Pricing

What "spot price" really means

Guide 02 of 066 min readEducational

Every metals app, including this one, leads with a spot price. It is the most quoted number in the market and the most misunderstood. The short version: spot is the reference price for immediate delivery of wholesale metal — and it is almost never the price you personally pay.

The number itself

Spot is set in the wholesale market, where metal trades in large, standardised lots between banks, refiners, miners and institutional dealers. Gold and silver are quoted per troy ounce — 31.1035 grams, not the 28.35 grams of an ordinary ounce. Platinum and palladium follow the same convention. Copper is the odd one out, usually quoted per pound or per tonne, because it trades as an industrial metal rather than a monetary one.

Alongside the continuously moving spot price sit formal benchmark prices — most importantly the London auctions, which produce a published reference price for gold twice each business day and for the other precious metals on their own schedules. Those benchmarks are what contracts, funds and refiners settle against. Spot is the live market; the benchmark is the official photograph of it.

Why the dealer's price is higher

When you buy a physical coin or bar, you pay spot plus a premium. The premium is not a markup for its own sake — it covers real costs:

  • Fabrication. Turning wholesale bullion into a one-ounce coin costs money, and costs proportionally more for small units. A one-gram bar carries a far higher premium per gram than a kilo bar.
  • Distribution and inventory. The dealer holds stock, insures it, ships it and hedges the price risk while it sits on the shelf.
  • Scarcity and demand. When retail demand surges, premiums widen independently of spot. In stressed markets the premium on small silver coins has at times exceeded the metal's own price movement.
  • The spread. Dealers buy back below spot and sell above it. That round-trip gap is the real cost of a short holding period.

Why the app's price and your dealer's price differ

Aurix shows an indicative reference rate aggregated from market data providers. It is a research number: accurate for tracking movement, context and history, but not an executable quote. No app price is. If you are transacting, the only price that binds is the one your dealer or broker confirms at the moment of trade.

This distinction matters for a second reason: currency. The spot price is fundamentally a dollar number that gets converted for every other currency. Two apps showing "the price of gold in rands" can differ simply because they used different FX snapshots.

The practical test Before buying, work out the total cost per ounce including premium, shipping and any tax — then compare it to the buy-back price the same dealer is offering that day. That gap, not the spot price, is what you have to overcome before a holding is in profit.
Go deeper — free The gap between the spot price and the price on a jeweller's bill has six separate steps in it, and only two of them are negotiable. The Academy's Foundation works the whole chain through with real arithmetic: What you actually pay — the all-in per-gram number.

Educational content only. Aurix does not buy, sell, store or broker metal, and does not quote executable prices.