When you start investing in precious metals, it is often the intention to maintain your purchasing power or want to make a profit. Which product is most favorable, partly depends on the 'spread' of the product. The spread indicates the difference between buying and selling.
Gold spreadDo you buy a gold kilo coin for €56,850? If you sell it again immediately, you will receive €55,075. The spread of this product is 3.22%. The first selling price includes production costs and a (low) profit margin. These costs vanish the moment you sell the coin again, giving you a lower price in return.
Does this mean you always make a loss? No. The beauty of our product is the prices are based on the gold and silver exchange rate. Does the rate go up compared to the time of purchase? Then the spread will varnish and you will start making a profit compared to the purchase price.
Silver spread
The silver spread is generally higher than the gold spread. This is because silver bars are subjected to 21% VAT, which you cannot get back as an individual. For silver coins, VAT is only charged on the seller's profit margin, so this difference is smaller than with bars.
The spread often fluctuates based on the silver price and market conditions. As an example, the situation at the end of 2022: the spread of silver coins is quite high, about 20%, while it was previously at 10%. Usually the spread is around 10 - 15% depending on market conditions. In the past we have also seen a spread of 30% and never less than 7 to 8%.
At the end of 2022, there are a number of factors that play a role, as a result of which the spread is relatively high. First of all, the VAT rate on imports into Europe has been increased. Until July 1, it was possible to import silver cheaply. This is no longer possible because the laws and regulations have been adjusted and the rate has been aligned with other countries.
In addition, the silver price has fallen quite sharply, which means all fixed costs (i.e. production costs and shipping costs expressed in euros per coin) are relatively higher. For example, it costs roughly €2.50 to mint a silver coin, regardless of the level of the silver price. €2.50 at a silver price of €20 is 12.50%, while the share of production costs at a silver price of €25 or €30 is 10% or 8.33% respectively.
At The Silver Mountain, we keep a close eye on this. For example, under certain circumstances we can increase our bid price for silver coins, so the spread remains as low as possible for you.