What does the spread actually measure?
Every product has two prices: what the dealer sells it for and what the dealer pays to buy it back. The gap between them is the spread, and it is the amount the metal's value must rise before you break even on a round trip.
A product bought at a 30% premium with a buyback near spot carries a spread of roughly 30%, the metal must appreciate that much before you see a dollar of gain.
Why does the spread matter more than the premium?
Buyers fixate on the purchase premium, but the buyback side is where surprises hide. Some products carry modest purchase premiums yet terrible buyback pricing; others, usually heavily marketed collectibles, are expensive on both sides.
Standard, widely recognized bullion tends to have the narrowest spreads because every dealer in the country will bid on it. Obscure or 'exclusive' products have wide spreads because only the original seller will.
How does the spread show up in practice?
The test is one question, asked in writing: 'If I sold this exact product back to you today, what would you pay?' The answer, set against the sell price, is the spread. A dealer who won't answer it in writing has answered it another way.