What are decent premiums for physical silver / gold coins / bars?

Question

This a question I have been trying to find an answer to in these last months, and don't seem to find an answer. My curiosity is simple: what are decent premiums for the products mentioned in the title, and what to stay away from?

For example: at this moment, the best price that I could get 100g silver bars, for example, is at a ~13% premium against the spot price. Is that good for 100g bars? What about 250g, 500g, 1000g?

I assume coins should have a bigger margin, since they are smaller and look like more work for the minter than a bar. I bought some britannias 1oz at around 19-20% premium. Is that fair enough?

Thanks in advance!

Answer 1

The premium for silver seems to be much higher than for gold, looking at the Kitco web site as an example of a large dealer. So if you want to pay as little premium as possible, buy gold instead of silver.

Answer 2

The premium/discount (discount value being a negative premium) value is related to the perceived future value of the bullion in question. If you think the coins will appreciate more than 19-20%, then it makes sense to buy at 19-20% premium, otherwise it doesn't. In this way, precious metal trading is very similar to buying stocks.

To add to this, the difference in appreciation and premium at the the time of purchase, divided by the time to appreciate, is your RoI. If you buy at 20%, and it takes 4 year to appreciate 24%, your RoI is 1%. I believe most premiums are set in reference to 1 year of appreciation.