Dealer margins when gold prices are soaring.

When gold prices are soaring on the open market, I would resist selling my gold to any dealer who wants a big spread. There is no reason for a spread when it is possible, or even likely, that the gold you are selling today will be worth more tomorrow or next week.

When gold prices are moving lower, it makes sense for dealers to want a spread so that they can cover themselves. After all, a dealer doesn't want to pay $5 today for something that might be worth $4 tomorrow.

But the environment is different for gold now. If you were to sell your gold today at $1900 an ounce, there is the possibility that tomorrow or next week that same gold might be worth $1950 or even $2000. This can happen in this kind of hot gold market.

If you are selling now you want to get the "spot price" or better for something that is recognizable such as a Krugerrand or American Gold Eagle. Now, if you are selling gold jewelry then it makes sense that the dealer could demand a larger margin because there is no clear market price for reselling gold jewelry. There is a clear market for selling government issued gold bullion.