What is the Bid Price vs Ask Price?
Published on 12/28/2021 by APMEX
When you’re ready to sell your Precious Metals, two terms you are likely to encounter are bid price and ask price. In a nutshell, the bid price is how much a dealer is willing to pay for your silver, while the ask price is how much they are asking in terms of Platinum, Palladium, Gold or Silver spot price. The spread between these two prices is largely determined by market conditions and dealer preference.
Bid Price: The price at which a dealer is willing to buy your product.
Ask Price: The price at which a dealer offers to sell the same product.
In normal market conditions, Precious Metals bid and ask prices will vary together. This is true with nearly every stock and commodity, spot price or otherwise. However, in particularly volatile or uncertain markets bid and ask prices may diverge; the dealer would be willing to pay more for Gold or Silver than they're asking investors to sell it for.
The Precious Metals market is unique in that dealers often use a "tiered" price structure to pay owners for their Gold or Silver products. This is because Precious Metal bars and coins are not always identical in shape or size, which would affect the weight.
So dealers typically determine the bid/ask prices they will offer at various increments of weight - e.g., "Precious Metal bid/ask prices per ounce," "Precious Metal bid/ask prices per gram," etc. The bid price a dealer offers will be based primarily on Gold or Silver's spot price today, while the ask price they will charge investors is typically higher to help cover their own expenses and profit margin.
Why Bid and Ask Prices Differ
The bid and ask price dealers offer investors and owners directly is set by the Precious Metals dealer. The Gold or Silver price they will pay or the price they will sell Gold or Silver for varies by the dealer and is largely based on their own market conditions and profit margin.
Typically, dealers charge a slightly higher Silver or Gold price than what they're willing to buy it back for in bid prices. This allows dealers to make a small investor profit margin on the Precious Metal bullion they sell, coins they buy or Precious Metal scrap they purchase.
Make certain you know the exact Precious Metal price dealers will pay before selling your Gold and Silver bars and coins to any buyer - this will allow you to determine whether you're receiving the Precious Metal bid price, ask price or spot price.
What is the difference between Gold and Silver bid price and Gold and Silver ask price? The answer to this question is very simple: it all depends on who you are selling your Precious Metal to or buying from. Simply put, the dealer's asking price for Gold and Silver will always have a higher spot price than the bid price they offer.
In terms of bid and ask prices, dealers generally fall into one of two categories: Those who charge a fixed bullion price per ounce or Precious Metal rate per gram, regardless of how much you're buying or selling.
No matter how you sell or buy from a dealer, it is important that Gold and Silver bullion bid prices or rates are always clearly stated. You should never buy silver coins, silver bars or silver scrap without knowing what spot price, bid price and ask price will be in advance.
Precious Metals bullion bid prices and bullion ask prices can vary significantly from spot price, so shop around for the best rates on your desired Precious Metal before you decide to sell your bars or coins.
Prices in Action
You are ready to sell your Precious Metals. Here’s what you do:
See who wants to buy your Precious Metals.
Did you know you can sell Precious Metals back to Precious Metals sellers? Many online retailers that sell Precious Metals will also buy them back whenever you are ready to cash in. You can also try jewelers, pawn shops or coin shops, but there is much less risk involved when working with reputable retailers whose sole business is buying and selling Precious Metals.
What buyers look at when considering bid and ask prices for Precious Metal sales is the amount of bullion a customer plans on selling. If you only want to sell one or two coins, bars, rounds or scrap then you will likely end up paying what dealers pay for bullion per ounce or silver rate per silver gram higher silver spot silver price.
See what the bid prices are for your Precious Metals.
It is a good idea to sell Precious Metals when they are liquid. The more liquid something is — the more in demand or rare — the easier it is to sell. If Precious Metal bullion is rare and coveted, its bid and ask prices will be higher than items that are more common.
Also, the more liquid, the smaller the spread will be between the bid price and the ask price. That means more money for you. Dealers often list the items they are interested in buying, and a list with the bid price and ask price so you can see the spread — the cost of selling Precious Metals — on the market.
See what prices you might get.
If your Precious Metals aren’t priced like you wanted or they aren’t listed on a retailer’s wanted list, you should consider selling other pieces in your portfolio. It is recommended that Silver price rates be reviewed on a regular basis, but if you have truly rare or hard-to-find items that dealers might not list online, it’s worth trying to find out what they would pay.
There is always some risk involved in selling metals. You can sell them for less than you want. However, you can also sell them for more than you expect. In fact, some rare items have sold for hundreds of dollars above the metal’s value because a dealer was willing to pay it to add the item to their collection. It is recommended that those wanting to sell check the Precious Metals bid price rates, ask prices and spot prices on a regular basis to stay informed. If you have truly rare or hard-to-find items that dealers might not list online, it is worth trying to find out what they would pay.
If Gold isn’t fetching the price you were hoping for, try selling Silver instead. Selling Silver is just as easy as selling Gold, and the metal’s affordability may make it easier to sell. Ultimately, your goal is to get as much return on your investment as you can, and that means being flexible with the market.
Contact Your Buyer
Whether or not you find your product on a retailer’s wanted list, you should contact your preferred buyer. They’ll want to know if you’re selling Gold or Silver, and they may still be interested in making a bid.
Even if the Precious Metals ask price is too low, they might be able to offer you a good deal. If that doesn’t work out, you can always sell at another shop. Don’t let the prospect of making less money stop you from getting a return on your Precious Metals investment.
Researching Precious Metal spot prices is essential to knowing when is the best time to try to sell your bullion and coins to get the greatest return on investment. It is also important to remember to be flexible when finding a buyer and to not be afraid to look into different buyers if the first bid price is not what you were initially asking for.