Spot Price and Dealer Spreads Explained: What You Actually Get Paid for Gold

Almost every argument about gold pricing comes from one misunderstanding: people see the spot price on their phone, multiply it by their ounces, and expect that number in cash. Spot is a reference price for large, unallocated, wholesale-quantity gold traded between institutions. It is not a retail offer and no dealer anywhere pays it.

What spot actually is

Spot is the price for immediate delivery of gold in the wholesale market, quoted per troy ounce in US dollars. In Canada, a CAD spot price is that figure converted at the current exchange rate, which means your payout moves with both the gold market and the loonie. A strong gold day can be cancelled out by a strong Canadian dollar.

Why there is a spread at all

• Verification: scales, callipers, ultrasound equipment and the time to use them properly
• Market risk: the dealer owns the metal from the moment they pay you, and gold can move before they offload it
• Liquidity: you are being paid today rather than waiting for a wholesale lot to fill
• Overheads: a physical shop, insurance, security and staff

A spread is not a trick. A spread that is hidden, or that changes depending on how much the seller appears to know, is.

Buy side, sell side, and the round trip

Every dealer has two prices: what they pay you (the bid) and what they charge you (the ask). The distance between them is the round-trip cost of owning metal through that dealer. AGN posts both publicly on this site, refreshed hourly, precisely so you can see the round trip rather than guess at it.

Premiums: why a coin costs more than a bar

Above the metal value sits a premium set by fabrication cost and demand. A 1 oz bar costs less to produce than a 1 oz coin, and a 1/10 oz coin costs far more per ounce than either. That is why buying ten tenth-ounce coins is more expensive than buying one ounce coin, and why the same is true in reverse when you sell.

Comparing dealers honestly

1. Ask for the price per troy ounce of fine gold, not per gram and not as a mystery total
2. Ask what the spread is relative to spot, in dollars or percent
3. Ask whether any fees, assay charges or handling costs come off afterwards
4. For online dealers, add shipping, insurance and the days your metal is in transit
5. Check whether the buy price changes for small quantities

Once you have those four numbers from two or three buyers, the comparison is arithmetic rather than salesmanship.

A note on jewellery

Scrap jewellery cannot be priced this cleanly. Purity has to be established by testing, weight varies with stones and clasps, and refining recovery costs money. That is why we quote jewellery in store after testing, while publishing our bullion prices openly — the two are genuinely different products.