Below is an article from BullionStar, a bullion dealer based in Singapore where you can buy and store gold and silver at competitive prices. BullionStar was established in 2012 after Singapore government exempted investment grade precious metals from the goods and services tax (GST). Just like BullionStar, one of the goals of SG Wealth Builder is to educate Singaporeans on the merits of owning gold and silver bullion as a means of wealth preservation.
Precious metals and bullion products in physical form often have a higher price than the spot-price. The spot-price is the price for which someone can buy certificates or futures on the commodity exchange. It is however mathematically impossible, based on the paper market volume traded, for these so called paper metal products to be fully backed by physical precious metals.
Premium for Precious Metals
There are two components in the price premium for physical gold and silver. The first and most natural part is accounted for in the melt and minting cost. This part of the premium is called the natural premium. The second component is a market premium that arises when the supply and demand in the paper market for certificates and futures doesn’t correspond with the physical market.
First, take a look at the production cost for gold and silver in bullion form. BullionStar explained that gold and silver in bullion form is often minted into 1 oz coins or small bars ranging from 1 oz to