Explaining the Difference Between the Physical and Paper Market prices

For all of us who read about gold and silver prices, you have inevitably come across articles and commentaries regarding the differences in prices between the physical gold and silver market and the electronic (paper) prices. As you know the price of gold and silver you see on TV represents the “paper” market. The actual prices paid for real silver coins/silver bars and gold coins / gold bars represent the physical or “real” market. It’s similar to comparing the price of a barrel of crude oil to the price of gas at the pump. While the crude market makes good headlines, it’s the price at the pump that matters most to people who want to buy and use the real commodity. 
Let’s compare this to crude oil and the price at the pump, we all know that a drop in crude oil prices doesn’t necessarily lead to a decrease in prices at the gas station; the same idea can be applied to precious metals products. When the electronic/paper market prices decrease, it does not necessarily mean the ask price of gold and silver in the physical market are following suit.