What Is the Bid-Ask Spread?
When trading silver bars, you encounter two prices: the ask (what dealers charge when you buy) and the bid (what they pay when they buy from you). The difference, known as the bid-ask spread, represents the transaction cost.
Understanding spreads is essential for evaluating the true cost of silver ownership. A kilo bar purchased at 4% premium and sold at 2% below spot requires silver to appreciate approximately 6% just to break even.
Kilo bars typically enjoy competitive spreads, often 2-4%, reflecting their established market position and dealer familiarity.
Factors Affecting Kilo Bar Spreads
Refiner recognition significantly influences spreads. Bars from recognized refiners trade efficiently through established channels. Unknown-brand bars may face wider spreads and authentication requirements.
Market conditions affect spreads. During volatility or supply stress, spreads can widen. Calm, stable markets produce the tightest spreads.
Dealer selection matters. Work with dealers experienced in kilo format bars for best pricing.
Calculating Your Break-Even
Before purchasing, calculate the price appreciation required to break even after accounting for the full spread. If you pay 4% over spot and expect to receive 2% below spot when selling, you need 6% appreciation to break even.
For a kilo bar at $2,200, that represents meaningful dollar movement—but quite achievable over typical holding periods.
Continue learning about kilo silver bars:
For more detailed information and current pricing:
Monex kilo silver bar economics