Precious metals prices explained: spot, LBMA benchmarks, premiums and bar formats

The question "what is the price of precious metals?" therefore has no single answer. A company buying 1 kg bars needs to know which reference the seller uses, at what time the price is fixed and which surcharges apply.

Our overview of the individual metals and of physical versus paper metal is in the guide precious metals list and trading.

The difference between bid and ask is the spread. In the wholesale market it is narrow; for small quantities and small bar sizes it is wider. Price websites usually show a spot price or a delayed mid-price, often without saying whether it is bid, ask or mid, and without any premium.

• Spot prices on websites may be delayed or averaged.
• They refer to wholesale metal at a reference location, not to your bar format, quantity or delivery address.
• Currency conversion and VAT are often not included.

For a binding price, the counterparty confirms the reference, the time of pricing, the premium or discount and the delivery terms in writing.

In the OTC market banks, refiners and traders deal bilaterally; prices refer to metal held at a specific location, for example loco London or loco Zurich. Futures exchanges add contracts for future delivery; COMEX gold futures, for example, refer to 100 troy ounces. Futures and spot prices are closely linked but not identical, because futures include financing and storage costs until the delivery month.

For precious metals trading hours this means: there is practically always a price on working days, but liquidity is highest when London and New York overlap. Over the weekend the market largely rests, so the first price on Monday can differ from Friday's close.

In the auction, participants enter buy and sell volumes at a proposed price; the price is adjusted in rounds until supply and demand balance within a tolerance. The result is a price in US dollars per troy ounce. Because it is set at a known time by a documented procedure, it is well suited as a reference in contracts. Official methodology and access conditions are published at lbma.org.uk.

Important: the price refers to fine weight, i.e. the pure metal content. A bar with a gross weight of 1 kg and a fineness of 995 contains 995 g of fine gold; a bar with 999.9 fineness contains 999.9 g. For large bars the invoice is based on the fine weight stated on the bar or in the assay.

• Refinery: bars from refiners on recognised accreditation lists are easier to resell and finance.
• Location: metal loco London or Zurich differs from metal delivered to another country; transport and import formalities cost money.
• Freight and insurance: valuable transport with specialised carriers.
• Storage: vault fees if the metal stays in custody.

The premium changes with market conditions; in periods of strong demand for certain formats it can rise noticeably.

A doré contract typically defines:

• Assay: the gold and silver content is determined by an independent or agreed laboratory; provisional and final assays can differ.
• Payable content: the percentage of the assayed fine content that is paid for.
• Refining charge: a fee per ounce or per batch for refining to bullion quality.
• Penalties: deductions for undesirable elements.
• Price reference and settlement: e.g. LBMA price on a defined day after assay, often with a provisional and a final payment.

Because doré can come directly from mines, refiners and buyers demand detailed proof of origin. Doré offers without a traceable chain of custody, especially from conflict-affected regions, are a serious warning sign.

Typical elements of a price clause:

• Reference: LBMA Gold Price AM or PM, LBMA Silver Price, or an agreed spot quote at a defined time.
• Pricing date: order date, delivery date, assay date or an average over a period.
• Premium or discount: in percent or as a fixed amount per ounce.
• Basis: fine weight according to bar list or assay.
• Currency: usually US dollars; conversion into euros at an agreed rate.
• Delivery and risk: location, Incoterm, insurance and transfer of title.

Before a contract, both sides go through identification and compliance checks; details are in our guide on KYC and compliance in commodity trading.

With physical metal the buyer receives allocated bars with a bar list, or delivery to a vault or address. Paper products only track the price; they involve counterparty or exchange rules but no physical bar in your possession. Which approach suits a company depends on its business purpose, not on a general recommendation.

We broker physical transactions between verified companies, such as refiners, traders and industrial users. We do not trade on our own account and do not hold stock. Details on our scope are on the precious metals page.

• Large discount to LBMA: if verifiable, good-delivery-quality gold is sold far below the benchmark, there is usually no real metal behind the offer.
• No bar list, no assay, no refinery: serious offers name refinery, bar numbers, fineness and location.
• Doré from conflict regions without a traceable chain of custody.
• Advance payments for export permits, taxes, "certificates" or insurance before any metal can be inspected.
• Pressure and secrecy: short deadlines, refusal of independent assay or of KYC checks.

More patterns are described in our guide commodity scam warning signs.