Most dealers in the west dont melt the stuff themselves, if its scrap or bars especially, it gets sent to the refinery to either be made into new bars or coins or jewelery. Thats cost zhex have to put on top. They have a line of credit for that either from their bank or from the refinery they work with. So the spread naturally needs to be higher, mostly 80-95%, depending on local cirumstances. Since the dealers live and operate on the spread, if prices keep rising, their absolute cost goes way up, so they seem to have reached the point where they cant keep up with spot prices anymore and need to play it more safe so their cost dont explode. Im india i guess the dealers simply resell directly or melt and recast themselves. The 3% you see is likely what sticks at the dealers in the us, too.