The Role of Legitimate Dealers in the Gold Buying and Selling Process
The innate allure of gold has long captured human societies but it also holds appeal for criminals seeking to legitimize ill-gotten gains. With no paper trail and a global network of dealers, precious metals are an attractive conduit for money laundering operations. This makes it imperative that gold dealers carry out robust anti-money laundering (AML) screenings to identify suspicious transactions.
A reputable dealer will provide clear pricing information including all transaction and assessment costs to the investor. You should always compare the general price quoted over the phone or by email to the actual price upon receipt of your bullion item and be wary of a dealer that continually changes the pricing of a particular product. This is often a red flag that indicates the dealer may be concealing their true cost structure and is seeking to make an unnecessarily large profit from your sale.
Moreover, a reputable dealer will offer secure storage options for investors and consumers. These services come with their own set of operational costs and risks which a dealer needs to cover in order to remain viable. These additional costs are typically reflected in the dealer’s wholesale or wholesale-to-retail prices.
It is also essential for dealers to factor in the cost of their own inventory and other assets such as their premises, equipment and staff in their pricing structures. They also need to consider the ongoing storage of their inventory which can eat into significant capital reserves and thus must be incorporated in their pricing as well.
Finally, dealers need to take into consideration the volatility of the bullion market. This can affect demand for bullion products in both the retail and investment sectors affecting the dealer’s profitability. As such it is advisable for dealers to stay abreast of the latest news concerning global economic trends and currency markets in order to predict potential future demand trends.
In addition, it is important for a dealer to be able to accurately forecast their own operational and administrative costs as this will help them create a pricing model that reflects their business needs whilst enabling them to maximize profit on sales to the public.
In the UK, a buyer of bullion bars and coins is charged VAT at 20% on their purchase which can eat into any potential profits. Additionally, physical gold is not easily liquid and can sometimes take days or even weeks to sell, further eroding any potential short-term profits. Nevertheless, when purchased from a reputable dealer, the risk of these hidden costs is minimized and buyers should be confident that they are making an informed decision based on their own research and not a dealer’s high-pressure sales tactics.