The premium is the amount you pay above the spot price when buying physical silver. If spot is $53/oz and you pay $59/oz for a Silver Eagle, the premium is $6 — or about 11%.
Premiums exist because physical silver has real costs that the spot price doesn’t include: minting, packaging, dealer inventory, insurance, shipping, and margin. The spot price reflects wholesale professional market transactions, not the retail supply chain.
Premium size varies by product:
- Government coins (Silver Eagles, Maple Leafs) carry the highest premiums — typically $4–8/oz — because of their recognized brand, government backing, and liquidity.
- Private mint rounds carry lower premiums — typically $2–4/oz — because they lack the sovereign guarantee but cost less to produce and distribute.
- Silver bars (10 oz, 100 oz) often have lower per-ounce premiums than coins, especially at larger sizes, because production costs scale.
Premiums fluctuate with market conditions. During the 2020 COVID disruption and the 2021 silver squeeze, premiums on retail silver products spiked dramatically even as spot prices moved more modestly. Physical supply constraints, not just spot price, drive premiums.
The premium is money you don’t get back at spot price — dealers pay you spot minus their buyback margin when you sell. Understanding this round-trip cost matters for evaluating short-term vs. long-term holding strategies.