When considering a purchase, gold buyers should consider what current gold value actually is, what gold is worth, and how the spot price fluctuation of gold and other precious metals actually works. Variations in spot price will always have some effect on the actual cost of a gold coin or bar that you purchase, but other factors will have an impact as well.
An important consideration about precious metal spot prices is that they are based on the futures contracts, which are traded in much the same way that commodities and stocks are traded. The commodities exchange (COMEX) based out of New York are where much of the world’s precious metals prices are determined. As futures are traded throughout the day, prices fluctuate accordingly.
So what does this have to do with the price of gold or silver bullion at your local coin dealer? While the spot price obviously weighs quite heavily on what is charged by the dealer, there are other factors to take into account. For one thing, a dealer must have a certain profit margin in order to stay in business, thus they are unlikely to sell gold at exactly spot price.
It is not uncommon for a customer to expect to buy gold at exactly spot price, and at the same time when they decide to sell some bullion, they expect to be paid spot price as well. This is not realistic, especially when selling to a dealer, because there has to be a spread to allow the seller to make some profit.
Availability is another factor that can affect the prices of precious metals. Often when metals prices are rising rapidly, the mints are unable to provide all the bullion that is required. This causes a classic supply and demand situation, where there is not enough gold to supply customers. When this happens, the premiums on all kinds of precious metals generally rise. If you are selling your precious metals at this time, a buyer will often pay you a better price in relation to spot price because they are able to sell it at such a premium.
A buyer should also take into account numismatic values or special circumstances that make the value of gold worth more than just spot price. A good example of this would be a rare coin of historical significance or a natural gold nugget of exceptional quality. These can often bring many times the melt value of the gold that they contain.
Spot price should always be taken into account when making a gold purchase. Day-to-day trends are worth looking at, but the long-term trends are even more important from an investment standpoint. Keep in mind that the spot price is based on futures contracts that involve thousands of ounces of gold per transaction, so the price of gold bullion and coins are not going to mirror spot price exactly. If a gold item has exceptional value due to rarity, it could likely be worth several times the value of the precious metals that it contains.