Gold dealers make money on buying gold from the public. Many gold dealers are simply marketing companies, which means they facilitate the trades but do not keep inventory on hand. When you sell your gold to a gold dealer, that dealer is likely going to sell those same metals to a large-scale depository or wholesaler.
What is gold bullion dealer?
Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins. Investors can buy or sell bullion through dealers who are active on one of several global bullion markets.
How do gold bullion dealers make money?
So how do gold dealers make money? Dealers make their money on the “premium,” the amount charged over the spot price. For a US Mint Gold Eagle, you may pay a premium of $60 above the spot price of gold. Therefore, the gold coin you purchase from a dealer may actually cost the dealer $40-$45 over the spot price.
How much does it cost to buy gold from a dealer?
Therefore, the gold coin you purchase from a dealer may actually cost the dealer $40-$45 over the spot price. As strange as it may seem, for a purchase of ten gold coins with a dollar value of $14,500, a gold dealer may profit only $100-$150, or right around 1%. Sign Me Up!
How does a bullion dealer make their money?
Bullion dealers make money on the fees they assess on purchases. This amount is called the premium, and it is the amount the broker charges you above and beyond the precious metals’ spot price. The broker may also be speculating on the price of the metals, which can increase or decrease their profits.
How are gold brokers unaffected by the spot price?
Gold brokers are unaffected by the spot price at all, because the spot price they charge to the customer is roughly identical to the spot price they buy from the wholesaler. In this way, they essentially pass along hedging responsibility to the wholesaler,…
Why do gold dealers have a bad reputation?
Gold prices fluctuate rapidly, so a delay can result in a different price than you expected for a purchase or a sale. Reputation: Reputation is critical with gold dealers. While rare, fraud is not unheard of, typically occurring when gold bars and coins are only coated and the underlying metal is not actually gold.
