By MyGold

08/01/2013 One point of confusion for investors looking to buy physical gold can be the quoted prices of coins and bullion bars. You may question what is going on when a gold dealer offers gold at a higher price than the spot price you found on the Internet. In fact, we show the spot price here on our website, but our gold investment products will cost you a little more. You will find the same type of pricing anyplace you try to buy gold and there are several reasons why it works this way.

Think of the quoted spot gold price as a benchmark or securities markets trading price for buyer, sellers and investors. Only large banks located in London or New York could possibly buy gold at the quoted spot price. And even at the spot price the bank would have extra expenses like hiring an armoured car to pick up the purchased gold and pay for some place to store the bullion bars.

The point is that there are extra expenses involved in the process to go from the spot price to the point of having a gold coin or bullion available for sale at a dealer’s location. Expenses such as testing, minting, transport and storage must be added to the value of the gold sitting in the vault at your local bullion dealer. Also, like every type of investment, the company selling you the gold must add a little commission or mark-up to cover their expenses.

The good news for you as a gold buyer is that the gold dealer business is very competitive. A dealer knows that you have choices of where to buy what are essentially the same products – gold coins and bars. As a result, the price mark-up you pay to buy gold will be relatively minor compared to the spot price you find in the Internet.

Use the published spot price to see how the value of your gold is changing in both the long term and short time frames. If you look at how much the price has changed over longer periods of time compared to the little extra you pay to buy physical gold, you can see that there are large profits to be made for the investor that understands how things work.