing
Because these factors are constantly changing, spot prices move in real time — sometimes significantly within a single day.
Why Do Retail Prices Differ from Spot Prices?
When you purchase physical gold or silver, you pay more than the spot price. This difference is called the premium.
The premium covers:
- Refining and minting — Transforming raw metal into investment-grade bars or coins
- Manufacturing quality — Ensuring purity standards, stamping, and certification
- Packaging and documentation — Protective packaging, assay certificates, and serial numbers
- Distribution and logistics — Secure transport and handling
- Dealer operations — Storage, insurance, and service costs
Think of the spot price as the wholesale cost of raw metal, while the retail price reflects the finished, certified product ready for investment.
What Affects Premium Sizes?
Not all bullion carries the same premium. Several factors influence how much above spot you'll pay:
1. Product Type
Barsgenerally have lower premiums than coins because they're simpler to produce and manufacture in larger volumes.
Coins typically carry higher premiums due to:
- More intricate designs
- Government-issued legal tender status
- Collectability and recognisability
- Additional security features
Rounds (coin-shaped bars from private mints) usually fall between bars and government coins in terms of premium.
2. Size
Smaller denominations often have higher premiums per ounce because manufacturing costs are spread across less metal.
For example:
- A 1g gold bar may have a higher premium per gram than a 100g bar
- Ten 1oz silver coins will typically cost more in total than one 10oz bar
If you're focused on acquiring the maximum amount of metal for your money, larger formats generally offer better value.
3. Brand and Origin
Sovereign mints (government-backed institutions like the Royal Canadian Mint or Perth Mint) often command slightly higher premiums due to:
- Official legal tender status
- Global brand recognition
- Established quality standards
Private mints like New Zealand Mint typically offer competitive premiums while maintaining the same high purity standards (.9999 for gold, .999 for silver).
4. Market Conditions
Premiums can increase during periods of:
- High demand — When many investors are buying simultaneously
- Supply constraints — Production delays or logistics challenges
- Market volatility — During uncertain economic conditions
Conversely, premiums may be lower during calm market periods when supply is readily available.
Understanding GST on Bullion in New Zealand
In New Zealand, investment-grade bullion that meets specific purity thresholds is zero-rated for GST:
- Gold: Must be at least 99.5% pure
- Silver: Must be at least 99.9% pure
- Format: Must be in bar, ingot, or wafer form
This means qualifying products don't include GST in their price. All New Zealand Mint bullion products clearly indicate their GST status on product pages.
Spot Price vs. Your Purchase Price: An Example
Let's say the spot price for gold is NZD $4,000 per troy ounce.
- Spot price: $4,000
- Premium (8%): $320
- Your price: $4,320 per ounce
This premium covers manufacturing, certification, packaging, and distribution — giving you a finished, investment-grade product with verified purity and weight.
How to Track Spot Prices
You can monitor live spot prices through:
- New Zealand Mint's website — We display current spot prices on our homepage and product pages
- Financial news platforms — Sites like Kitco, BullionVault, and Bloomberg
- Market data services — Real-time pricing through commodities trading platforms
We also provide historical price charts to help you understand longer-term price trends.
What About Selling? Understanding Buyback Pricing
When you sell bullion, dealers typically offer a price close to the spot price, minus a small margin. This is sometimes called the "buy price" or "bid price."
At New Zealand Mint, our buyback program offers:
- Transparent pricing based on current market rates
- Clear pricing structure with no hidden fees
- Quick processing for eligible products
The price you receive when selling will depend on current spot prices at the time of your transaction. Like purchasing, market conditions affect the selling price.
How to Get the Best Value When Buying
- Compare premiums across formats — Larger bars typically offer better per-ounce pricing
- Consider volume discounts — Some dealers offer lower premiums on bulk purchases
- Buy during calm markets — Premiums are often lower when demand is stable
- Check live pricing — Spot prices change continuously, so timing within a trading day can matter
- Understand what you're paying for — Lower premiums aren't always better if quality or authenticity are compromised
Why Transparency Matters
At New Zealand Mint, we believe you should know exactly what you're paying for. That's why we:
- Display live spot prices on all product pages
- Clearly show the premium above spot
- Explain all fees and charges upfront
- Provide detailed product specifications
- Offer certified purity documentation
Our goal is to help you make informed decisions based on clear, accurate pricing information.
Key Takeaways
- The spot price is the global market price for raw precious metal
- The premium covers manufacturing, certification, distribution, and dealer costs
- Premiums vary based on product type, size, brand, and market conditions
- Larger formatsgenerally offer better value per ounce
- Transparent pricing helps you understand exactly what you're paying for
Understanding pricing mechanics helps you evaluate options, compare products, and make purchases that align with your investment goals.
Ready to Start Investing?
Browse our full range of gold and silver bullion products, with live pricing and detailed specifications for every item. Our team is available to answer questions about pricing, premiums, or any aspect of your purchase.
Important Information
This article is for educational and informational purposes only and does not constitute financial, investment, or tax advice. Precious metals investing carries risk. The value of precious metals can fluctuate, and you may receive less than you paid when selling.
Before making any investment decision, consider seeking independent advice from a licensed financial professional who can assess your personal circumstances and goals.
New Zealand Mint provides information and products but does not provide financial advice.
