When Spot Prices Surge, Did Dealers Get Rich?

We’ve seen an unprecedented surge in precious metals spot prices lately. And when that happens, one comment we hear pretty often is: “Wow… you guys must’ve gotten filthy rich with this latest push.”
I understand why someone might assume that. When prices jump, it can feel like anyone “in the business” automatically wins. But the truth is, that’s not how a responsible bullion dealer operates. And because I’m a big believer in transparency, I want to explain—at a simple, practical level—how pricing works in our world.

The first thing to understand: hedging

If you look up the word hedge, it can refer to a row of shrubs that protects your property. That’s a pretty good picture of what hedging is for us.
In the precious metals business, we hold a certain amount of gold and silver exposure at all times—either physical ounces (inventory) and/or a hedge position in the futures market. When a customer buys from us or sells to us, we work to offset that transaction by buying or selling a futures contract. The goal is to keep our overall position balanced.
So if spot goes up or down, a properly hedged position means the price move itself doesn’t automatically create a windfall profit—or a painful loss—for the dealer. At the end of the day, they’re ounces. The job is to stay even, serve customers, and manage risk responsibly.
Why spreads widen when markets get volatile

In calm markets, hedging is relatively smooth. But when prices are moving fast, there’s a real-world challenge: you can’t always move quickly enough to offset every transaction instantly—especially when phones are ringing, quotes are changing rapidly, and orders are coming in back-to-back. That short window of exposure is where risk shows up. And that’s one of the main reasons you’ll see the spread widen in volatile markets.

A quick definition:

• Bid = the price we pay when we buy from you
  Ask = the price we charge when we sell to you

We buy on the bid and sell on the ask. When markets are moving quickly, we may increase the spread (a little extra “padding”). That helps protect against sudden price moves during the brief moments we’re exposed while hedges are being placed.

Now let’s talk about premiums

Premium is simply the amount above spot that applies to real, deliverable products—coins and bars you can actually hold. On a purchase from us, the premium is the amount on top of the ask price.
Premiums vary for a simple reason: our acquisition cost varies. Different products have different real-world costs and availability. And in fast markets, replacement cost can change quickly—sometimes even faster than spot.
When you sell to a dealer, premiums are typically reflected in the bid side of the quote. I say typically because there are times when demand is so strong—and selling is so light—that dealers may pay above spot to secure inventory.
The big takeaway

When spot prices surge, it’s easy to assume dealers are “making a killing.” But in reality, a professional bullion dealer is working to stay hedged, manage rapid price movement, keep inventory available, and quote prices responsibly in a volatile market.
If you ever have questions about a quote—bid, ask, spread, or premium—call us. We’ll walk you through it in plain English. You deserve to understand exactly what you’re paying and why.

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