Gold Spread Calculation

[brian8888]

Hi 

Spread =[ ( Buying Price- Selling Price ) / Buying Price]  x 100 %

This is how i calculate Gold Spread ,

 

Any other methods or standard to calculate Gold Spread ?

 

I found  a Calculator to calculate Gold Spread here

 

[sixgun]

The spread is the difference between the buying and selling price.

The formula you have is the spread as a percentage of the buying price.

It is simple arithmetic.

There are no other methods or standards used.

[Kowloon88]

This is my understanding:

A dealer will have two different prices for buying and selling gold. For example, assuming gold is £1,000 per ounce:

Dealer buys at 96% of spot: (0.96*1000) = £960 per ounce

Dealer sells at 3% over spot: (1.03*1000) = ££1,030 per ounce. This is also called the premium. 

The dealer makes money and covers his costs in the above difference between the buy/sell price. This is also known as the spread. You can calculate this in absolute terms, which is the £ difference, or express it as a percentage.

In the above example, the spread is (1030-960) = £70 in absolute terms. As a percentage it is ((70/960)*100) = 7.29%

If you buy and sell frequently, you will be interested in the spread, which can differ amongst different dealers.

If you primarily buy, then you may be interested in the premium above spot. Aim to buy bullion close to (or lower than) spot where possible.

To give you an indication of how well you are doing, you can also pool your gold purchases. You add up the total weight of pure gold and total up the price paid for all that gold. You then divide the total purchase price by the total weight (grams is easier). You now know how much your portfolio of gold is worth against the market value per given weight unit. This makes sense if you have lots of different gold coins paid for at different prices.

Let me know if anyone spots a mistake in my thinking! Hope that helps

 

 

[gazer]

On 31/03/2019 at 12:10, Kowloon88 said:

This is my understanding:

A dealer will have two different prices for buying and selling gold. For example, assuming gold is £1,000 per ounce:

Dealer buys at 96% of spot: (0.96*1000) = £960 per ounce

Dealer sells at 3% over spot: (1.03*1000) = ££1,030 per ounce. This is also called the premium. 

The dealer makes money and covers his costs in the above difference between the buy/sell price. This is also known as the spread. You can calculate this in absolute terms, which is the £ difference, or express it as a percentage.

In the above example, the spread is (1030-960) = £70 in absolute terms. As a percentage it is ((70/960)*100) = 7.29%

If you buy and sell frequently, you will be interested in the spread, which can differ amongst different dealers.

If you primarily buy, then you may be interested in the premium above spot. Aim to buy bullion close to (or lower than) spot where possible.

To give you an indication of how well you are doing, you can also pool your gold purchases. You add up the total weight of pure gold and total up the price paid for all that gold. You then divide the total purchase price by the total weight (grams is easier). You now know how much your portfolio of gold is worth against the market value per given weight unit. This makes sense if you have lots of different gold coins paid for at different prices.

Let me know if anyone spots a mistake in my thinking! Hope that helps

 

 

Thank you I enjoyed reading your write up, very easy to understand the process. 👏