How dealer buyback spreads affect total returns
Buying is only half the transaction. Why the gap between what a dealer sells at and buys back at often matters more than the premium you paid.
7 min read · Updated
The number nobody compares
Comparison sites, including this one, focus on what you pay. That is the half of the transaction happening today, and it is the half you can measure.
But every purchase has an exit. What determines whether you came out ahead is the round trip: the premium you paid on the way in, plus the discount you accepted on the way out. The second number is usually larger, and almost nobody checks it before buying.
What a spread looks like
A dealer sells a coin at a premium above spot and buys it back at or below spot. The gap between those two figures is the spread. It is what the round trip costs you — and it covers the dealer’s own costs and risk, not only their profit.
| Stage | Versus spot | Amount at £2,000/oz spot |
|---|---|---|
| You buy | +4.0% | £2,080 |
| Dealer buys back | −1.0% | £1,980 |
| Round-trip cost | 5.0% | £100 |
Why gold has to rise before you break even
The consequence of that table is straightforward. With a 5% round-trip cost, gold must rise about 5% before a sale returns what you put in. Below that, you lose money on a position that was technically profitable in metal terms.
This is not an argument against buying gold. It is an argument against buying it with a wide spread, and against buying it if you may need to sell it quickly.
This is not a prediction
What makes a spread narrower
Spreads vary widely, and several factors are within your control.
- Liquidity. Sovereigns, Britannias, Krugerrands and Maple Leafs are traded constantly, and buyback prices are correspondingly competitive. Obscure products are not.
- Recognisability. A coin a dealer can identify instantly needs less verification than an unfamiliar bar, and that difference shows up in the price offered.
- Condition and packaging. A bar still sealed in its assay card is easier to resell than one that has been removed. A marked 24 carat coin may be offered less.
- Size. Small fractional coins carry a high premium on the way in and rarely recover it on the way out.
- Where you sell. The dealer who sold it to you is not obliged to offer the best buyback — get more than one quote.
Checking before you buy
Most UK dealers publish live buyback prices. Before committing to a product, look up what the same dealer would pay for it today and calculate the round-trip cost yourself.
It takes a couple of minutes and occasionally changes the decision entirely — particularly for fractional coins, where a low headline price can conceal a round-trip cost several times that of a full-ounce coin.
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