Lowest premiums

[Last updated February 2017]

Where are the lowest premiums?

Hong Kong.

Bring cash and/or local bank draft, cashier’s check.

You can buy investment grade gold coins in Hong Kong for just a few dollars above spot. But it’s important that you shop around as dealers regularly manage their premiums against supply and demand. A dealer may ask for a 0.2% premium in the morning then 5.2% in the afternoon for the same item. Just before Chinese New Year is a bad time for buyers – demand soars and so do premiums.

The precious metal desks at Hang Seng bank and Bank of China in Central are often the two best places to buy in Hong Kong. Also try the main HSBC branch. We suggest you at least check out these three before committing to a purchase. Hong Kong dealers also have the smallest bid/ask spreads at the retail level and occasionally will bid higher than spot to buy-back coins or bars from the general public. Yes you read that correctly, they will occasionally bid more than spot to buy your gold.

Singapore is another good option in Asia with the added bonus of there being an excellent safe deposit storage facility there as well. As a foreigner you can forget India. Despite having the world’s biggest domestic market for gold, investment grade coin and bar dealers are few and far between in India. The process of buying tiny amounts as well as jewellery items as the local do is a minefield for the foreigner. If you must, ICIC bank sells 99.99 fine gold (and silver) coins and bars from its branches throughout India.

Dealers in Canada have on average the lowest day-to-day premiums for investment grade precious metals. You can buy 1oz gold Maple Leafs for less than 3% above spot regardless of day-to-day market fluctuations. Australian dealers closely follow, then USA, Europe, and finally the UK. Keep in mind however that Australian and Canadian dealers will add sales taxes to some items depending on their purity.

Dealers in the UK consistently charge the highest premiums. So much so that UK residents could potentially cover expenses – or perhaps even come out ahead – by travelling to and buying a few dozen ounces of gold in Hong Kong.
 

 

Dubai souk

The Dubai gold souk is located in the city’s commercial district. Here you’ll find 400 or so retailers trading almost exclusively in jewellery. It is probably the best place in the world to buy investment grade gold jewellery (21, 22 and even 24 carat). This form of physical gold can be bought in Dubai for very little over spot price. The trick is to bargain hard. There are no fixed prices, so you should never accept the first offer.

Also keep in mind that the premium over spot will heavily depend on the nature of the item; machine-made jewellery is more oriented to the investment market compared to intricate artisan crafted items. The Dubai Gold & Diamond Park is the place to go for the latter.
 

Online bailment

Online bailment providers offer some of the lowest premiums to buy/sell precious metals. While they don’t strictly match our definition of a physical precious metal investment their many benefits – including in some cases very low premiums – make them worthy of consideration. See our section on bailment premiums here. Also see our section on Bailment.
 

Global survey of premiums

In early 2017 we carried out a survey of dealer premiums. We contacted twenty-two reputable dealers by phone and online in ten countries and got their best retail offers for a variety of items. We then calculated the asking premiums. Our results for 1oz coins and bars are summarized in the table below.

Please note the focus here is on ask premiums only, that is, the difference between spot and the dealers retail price. Any sales taxes or VAT that may be applicable are excluded. Also excluded are shipping costs and customs duty. Prices are for cash or cash equivalents. See our section on Taxes for more on customs duty and imports taxes.

If you do travel abroad to avail of global variations in premiums you should be aware of the various customs rules for transporting gold and silver across international borders. See here for more details.

(ask) premiums for 1oz Gold coin or bar (x1 item). Cash or cash equivalents.
Lowest Average[1] Highest
Canada  1.8% 2.9% 5.0%
Hong Kong[2]  0.35% 3.3% 5.0%
Australia  1.8%[3] 3.5% 6.0%
USA  1.6% 4.2% 5.8%
Europe  3.3% 5.4% 6.3%
UK  3.7% 5.7% 8.0%

Notes:

[1] taxable items excluded from this average

[2] very low premiums are common in Hong Kong but vary from dealer to dealer and can change quickly

[3] this was for a 1oz Krugerrand which attracts 10% sales tax (GST).  Lowest premium for a tax-free item from an Australian dealer was 2.4%
 

 

(ask) premiums for 1oz Silver coin or bar (x100 items). Cash or cash equivalents.
Lowest Average[4] Highest
USA  7.9% 10.9% 12.2%
Hong Kong  4.5% 11.7% 18.9%
Canada  9.5% 12.0% 14.7%
Europe[5]  9.1% 13.1% 19.5%
Australia  9.2% 15.8% 23.5%
UK[5]  14.0% 25.9% 56.5%[6]

Notes:

[4] taxable items included in the average

[5] all European and UK VAT is excluded

[6] this massive premium was for 1oz Brittanias

 

Buy in quantity

As with many things in life, buying precious metals in quantity usually results in a discounted premium. This is especially true in the UK and USA although we’ve never encountered a dealer anywhere who didn’t offer some sort of bulk discount. Even if bulk discounts are not explicitly offered it’s worth asking if you’re considering a large purchase.

Dealers will offer discounts on the premium for gold items but the serious discounts are reserved for silver. For example, you might pay half the premium if you buy a hundred versus just one 1oz Maple Leaf or Austrian Philharmonic silver coin. Another way of looking at this is there are very high premiums for buying single 1oz silver coins. Buying just one or two silver items is a low profit transaction for the seller. Add on shipping costs plus taxes and your overall cost to buy just one 1oz silver coin can be approaching twice spot price. Similarly, buying one small item containing a little gold is (unless you’re in India) considered a novelty purchase and will be priced accordingly.

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